Looking to start a LFS

[Atlfishstore]

I am talking to my business partner about starting a LFS in the Atlanta area. He has worked at a fish store for a few years, I have a background in cooperate America, (and have keep saltwater fish for years)
I have a few questions. I know that this will GREATLY depend on TONS of factors, but I am looking for ballpark numbers and information..

about how much money does it take to start up a LFS (small in size) *both fresh and saltwater fish*

from those that are currently in the business how long did it take before you were profitable?

How lucrative are they? *on average*

Please also provide any info that might help-- thanks

 

[dizzy]

Hey Atlanta,
You might just look into buying one of the existing stores in the Atlanta area. I hear most change hands pretty frequently. That way you can ask them to show proof of how profitable they were. You may end up learning it is not the gold mine it might look like. Or maybe it is.
Mitch

 

[sdcfish]

Atlanta,

You can find excellent resources for information on www.wetwebmedia.com

Best regards,

 

[Kalkbreath]

Lets sea...someone is fishing the local waters for a possible dip into the Atlanta fish store scene.
Lets look at the most recent history of current stores and their owners:
......Marine Fish just sold again I hear. (forth time in five years)could it be that the past owners were having way too much fun ?
......The Fish Store and More might be changing hands again...(third time in three years)Does one really sell a store a year after they buy it because it was everything they had hoped for?
......Pieces Pets went under last year (Was in Business fifteen years}went from 15grand a week five years ago to giving up. Couldn't even sell the store for a hundred bucks...he paid hundreds of thousands for years earlier.
......Qs fish room is out
......Madison's Reef too.
......Under the Wave seems to be going to live up to its name soon.
.......................
And trust me its not because my store is stealing all their customers.

I love my customers and they spend bucks on livestock .... but this online store stuff has taken the profit out of dry goods (like pumps and lights)to a point where what once was the backbone of the LFSs profit engine, is now a lackluster transaction at best.
Tanks sales are at near dealer cost due to struggling stores selling tanks cheap in hopes of making it up on livestock.
and then there is that local store where they sell fish to the public at the same price as the local wholesaler (like 12 dollar coral beauties and six dollar sixlines!)

.........sure having a fish store is great fun!
Trying to make a profit with a retail fish store in todays market isnt.

If you have a grand new approach to running a fish store, were all ears.

Maybe your the guy that can do what twenty or so current and past local store owners have found so elusive.

 

[sdcfish]

Atlanta,

I think most would agree here that one "KEY" factor of a successful retail store is the service and maintenance division that would keep cash flow going year round.

So when you are putting your business plan together, I believe it's imperative that you factor in a major effort towards aquarium service. You have so many options with your monthly customers that can shop in your store and pick out their fish and have them delivered with their regular service.....you can offer your service customers discounts.....terms.........(be careful), and other creative ways to generate bonus's for you and your customers......

While it's true that etail has had an impact on the retail stores....there are still many out there that provide the service their customers can appreciate.

Good luck.....

 

[bookfish]

Eric has a good point, most of the stores that I know (those that aren't shutting down) are supported by multiple revenue streams. The other popular one being internet sales.

 

[Kalkbreath]

That's great!
The hobby is switching into a service....(a spectator sport of sort)
Having someone else tend your aquarium is hardly a hobby.
Its like buying a model airplane or train set and then paying someone else to play with it .
What makes this hobby great is the first person experience.
Tank Maintenance service is like having some one else play with your tennis racket.
its like some one else caring for and correcting your children.
its like some one else "servicing" your spouse.

......... what happened to the hobby I once new?

.........Actually I know what happened, now I have to "fix" it.

 

[sdcfish]

Kalk,

No....the hobby is not "switching" into a service......this has always been a key factor in successful retail shops.....since I have witnessed in my 40 some odd years of being around retail shops....thanks Dad.

More often I speak to retail shop owners, the more I hear them speak of "if I had to do it all over again"......they would only do service and forget the shop. But I hope that's not where the hobby is headed, but financially, it's a much more lucrative side of the industry.

Hobbyist's will be hobbyists...but a retailers cam open up their market exponentially by adding the service to those who simply just want to enjoy.

Just my experience........Atlanta can decide for himself how to approach his venture.

Best regards

 

[Anonymous]

Friendly reminder: keep the discussion respectful and please remember that your opinion is your opinion, not fact.


BTW, there are many RC kits now that simply need you to charge batteries in order to play with it. There are different aspects to every hobby. Some people love the tinkering, some don't. :mrgreen:

 

[Atlfishstore]

what about the svc part of the business? I know that it can be lucrative, but is there really the demand to support the business and sustain it for a number of years?

 

[Anonymous]

I think there is more demand for it than you would expect. There are always people who don't yet understand what they are doing and need help. A good selling bonus is that you can go and set up their new tank.
It is another business and it does take time, so you need people and time to do it. That said, if I were opening a shop, I would offer service.

 

[Anonymous]

I know of two different LFS in my area have a combined count of accounts around 300. These guys aren't cheap I might add. There's many more service guys around with around 50+ accounts. It's definitly a BIG part of a LFS IMO. One shops service side pays the retail bills :lol:

 

[JennM]

Jeff (Kalkbreath) makes some excellent points - while he may sound sort of "doom and gloom" he's right on the mark.

Jeff - you forgot some...

Aquarium Showcase - flipped once in the last 3 years.

Pets Unlimited also flipped recently, in fact I saw the new owner at the airport yesterday - that one's full line but has always been known for its saltwater.

Fancy Fins - went out of business about 5 years ago.

And who could forget the Reef Store?! That's where I got my start, and it went down in a ball of flames.

I also know for a fact that the former owner of the Reef Store tried to open another store last year - "Fishheads" - had space and a sign and everything, and for whatever reason, it died before it ever got built. One day the sign disappeared and all that was left was holes in the concrete floor where I presume drains were meant to go.

Jeff and I opened our stores around the same time. We were both newbs to the ownership biz, and now we're both somewhat "long timers" in these parts. Hell of a change in just about 5 years.

My store does service, Jeff's doesn't. My take is that service *does* help maintain cash flow, but it's only a small percentage of my customer base. So Jeff, the vast majority of people are still DIY hobbyists, but it's wise not to overlook that segment of people who "just look at the pretty fishes". A good service entity can sell wisely to those people, and have awesome displays that make great advertisements. Of course there's a good segment of maintenance "services" that offer poor service and overpriced and inappropriate livestock choices - I've inherited business from one "service" in particular over the years and I just shake my head at what I walk into - but I digress.

Service accounts only make up about 3% of my customer base. That means there are still plenty of hands-on people out there. However my biggest-spending customers make up a high percentage of my "best customers" (spending-wise). I'm not at work right now to look at the numbers but if I think of it when I get there, I'll take a look at my top 10 spenders and note how many of them are service accounts. I know for certain my top spender is on the service list, but she's also very hands-on - just that she has such a huge set of systems (~1500 gallons total) that she needs HELP keeping up with it. She's more educated than most, as she's got tens of thousands invested.

It's not an easy business - and to the original poster, make sure you have more than a solid business plan, more than enough startup cash and a cushion to fall back on, because typically this type of business (and many other types) run in the red for a long time, if they ever do turn a profit, it's likely not a large one.

When the biggest, most well known store in the city appears to be struggling, that's a big red flag, IMO.

I may come across as sounding like, "Atlanta does not need another LFS" but that's not so. I think lots of *good* stores make it better for everyone. However, I've seen many hobbyists have a pie-in-the-sky idea about owning a LFS, if they've seen a fish invoice or a transship price list. It's NOT that simple. There are lots of factors that make this business more risky and more costly than other types of retail businesses, and unless you've actually spent time working in the trade, I'd strongly advise against venturing out on your own until you've actually worked in the trade for a while. Hobbyists often make poor business-people - not a slam - that's a fact.

I was a hobbyist, turned LFS employee, turned entrepeneur. It's not a hobby for me anymore. It's a business, a job and at times, a struggle. I love what I do but not everybody has what it takes to run the business end of it.

If it was easy, everybody'd do it.

Jenn

 

[Anonymous]

I know you all speak the truth. My boss was out there a few months ago for a club presentation. He printed out a bunch of directions for stores. Almost all were out of business. He only got to see a small amount, compaired to the printed list.

 

[JennM]

Of my top 10 dollars-spent customers for this calendar year, 5 are currently service customers. Of the remaining 5, one *was* a maintenance customer and changed to another service company, and another simply began doing it himself.

Of my all-time top 10 dollars-spent customers, 6 are currently service customers, one moved out of state, one moved to south GA. Those latter two don't shop with me anymore for geographical reasons, and we did not service their tanks. Of the other two, one no longer shops here because I threw him out for flashing illegal drugs in my store. Neither of those were service customers either.

Don't underestimate the value of service customers

Jenn

 

[dacarlson]

For me the exciting thing about owning a business is the ever changing business climate and the challenge of making changes to keep up with the change. Yes the Online’s are here and here to stay. Yes it is harder to make a profit but based on my experience and where my profit centers flourished, this is what I would do “If I had it to do over again.”

I agree with sdcfish (by the way, they were great to me for 6 years) that service is where you need to be, if not solely at least a large percent of your business. Three areas where I was successful were high-end residential, commercial, and service. Most of my profit came from these three areas. These clients are paying for your knowledge and expertise and will not nickel and dime you to death. Granted, the hobbyist is still important but from my experience not where the money is. After all, I’m running a business to make a profit and not to go broke.

At this time I would not open a typical B&M store but a much smaller office/gallery setup. Keeping overhead down would be the key for me. Having a few great display aquariums sells your systems. Having a nice classy place of business is important working with these types of prospects. I know in our area these areas were untapped. With the high-end and commercial focus comes the service opportunity and I was shocked at how many high end systems went out my door. I would only have enough holding tank space to provide for these clients. Sure, I’m probably still going to sell to the hobbyist but that is not my focus.

There are all kind of ways to attract these types of clients, mailing flyers to different vertical markets, word of mouth, contractors, interior design firms, etc…. My best opportunities came from offering a beautiful reef system to a vender at a home or business show. It cost me very little and was an attraction getter for them. People would flock to their booths just to look at the beautiful reef system.

This is something I am thinking about again, and granted, for my demographic area I think this would be workable based on my past, maybe in a metro area it would need to be different. This is just my thoughts. You may agree or disagree but that is fine too.

 

[Kalkbreath]

Service industry rides on the backbone of the brick and mortars.

This idea that the hobby can survive without traditional brick and mortar retailers out in the market place creating the customers....is fool hearted.

The back bone of the trade is the entry level hobbyist.
without these key players ,the wheels that turn this industry would grind to a halt.

One can clearly juxtapose the two client bases side by side and see that the service trade represents only about 5 % of the market share.

I dont think the coral farms over seas are going to be too thrilled about this new approach.
Forgetting the general public in this "new" service industry approach to selling reef tanks is a sure fire way of decreasing demand for farmed products to the point where its fruitless. Importers wouldnt even be able to arrange shipping based on such a huge reduction of volume.


This also would decrease the demand for entry level aquarium products.
Companies like Coral life, Prism and JBJ would soon fall to the way side if the Brick and Mortars stopped creating these key entry level consumers.

If you want to see what the market will look like when all retailer take this advice of "service without storefront. "

Look at Cities like Nashville Tenn. compared to Chattanooga and Knoxville.
The cities of Knoxville and Chattanooga have about 160,000 people each.
Nashville has almost four time as many people with 600,000.

Which city do you suppose has more reef hobbyists? And why?

Which city do you suppose has more affluent residents?

Nashville has virtually no reef stores and thus almost zero hobbyists.(Even with affluent record industry and banking citizens)

Chattanooga and Knoxville even though they have one forth the populations have multiple brick and mortar retail reef fish stores and thus quite a healthy reef keeping population.

Without the traditional B&M retailers leading the way ...this hobby is toast.

 

[JennM]

This also would decrease the demand for entry level aquarium products.
Companies like Coral life, Prism and JBJ would soon fall to the way side if the Brick and Mortars stopped creating these key entry level consumers.

Hmmm...

Coralife (aka Central Garden & Pet) isn't going to go anywhere soon. By "Prism" I assume you mean Red Sea.

As far as certain Red Sea products (like the Prism) and most, if not all of JBJ, IMO the hobby would be BETTER OFF if those were gone.

People sink money into cheaply made, poorly performing products, only to get peeved off and disheartened when a serious product is recommended in its stead, when the cheaply made product fails to perform. Sure the serious product would have cost a few bucks more initially, but it really sucks to buy a piece of crap equipment, only to learn that they need to put good money after bad. I'm sure most hobbyists have a salvage box in their basement or attic with things like Power Sweeps, Skilters, Sea Clones, Visi Jet skimmers, undergravel filters and a myriad of other cheap crap that never did what was expected. There's a reason why you pay more for a CPR or an Aqua C skimmer that you do for a Prism or a Sea Clone - the former WORKS.

I can't tell you how many people have come to me for a quote - say on a 75 g system, so we quote them on a reef-ready system with a sump and a good skimmer (I'm partial to Euroreef)... and then they go down the road to another store (in particular, one that recently shut its doors for the second time) and they get a *CHEAPER* quote for a standard 75 and a Fluval or two. 6 months later when they've bought the el cheapo system and they have low dissolved oxygen and sky-high nitrates, they ask me to fix the problem :roll: What's more expensive? Buying the right system the first time, or having to MacGyver a crappy one after the fact?

Sorry but some "entry level" CRAP *should* go the way of the dinosaur. Personally I can't believe they still manufacture the Skilter - but every now and then I get somebody coming in for replacement media (which I don't carry - the filter or the media) or to ask why it's not working right.

That too is a symptom of the corner-cutting attitude of many, that is also fueling the drive away from Brick and Mortars. Nobody wants to spend more than they have to, but the perception of value added in dealing with somebody who can help you avoid buying crap equipment seems to be losing its value with some.

Unfortunately, if people are still getting some poor or questionable advice at LFS (read any internet forum - there's always somebody slamming their LFS for "selling them junk") that tars us all with the same brush. It doesn't matter that the responsibility ultimately rests with the end user - if a customer is advised that an Aqua C skimmer is better, but all they see is the price, and buy a Prism, then a week later they're slamming their LFS, they never mention that they were advised to buy the better item, but *chose* the cheap way - and with the amount of defammatory-to-LFS posts I've seen over the years, I find it hard to believe that none of us out there recommend better equipment over worse. Of course I don't carry the crap, so it's not offered as an option - although I've had people decline the better equipment from me and go and buy junk elsewhere - and more often than not they end up returning to buy the better equipment from me in the long run. Too bad they didn't listen in the first place and save some $$....

There's no doubt the dynamic of the B&M in this city has changed - even in the half-dozen years I've worked in this trade. I suppose at some point it will "level out"... but for now the pendulum seems to keep swinging back and forth. Pro-online one moment, pro-LFS another... wonder where it will settle?

Oh yeah and Jeff - we forgot about Ebaeseller/Empire Pets - the online selling guru in Marietta (who eventually got kicked off eBay but he's still buying product so he must be selling it to somebody), and Aquabuys... both online entities but who offer local pickup and thus undermine LFS here on dry goods.

Jenn

 

[JennM]

Service industry rides on the backbone of the brick and mortars.

Do you suppose that is why Premier Aquatics (service company) ended up working out of Marine Fish (brick and mortar)?

A couple of stores around here did not formally provide service. Their part time employees would perform service on the side, for customers they met while working in the store. The problem I saw with that is that if there was a liability issue, the person employing the algae scrubber on the side, was taking his chances if the person had liability insurance or not.

Under the store's umbrella (policy), customers have the security in knowing that the person coming to clean their tank is insured. There's also the backup of being able to send another technician if one technician is off sick etc.

When service is done through my store, customers receive a written contract explaining our fees, services, what they can expect of us, as well as what *we* expect of them... we clean their tank every other week - *they* are responsible for care, custody and control between cleanings. This is a big one, because some folks figure that paying somebody every other week, absolves them of any responsibility whatsoever....

After examining my own statistics in this thread, perhaps I need to focus on growing my maintenance business further - that is where the money seems to be! Of course there's more costs involved at my end - I used to do all the maintanances myself, now I have 2 technicians to pay... but it sure does keep the cash flowing!

Jenn

 

[dizzy]

So what is it then? Do Jenn and Kalk think Atlanta ought to jump into the waters or not? :?