I want to start a LFS

The best way to make a small fortune with a LFS is to start with a big fortune.

Start as pure maintenance if you are going to go through with it. Until you are successful with that and have good clients don't even consider opening a brick and mortar. Operate out of your basement.

Also, have a great insurance plan.
 
A couple of thoughts on the business end of things:

Cash flow is critical. I would never consider paying off low interest student loans early. Leverage the loan and invest in something with higher yields. Keeping cash on hand to pay bills and the inevitable emergencies is absolutely critical. Lots of businesses that "make money" have to close because they can't generate enough positive cash flow.

Ask yourself "what makes this business distinct" i.e. what do you offer your customers that your competitors don't? As has already been pointed out, you're going to have a hard time competing with online stores and local big box stores on the things they sell. You need to target a portion of the market that those competitors don't serve where you can make a reasonable margin. Custom installations, maintenance contracts, environmentally sustainable, locally farmed frags, (perhaps pre-quarantined disease free fish?,) these are all areas where LFS can compete successfully. The other thing that LFS typically offer is advice, but this can be challenging to monetize. (How will you avoid show rooming?)
There's always a segment of the market that is willing to pay a premium for premium services. How can you win that business?
 
A relatively 'safe' start might be as on-line, maybe with a 'membership only' sort of clientele---you don't need showroom stuff, you maintain utilitarian tanks, you deal mostly by mailorder and shipping (with skill and attention) and you allow 'membership' purchases, if they sign up online and pay something for the privilege of showing up, picking their own stock, and also understanding they're in the back-stairs of a shipping business, where you control who comes and goes, and deal mostly with online customers, with some that are the more serious shoppers. Sales staff is at a minimum, shipping takes priority, and you don't have to put up with the people who buy a clownfish and have no clue it's a marine species, not freshwater.
 
A relatively 'safe' start might be as on-line, maybe with a 'membership only' sort of clientele---you don't need showroom stuff, you maintain utilitarian tanks, you deal mostly by mailorder and shipping (with skill and attention) and you allow 'membership' purchases, if they sign up online and pay something for the privilege of showing up, picking their own stock, and also understanding they're in the back-stairs of a shipping business, where you control who comes and goes, and deal mostly with online customers, with some that are the more serious shoppers. Sales staff is at a minimum, shipping takes priority, and you don't have to put up with the people who buy a clownfish and have no clue it's a marine species, not freshwater.

This is an excellent idea. Still some risk, but order of magnitude less.
 
I had a psychic connection with you and your store name will be:

"Nice Wrasse Corals"

When you decide to use this name I will sell you the domain for a premium. ;) I kid haha.

I wish you the best of luck with your endeavor, hopefully you will beat statistics and live your dream.
 
I still stick to The Coral Co. being a good name, but check with USPTO to see if any of your possible names are already trademarked. :)

I do like the idea of doing it online, really you don't 100% need a retail storefront, but this does add shipping complications, DOA policies, insurance, dealing with leaking boxes or bags, etc. However, it would cost a lot less to start up.
 
I had a psychic connection with you and your store name will be:

"Nice Wrasse Corals"

When you decide to use this name I will sell you the domain for a premium. ;) I kid haha.
/QUOTE]


I don't think I'll be back in business with corals or fish anytime soon.

Brett
 
On the subject of frag swaps, maybe try hosting some? Once you get in contact with the locals and they know about your store, having your store host a frag swap would be a great way to bring people in the door.
 
I owned an LFS for years and then worked in wholesale and importing for while, so here's my 2 cents:

First is location location location. Not which part of the city you're in, but which city you're in. There are lots of great LFS here in Los Angeles, and they all make money because we have a high hobbyist density. I knew a shop in Ohio that had great corals but closed due to not having enough hobbyists nearby. Hobbyists will seek you out, no one goes to stores because they drove past them in high-rent high-visibility areas, they find them on Google. My shop was in an industrial area and never had problems making money, the cheap rent and power helped too.

Now that you're physically living in a city that has a high hobbyist density, the second concern is money. Just triple whatever amount of money you think your first year will cost and you'll be halfway there. Putting together a store from scratch is extremely expensive, and I wouldn't recommend dry goods since Amazon will always have you beat. I couldn't more strongly recommend starting in your garage or home and then building up slowly from there. It will help you get all of the mistakes out of the way as learn how to put a system together as well as build a brand and a customer base, and if you can't make your garage work you definitely can't make a store work. Finally, it will also help you build what you really need, which is

Connections connections connections. Can you get good corals? More importantly, can you get nicer stuff than your competitors and be able to sell it for less money? Those connections don't fall from the sky when you open up a shop, quite the opposite you need to have them in your pocket before you open the doors. Wholesale reps work on commission, and every one of them has a stack of customers who tell them "let me know when you have a bunch of cherry pieces and I'll order." If you order consistently they'll bend over backwards for you, but if you're one of those sporadic "send me the nicest stuff" people then it's a waste of time and money to sell to you. The nicest pieces are going to someone who orders on a weekly basis because it makes the shop more money and therefore makes the rep more money. Shops that ordered from me every week made bank, I even went into work on Sundays for them if they needed corals on a Monday.

My advice is not to do it. I sold my shop because I got burned out. It's a ton of work, plus you'll see the worst in humanity and it will eat away at you over time. That guy who left bad feedback even though you did everything he wanted is called a good day. Try eating the 40th fraudulent chargeback someone filed with their credit card company just to get $300 of free corals only to see them sell frags online a week later, or try to sleep after some anonymous person sends you an email that they're going to pour bleach into your tanks.

As a wholesale rep to this hobby/passion... you hit the nail on the head haha :lol2:
 
I owned an LFS for years and then worked in wholesale and importing for while, so here's my 2 cents:

First is location location location. Not which part of the city you're in, but which city you're in. There are lots of great LFS here in Los Angeles, and they all make money because we have a high hobbyist density. I knew a shop in Ohio that had great corals but closed due to not having enough hobbyists nearby. Hobbyists will seek you out, no one goes to stores because they drove past them in high-rent high-visibility areas, they find them on Google. My shop was in an industrial area and never had problems making money, the cheap rent and power helped too.

Now that you're physically living in a city that has a high hobbyist density, the second concern is money. Just triple whatever amount of money you think your first year will cost and you'll be halfway there. Putting together a store from scratch is extremely expensive, and I wouldn't recommend dry goods since Amazon will always have you beat. I couldn't more strongly recommend starting in your garage or home and then building up slowly from there. It will help you get all of the mistakes out of the way as learn how to put a system together as well as build a brand and a customer base, and if you can't make your garage work you definitely can't make a store work. Finally, it will also help you build what you really need, which is

Connections connections connections. Can you get good corals? More importantly, can you get nicer stuff than your competitors and be able to sell it for less money? Those connections don't fall from the sky when you open up a shop, quite the opposite you need to have them in your pocket before you open the doors. Wholesale reps work on commission, and every one of them has a stack of customers who tell them "let me know when you have a bunch of cherry pieces and I'll order." If you order consistently they'll bend over backwards for you, but if you're one of those sporadic "send me the nicest stuff" people then it's a waste of time and money to sell to you. The nicest pieces are going to someone who orders on a weekly basis because it makes the shop more money and therefore makes the rep more money. Shops that ordered from me every week made bank, I even went into work on Sundays for them if they needed corals on a Monday.

My advice is not to do it. I sold my shop because I got burned out. It's a ton of work, plus you'll see the worst in humanity and it will eat away at you over time. That guy who left bad feedback even though you did everything he wanted is called a good day. Try eating the 40th fraudulent chargeback someone filed with their credit card company just to get $300 of free corals only to see them sell frags online a week later, or try to sleep after some anonymous person sends you an email that they're going to pour bleach into your tanks.

I didn't have really any issues with chargebacks, but I totally lost my passion for the hobby. I'm just now getting it back after nearly a year and a half.

Your best bet (which will make you enjoy the hobby as well as your tanks at home): Stay small, don't expand. Get one frag tank and go to swaps/local clubs. Try to sell to other local fish stores. Once you "monetize" more than a hundred bucks or so a week, it is far to easy to think to expand, which kills your profit faster than you can imagine.

Also with selling online - you need TONS of volume to get good discounts on overnight shipping. I was getting 40% off standard rates, and my shipping costs were still more than my rent (1500) and power (500) per month.

Add in costs for styro and boxes (often 7-9$ a piece) a $100 of coral turns into 60$ of shipping costs. Add in heat/cold packs, tape and well you need the volume to survive.

I certainly don't want to discourage you, as there is money to be made. Just be prepared to work a second or third job to keep the business afloat for the first year or three.
 
I don't know if it was mentioned or not, but a backup generator will be a lifesaver, even if just one use, you will save a lot of livestock. Recently had lost power for 4 days where i'm at and if i didn't have a backup generator, i would have lost my whole tank, and while only 90g probably would have cost me a grand to restock to where i'm at. generator costs $600. already a good investment. Of course you would need a larger one, but a full blow lfs is going to have quite a few grand in their tanks, 3 grand plus install will get you a generator with an auto transfer switch, and will more than pay for itself the first time power goes down.
 
Start small. Here in MN we had a LFS that could fit probably 5 people. He had about 15 tanks for fish, a 4 ft coral tank, and a small display tank. Nice and simple, cheap to run. He grew the maintenance side of the business the most, but eventually sold the business. Turns out that he was making a lot more money on the side doing website stuff when customers were not in the store.

The new owner moved the store into a much larger location. He seemed to survive off the maintenance income. Eventually sold the store to another guy due to family health issues. The 3rd owner did alright, and tried to breed clownfish, run a store, do maintenance, and still have a social life on top of all that. His tanks were always dirty, couldn't raise more than a handful of clownfish, and I don't know enough about the service side to comment. He recently closed the retail store, due to landlord issues.

I guess what I'm saying is that if you open a store, start it as small as possible in a retail location. If you are able to scratch out a profit, put it back into the business and grow. Don't rely on the store to pay your bills, keep it as a "Hobby store" till you get things figured out and get some traction. Seriously explore shipping options too. Summer is slow for walk ins, but strong for online sales. Winter is strong for walk ins and very difficult in online sales. There is a balance.
 
I don't care what it's called (although Strictly Marine is my vote). I don't care where the store is located or if the prices are 20% more than online. I don't care that you carry the entire Ecotech line. All I care about is good looking, healthy livestock. If I see one fish on display with obvious ich or brook, if I see aiptasia, bubble algae on frag plugs, dead fish, dead corals, gaping clams, etc. I will not buy from you. Period. Frankly, I don't even care if you are a rude to me if you have primo livestock kept in clean tanks. I'll gladly give you my thousands of dollars in business.

Anything else I don't care about. None of the stores where I live pass. They all suck. Most are an encyclopedia of pests, parasites, and disease.
 
Geez...Buzz, you do realize that it's a whole different ballgame when it comes to quarantine for shops, right? Even the best store is going to have problems every once in a while. While tanks with fish covered in ich, aiptasia, or bubble algae should be a warning sign, a few frags that have a piece of bubble algae or so, or a single fish with ich/brook, shouldn't be too big of a problem. The people who work at the LFS don't have the time to constantly monitor every tank for a small problem. However, if you tell the shop owner about a problem, and they don't do anything, that's a major no deal. My LFS has aiptasia in its frag tanks (like...2), and has an aiptasia filefish on hand and is considering peppermint shrimp to help combat its 'problem'. By your standards, it would probably fail as it has a few frags that have a single bubble on them, or a tiny aiptasia anemone on them.
 
Geez...Buzz, you do realize that it's a whole different ballgame when it comes to quarantine for shops, right? Even the best store is going to have problems every once in a while. While tanks with fish covered in ich, aiptasia, or bubble algae should be a warning sign, a few frags that have a piece of bubble algae or so, or a single fish with ich/brook, shouldn't be too big of a problem. The people who work at the LFS don't have the time to constantly monitor every tank for a small problem. However, if you tell the shop owner about a problem, and they don't do anything, that's a major no deal. My LFS has aiptasia in its frag tanks (like...2), and has an aiptasia filefish on hand and is considering peppermint shrimp to help combat its 'problem'. By your standards, it would probably fail as it has a few frags that have a single bubble on them, or a tiny aiptasia anemone on them.

I don't agree at all. Fish with visible ich or brook is not a small problem. Most LFS tanks are plumbed together so that one fish with brook or ich has infected them all. Don't have the time? Huh? What else are they suppose to be doing? Why should I have to tell them that a fish is dead or is so infested with ich it has spots on it's eyes? Come now. Most issues can easily be spotted with a daily 10 minute walkthrough. Why would they leave aiptasia and bubble algae on any frag or in any tank? All of the LFS I have been to have not been properly maintained in months. I would not buy any livestock from any of them.

To be fair, most LFS are set up in dumb ways. There really should not be sand and live rock in every tank. If I were setting up a LFS, one or two show tanks would be set up as full reefs. Maybe one SPS another LPS. Everything else would be bare except for clay pots and PVC hideouts. Just like commercial suppliers. Oh, and my frag tanks would not have fish in them-ever.
 
I don't agree at all. Fish with visible ich or brook is not a small problem. Most LFS tanks are plumbed together so that one fish with brook or ich has infected them all. Don't have the time? Huh? What else are they suppose to be doing? Why should I have to tell them that a fish is dead or is so infested with ich it has spots on it's eyes? Come now. Most issues can easily be spotted with a daily 10 minute walkthrough. Why would they leave aiptasia and bubble algae on any frag or in any tank? All of the LFS I have been to have not been properly maintained in months. I would not buy any livestock from any of them.

To be fair, most LFS are set up in dumb ways. There really should not be sand and live rock in every tank. If I were setting up a LFS, one or two show tanks would be set up as full reefs. Maybe one SPS another LPS. Everything else would be bare except for clay pots and PVC hideouts. Just like commercial suppliers. Oh, and my frag tanks would not have fish in them-ever.

What you're describing are heavy ich infestations. Those need to be taken care of immediately. But if the fish have a cyst here or there? Who's going to notice that on their daily walkthrough? Maybe the fish-conscious worker.

As for the time thingy, think about it. You have to restock the shelves. You have to catch fish for customers. You have to educate customers about the requirements of absolutely everything. In OP's case, you have to go out and maintain customers' tanks. Maybe a cursory glance before opening and after closing, but still. Maybe a fish doesn't want to be seen, and maybe you have way too many fish tanks. Even the best people can get caught off balance one day. The least that you could do is point out the offending fish so that the person working the store can try to remedy the problem.

Why leave aiptasia/bubble algae? Maybe the frag was recently created, and the aiptasia/bubble algae popped up from "nowhere" as they often do. You can't remove the pest without stressing the frag, and with any animal, stressing it after it's been wounded is NOT a good idea.

As for the fish/decoration idea you have, exactly who are you appealing to? Knowing hobbyists who know what they're dealing with would love your simplistic setup. Newbies who come in will be horrified by the severe utilitarianism of it. They want to know what the fish will look like with sand and rock in the tank, not a chunk of carved PVC. You can't honestly expect to have one of everything in each of the show tanks, can you? Additionally, fish that don't feed at first, will often be able to find "munchies" on live rock to sustain them until they start eating prepared food. Live rock is (in my opinion) also more comforting to the fish; most fish come from a region where rock is common, and already associate live rock with safety.

Frag tanks: I have to respectfully disagree with you. Fish are excellent helpers in a frag tank. Halichoeres wrasse will peck off red bugs and problematic isopods and amphipods. Tangs will munch off long and short algae. Certain rabbitfish will devour bubble algae. Filefish and Copperband butterflies can be trained to eat aiptasia. Damsels can provide more water movement as well as waste for the corals to utilize as food.

For time and pest problems: the OP has mentioned she will hire students, who may or may not be educated when it comes to fish. A normal (non-fish loving) student isn't going to be as completely thorough as a fishkeeper. Most likely, they aren't going to care that a fish has just died. Probably, they aren't going to care about selling aiptasia anemones. They might not even care about selling bubble algae.
 
I've owned a business (an automotive speed shop). There are literally hundreds of things I could tell you about owning a business, but these two will do:

1.) turning a hobby into a business will ruin the hobby for you. Just trust me on that.
2.) own your business. Don't let your business own you. This you'll understand after a couple of years in.
 
What you're describing are heavy ich infestations. Those need to be taken care of immediately. But if the fish have a cyst here or there? Who's going to notice that on their daily walkthrough? Maybe the fish-conscious worker.

Well, to me being a little bit infested with ich is like being sorta pregnant. They spend hours in the store and are in front of and around the tanks all day. If I am in the store for 5 minutes and I notice a flashing yellow tang, why don't they? What about the dead fish stuck to the intake that is now bleached white and fuzzy? That doesn't happen overnight. The workers have walked by that same tanke dozens of times and have missed it?

As for the time thingy, think about it. You have to restock the shelves. You have to catch fish for customers. You have to educate customers about the requirements of absolutely everything. In OP's case, you have to go out and maintain customers' tanks. Maybe a cursory glance before opening and after closing, but still. Maybe a fish doesn't want to be seen, and maybe you have way too many fish tanks. Even the best people can get caught off balance one day. The least that you could do is point out the offending fish so that the person working the store can try to remedy the problem.

Yeah, owning a business is damn hard work. A cursory glance at the most important thing they have? I should not have to point out dead fish that have been dead for days nor fish so badly diseased they are near dead.

Why leave aiptasia/bubble algae? Maybe the frag was recently created, and the aiptasia/bubble algae popped up from "nowhere" as they often do. You can't remove the pest without stressing the frag, and with any animal, stressing it after it's been wounded is NOT a good idea.

I disagree here. Removing a bubble or two from a frag plug should not stress even a newly cut frag. If it did, I would not want that frag anyway.

As for the fish/decoration idea you have, exactly who are you appealing to? Knowing hobbyists who know what they're dealing with would love your simplistic setup. Newbies who come in will be horrified by the severe utilitarianism of it. They want to know what the fish will look like with sand and rock in the tank, not a chunk of carved PVC. You can't honestly expect to have one of everything in each of the show tanks, can you? Additionally, fish that don't feed at first, will often be able to find "munchies" on live rock to sustain them until they start eating prepared food. Live rock is (in my opinion) also more comforting to the fish; most fish come from a region where rock is common, and already associate live rock with safety.

As I said in my other post, set up a couple show tanks with live rock, sand, the whole shebang. You don't have to have one of everything! Keeping healthy livestock in clean holding tanks is not going to scare off potential customers. Do you think Divers Den holds fish with sandy bottoms and live rock in thanks? LOL! They hold all sorts of fish for months.

Frag tanks: I have to respectfully disagree with you. Fish are excellent helpers in a frag tank. Halichoeres wrasse will peck off red bugs and problematic isopods and amphipods. Tangs will munch off long and short algae. Certain rabbitfish will devour bubble algae. Filefish and Copperband butterflies can be trained to eat aiptasia. Damsels can provide more water movement as well as waste for the corals to utilize as food.

If they have all those sorts of pests they are doing it wrong and I would not buy anything out of the tanks that were so infested. It is not impossible to keep pest free corals. Hard to do? Sure, but not impossible.

For time and pest problems: the OP has mentioned she will hire students, who may or may not be educated when it comes to fish. A normal (non-fish loving) student isn't going to be as completely thorough as a fishkeeper. Most likely, they aren't going to care that a fish has just died. Probably, they aren't going to care about selling aiptasia anemones. They might not even care about selling bubble algae.

The fact remains I have thousands of dollars in expendable income that I could be spending at the LFS on livestock and I don't. Problem is, they are poorly run. There are a few shops aroound, but none come close to properly keeping livestock. Why should I shop there? The shops near me that have been in business a while also have maintenance contracts that I am sure keeps the storefront from closing. There is a great business plan for you--work one business to keep the other from going under. I'd bet if someone would do as I suggest, they would not need to float the business with maintenance jobs on the side.

How refreshing would it be to walk into a totally clean LFS where all the livestock on display were healthy and all the tanks were clean. I think I would fall right over. Unless of course it was the first day of the grand opening.
 
BuzzPion you have an unrealistic expectation of what you should be getting from a LFS. Do you not buy anything anywhere, because no one lives up to your standards? I sure hope you don't buy online without inspecting their facility first.... Even places like Divers Den do not have what you're asking, the fact remains that fully QTing livestock (fish AND corals) is very expensive and time consuming.

I think you have failed to understand that these are practices we hobbyists have to do ourselves, it's just part of it. No one will do it for us.
 
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