Question you may be able to help with. Possible new LFS
Yes I and a friend are interested in starting a pet store.  Our Main
focus of the store will be our Fish department.  We are also going to
be focused on "new to pet owners".
<Better by far to widen your commercial focus... have something for intermediate, advanced folks/approaches>
  We have an excellent layout for a
store completed and scaled and built a model.  We are having difficulty
coming up with a realistic startup cost to start pitching our idea to a
bank for funding.
<Some general rules of thumb, guesstimates can be found sprinkled amongst articles and FAQs on the WWM Aquatics Business subweb... I would count on whatever operational costs you have not being able to cover them from anything other than savings/borrowings for a good two years... Utilities, rents, your wages...>
  We have talked to numerous people in the business
who stated that the idea was very well thought out, and they also said
that it was a very franchisable idea and plan.
<Wait on the franchising... this is an entirely different biz, animal than owning/operating (even designing, packaging) a retail concept>
  Unfortunately none of
the owners where willing to help us as i guess they felt threatened by
competition.  We don' t feel that we can successfully pitch the idea to
a bank with out solid proof as to startup cost.  Any information that
you could give would be greatly appreciated.  Thank you for your time.
<You do need spreadsheets detailing monthly ongoing fixed and variable costs... along with projections (including seasonality) of product, livestock categories. Do you have Excel or Lotus experience? What data/categories do you already have listed? Make a two year (24 page) spread sheet with what you have on it... and send it along... We'll go "back and forth" a few times I believe you will grasp what is involved. Bob Fenner>
Dennis E Roach Jr.. 

ECO follow-up
Hello once again Bob,
Well we got an "intro" letter together but wanted to holdup a little bit before sending out to some big dogs.
We're in the process of adding FLASH to our website to demonstrate the dynamics of molecular structures of water and what exactly our product is able to achieve. It's going to be quite interesting. It should be completed by the end of this week, so I just wanted to let you know, why we haven't forward an intro letter.
<Okay>
Also, when dealing with say, Dr Foster, Premium Aquatics, Aqua Direct, as distributors: what is a good estimate % discounted price to these outlets. We're in the final stage of presenting our Business Plan and wanted to have an ideal before plotting the core marketing strategy. We're still indecisive with that avenue, but wanted to have a ballpark figure to juggle in our planning.
<Understood... typically there is a 40% or so net margin between distributors and wholesalers in our trade, with some keystoning (doubling) margin left for independent retailers... but with more expensive items like your units the markups at retail may be somewhat half of this>
We've established a very good rapport with Sam Gamble and things are getting interesting as well with Bob Goemans.
<Ah, good>
Anyway, once again thanks for any info you can provide. I'm sure we will be linking to WWM as a sponsor as soon as we begin our advertising campaign.
<I look forward to your success. Bob Fenner>
As always a pleasure, Carl Denzer

Re: ECO follow-up (mark-up structure structure in the pet fish trade)
Bob,
Just to make sure I understood the % discount.... So on items like ours priced at $65 to $85.... the average would be 20% to 25% discounted to dist/retailers. I didn't realize that our product would be consider in the higher bracket of cost items.
<Mmm, yes... as a rough rule, most anything a dollar or two is double-tripled to retail cost... a few dollars to a few tens of dollars, doubled. several tens of dollars, to hundreds, much less scaled mark-up... Look in the stores... what percentage products sell for about your mark? Not one percent...>
Thanks much for the info. Its nice to have your insights to prepare us for future dealings.
<These are mainly just historical perspectives... I was the person (consultant, buyer) at the mass-merchandiser Petco, who made the original "set" and put together the selection for their entrance into the livestock parts of the trade (1991-1994)... we were very aware of others costs, mark-up structures. Things may have changed by now... For instance, you two will have to cross the Rubicon of what to do with etailers... how is it you will compel them to not "give away" (and ruin to a large extent) your other markets? Should you care?
Bob Fenner>
Have a wonderful day, Carl

How many of us are there?
Hi WWM Crew,
<Cheers, mate>
Has anyone ever figured out how many home aquarists there are in the U.S. and the break down between fresh and salt water aquarists?
<Yowsa... heck ya! Big business... it is known and revaluated all the time. Multimillion dollar industry>
Working on a biz plan and this info would be good to know....
<do look up, subscribe perhaps to PIJAC (Pet Joint Advisory Council). They have some free information, more for members (industry participants as you soon will be) exactly for writing business plans!!! Demographics, market shares, percentages, etc.>
As always, you guys are the greatest and thanks for all of the help.
<also look to subscribe to trade journals (not cheap) like Pet Age, Pet Business and Pet Supplies Marketing... articles, and data of great value... also industry contacts and indices (wholesalers, retailers, manufacturers, etc)>
Wes
<very pleased to hear you are writing a business plan! Anthony Calfo>

Pet shops
Bob,
I hope my memory isn't failing me and you are the one who has written a
series of article for FAMA related to starting a pet shop.
<I am one of them, yes>
I have a related
question for you (if you are the one to be asking). There is a LFS who has
a decent store. They seem to have a good business and deal with everything
i.e. reptiles, fresh, salt, dogs, cats, rodents, birds, etc. Basically, they
have it all.
<Admirable. A difficult proposition>
I was talking to one of the employees the other day and he
said he thought the store grossed about $800K. I've always thought about
opening a store (I know, there's a screw loose somewhere). When I was in
there today, I jokingly asked the owner if he wanted to sell and he said he
would for $1.6M which is what he says he grosses. Both of these figures
seem impressive but really don't have a bearing on my questions which has a
lot of variable. But basically I was wondering: If buying an established
store, how does the gross receipts typically relate to the asking price?
<In highly variable ways... There are stores that are profitable that have sold for little more than their stock/inventory and depreciated fixture prices... Others folks ask a fortune for, like in your example>
I
know that there is no hard answer but my first impressions was that if he is
grossing an amount, whether it is $800K or $1.6M, then expecting to get that
for it is unrealistic. I know the price all depends on the demand but what
is your feeling on what a person could expect to get as a percentage of
gross (or net) receipts?
Thanks for your time.
Kirk Pfeffer
<Mmm, the gross and often net are typically employed in some fashion in estimating a sale price for a going business. In the service side of our industry some 3,4 to six times a months "take" is about right for buying actual accounts, routes. For retail stores, I would pay no more than a few months worth of sales...>
Kirk R. Pfeffer
<Please read over the Business part of our site: www.WetWebMedia.com for much more, particularly my re-use of Musashi's "Five Elements of Successful Retail" series. Be chatting, Bob Fenner>

hope Hawaii was great (sources of educational seed money)
Hello Bob,
I hope you had time to rejuvenate your spirit in Hawaii. I think the best
time I ever had was while on vacation on Maui.
<Great places to become oneself>
In the process of putting together my business plan, and thanks for the info
from your web site, I was wondering if you know of any grants available to
help support public education and coral propagation.
<There are a few... Sea Grant takes forever but has a lot of the publics money... NGO's like the Ford and Packard Foundation have sponsored quite a bit of pro-reef work/ers the last few years (the MAC for instance)... Really, you've got to collect catch-words, phrases, put together your organization, goals... and write, make presentations, write, call... write... and write, oh and wait, be patient. Best to go the "self finance" route... if you can (this has been my means)>
Also, you mentioned your fish list. Is it setup in a way that lists good
fish for a reef tank, or does it just list the fish by species and then you
indicate whether or not it is good for a reef tank or not?
<Hmm don't know which list you're referring to... the AMDA has one... Bob Fenner>
Thanks,
Bruce Azzarito
hope to be doing business as:
Captive Reef Systems

Request for help in making a new LFS
I have a quick question, can you lead me in the right direction? I was
seeking a small business loan to open up a small decent size tropical fish
retail store fresh and marine. strictly fish! that's it. aquariums and
deco, filters, sumps, etc... you get the picture right? lol:) if you know of
any websites that I can surf for a small business loan would be highly
appreciated! thanx again rob!:)
<Please take a long look at the Business Index of articles posted on our website: www.WetWebMedia.com for this and other valuable insights into what the pet-fish trade is about, "Finance", "Location"... Have you worked for others in the field? You should first... Much more that we'll be talking about, I'm sure. Bob Fenner>

Average Profit
Bob,
What is the average gross profit (expressed as %) of Marine Fish? Of course
not counting fish loss or any other factors only that I would be able to buy
at reasonable prices and sell in a market with out tons of local pressure.
<At retail, most shops employ a "sliding scale" of initial mark-up... For very inexpensive livestock items (like Damsels), 3-400%, which at a few dollars doesn't cover bagging, ringing, maintenance... but is the market. For "medium-priced items" (ten to a few tens of dollars) many folks double/keystone their initial costs... Where expensive live product is involved, often 50% is all that can be charged... Let's say, a large marine Angel costs you two hundred dollars, you may only be able to charge three hundred retail for it... As you can/will see/understand, the vast majority of profits in the trade are made through drygoods sales... with the livestock being a draw (to the public and hopefully a "tie" in cost/return on equity/sales), with many smart independents tying service work in with their outlet sales... or subbing this out in turn>
What would you guesstimate as a reasonable goal to set for % of fish brought in that are losses in the store before going out the door?
<Hmm, reasonable? In the way of relative % of pieces, ten or twenty... Look over the Loss/Replacement book/system piece I've stored recently on the WWM site for more specifics on developing/implementing your own protocol here... very important to secure good suppliers and deal/make them deal with you, fairly, reasonably and consistently...>
Thanks, Sean Warren
<Good questions my young friend. You're thinking. Bob Fenner>