What It Takes to Open Your Own LFS
Toying with the idea of opening your own LFS? Think again, then think again, then slap yourself and think again. Operating any retail business is not easy. Running an LFS or pet store is even more difficult and involved than you might think. What are you going to need to operate a successful pet shop? Follows is just some of what we learned when we opened Fin-Tastic Fish & Pets in Kinston, NC.
Even if you have years of experience with your own saltwater aquariums, working for a period of time in an LFS or pet store will greatly increase your odds of success if and when you open your own store. There is so much to running a successful business that isn't immediately apparent.
Any successful retail business person will tell you that there are three things that are essential to succeeding: Location, location, and location. That cute little 2,000 sq. ft. spot in an alley that rents for only $500 per month will cost you more in the long run that that 2,000 sq. ft. storefront around the corner on Main Street that rents for $1,500 per month.
Financing for pet stores (LFS) can be difficult to find. If, when you are sitting down with you local banker (or the SBA, for that matter) and you can't put a lot of personal assets on the table for collateral, your odds of getting enough money in a loan to start up even a small pet store are pretty slim.
The failure rate of small pet stores is pretty high, and lenders know it. We were fortunate in that we were referred to the R.U.L.E. (NC Rural Economic Development Center) and received a "small business micro loan." There is some small business start up loans out there if you look for them, but for the most part, your start-up money will come from your own assets, credit cards (careful with those) and whatever money you can scrape together.
Many people borrow money from friends and relatives to open a new small business. Careful with that one as it is a good way to lose friends and alienate family members if the new business fails and the money can't be repaid.
One of the very best tools you can use to make an honest determination as to whether your new LFS will survive, let alone thrive, is a well-researched business plan. Most lenders will require that you submit a solid business plan before even considering a loan. Some of the things you will research is your competition (any other LFS in the area?), demographics (how many people are there in your area?), potential storefronts, local regulations, traffic patterns, potential cash flow, etc.
If you set up an LFS, you will need to have several suppliers for both livestock and dry goods. We rotate between suppliers to get better prices and a better selection when placing weekly orders. Quite often, we can get a specific species of livestock from one supplier, but not another. The same is true with dry goods like Sea Salt Mixes, Fish & Invertebrate Foods, Aquariums (we found that the Mini/Nano Aquarium Kits were much more popular that the Showsize Aquariums), Aquarium Lighting, Test Kits and so on.
We have also found that in some situations we can now go directly to a manufacturer, bypassing the middleman and getting a much better price on products.
Are you going to carry only saltwater fish, invertebrates and corals? As you can see in Open/Create Your Own Local Fish Store/Pet Shop, there are 17 times more freshwater aquarium in the U.S. Than there are saltwater aquariums. You might want to seriously consider carrying freshwater fish and products. You also might want to consider at least carrying dog and cat supplies to expand the number of people who have a reason to enter your shop.
If you don't let people know that you are there, they will never stop in. It has been said that "word-of-mouth" is the best advertising, but, depending on your location and situation, it can also be the slowest.
We made the mistake of trying to "cheap out" on advertising when we opened FF&P. Big mistake. We tried the back of the grocery store cash register receipt gambit. It cost us $75 per referral. The online Yellow Pages ad cost us $55 per referral. What finally really worked for us was billboards.
Billboards can seem to be very expensive (well... they are ;-) but, depending on their location and the traffic count ( the number of vehicles that pass by them every day or week) the can be a real bargain. There are 4 basic routes into and by Kinston, NC where we are located. While they are expensive (up to $700 per month, depending on location and traffic) they have paid off the best as far as new customers coming into the store. We have a bit of a unique situation, in that we are the only pet store within 30 miles, though. We noticed a definite jump in the number of new people coming into the store as soon as our first billboard went up. There were a lot of people that came in just to see what we had, but a lot of them came back and made a purchase later.
Knowledge & Advice
What keeps customers coming back to your LFS is solid advice. If you don't know what you are talking about (see Biggest LFS Whoppers), people will quickly pick up on it and take their business elsewhere. If you and/or your staff are not confident that you know the subject very well, you might want to hang off on opening an LFS until you are more knowledgeable.
There is a lot more work to setting up an LFS than most people realize.