Thinking About Buying A LFS

[RyanG]

Its a risky investment but it could be very rewarding...it could also make you bitter. I would take his books to an independant CPA and have him/her give them a thourough looking at.

[Rcpilot]

Excellent point Biff. +2

I DO need to see the guys finances. I know that. But I'm not sure he has them in order. I want to know expenses, overhead, profit, losses, taxes, etc. for the past 3-5yrs. Thats the only way to know for sure if it's worth the risk.

[SSalty]

What I would hate about owning a fish store is the un-known of when you leave for the day. Who knows what could happen when you are asleep at night. A power outage could wipe out the whole store. Also, who do you trust when you go on vacation? Taking care of that many tanks is worse than babysitting numerous children. Just like any business, there are risks. I meen I am worried when I leave my 55 gallon for a weekend or when I am on vacation. I couldn't imagine leaving a fish store full of tanks when I am gone for the weekend or vacation. I am best friends with the owner of the LFS and the above variables are what gets him.

Also, what would you have in plan for employee's?

If you have the time than go for it.

[Rcpilot]

I don't think I would hire outside employees right away. I'd most likely run it by myself and with the help of my wife for the first 1yr or 2yrs. If I manage to make it that long, I would hope it was profitable enough to hire some help -- at least some part-time help.

I wouldn't be able to take any vacations for a few years, but I'm okay with that. Anyone who has a business will tell you they were "married" to it for the first few years. You HAVE to be dedicated to it and make those sacrifices if you want an honest chance at success. Vacations can come later.

As for power outages:
I think I can insure the livestock. I'll have to check into that.
I would consider an emergency generator down the road, but I don't think I could afford to do that right away. No business is without risk.

[RyanG]

RC if you are taking out a small business loan for 50 grand anyways take out the extra 5 grand and get a natural gas powered emergency generator. Kick on instantly if the power fails.

[yote]

Dont know about Co. But here,you cant get insurance on fish and other related stuff.So thats something else to think about.

[SSalty]

Originally Posted by yote

Dont know about Co. But here,you cant get insurance on fish and other related stuff.So thats something else to think about.

Yup, that is exactly why I stated those risks in my first post. At my buddies store he can't either.

[naperenterprise]

You should do it! You only live once my friend...

Sounds like a very interesting opportunity. How many customers comes in the store if you were there visiting for an hour?

I think if you do this, you need to close for a few weeks, clean up the place, restock, revamp, come up with a different and better twist to the established success, and then have a grand re-opening.

While shut down SPEND $$$ on advertising, newspaper, radio, TV, what ever, get the word out about the grand opening, and BOOM, launch your baby...

[Altohombre]

You gotta change the name to make it seem different unless the past owner was well respected and people associate with that name. Any ideas?

[Rcpilot]

I've just become the recipient of some VERY interesting information. Not exactly what I wanted to hear, but I just saved myself $50 thousand bucks.

Here's the skinny:
The company is called Sherman Tank. Sherman tank has been in business around the Denver area for roughly 40yrs. Several different locations, but always as Sherman Tank.

The guy outright told me that, "You don't want my name associated with the store after you purchase it. I owe suppliers money and you'll never get any credit to buy inventory from them if you keep my name."

Fair enough.

Then he tells me he will not sign a "No Compete" clause. I ask him why. His answer,
"I have a warehouse full of hardware. I've got enough tanks and pumps etc.. to build 2 more stores like this. If you buy this one, I will set up another store with a portion of my remaining inventory and sell that one too. I want OUT of the fish business and I want to get rid of all my equipment that I've accumulated over the last 40+yrs. So, I'll probably set up 2 more stores similar to this and sell them at a modest profit. At that point, I will have paid off my suppliers and I can walk away debt free with a few bucks in my pocket."

Here's what I see:
He won't sign a No Compete clause and he doesn't want to give up his name because he knows damn well that he's going to take that name (known in this area for over 40yrs) and set up 2 more stores. Those stores will be named...... what else? Sherman Tank.

Then I'm stuck with $25,000 worth of used equipment and no name or reputation. I don't have the Sherman Tank name or phone number. I don't have the logo. All his customers will flock to his new stores---regardless of where they are. I'm just Joe Fuckstick with a fish store at 84th & Sheridan.

Whats he got?
$25,000 worth of working capital.

It's not worth it. If I am going into debt $50,000 for a LFS I'll do it on my own and not bother purchasing his "skeletons" and not deal with his used equipment.