Thinking About Buying A LFS

I must be nuts. I might try to get a small business loan and buy the LFS. The LFS that is about 1 mile from my house he is trying to sell out.

Here is a list of whats in the store:
79 -- 40g breeder tanks. They are up and running with livestock.

59 of those tanks are freshwater with undergravel filters and a common oil less air pump that is mounted in the back of the store.

20 tanks are dedicated to saltwater. 6 are for corals. 6 are for inverts. 14 are for fish.

All the SW tanks are running on refugiums with separate sumps and skimmer tanks. Each set of 6 tanks is running on the following setup:
There are 2 of the 40g breeders. One is the sump, skimmer and return pump. The other tank is the refugium.

There is a 180g SW display tank in the front of the store. It has about 150lbs of live rock and 1 large tang. (not sure what it is) It is running on a 55g refugium and a 40g sump with some kinda big skimmer. The lights are MH and more than adequate for a nice reef.

There is about $800 worth of livestock in the store right now. Only about $100 of that is saltwater. The rest is in FW.

The bread and butter of the store is in freshwater fish sales. But, if you stocked the SW tanks, it could produce about 40% of the overall sales each week.

The store produces about $20,000 in sales per month. Operating costs run just under $3000/month.

The cost to purchase the store and livestock is $25,000

I would need an additional $25,000 in operating capital. This would give me the cash I'd need to stock the tanks full. Right now, the tanks are about 10% of capacity. It would take about $5000 to stock the tanks full. That would leave about $20,000 in operating capital.

The store has about $2500 worth of dry goods in stock right now. He is willing to sell it to me at a loss for $1750.

The current markup is 2-3X Keystone on livestock and about 60% on dry goods. He is doing pretty well at that rate.

I have calculated it out on paper and I think I can make it work. If I kept doing exactly as he has been, I should net about $85k per year. Thats NET -- meaning AFTER I pay the bills and Uncle Sam.

I'd need a $50,00 loan to do it though. I don't have that kind of cash lying around. Who does?

How many of you would even consider it?

make sure to take a look at actual financial information just don't take his word for it. If he was making such great money he probably wouldn't sell it.

If I could get my hands on the money to buy it,and operate for a month at least,then I'd probably go for it.
If you jump on it,I wish you luck with it.And expect a decent discount

That is a lot of money. We have had 3 stores close in the last 6 months. Right now people just don't have the disposable income to blow on their tanks. If you do decide to go with your plan, good luck.

He's selling it because he wants to retire. He's been in the Denver area, operating fish stores for over 40yrs. He's 60yrs old and wants out of the business.

I know it's a ton of cash. Thats the scary part. I also know the economy is pretty rough and people don't have the disposable income to spend on the tanks.

I talked to him for about 3hrs today. I tried to get financial info out of him, but he either isn't willing to provide details, or he simply doesn't know. I think he's just such a poor businessman that he really doesn't know. Thats been his problem for years and years. He simply doesn't MANAGE his business. He doesn't know how much he spends and how much he takes in and how much his net is at the end of the year. I think if he had the records, he would show them to me. He just doesn't keep track. His accountant must hate him.

He can tell me how much his weekly sales are. But he has no idea if he's making money or not.

Risky move for me.

But the idea of being self-employed and having a business less than a mile from home is very appealing. I positively HATE the HVAC industry. I'm so tired of working with contractors and architects. I'm sick of dealing with ignorant construction workers ( I used to be one, so I can say that) who have no clue how to build a building. I HATE working hard for some other guy when he makes all the money at the end of the year and all I get is a weekly insult (paycheck).

My wife is willing to run the store during the day while I continue to work my estimating job for a few months. But I'm not sure if that is the right move. It's the "safe" move because I could keep my weekly income from the estimating job I have now. But would the store be successful without my leadership and work the entire time the doors were open from day to day?

It would be the end of a hobby for me. As soon as you start doing business, the hobby is gone. I'm not sure I want to give that up. Cleaning fish tanks every day is not pretty or fun.

He has to claim income on his taxes. I am sure if you kept pressing him he would show you information. He must have it somewhere.

Wow that's a big career change! Well, we're losing a few LFS around here in southern cal with the slumping economy, but I don't know what it's like in Denver. I wish you the best of luck. I think the others are right, get as much sales and financial info as possible. If you go through with it, I'd suggest hooking up with ORA and stocking their awesome tank bred clowns and dottybacks, then you're in the door for all their top notch aquacultured corals! To me, getting out of construction and being self employed, supporting my hobby and making a living at it would be THE American dream! Hey if it fails, maybe you could get a bailout from Congress!

i have been thinking about the same thing for three years.our lfs only cares about his lizards.he only has fw tanks and they are always cloudy.i go about 50 miles to another fs and he has everything.he say's he gets alot of customers from are area that say the same thing.the funny thing about it is he only does about 10% business with the lizards,snake and stuff like that.the rest is in fw and sw fish and his store is always busy.so i say go for it and hope you do well.but keep the business part away from your personal finances and you will be ok.good luck and tell me how it goes so i can talk the wife into the same deal..

Letting your wife be the main person in the beginning would be risky, not because I don't think she knows what she's doing (for all I know, she's a pro), but because that is the time when you are going to get people coming into the store for the first time, and they'll decide, from that one encounter, if they are going to come back or not. If it was my store, I'd want to be there full time in the beginning so that I could be sure to give the best service possible, and let new customers get to know me. That way there's a much better chance of them coming back.

+1 Biffer