number crunching for aquaculture

[xxbrianxx]

Hey guys, so I'm looking to get into aquaculture eventually as a small side job and I was doing some calculations. I was curious why it's so hard for people to profit because based on my numbers it doesn't seem too difficult after startup costs.

 

Basically the plan is to purchase 40 frags (which I already have) and grow them out for a year. In a year's time it's easy enough to grow the frags into good size colonies which (based on my grow rates) are at least 5 times the size of the original frag. And keep in mind that's a conservative number. So ill frag each colony into 5 frags, keep 1, and sell the others for $20 each (a very common price for a lot of stony corals). I'll then use half of the revenue to buy as many $20 frags as possible, which triples my broodstock, and then keep the rest. And then just rinse and repeat. Here are my numbers....salt costs are based off of distilled water ($1 per gallon), esv salt (approx $1 per gallon as well), and 50% water changes once a week. I left out costs of food, filtration, and tanks because I figure the cost food and regular AGA glass tanks will be insignificant in the end, and (forgive me for this) I'll be operating these tanks with mainly ATS's which I'll be building for next to nothing. I know that guy didn't make much sense but hey they work for me lol. Electricity is also basically free for me since this first tank will be operating in my dorm room and once I expand, the rest will probably be in my parent's house until I find another place after year 4.

 

Also for lighting...I'll be going LED and by year 4 I'll probably have 5-6 20 long tanks each with an LED fixture that costs around $500 to make. So overall it doesn't take away too much from profit. I feel like I can underestimate some of these costs because first of all they aren't too big to begin with and second of all because I'll eventually switch to rodi water and a cheaper salt which could easily cut my water change costs in half.

 

Year / # of Frags / Revenue / Cost of Salt / Profit

1 / 40 / 3200 / 260 / 1340

2 / 120 / 9600 / 780 / 4020

3 / 360 / 28800 / 2340 / 12060

4 / 1080 / 86400 / 7020 / 36180

 

So basically by the time I'm out of college I'll have made around $50k and from then on I'll be making even more per year. I'm not looking to get rich from this but I just want another source of income that I can pull money from instead of taking out loans eventually.

 

Well that's about it. Please let me know if I forgot something or miscalculated. I'd really appreciate some feedback, thanks!

[ericm1205]

Figure in deaths and pets?

[xxbrianxx]

Yea I probably should factor in deaths...but with hardy lps/palys deaths should be at a minimum. What do you think's a good guideline for deaths? And sorry I don't know what you mean by pets..?

[28g nano noob]

i actually breed guppies as a side thing makes ok money..lol

[uwwmatt]

And sorry I don't know what you mean by pets..?

Pests, I am guessing.

 

Have you figured in shipping costs and packaging material, or are you only selling local? Also you have to claim it as income on your taxes if you have earnings more than $600 per year. So take your profit column and chop off 20%

[GOODgREEF]

I think he meant pest

[xxbrianxx]

Ohh I see. Hm well I've never had a pest problem so I'm not sure what guidelines I should use to calculate losses from pests.

 

And yea I think shipping materials across 4 years would be around $6400. I calculated that assuming each customer spends around $100 since no one would really be able to justify shipping with anything under that. So that means number of frags sold in total divided by 5. And then multiply that by $5 (approx cost of each insulated box). Would that be about right?

[xxbrianxx]

bump

[MerrittA]

You should read this "Book of Coral Propagation by Anthony Calfo" it will really help you in setting this up correctly.

[xxbrianxx]

yea I've actually already read that. Maybe I missed something or maybe I just read it too long ago...but I didn't see too much about an actual business model. All that I remember is a lot of propagation techniques and just more technical stuff.

[jeremai]

the reason aquaculture doesn't generally work as a small side business has to do with the proportion of time and energy expended to money earned. growing, bagging, and shipping a few (less than a hundred) corals a month takes too much work for the corresponding profit to be worth it. since you're doing all these calculations, go ahead and work out your hourly pay based on how many frags you'll sell each month. then subtract 20% - and that's being generous more than cautious.

[xxbrianxx]

well one main difference between the model I have up there and the typical model is that I'll have growing and selling phases. During the school year, I'll try and touch the corals as little as possible so they'll never have any loss of growth rate due to fragging, stress, etc. Currently all I do for my tank is dose food/additives everyday which takes around 30 seconds and do a water change once a week which I've gotten down to about 5 minutes. So I don't think the growing phase will need all that much time and energy. This will also let me focus more on school since I'm spending less than 10 minutes a week doing maintenance. Over the summer when I have a lot more time, I'll do all the packaging and selling at once which will make it more efficient since I won't have to regularly purchase shipping materials, run to the post office, pack corals, etc.

[jeremai]

and what happens if people just aren't buying when you're selling? summer is statistically the slowest time of year for coral sales.

[xxbrianxx]

that's a good point...I've heard that before too. Do you have any clue why though? Are people just spending too much money on vacations?

[jeremai]

different priorities. kids are out of school, bbq's, vacations, spending time outside, etc. reef tanks are put on the back burner till the weather turns.

 

good luck and all, I just want you to be pragmatic.

[Trogdor447]

A few factors left out -

 

Time Invested - Its not just a plant and forget - you have to schedule time to propagate - your time is worth money - although you may not see that yet -

Steady Customers - you have to find some - and keep them coming - not just one and done

Cost of Equipment - Frag plugs - etc yes you buy in bulk - but it will start to add up

Lighting Equipment & Upkeep on them - Replacement bulbs -

Packing Equipment - Tape Bags - Heating packs etc - cost could be passed onto the buyer, but you still need to have the overhead

Don't forget your Accounts through UPS/Fed Ex - and the cost in travel - and shipping costs on your incoming corals.

 

Web Site - You need to pay for your Online Shopping cart - Also visa/master card payments per - There is some 'unlimited' shopping carts but for the most part its fairly expensive portion.

 

If you find a reasonable website host - they wont charge you more then ~ 10 dollars a month just for the server and domain routing for a 'business' you need to have 100% uptime. You'll need to pay for presumably 1+ year in advance to get the premium rates.

 

The biggest thing i seen you say - You live in a dorm - Great free electric - Mom and dad - may start to make you pay some of the electric bill after you move home and the bill doubles

 

 

All in all - if you can bear the initial year with a 'break even' goal - and this means you have made 0 dollars for your Time/Equipment/Maintenance - Your doing 'well' as a start up But keep in mind you have profited nothing the first year.

[xxbrianxx]

hmm well I'll mull that one over..

 

haha yea thanks a lot I appreciate it. Like I said I'm not looking to get rich. Just want some extra income while I'm looking for a job a few years down the road.

[bensanders]

people are busy going on vacations and spending money on outdoor projects.

 

also, it can sometimes be tougher to ship corals in the hotter summer months. Living here in Austin I wouldn't dare have a coral shipped to me right now. That was a lesson learned the hard way

[Dasani]

There are so many different coral businesses out there. and so many of them have such a good rep. It takes a lot of time to get a good rep and get a routine down.

 

I think a good rep is a big factor in it. I have people that sell frags locally down here. It's a couple that sells out of their house. The husband got laid off and then he started the frags. He eventually had to go back to work and cut down on his frag business. They have been operating over 2 years and have a great rep. It's just in a bad location so they don't have many customers. I haven't had the need to go in about 2 months. If I had the money, I would order online over them.

 

You have to look in popularity of the hobby in your area. How many LFS are out there? Do they sell online? Do they have good reps? How long have they been in business? Stuff like that...

 

Like Jer said, people may just not want your stuff because they can get it from a major company with a good rep.

 

If I was doing anything like this, I would set up a 20 long or something and sell frags year round just on the classifieds. Build up a good rep and inventory, then start going to frag swaps and selling locally, then after a couple years, try a website and see where that gets you.

[jeremai]

if it were me, I would grow frags and sell them wholesale to the LFSs in the area and not deal with shipping at all. biggest hassle and expense, imo.

[xxbrianxx]

A few factors left out -

 

Time Invested - Its not just a plant and forget - you have to schedule time to propagate - your time is worth money - although you may not see that yet -

Steady Customers - you have to find some - and keep them coming - not just one and done

Cost of Equipment - Frag plugs - etc yes you buy in bulk - but it will start to add up

Lighting Equipment & Upkeep on them - Replacement bulbs -

Packing Equipment - Tape Bags - Heating packs etc - cost could be passed onto the buyer, but you still need to have the overhead

Don't forget your Accounts through UPS/Fed Ex - and the cost in travel - and shipping costs on your incoming corals.

 

Web Site - You need to pay for your Online Shopping cart - Also visa/master card payments per - There is some 'unlimited' shopping carts but for the most part its fairly expensive portion.

 

If you find a reasonable website host - they wont charge you more then ~ 10 dollars a month just for the server and domain routing for a 'business' you need to have 100% uptime. You'll need to pay for presumably 1+ year in advance to get the premium rates.

 

The biggest thing i seen you say - You live in a dorm - Great free electric - Mom and dad - may start to make you pay some of the electric bill after you move home and the bill doubles

 

 

All in all - if you can bear the initial year with a 'break even' goal - and this means you have made 0 dollars for your Time/Equipment/Maintenance - Your doing 'well' as a start up But keep in mind you have profited nothing the first year.

 

For time invested, like I said regular maintenance during the year should be manageable and I'll do all propagation during summer. And don't worry I'm fully aware time=money. Our econ teacher senior year drilled that into us

 

Steady customers..I'm planning to start off selling on classifieds section until I expand more and build up a rep.

 

Cost of equipment..I've already done a lot of calculations and it does seem insignificant at the moment but yes I realize it'll grow as I expand. I'll keep an eye on that.

 

Cost of lighting..since I'm going with LED's, each fixture should be good for 4-5 years and at that point the money coming in should be able to absorb that. Of course I'll redo the calculations and factor in the replacement time for the fixtures too.

 

Cost of incoming coral..well I'm not looking to go wholesale. There's plenty of corals in the classifieds, ebay, CL, etc where I can get 10 good frags for $200 shipped. So I don't really need to buy in huge quantities to get rid of incoming shipping costs altogether. I realize that's not sustainable though if I eventually want to expand more. But that's way down the road so I'll leave that for later if I even get there.

 

Web hosting..I've got a decent amount of experience with websites as I used to do some internet marketing. Plus I already have an account with a good web host so I think I'm good with that.

 

Electricity...I sure hope they don't charge me lol. To be honest I haven't looked into electricity too much. Does anyone know the approximate cost per wattage these days?

[Dasani]

if it were me, I would grow frags and sell them wholesale to the LFSs in the area and not deal with shipping at all. biggest hassle and expense, imo.

That could possibly be the greatest idea I have ever heard.

 

You would have to sell them cheaper, but an LFS would buy locally over paying for shipping any day!

[jeremai]

that'll be $500 for the consulting fee. I accept paypal.

[xxbrianxx]

There are so many different coral businesses out there. and so many of them have such a good rep. It takes a lot of time to get a good rep and get a routine down.

 

I think a good rep is a big factor in it. I have people that sell frags locally down here. It's a couple that sells out of their house. The husband got laid off and then he started the frags. He eventually had to go back to work and cut down on his frag business. They have been operating over 2 years and have a great rep. It's just in a bad location so they don't have many customers. I haven't had the need to go in about 2 months. If I had the money, I would order online over them.

 

You have to look in popularity of the hobby in your area. How many LFS are out there? Do they sell online? Do they have good reps? How long have they been in business? Stuff like that...

 

Like Jer said, people may just not want your stuff because they can get it from a major company with a good rep.

 

If I was doing anything like this, I would set up a 20 long or something and sell frags year round just on the classifieds. Build up a good rep and inventory, then start going to frag swaps and selling locally, then after a couple years, try a website and see where that gets you.

 

Well that is my basic plan..just start out small and slowly build over the course of 4 years. I have no doubt that reputation is huge but normally large companies always come with huge price tags. So I think it sort of levels the playing field. Maybe it's just me but personally I have no qualms with purchasing from a smaller vendor to get 80% off (ex. miami hurricane chalice for $100 on wwc for under $20 on classifieds sections) I know it's only one example but you get my point.

 

if it were me, I would grow frags and sell them wholesale to the LFSs in the area and not deal with shipping at all. biggest hassle and expense, imo.

 

I was debating this...but I'm not sure how low I would have to go to beat wholesalers. I know people aren't supposed to discuss wholesale prices but maybe just to give me a general idea? Like a rough percentage of retail price. I know my LFS buys corals from customers for a third of the price so I would assume wholesale is either equal or slightly higher...I'd have to redo my numbers...since that would drastically cut revenue. But maybe it'll be more profitable in the end. What do you guys think?

 

that'll be $500 for the consulting fee. I accept paypal.

 

I'll get back to you on that one (maybe in a year or two)

[Deleted User 6]

Are you hoping to do some kind of aquaculturing as a career? Otherwise, I'd spend your time getting a job in the field you hope to work in long-term.