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  #101  
Old 10/31/2006, 10:53 PM
laverda laverda is offline
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Quote:
Originally posted by WarDaddy
One of the issues I struggle with, is how do I account for my power consumption? My "farm" is in the garage, and run off my home's power. I want an accurate tally of the amount of power I use for the business, so I can expense it properly.
Get a Kill-a Watt and measure the usage of all your components and add it up. Easy to do on a spread sheet that way if you make chances to your light schedule, say increasing it one hour, just change the number of hours and the rest will be updated. I would figure it all based on the top teir you use.
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  #102  
Old 11/01/2006, 09:21 AM
raaden raaden is offline
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If you haven't gotten Quicken yet give Small Business Accounting Express a try. It is free and is a business accounting tool. I did testing for it and am pretty happy with it. If you outgrow that you (which you probably will when you start GH ops) you can upgrade to full SBA 2007 for $149 well worth it, when you look at all the time it can save. I tried simulating my financials with Microsoft Money and it was a bit too painful.

On the power issue, you can do a couple of things. 1. is to take the home business type deductions where you calculate your bills based on the amount of the SF of the house you are using. In the case of heavy lights and pumps, you WILL GET SCREWED with wayyy lower deductions for the business. The other is to have a log of the power you are using. Like laverda said you can run individual meters on your outlets, but if you have multiple rates based on when you use the power you have to deduct at the lowest billed rate. If this is the case you have another option(and especially if you are running in a garage) is to have another meter put in by the Elec company. It is relatively inexpensive and you can have that meter be billed to the business so you have solid records of exactly what you are spending on power which will be one of your largest expenditures. I have already had a separate meter installed for my business
  #103  
Old 11/01/2006, 11:14 AM
WarDaddy WarDaddy is offline
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Raaden,
Thanks for that great info. I am downloading the software now. I figure, use the free stuff now. If I like it cool, if not upgrade to quickbooks later.

I am a MS junkie, it is what I do for a living (my real job). so this is a logical extension of my MS software library.

I am going to order a a kill-a-watt and run my setup through that. As for elect cost, I will track the KWHs my set up uses, then use an average of the 3 rates I am charged. I will keep it simple, but will keep all my bills and kill-a-watt reading to verify costs.

I hope to have my RBTA in the garage setup this weekend :-) Whoot!
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  #104  
Old 11/02/2006, 01:31 PM
raaden raaden is offline
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Bryan,

If you need some help setting up the app pm me I might be able to help a bit.

Good luck with the RBTA's, I am interested to hear how it works out
  #105  
Old 11/02/2006, 02:16 PM
WarDaddy WarDaddy is offline
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So far it seems straight forward.

I am entering all my expenses as I go. That is eye opening :-)

I have a small system up now, the Bigger one is getting set up.

I am going to try an LTA as well. I am getting a very good looking one at a great price.
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  #106  
Old 11/03/2006, 10:59 AM
hamburglar hamburglar is offline
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Check the reading on the Kill-A-Watt meter often. When the power blinks, it will reset the counters and you will lose your data. Otherwise, those meters are great.

Get one on EBay cheap. That is where I got mine for about 2/3 retail.
  #107  
Old 11/05/2006, 09:19 AM
redox redox is offline
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extra meter

raaden have you actually checked with the power co and found out how much it costs and if it can be done in areas that arnt zoned for bussiness?I could sure use an extra meter since in peak summer months Im pulling around 30amps. Yea thats 30 amps in the gh and my house is pulling 30 at peak times which equates to about $ 500 or more per month. I could sure use a write off at tax time with half that power bill . I am getting ready to move my meter base location anyway due to a garage add on so now would be the time to address that issue. any advise you have Brian would be greatly appreciated
  #108  
Old 11/07/2006, 10:12 AM
raaden raaden is offline
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Redox,

I don't know about a full fledged business use, but my second meter is listed as agricultural use so that I can get a discounted rate with the elec company. I would think they don't really care, and if you have a business license it shouldn't matter. You might also look at the agriculture angle. I have been reading on some anti-nuisance laws that NC put into affect a couple of years ago. I am not sure if they apply on the coast or not but they can't stop you from starting a "bona-fide" farm use on any property within some reasonable limits, like you have to actually produce something and you have to meet any discharge rules.

If you need more info let me know.
  #109  
Old 11/07/2006, 10:38 AM
RedSonja RedSonja is offline
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The Raleigh, NC Harbor Freight had the Kill-A-Watt for $29.95 when we were in there last week. Anybody looking to buy some might check your local Harbor Freight for them. Dunno if that's any better than eBay but you don't pay shipping and it's instant gratification.

-Sonja
  #110  
Old 11/07/2006, 12:15 PM
hamburglar hamburglar is offline
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$29.95 is a good price. I've seen em go for $50.
  #111  
Old 11/07/2006, 01:02 PM
Whaledriver Whaledriver is offline
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Check out the price of natural gas generators at Home Depo. They are on sale now

http://www.homedepot.com/prel80/HDUS...de=cii_5784816

Man I just copied the address and all that spit out
7000watt LP or Natural gas automatic generator for $1888
  #112  
Old 11/08/2006, 05:57 AM
redox redox is offline
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whaledriver thats funny you mentioned that because my backup genny paid for itself once more last night when the power went out for an hour, thank goodness for technology. northern tool had a sale going on as well their prices were good and free shipping . I run an 18k and between my house and the gh it struggles,am looking to upgrade to a 25 k and they run about 9000$ but trust me that sounds like alot but its well worth every penny
  #113  
Old 11/10/2006, 04:02 PM
RCS RCS is offline
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With regards to security, it's an oldie but a goodie, but what about a dog?

People always think I'm nuts because I rarely lock the doors on my house. I have a rather larger German Shepherd that is a rather obvious deterrent.

Most people would shy away pretty quickly from a guarded greenhouse, and dogs tend to be even lighter sleepers than competition gunmen.
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  #114  
Old 11/10/2006, 04:53 PM
hamburglar hamburglar is offline
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The dog is not a bad idea.....might also serve as large rodent control in the winter months. An attack anteater would be the best of both worlds.
  #115  
Old 11/12/2006, 08:49 AM
bitis316 bitis316 is offline
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It's a very difficult buisness to get off the line....Make sure that you think everything through very carefully....Figure every little detail out including advertising before you begin....My family made that mistake back in the day, and the first couple of years were rough.....When they figured that out everything else was gravy.. as long as you have quality stuff and a couple of handfuls of real rarites or prize species/color phases,,,,Good luck...I plan to take over my families in a year when i finish vet school......Save the reefs!!!!!!!!!!!!!!!!
  #116  
Old 11/13/2006, 08:57 AM
raaden raaden is offline
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I think my biggest fear with a dog is that he would end up tearing the plastic, but I do agree that it would probably be the best option.

I completely second bitis's comments about details. It seems that no matter how deep I look into things there is still more to find out. The other thing is that you have to be able to pay people to do the things you don't know about. As much as I like to think I can handle all of the details (I can you know , there are things you can't find in books. The two that come to mind recently are accounting and Marketing. I know that I can run my books day to day, but there is so much that I have no idea about when it comes to accounting. If you consider a quarterly review by an accountant as hiring a contractor to come in and keep you on track it will surely pay for itself over time.

One of the first things I did when I finished my business plan was to have an accountant look over things for me. I paid him about $350, and he gave me a list of things that I could do to either reduce my costs or to save money on taxes. He couldn't help with numbers as far as whether my sales were on target or not (no comparable companies to search against) but he did tell me some things that helped me to refine production and sales numbers to be more realistic.
  #117  
Old 11/14/2006, 07:23 PM
smketyr smketyr is offline
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Spend the money on an alarm system vs. the dog.

I had (note had) a well trained shepard/collie mix "the" guard dog. This was a great dog, and when we got him it was for security, would not let anyone near us, alerted us if someone was in the yard. Long story short. The house got burglarized and the thief took the dog too. We happened to have a baby monitor with a video camera in it. The thief broke in through a window in my sons room, the dog was doing its job. The thief threw a few biscuits and was the dogs new best friend.

The guy was arrested a few months later and thanks to the video he was convicted. He got $300 for the dog. We got nothing but a headache and learned a valuable lesson. I have a home security system which equals the cost of the dog and training and it won't become a thiefs best friend over a buscuit.

Just another expense to add to. Good motion sensor llighting is also a deterrent.
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  #118  
Old 11/14/2006, 10:46 PM
SnkyJake SnkyJake is offline
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The net profit in your business plan is less than the interest earned in a money market account. You need to aim for 7% MINIMUM. (When I started my business, my banker told me if I was only going to earn 3% -my stated goal- I'd be better off working for someone else and putting my checks in a savings account)

Also, I'm not sure if State sales tax is collected on electricity where you live (it is in Iowa). But in Iowa, you are exempt from sales tax on that portion of electricty used specifically in operations that produce income. (So the lighting in the office or security lights would be taxable, but the lighting of the fish tanks, pumps and filters would be tax exempt) If your electricity is state-taxed, ask the power company for a tax exemption form. It's kind of a pain to fill out the first time (you have to estimate KWH for every item to determine your exemption percentage) but it's well worth it. (The next year you can just copy the same page) At 71% exemption rate, I save over $50.00/month.

The thing I love about your business plan, is that anyone who reads it can tell that you have the passion and desire to make this work. I wish you the best of luck in your venture!
  #119  
Old 11/15/2006, 07:51 AM
raaden raaden is offline
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Agreed on the alarm system, with one exception: I am not sure how the plastic will react with the motion sensors. You can get some good movement on the plastic sheeting in the wind and that may set off the alarm constantly. I think I am going to use cameras/door sensors to start and see how that goes. Again I think the best defense is obfuscation, make it hard enough to find and hopefully you don't have to worry.

SnkyJake, thanks for the great comment and for looking through the plan. I wish that were the first time someone has brought up the company returns. When I first showed the plan to my dad (an accountant) he said get a mutual fund, it will be less work and more money , and honestly if that is what someone is looking for then this is definitely not the best way to get it. I will say the money is a bit of it, but much more of it is that I have always wanted to have a business that I can run, and this is the first time I have had one that I can start with my own money. Also this is something that I really enjoy, and could see myself doing on a daily basis. So while I think I can get enough to live on I definitely don't think I will get rich with it. Besides I hear being rich is really boring

On the electric, I don't know about the taxes (I will check into it), but the elec company here is a coop and they have great discounts for farm use that I have already gotten setup. When I talked to them about the additional meter they didn't say anything about forms for tax deferral. Would that be something that I might have to do at a government office. Maybe I will give them a call and see what I can find out.
Thanx for the tip
  #120  
Old 11/15/2006, 01:37 PM
laverda laverda is offline
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raaden if your projected profit is not higher then 7% you really need to look again. The reality is you will probably not make what you are aiming for to begin with, due to some unforeseen circumstance. You need a bigger potential to allow for this if nothing else.
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  #121  
Old 11/15/2006, 02:33 PM
stony_corals stony_corals is offline
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Just my .02 cents. I (initially) started with high-end retail, meaning sps and clams only. It's been a year, and I'm switching over to a coral farm. Retail isn't fun....

In general, there is too much emphasis on the business plan. Throughout the thread, there are many times where there was a new discovery or change made. I've updated my business plan monthly and consider it a living document, not the end plan. It's a tool for the entrepreneur to set goals, understand your burn rate, and determine if you can pay the bills that month. That is unless you take external money (from a banker or investor). It's something you're going to iterate over.

If you aren't going to take external money, do yourself a favor and buy a couple of good books "The Art of the Start" by Guy kawasaki ( a bit tech heavy), and for inspirational purposes, "Losing my Virginity" by Sir Richard Branson. The first a how-to, the other to show you that failure is essentially a learning experience. You're not going to make your numbers, your costs are going to exceed what you've budgeted for, and things aren't going to come together perfectly on your timeline. I spent a lot of $$$ on getting an MBA in Finance and Entrepreneurship and these two books alone are well worth their weight in gold...

A key point... start small, boot strap, expand with funds generated from the business, or at a pace with which you can stomach to finance otherwise....

In the words of Patton, "Plans are worthless, planning is invaluable".

To comment on laverda's comment. 7% is low. But not many business make money their first year, some never. I've not looked at the financials, but this is why variance analysis is nice - if you're costs are 30% higher what does your net look like, and so forth.
  #122  
Old 11/16/2006, 07:59 PM
raaden raaden is offline
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Two things real quick before I get into the viability of the business. 1. All of my basis numbers are really really conservative on the side of projected sales and expected losses (both livestock and operating costs). 2. And there is a very large outlay for both equipment and broodstock that skews the overall profit of the company for the first three years.

**Begin self prophetic rant**

With that said the business is definitely viable and profitable in the long term (5 yrs). It could even show a significant profit in the midterm (3 yrs) if I decide not to do the expansion at that point. I will say that this is definitely not something I am doing for the profit, but the profit is definitely one of the reasons that I am doing it, if that makes sense. Thinking about it the following is something that I definitely should have covered earlier in this thread as it is important to understand the motiviations for getting into any business, and if the motives are not right you can get yourself into alot of trouble.

Motiviations:
1. The prime motivation for me in this venture is not money, or the culturing of corals (GASP!!!), but it is the yearning I have had ever since I got out of the Navy to start a business and be working in a venture that I have some amount of say in, and can see myself doing everyday for next 15 years. The idea that decisions I make can affect an entity that I own. I have written a total of 5 business plans in the last 10 yrs, and have gotten further into each business each time. All of them however hit the same wall at some point: I needed backers that were looking for conservative ways to make money. Not to say that they were all risky ventures but I have never looked to get into a business that is already established. There is little interest for me in that and it is very hard to compete with larger entities when the market is large. This is the first one that I can take from an idea all the way to market.

2. My secondary motivation is definitely that I would love spending the day doing the types of activities I have foreseen for this type of venture. I have done many things over the past section of my life and there are only a couple that I have continued to be interested in without losing focus or "hitting the wall" on. SW aquariums are probably the top of the list, there is always something new to learn about. There is always a better technique or refinement that is just waiting to be discovered, and that is a huge draw for me. As is the results of finding that better technique, which is sharing it with others so that they can reap the benefits. If I can make some money along the way that just makes it even better. Take the stock market as an example, I have played in the stock market for about as long as I have had the money to do so. I really like the research and decision making, and it is very much like a business, but I don't have the capital it would take to make a living doing it, and the lifestyle and day to day activities are not as interesting to me as this would be.

3. Other things that are specific to this business that interest me are the facts that this hobby will need some serious reform if it is to continue to thrive into the next 10 yrs. I agree for the most part that the hobby end of the reefs is a very small amount of the overall damage that the reefs sustain, but it is the easiest to curtail because it is very noticeable. There are strict numbers kept of how much of a net effect it has. Building and ecological damage numbers are much harder to come by, and kept very far away from groups that are responsible how our hobby is managed (CITES, EPA, and others). This leads me to believe that the coral farm, and hobbiests who produce even on a small scale will become an increasingly important part of the hobby. If I can help spur that with info or by paving the way, I like that idea.

4. My final test is usually can I make enough to live on the proceeds as a sole income. If I can make enough to live on comfortably that to me sounds like a business plan. There is much I want to do with my coral farm besides just pump out corals for sale. I have been researching grants for all sorts of things this winter and there are some really nice research grants for things that I would like to study, in regards to having the farm. I definitely think after the initial spin up this falls into that category. And if the market grows, who knows it could end up being much more, but even if it isn't I should be able to get by on what I can do.

*** End self prophetic rant***

Ok back to the business end of it. The numbers are not as bad as they look. If you take the solid projection at 3 years and take out any costs for expansion, along with the additional income it would have produced the business returns are well over 7%. They are much more like 20-28% and that is without the back end of the depreciation scale. The long term forecast for the business after expansion is well over 40%. So I am not sure that everyone is looking at the long term picture that is necessary for a capital business. I agree in the first year there are no profits and a significant loss carries over to the second year, but I think you would be hard pressed to find a business that doesn't show the same things. Investments are not the same as businesses, and I agree that I could probably come close with an agressive portfolio, and a good manager, but then I would be losing out on the three top reasons for doing this in the first place. I could get much deeper into what I looked for in the financials to determine the viability of the business, and will be happy to if anyone is interested, but this is a reef board and I already hear people clicking away .

As far as the business plan itself goes Stony hit it square on the head. The first thing you learn is that the bp is a living breathing entity that works for your business, just as you do. It has to continue to evolve just as you do as the manager. Mine has changed more times than I have cared to rewrite it. It has gone through atleast 6 major revisions, and countless little notes that get stuck on this page or that as I come up with new ideas or little tweaks that I want to make. That was part of the reason that I started this thread was to get my mind off of tweaking it and try to get something out that I could work from... that didn't work so well I am now working on #7 and have already started the sticky notes for #8. Initially the business plans purpose is to force the proper amount of research before starting the business. This is why noone will give you money for a business without one. It just shows that you have done your homework, and that you can stick with the idea long enough to get somewhere. After that though the bp is a little less important and you start with the financial plans. These show that you have your goals set correctly and whether you are on the right track to attaining them. There really is no end plan for a business plan until you start your exit strategy and most people and businesses never make it that far.

BTW Sir Richard Branson is a business genius and that book is a very good one to get when you are not sure you want to get caught up in this whole business thing. A SCORE Rep told me about it , and Screw It, Lets Do It when I was in a rut with one of my bp's and wasn't sure if I really wanted to do all this business crap. It changed what I thought having a business was all about and really shaped my views on Entrepreneurship in general.

Anyway, if I were to sum up starting this business in a Branson euphamism, I would say that this is the adventure I have been searching for and now that I have the chance to go, dying doing it doesn't seem like such a bad option. For it is the adventure I am after not the memory of having done it.
  #123  
Old 11/19/2006, 04:58 PM
stony_corals stony_corals is offline
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Raaden,

I hope you weren't taking me as being negative. In the end, we each have our goals and dreams that we aspire to. I think your rants are spot on.... each entrepreneur needs to understand what they what to get out of the business and you've got a lot of great reasons and motivation to move ahead.

Just a couple of comments, bankers and vcs hear this statement from every entrepreneur

All of my basis numbers are really really conservative on the side of projected sales and expected losses


Also be careful of this statement,

Investments are not the same as businesses, and I agree that I could probably come close with an agressive portfolio, and a good manager, but then I would be losing out on the three top reasons for doing this in the first place.

Actually, as an entrepreneur, you should view this opportunity, partly, as an investment. As you are successful with this, and have the opportunity to decide where to put your hard earned cash, would you rather put your money into a business that earns 20% per year, versus a 401k/Rothe IRA that may earn 10% (since 99% of money managers underperform the maket average, the long-term market returns are ~10%). Think critically about this.

I've not looked at your financials and plan, yet, but I'll look through it this week. Again, what you are doing is what has made this country great - starting a business. Everyone should aspire to as the risk of going to work for corporate America is much greater (for the individual) than the risk of failure in starting a business! I'll get off the soapbox now!
  #124  
Old 11/20/2006, 08:13 AM
raaden raaden is offline
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Stony,

I didn't take it as negative at all, and I am glad to have you along on this. I really appreciate your point of view, you have some good business knowledge and reef knowledge which is exactly why I started this thread. I couldn't find anyone that could check me on both parts at the same time. Your comments were very much appreciated, and just sort of opened my eyes to the fact that to someone who has not seen all the rest of the info in the plan and just looks at the numbers it probably would seem like a bad idea to get into this type of venture. I really took it as a good thing, because I am sure there are quite a few people that looked at the financials and thought "there's no was I would do this, it can't make money", and I have talked personally to quite a few in the world .

Good catch on the quotes about investments and numbers, because as I'm sure Rick Rottet can attest no matter how much you think you are putting aside for emergencies, or how conservative your product rates are there is still room for Murphy to come and grab you by the scruff!

On the investment side, one thing I tried to design into the business was not so much the end term returns, but residual income and growth. If you look at the extremely long product cycles and the time to market for a particular piece the ROI really comes from the amount of product in the pipeline (as long as there are no catastrophic events :gasp:, and as long as I can keep the business going through the third year. It seems to me that this will become the point where I can redesign the business based on the results that I see, and choose one of the following courses: keep the same (growth returns), look at expansion with an eye on money returns, or just stabilize and live off the results.

You are again right on with this statement:
Again, what you are doing is what has made this country great - starting a business. Everyone should aspire to as the risk of going to work for corporate America is much greater (for the individual) than the risk of failure in starting a business
When I got out of the Navy I was a contractor for 6 years so I know exactly what you are talking about. I can really relate to the fact that there is almost as much risk in working for a company as there is being a company, just a little cheaper to get into a job than it is to start a company.
  #125  
Old 11/20/2006, 10:57 AM
RedSonja RedSonja is offline
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raaden,

I loved reading your "rant." I have much the same reasons for getting into coral farming, with perhaps more treehugger (Kenya treehugger, if you will emphasis. I still have PADI certification on my "to do" list but even before doing any diving, I want to do my bit to save the reefs. I'm sure once I see some "in person" I'll be even more passionate about it.

Thanks for the post, it's been a dreary few days and not much business progess here due to family and household stuff, I needed a reminder of why I'm doing all this.

-Sonja

ps. we got the tank delivered last Tuesday!
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