Reef Farm Business Plan

raaden · #1 08/02/2006, 06:49 PM

I finally realized I could spend the next 12 months (I have already spent 18) still working on this and probably want to do more with it, but it is not helping anyone if I do. So the time has come to set it loose and see what happens. Many have asked for copies of it, and I apologize that most of you had to wait for so long but I wanted to make sure that it was as close to what I would expect from a BP as possible.

Please stop by here take a quick read of the page and then give the plan a read. There is some important info on the page as to what state the plan is in and some other stuff as well. Once you give it a read I would like to collect as much feedback as you all can give in this thread, so that everyone can benefit from it. I will be posting in the near future at this site the Operating Plan and Financial Statements, as well as a blow by blow of the road to operation (a la Rick Rottet, but hopefully with fewer hurdles).

Let me know what you think and thanx to everyone that helped along the way.

Philip Root · #2 08/02/2006, 08:51 PM

Looks very nice, I am doing a project very close to what you are doing. I am looking at a lot larger output. Here is a link to my project. www.thecoralgardens.com

zeuss zoso · #3 08/03/2006, 12:56 AM

Amazing plan. I am 15 now, but in 3-4 years I think I could be that "college student" you are looking for.

Seriously, I probably wouldn't go to school there, but that would be a sweet summer job.
Alex

Nammy · #4 08/03/2006, 06:58 AM

Raa - Didn't have a chance to look at the BP yet but plan too soon.
BTW, Here is a link I found to "How TO" BP.

http://www.sba.gov/library/pubs.html#fm-10

hamburglar · #5 08/03/2006, 08:24 AM

Notes from Hamburglar:

Have you identified both the initial facility location as well as the expansion location?

I love the handout idea! Great for the customer and it forces the retailer to properly label the species.

Are you biting off more than you can chew with the coral lineage tree on the website? Might need to keep this very generic to avoid hiring an employee just to keep this up to date. Simply pointing he end user to a species specific (not individualized) page should suffice.

Bar code labels partially imbedded in the frag rocks/plugs might help with identification and information tracking pertaining to growth and sales. I may also be scanning the document too fast…..did you have a source/method established for your frag rocks/plugs? I have ideas that I can share if you are interested.

Quote: “A unique item will be offered to retailers whose purchases exceed $1500/month”. This leaves a bad taste in my mouth for some reason. I would be cautious about this.

The driver sounds like he/she could make or break you. A lot of customer contact responsibility is being placed on this individual. Make sure this individual shares your passion for the business.

Are you considering acquiring tank raised specimens for your broad stock? This could speed up your initial production and keep the “hard core” tank raised customers happy with your inventory selection. I’m sure you will have several low cost (if not free) local sources for these items including local reef clubs and wanabe coral farmers.

Are you planning on growing green water, b. shrimp, or rotifers for feeding the corals? You could consider adding a few tanks for tank raised fish if you will already have that stuff going on.

raaden · #6 08/03/2006, 08:33 AM

Phillip,
Very nice site. It looks like you are just about where I am. I am just finishing prepping my site, and am anxiously awaiting equipment to be delivered. Look forward to catching your updates and feel free to pm me.

To anyone attempting this endeavor (or any business really) you wouldn't believe how helpful the SBA and SCORE are. They give lots of feedback, have a wealth of information (business wisdom, industry numbers, financial planning, and more contacts than you can shake a stick at) you really can't get anywhere else, besides all of the financial aspects (SBA letters, Investor contacts) that everyone probably knows about. The biggest thing that helped me was that they kept me focused on the core business, since I have a tendency to dream a little bigger than I can handle at the beginning, and kept me refining my ideas so that I can get the business up, running and profitable in the shortest amount of time.

I am hoping to have the financial sheets up by the weekend, as I have a bit more cleanup to do on them so that they more easily read and not so hard to follow. The operations plan I hop to have up by the end of next week so keep an eye out and don't forget to leave some feedback after you have looked through all the info. I would really like this to turn into a collaborative plan that all can share.

raaden · #7 08/03/2006, 11:21 AM

Ham,

Great Questions:
Locations: Initial location is ready and permits are in hand. For the expansion it is going to depend on a few things (how well production goes, how well the product is recieved, and lately how much the area grows pushing outward) but my thoughts are to lease space on an existing farm and I have a few places in mind. If things go toward the good side of the plan I would like to setup a nicer facililty on a private lease but that is if the company has enough capital at that point... it is getting expensive around here. Initially I budgeted enought to cover a 5 year lease on 10 acres just east of Raleigh on an old farm parcel. In the last six months they started developing there and now I can't even get close to what I budgeted, so I will have to see what happens. It is still 12-18 months off from now so I think sales will determine what happens on that front.

The handouts idea came during one the braintrust sessions we were talking about before ;}. The Coral lineage tree I don't think is going to be that difficult, I have some ways that I think will make it much easier to maintain than it seems. These are covered in the operation plan but suffice it to say that the corals will be done in lots and all in a lot will share the same leaf on the tree. Same thing with the frag labels, they will be id's for all in the lot. I am planning on getting my daughter to make the plugs... she helped me make the rocks and plugs for my second tank and loved it. I am definitely interested in any input you can give on this though, especially if you have any ways to increase the "lacyness" or porosity of them.

The unique item... I am not sure what the bad taste is but I did get alot of requests for something like this from retailers and almost all of them liked the idea whether they requested it or not. It is just an incentive to maintain business with us, and a way of getting customers into the store. Most of the retailers I surveyed said they were concerned if all the stores in the area were buying from us that they would in effect be selling the same exact stock as everyone else and they would have to fight too much on price to keep customers. While I don't agree with that (for many reasons discussed elsewhere) I saw this as sort of a caveat to that concern.

You are absolutely correct about the drivers importance. This is why I would be handling the duties intially and then will share it with the person that is brought on first or to a dedicated "outside sales rep" if sales go well. It will definitely need to be someone with good experience and knowledge, as well as a great personality.

I am absolutely looking for tank raised specimens to start with. I would prefer to start with only these and if there is some sort of lineage on them that is all the better. If needed I will get some exotics (read: rare or highly prized) from the wild if need be but would definitely prefer AC'd stock to start. I thought about the free thing and am hoping to get some donations from people for a listing at the top of the lineage tree for that coral... how does that sound.

I will start out producing some supplements initially for internal use but have thought about refining them and selling them under the same brand. Not sure if I will proceed with this part or not, depends on how much time the rest of the business takes up. If I do try out producing some non-photo corals I iwll definitely put out something to support them. I am not sure I want to do the fish thing. I messed around with clowns and cardinals before I moved and while it was fun I am not sure I would have the time to invest in large scale production. If I do I would like to get some seahorses, again mostly for the fun and accomplishment of it.

Whaledriver · #8 08/03/2006, 01:01 PM

I haven't read anything you posted yet but I was wondering if your property is taxed as a farm or for agricultural use? This should lower property taxes. Also can you get any help from a state or local farm bureau? If you call it aquaculture they might be more receptive than coral farm

hamburglar · #9 08/03/2006, 02:47 PM

Philip, I was checking out the pics on your site. How close is that woods line to your proposed GH site? I'm not really worried about the light. I'm more worried about trees and limbs coming down in a storm.

Website looks very nice. I like it.

raaden · #10 08/03/2006, 03:03 PM

Whaledriver,
I didn't look into the farm bureau, I will try that out. As far as being considered a farming activity, or agricultural, I did look into this and unfortunately anything dealing with or distributing to ornamental or non food species is not considered aquaculture in the state of NC. I believe this is so that people that breed fish for aquariums wouldn't have to go through all of the permitting. The unfortunate thing is that I am stuck on the outside looking in. There are huge tax, and other, benefits to being considered a farm or agri/aquaculture facility. There is one loophole that I may consider when I look into expanding: If I produce greenwater or roties and decide to market it them, I can try the aquaculture route since it does not say anything about supplements for ornamentals just the ornamentals themselves.

I wonder if Redox, Ham, or RedSonja have found anything different out.

ballinnmiami · #11 08/03/2006, 05:44 PM

I have read thru the SBA site/SCORE and I feel this information we are putting out there could help a lot of people in the future. One should realize that it takes a lot of hard work and dedication to get where most people dream of being and that is owning their own business.
I will have to sit down a really read thru that SBA site and re write my business plan.

raaden.....I feel your are very close to where you want to be. I read thru most of your business plan and all I can say is that you have thought about every little thing. After reading your BP I will have to re think mine. Your BP is very professional and clear to understand. Also it shows a goal for the future. Good work and good luck.

Danny

hamburglar · #12 08/03/2006, 08:15 PM

Raaden, I do not think our business exists acording to the state of NC.

I looked through the state pages a little while back to try to identify correct permits and I got nothing from it. I never did get on the phone with anyone, and this is what probably needs to be done.

raaden · #13 08/03/2006, 09:49 PM

Ballin,

Thanx for the great words, I hope as well that I am on the way. I have invested alot into this and look forward to investing even more in the future. I love a challenge and this seems to be just that.

You are exactly right about the getting the info out there. That was my hope in starting this thread. I wanted to do a couple of things with it. First I wanted to repay all those that helped me by passing on what I learned both from people in the hobby and also from those that helped me on the business side. Second I wanted people to see what goes into what I hope will be a successful business and plan. There is a lot of money that is needed to do something like this and alot of time and effort. Jumping into something like this without doing all of your homework is a recipe for disaster, I think to keep this hobby successful in the future we will need many people to do this sort of thing and if the ones that try early are not successful the it will have a huge impact on all.

I would definitely suggest not only reading thru the stuff on the SBA site and working on a plan but visit the SBA office as well, they are great people and if they think you are serious they will help you more than you can imagine.

If I can help at all PM me.

Ham,

You are kind of right on that. They don't specifically recognize coral propagation or farming in name but the do consider it to fall under ornamental aquaculture. I spoke to 2 people on the State Board and they said no permits specifically for the ornamental aquaculture and I didn't need to be certified or anything like that. I did, however, need a bunch from the county (Wake). Like I posted earlier I would have actually traded the work in getting the permits from the state for the help and recognition of being certified for aquaculture, especially the tax benefits. There also is no formal recognition by the federal government. There is not specific NAICS for what I am looking to do but I do think I can fall into the federal standard for aquaculture. My accountant is supposedly doing research on this but I haven't heard from him in a while so who knows.

Whaledriver · #14 08/03/2006, 10:31 PM

It sounds like getting things recognized as a farm might be worth the struggle. You might use the federal recognition as a way to show the state what you are doing.

Steven Pro · #15 08/04/2006, 06:33 AM

You might want to reconsider being open to tours of local fish clubs. I have heard more than a few stories of people being ripped off my other fish keepers soon after having an open house. Not to mention, anyone with a pocket knife can gain access to a poly covered greenhouse.

hamburglar · #16 08/04/2006, 07:24 AM

You will need some really ill tempered triggerfish to protect your stock from would-be coral snatchers.

raaden · #17 08/04/2006, 08:04 AM

Steven,

I have been fighting with that idea, especially recently. The issues as I see them are:
If I keep it closed and hidden does that make something a target or does it stay out of sight out of mind
Anyone can find out where it is with just a little research, If you know the business name and the owner name you can reference building permits (atleast in NC they are publicly available for review) and if it is on your business address a phone book is all that is needed.
If I open it up and keep a good rapport does that lessen the chance of being raided.
I will probably keep a dog there... and maybe even a surgeon fish or two :}
I am leaning, lately, toward it may just not be worth the hassle especially if someone tries to cut their way in in the winter and the heater can't keep up, that would be worse than just losing some stock.

Interested to hear what everyone thinks on this as I am torn...

Steven Pro · #18 08/04/2006, 10:36 AM

Rare clams stolen from Waikiki Aquarium

Southwest Saltwater in Tucson Arizona was robbed

The worst instance I can recall when during a tank tour in Southern California. One of the earlier tanks on the tour was robbed of all its expensive equipment and corals while most other people continued on the tour.

Nammy · #19 08/04/2006, 11:31 AM

In my book anyone that does anything in that nature are in the same category as terrorist.

zeuss zoso · #20 08/04/2006, 03:58 PM

That's effed up to steal stuff like that from the Aquarium and especially to do on a tank tour??! If someone tried to jack my inexpensive equipment I would hit them with a crowbar.
Alex

hamburglar · #21 08/04/2006, 08:18 PM

Raaden, simple cameras in plain site may be a good enough deterant. Greenhouses are large and open so only one or two would do the trick. If you're like me, you would make them private web cams so that you can check your stuff while you are on vacation.

Like you said, if someone wants to steal your stuff bad enough, they are going to get in. At least if the door is wide open there will be no property damage to deal with.

raaden · #22 08/05/2006, 05:43 PM

I heard about the Waikiki Aquarium, I was there in late May of last year for a conference and during the tours they were talking about it, as well as some signs up in the aquarium itself.

I think hams idea is about the best I have heard. Some wireless cameras on the perimeter and maybe one on the inside (not sure how long it would last in the environment) probably won't stop anyone but would give some good evidence.

I know this sounds a bit trite but it is a sad story that we even have to have this conversation. Reefers are such a close group for the most part I wouldn't expect this to be so common. I do appreciate the heads up though as I sort of let this go as a non issue until Steven brought it up. These are the sorts of things that I am hoping to get out of this.

rcklbs · #23 08/07/2006, 09:34 PM

Raaden, Thanks for sharing your experience in this endeavor. I am about 3-4 months from finishing a farm in my garage in Texas and will be happy to share my successes and failures if you like.

raaden · #24 08/08/2006, 07:46 AM

rcklbs,

Please do share your results. I would love to get a good cross-reference of both a greenhouse plan and an inhouse plan. I think it would be interesting to see the differences in what is needed and what works best in which circumstances.

P.s. Sorry to all who were looking for the financials this weekend. I went to pick up some of my permits on Friday and they were turned down because of a bunch of little things (my septic drains were not quite to scale, and a roadway that runs on my property was on the wrong side of the right of way), that were wrong on my "professional survey". so I decided to do it myself and spent the weekend with a tape measure creating my own survey.

The financials will be up this evening when I get home from work.

raaden · #25 08/08/2006, 10:04 PM

Go Here to get the financials for the reef farm. They are up and available. These have undergone some big changes within the last few months. I have had to scale them back as I decided to not go with investment money. At the same time the SBA advisor suggested that I start with only one house and see what that entails rather than going with the three that I had originally planned (This was also covered in the BP). So I am not sure that the financials are as solid as I would like them. Please let me know if anyone sees anything strange.

The financials themselves are very automated. You will see that many different formulas are used for just about everything in there, and as you change one thing (i.e. production of one species for one month, or capital outlays for one quarter) you can see the effects it has on the entire plan. If you want to mess with them have at it but before you enter info into a cell check to see if there is a formula there, if so, it usually means that there is a better place to edit the information and have it carried forward. Also all four require that the others be visible. So if you get any errors in cells for 07-09 it is probably because you need to update the paths for the previous year so it can carry values forward.

I really liked the automation and this is the first time I have used excel for this so it was a little strange to see all the updating going on. It was great for working out my production cycles and seeing how I could affect things by keeping back a colony to make a new mother vs. selling it for money. It made getting the break even point early easier than I imagined it would be.

Anyway just as before if you have any questions or comments I would love to hear them. Also I am not sure when the operating plan will be up but I am still hoping for this weekend.