# LFS failures



## ar1_pyroboy (Jun 20, 2009)

Ok, I'm not sure how to pose this question but I just thought it would be a good discussion anyway. I was doing a search for local fish stores and have come across many stores that are no longer in business. There was a new fish store that opened up close to my house and within 3 months they went out of business too. Why do so many LFS fail? 

It would also be interesting to hear from people who previously owned fish stores (but I'd like to hear everyone's opinion as well) and why they decided to close up shop. Some fish stores had very knowledgeable staff and extremely clean stores, yet they also failed. Obviously competing with the big guys play a role, but then why do other stores like Menagerie still stay in business? Is it the variety? The service or location? It has to be something right? What are your thoughts? 

P.S. I hope my stupid writing is clear, I apologize if it's confusing...I really hate to write lol.


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## AquaNekoMobile (Feb 26, 2010)

Suuush... I heard Jewel has something to do with Menegerie being popular. LOL  At least from a mate that's been there. I'm taking a guess here as I've not owned a LFS but I think many pick a place too large or location or think they want to expand larger then start small and build out from there. 

I don't think you can really compete on price with big box stores and thier return policy unless you've got a lot of breeders lined up on your supplier list locally.


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## ar1_pyroboy (Jun 20, 2009)

That's an interesting point regarding the suppliers AquaNeko. With so many local hobbyist, I find it interesting that there are not more who are willing to sell to LFS.


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## Guest (Sep 25, 2010)

AquaNekoMobile said:


> Suuush... I heard Jewel has something to do with Menegerie being popular. LOL  At least from a mate that's been there. .


umm... Jewel hasn't worked there in over a year. We now sell more fish since she left. If we had to rely on her mostly middle-aged gay clientele that came to talk to her and not buy stuff we would have had to shut down the fish room :O

not that we didn't love her....or her middle-aged gay clientele


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## Chris S (Dec 19, 2007)

I'm sure many LFS's struggle for a variety of reasons, but I might be able to pinpoint a couple:

1. Basement operators undercutting legit retail/distributors
2. The lack of quality fish wholesalers in Toronto
3. The unwillingness to adapt to changing demographic and demand
4. The time and effort needed to run a small store in competition with the big boys (PetSmart, Big Al's)

They probably don't all apply to each case, but I bet one or two do in every situation


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## ar1_pyroboy (Jun 20, 2009)

Chris S said:


> I'm sure many LFS's struggle for a variety of reasons, but I might be able to pinpoint a couple:
> 
> 1. Basement operators undercutting legit retail/distributors
> 2. The lack of quality fish wholesalers in Toronto
> ...


I think you might be right, I mean there are probably more situations that affect retail stores, but I have a feeling that pretty much sums it up. Thanks for your input .


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## wtac (Mar 17, 2006)

Most new LFS start with a passion but soon get stung on the financial side.

Like any business, it takes a few years before one sees a regular cash flow and $$$ in the bank. Minimum monthly sales required to stay afloat on both the business and personal end MUST be determined as well as $$$ for restocking for what was sold.

For example, let's say I want to open up an LFS. In 1500sqft in the downtown area, I'm looking at monthly:
~$5000 rent 
~$1500 utilities phone, hydro, water, insurance, etc

Just keeping the doors open for business, I have to bring in a $6500/month in sales before taxes.

My personal living expenses (household expenses, car, gas, cell phone, etc), say it's ~$2500/month

So in total, monthly sales must be ~$9000/month.

Obviously money has to be "re-invested" in the company to replenish stock, conservatively $1000/month so I have to sell $10,000/month in stock and services just to break even for one person. Add on professional services such as accounting, legal retainers, etc and staff, the monthly figures goes up.

$10K/month doesn't sound like much but when you look at the mark-up on fish, coral, and drygoods, that's ALOT of product to sell for a minimum $10K/month. Also keep in mind 3-5months of the year, it's dead slow for LFS's.

JM2C


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## planter (Jun 9, 2008)

wtac said:


> Most new LFS start with a passion but soon get stung on the financial side.
> 
> Like any business, it takes a few years before one sees a regular cash flow and $$$ in the bank. Minimum monthly sales required to stay afloat on both the business and personal end MUST be determined as well as $$$ for restocking for what was sold.
> 
> ...


This is the more likely reason they go under IMO. Most people don't realize what it takes to open a store front. You have to go months or years before you start seeing any money.

I wouldn't try it unless I had a least 250K that I would be willing to lose.


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## wtac (Mar 17, 2006)

Yep...forgot to include income taxes so that monthly figure goes up a bit more, not to mention the inial investment cost to furnish and stock the store. If you took a loan out for that, add that to the monthly expenses too....ugh...my head hurts just thinking about it


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## AquaNeko (Jul 26, 2009)

Well if you can have a store front with living quarters on site that would help save travel expensives as well tho I think if you've got a basement with a seperate enterance a basement LFS isn't a bad idea to start small that way till you build up from the local neighbourhood and clientele and keep costs low till business grows tot he point where you can't do it anymore from your home then move to a real store front.

I remember a few people with some small businesses like one guy I know from my HS days and still runs a comic shop from his basement that I check in from time to time. Nice cosy setup in there and another which I knew back in the day that ran a PSX/PS2 modding service from his basement which his place was setup like the store front of a automotive garage service desk as you walk in with everything all laid out and organized for the customers to pick and choose. 

Tho if you do a basement LFS like that you'll have to invest in a dehumidifier as extra costs as you have to worry about mould in your home as you live there then if it was offsite at a retail space.


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## goffebeans (Jul 23, 2007)

wtac said:


> Most new LFS start with a passion but soon get stung on the financial side.
> 
> Like any business, it takes a few years before one sees a regular cash flow and $$$ in the bank. Minimum monthly sales required to stay afloat on both the business and personal end MUST be determined as well as $$$ for restocking for what was sold.
> 
> ...


+1. This would equally apply to Small businesses in general. Tons of small businesses fail everyday, we just don't notice them.


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## wtac (Mar 17, 2006)

To do a LFS in a basement of the house, depending on business traffic and relationship with your neighbors, you may get heavily fined due to zoning by-laws.

To stand out above others, most of the higher-end product distributors will not sell to those that do not have a retail storefront to prevent destabilizing the pricing structure.

Look at Ecotech powerheads in the GTA today. A few years ago, they sold directly to a few "basement operators" (BO) and they destabilized the pricing structure. Knowing what they cost and what the BOs were selling on a "group buy", no LFS would stock them on their shelves. Since then there is a bit of structure, eliminating the BOs for the most part but not enough that it makes it worthwhile for a distributor here to carry them, except for one, who is taking the gamble. It'll be interesting to see how that progresses.


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## wtac (Mar 17, 2006)

goffebeans said:


> +1. This would equally apply to Small businesses in general. Tons of small businesses fail everyday, we just don't notice them.


LOL...yeah. Just by that example, annual sales of $120K on a 1500sqft sounds like alot, but that's just for a sole business owner and operator to break even overall. To have a few staff, buying new product, attend trade shows, store improvement and heaven forbid, make a profit and have a comfortable life, annual sales should be ~$275-300K, minimum. That's ALOT of stuff to sell


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## bigfishy (Jun 19, 2009)

Even if a store sell the products in cheap price, they will get complaint by other shops. If the wholesaler is getting a lot of complaints about it, their account can also be terminate.



AquaNeko said:


> Tho if you do a basement LFS like that you'll have to invest in a dehumidifier as extra costs as you have to worry about mould in your home as you live there then if it was offsite at a retail space.


It's more cheaper to goto the 3rd world and dig a hole and sell fish


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## kev416 (Aug 22, 2010)

Most hobbyists that start fish stores are not good business men. The ones that are create stores like Al's and Menagerie. And they hire good staff. That being said, those owners like Al's and Menagerie rode a wave where the hobby developed leaps and bounds and the manufacturers created new products to meet the hobby's demand and people spent money. Back then the hobby never had to compete with ipods and video games. People today spend there money elsewhere. The hobby is in decline overall compare to what it was. It's become a game of the cheapest price and people aren't willing to support a store even if that store has that advice. Just compare the difference between Big Al's online in Canada versus the States and look at the difference in price.


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## planter (Jun 9, 2008)

most small businesses fail because they are under funded right from the start. You need a lot of money to get into a venture like a fish store. You need enough cash to carry you over for months until your store starts to see some traffic. You also need to stand out from the other stores. 

Lets face it for most of us this hobby is an endless money pit. There is always something to buy. Most of the people who spend the big bucks are not going from forum to forum looking for deals on used filters or fishroom condition tanks. 

They are people who will walk into a store looking for something within a budget. If they find something that is in their price range they buy it. They want a simple transaction and more often then not they are not informed about how to run a fish tank.

Why do you think the first thing you see displayed at any major fish store all starter kits ranging from 10 to 125 gallons. 

They ask " is this all I need?" store answers yes. Then they head to the back to buy the fish.

Those are the customers that keep stores open. 

Most people see aquariums as a way to add something unique to a living space. Not as a hobby.


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## TBemba (Jan 11, 2010)

Also a very small percentage of people keep fish and a small percent of those people keep fish as a hobby. The market is remarkably small especially in Canada with our small population. Toronto is one of the biggest market in Canada if not the biggest and look at how many LFS it can support.

Then there are all the independent sellers and basement or hobbyist breeder. Not to mention the ability to now order fish on the internet and have it delivered if not to your door to your local airport.

I am surprised any LFS can make it. Then add all the personal bashing of an upstart store or even an established store that can't deliver quality stock when they say they will and you have an easy way to lose alot of money


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## planter (Jun 9, 2008)

Most people complain about the conditions that some LFS are in when they visit but they are not willing to pay a premium to ensure better conditions and heather stock.

Everyone wants top quality stock for sub standard pricing. 

I'll bet if you paid 2x - 3x the amount for fish, those LFS chains everyone whines about would be spotless.

I hear people bash LFS's here all the time. They go on about some dead fish in a tank or smell or whatever. Everyone knows what is costs to run a display tank multiply that for 400 tanks and then try to sell neon tetra's for a buck and let me know how that works out for you.

get real.

OK I'm done ranting.


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