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Re: killie profits ... or ... fun with numbers ( warning ==>LONG )
I must say both responses to making money very good and "funny" reading
but, is the question of making money and living off killie's
different. I'm close to paying for the hobby and putting a few bucks in my
pocket and over time maybe some more but this is all slow growth not
creating a .com or a top 500 company. I admit this is not all from killies.
Bill
At 09:47 PM 2/7/02 -0500, you wrote:
>ok, since i did it for 2 years while in college, i must take the pro to
>this, just for laffs.
>
>joebobwantabeabreeder wants to make a living off of killies, so how can he
>do this. first off joebob needs help via helpful wife/girlfriend, mine
>hated doing water changes and constant blue fingers, so i had to overcome
>that large hurdle, an understanding of how to raise killies, and a grasp
>of how the market fares. If joebob wants to do this properly he/she needs
>to know how to market his/her fish, where to buy food cheap, and learn to
>live with a blue stainned pointer finger. say joebob needs to make 50 k a
>year, and assume he/she does not take into account health care and/or
>phone bills, since internet and 800 numbers should reduce that cost.
>joebob would then need to clear $1300 a week to cover overhead/taxes etc,
>or approx (for simplicity) $260 a day.
>But wait there is further delima one must overcome, the shipping
>seasons. The individuals do more buying in the warmer months while the
>retailers do better in the cooler months, so how can this be overcome.
>joebob needs to find his/her place in the killie industry.
>joebob would need to find 2 suppliers that would buy 600-1000 pair a
>month, which can be done, i did it for over 2 years. joebob would also
>have to have a climate controlled room for breeders, approx. 100-120 ten
>gallon tanks. joebob would need to raise the killies large, so when they
>get into the petshops they sell quick for re-orders. joebob would need
>variety, so the same 5 types of killies would not be re-circulated.
>assuming joebob did all of this, and a reasonable price of $2.50 per pr
>was obtained, he would have say 1500 pair of killies sold per month at
>$2.50 or 3750 a month or 45 thousand a year doing 12 types of killies,
>raising them up to adult size and making less money per pair than if
>he/she sold fish to auctions, internet, f&e listing.
>that is a lot of work, and yet the goal is not achieved, of 50k per year.
>so now joebob is trying to make extra money by raising the harder killies
>that will fetch more money from the above alternatives. He/she gets 30
>types of hard to find killies, now he/she needs another 75 tanks of
>breeders to try and produce them. but wait now there is less time for the
>bread and butter killies that was making the 3k plus a month and there is
>also less tanks. now joebob has to expand the raising room to house the
>additional 30 species and the 300 tanks need to become 500 tanks and now
>joebob is doing water changes at 1am, while getting up at 5am to bag fish
>for the airport.
>great news joebob has this rare notho that he/she bought for $50 and has
>hatched 2000 babies. too bad for joebob because he/she only sold 12 pair
>in the bnl at $12 per pair, the mega fish farms thought they were ugly and
>wanted more australes instead, which joebob has a hard time to meet
>his/her goal of 200 pair a month to the exporters as it is, and he/she
>can't sell the notho, or those ep. riv., or cyn. to the farmers either.
>ooopppss this is suppose to be the pro side.
>the pro side can be done with a lot of time, consistent egg picking, and
>many, many late nights, but one needs to be able to supply 2-3 farms, 2-3
>wholesalers, 5-12 pet shops, a lot of fish in the bnl, internet and
>auctions. And the person needs to raise a large killie for the eventual
>pet shops, which requires a lot of food, time, and money to raise them. I
>never had a hard time getting $6 for a pair of 5 inch blue gularis, sorry
>to say now when i am trying to get back into killies I wonder if anyone
>has a strain that gets to be 6 inches.
>I never had a hard time getting $3.50 from a pet shop for a 2 1/2 inch pr
>of gardneri or $2.5 from an exporter. But i do not see those fish in pet
>shops currently, i see 1 inch twigs.
>
>the best bet would be for one to diversify with many types of fish, but
>the start up cost would be very steep. oh well hope you all got laffs out
>of it
>chris butcher
>
>----- Original Message -----
>From: Doug Dame
>Sent: Thursday, February 07, 2002 8:50 PM
>To: killietalk at AKA_Org
>Subject: Re: killie profits ... or ... fun with numbers ( warning ==>LONG )
>
>
>In response to crucible11@aol..com's question,
> Robert E wrote (in part)
>
> >> The only person I know of who made a consistent profit
> >> off killie breeding was the great John Gonzales of Philly.
> >> In the late 50's and early 60's, Gonzales devoted 3 floors
> >> of his brownstone type house to commercially raising
> >> killies. .....
> >> He advertised in the national magazines and sold to
> >> stores/individuals all over the country.
>
>
>(The following would work better in a spreadsheet, but nobody likes people
>who send attachments to list-servers, so I won't do that.)
>
>
>Let's assume that Joe or Juanita WannaBeCommercialKillieRaiser has a
>target annual income (before personal taxes) of $50,000 per year. Some
>people "need" more than that, some less ... but we gotta start with some
>number.
>
>And just as a ball-park quick estimate, that annual "variable expenses"
>for an operation of this scale would be $10,000, which covers food, water,
>electrical, etc, To keep it simple, for the moment we're going to ignore
>the necessary start-up capital needed for all kinds of "hardware" that
>would have a useful life of more than a year, and also ignore any required
>return on investment on that.
>
>So ... given these very simple assumptions, Joe or Juanita needs to $50k +
>$10k or $60k of incoming cash flow per year. And if we assume he/she ships
>fish out five times a week all the time ... that means approximately 250
>shipping dates per year. $60k cash flow needed divided by 250 shipping
>days means Joe/Juanita needs to realize $240 of gross income per day. So
>far, so good.
>
>One of the "Rules of Manufacturing" (which I'm just making up right now)
>is "the more units someone buys, the lower a price they will demand."
>(This is also called the Wal-Mart rule.) So if we assume that Juanita/Joe
>will sell to both individuals (say via print advertising and AquaBid) and
>"to the trade" (fish stores), we need to recognize that the price that is
>realized will be very different depending on who's buying. Let's assume this:
> - 75% of sales will be to the trade .. and 25% will be to John Q. Public
> - for the wholesale trade sales, an average price of $2 per fish.
> (Which I think is considerably higher than the Tampa commercial breeders
> realize, on average, but there's a killie-premium.)
> - for sales to individuals, prices will be higher, say those average $5
> per fish.
>
>Given that 75:25 sales mix, the AVERAGE price per fish sold will be $2 x
>75% + $5 x 25% = $2.75.
>
>Since our wannabe mega-breeder needs $240 of gross income per day, at
>$2.75 per fish on average, it becomes apparent that she/he will need to
>package up and ship out 87.27 fish per shipping day ... let's just call
>that 88. Since we expect a 75:25 mix of sales, 66 of those fish will be
>going out wholesale to fish stores ... let's say 2 shipments of 33 fish
>each ... and 22 fish will be to Aqua-Bidders ... say 4 shipments there. (I
>mention this detail only because Joe/Juanita needs to consider the time it
>will take every day to pack up those fishlettes for delivery, take them to
>the P.O., etc., as well as deal with the administrivia of responding to
>potential customers, following up with real ones, etc.)
>
>So ... we were at 88 fish per shipping day.
>
>If we assume that the average killie will be sold at 4 months of age ..
>some earlier, some later, no doubt ... then we need about keep about 17
>weeks of "work in progress" inventory going all the time. That's 85
>shipping days at 88 fish per day, or a total inventory of 7,480 fish.
>
>Now that we know approximately how big our operation has to be, we can
>estimate how many tanks we're going to need for all that, how much gear
>and space we'd need to provide fresh food for that quantity of fish, can
>think about engineering our water and filtration systems, etc etc
>etc. .... and I am NOT going to do that right now. But ... whatever the
>amount of capital needed to put together the physical operation turns out
>to be (including "rental cost" for the building) ... Juanita/Joe will need
>to recoup the investment in that, and as "capital projects" go, this is a
>moderately risky venture IMO. So if it were me, I'd need a 20% annual
>return on that to make it worth while. (The small business lending officer
>at the local bank might think that's not enough, if Joe or Juanita has to
>go that route.)
>
>Let's just make up a number for fun ... say $10,000 to set up the physical
>operation. A 20% ROI would mean that we need $2000 more income per year to
>fund that ... that's another 2.91 fish per day ... which means another 250
>fish in progress.
>
>And of course, once Juanita/Joe bites the bullet and commits to this
>entrepreneurial opportunity, scrounges up the $10,000, finds a place and
>gets it all going ... biology being what it is, it's going to take 4
>months before there are any fish ready to sell at the output end of the
>breeding pipeline. During which time there's no income. So ... we have to
>fund "working capital" for that phase too ... amounting to ...[ cranks up
>HP-12c calculator ... estimations omitted ] ... that's perhaps another 202
>fish per month for the first four years ... or about 9.7 (say 10) per
>shipping day. (And 850 fish-in-progress to produce the additional required
>10 sold per day.)
>
>So ... we started needing 7,480 fish to cover owner's profit and running
>expenses, added 250 for ROI of capital investment, and another 850 to
>recoup from the "start-up/pre-sales" phase of operations. Which is 8,580
>fishes in-house so far. How much time does it take .. every day ... to
>keep a "killie fishroom" of that magnitude going??? (I know how much time
>it takes me to deal with just 20 tanks and perhaps a couple hundred fish
>... but admittedly my methods are primitive, I'm just a novice hobbyist
>working on a small scale.)
>
>What if she needs health insurance ? To fund a retirement plan ? A
>substantial "rainy day" fund in case some disaster wipes out most of the
>livestock ? Just keep adding more fishes, more tanks, more gear, ......
>and more daily shipments, more water changes, more feeding, more mop
>checking .... (but not a assistant, because there's no budget for an
>assistant !!! )
>
>
>
>Now ...... what if the assumption of $2/fish to wholesalers turns out to
>be to optimistic ? What if Joe/Juanita can really only make $1.50 per
>fish ??? That would mean he/she'd need a 16% bigger operation to cover
>that, or change the sales mix to favor more (higher margin) fish to
>private individuals ... which brings up the question, just how big and
>insatiable is the demand for killies via AquaBid and other sales channels ???
>
>
>Anyway, I trust I've made my point ... making a living raising killies (or
>anything comparable) requires a bigger operation than one might think ...
>and I suspect that the "marketing and sales" part of the business is going
>to be as critical over the long-haul as the "technical" parts of
>successfully raising desirable fish in quantity.
>
>Mr/Ms Crucible11, if you're still interested, put your assumptions into a
>spreadsheet, play around with the numbers, see what kind of conclusions
>you draw, and whether there is or is not a viable business possibility.
>
>(We'll keep our eyes out for your upcoming flood of fish on AquaBid !!! <g>)
>
>HTH
>
>Doug Dame
>Interlachen FL
>
>
>
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