The fish we eat at a restaurant or buy in the market may not have come from a wild water habitat but, rather, may have been cultivated on a fish farm. Different species of fish and other aquatic creatures are raised in ponds, large tanks, or even cages in the ocean and then delivered to be eaten or kept as pets.
If you think you might want to start your own aquaculture business, it is a good career choice. According to a report published by Allied Market Research, the global commercial fish farming market, which generated over $271 billion in 2018, is positioned to reach more than $376 billion by 2025.
Whether you want to cultivate shrimp, salmon, tuna, tilapia, carp, mollusks, or catfish, here's what you need to know when starting a fish farm or hatchery business.
Background and Skills Needed to Start a Fish Farm
While you may not need a business degree to start a small-scale or large-scale fish farm (though it wouldn't hurt since it is a business), you should have some experience in the field. It's a good idea to work on a fish farm before starting your own so you can successfully monitor things like tracking feed, maintaining water quality, monitoring oxygen levels, and keeping the right water temperatures.
Rules governing fish farms can differ from state to state, so you should read up on the ordinances covering yours. For example, in Louisiana, "individuals or organizations wishing to import, export, transport, culture, possess, dispose, transfer or sell live tilapia in Louisiana must first request a tilapia culture or live holding permit from the secretary or his designee of the Department of Wildlife and Fisheries."
It's also good to have some knowledge of biology and be detail-oriented since you'll need to be able to quickly detect and deal with diseases, parasites, and other problems to keep your stock healthy. And you need to be healthy and strong yourself since being a fish farmer is a physically demanding job.
Before You Start a Fish Farming Business
Before you work with the fishes, you need to get your feet wet with some prep for the new business. The first thing you need to do is decide on the scale of your fish farm operation. Will it be a small, one-person operation run in your basement, backyard, or garage, or will it be a large-scale multi-acre run with several employees? Of course, the cost and requirements are different for each. If you have outdoor large or small ponds, the type of weather you have will determine whether your business needs to be seasonal or can run year-round.
Select Your Target Market
Your target market will be determined by the fish stock you raise, or you'll choose your fish stock according to the market you want to serve. Generally speaking, the types of customers you might have include:
- Food distributors (who supply restaurants and markets)
- Food processors
- Pet stores and specialty fish dealers
- Individual customers
You should see what the market demand is for different kinds of fish and what kind of competition is already servicing the market. You might decide to find another market for farmed fish if the first one you consider is already over-served, or you may find a new opportunity by extending your range of services. If you have outdoor fish ponds, you might allow fishing for families who want to catch their own dinners. You could also start selling fish-related products like fish food, water-testing supplies, pumps, and aeration units.
Aquaculture Equipment Needed
While the equipment you'll need depends on the type and size of the fish farm you're running, common items include:
- Fish tanks and pumps (ensuring that fish have fresh water pumped from a water supply into their ponds or tanks)
- Aeration devices (pumping oxygen into the water)
- Water-testing kits
- Fish food and refrigerators
- An initial stock of parent fish or fry
A large, high-quality fish farm operation might also require excavation equipment and land for pond construction, motorboats for cleaning and managing ponds, industrial-quality pumps, aerators and water-testing kits, and fish-processing equipment for when fish are shipped.
Once your fish farm is up and running, ongoing expenses might include:
- Eggs or fingerlings for restocking
- Fish food
- Equipment maintenance and replacement
- Expansion costs (new tanks, ponds, etc.)
- Shipping of fish
- Insurance costs
What Can You Expect to Earn Running a Fish Farm?
Again, this depends on the type and size of fish farm you are running. Do you intend to sell common fish by the pound or quantity to commercial food services or are you going to sell specialty fish?
Langston University, in Oklahoma, did an economic analysis of different types of fish production enterprises and determined that a fish farm that produces 3,000 pounds of wholesale catfish will need a minimum of $3,000 per acre in both startup and operating expenses. Its net profits should be about $300 per acre each year, or about $0.10 per pound of fish. If that aquaculture business adopts a retail marketing strategy rather than a wholesaling one for its catfish farming business, it could realize net profits of as much as $1 per pound of fish.
Make an Aquaculture Business Plan
Before you start a fish farm and invest in it, you should write a business plan that outlines everything from deciding your target market, the types of fish you'll cultivate, and your marketing strategies. A traditional business plan includes:
- An executive summary
- A company description
- A market analysis
- Organization and management details
- Service or product line details
- Marketing and sales information
- Any funding requests
- Financial projections
- An appendix
You'll need a business plan if you want to get bank funding for your operation.
Preparing to Fish Farm
Although you might love the natural simplicity of the idea to raise fish for sale, there's still more you need to do before you get going. For example, you must create a legal entity for your fish farm business, establish your tax status, open a business bank account, market yourself, and decide how to run your day-to-day operations.
You may need to hire employees if you want to start a large aquaculture business, factoring in salaries, payroll deductions, and expenses like time off and workers' compensation insurance.
Make Your Fish Business Legal
You will need to form a legal business entity to start your operations. The four most common types are a sole proprietorship, partnership, limited liability company (LLC), and corporation. You should probably get some legal advice to find out which one will best suit you in terms of liabilities, administrative burden, and cost.
Two of the common entities used by small businesses are sole proprietorships and LLCs. Sole proprietorships, as the name suggests, are run by an individual. They are relatively easy and inexpensive to set up and run. However, the proprietor may run into problems because they have no liability protection against personal debts and lawsuits. The partners in an LLC have a clear division between personal and business assets, giving them more liability protection and making it easier at tax time.
You will also have to choose a name when you set up your business, which many states will require to be different from other existing names. You can check potential name conflicts through state and federal business and trademark databases.
Register for Taxes
You'll have to register your fish farm business for different federal and state taxes. To do this, you will have to get an employer identification number (EIN). The nine-digit number identifies you for tax purposes. You can apply for your EIN for free online with the Internal Revenue Service (IRS).
You'll have to meet certain federal tax requirements if you have employees in your fish farm business, including:
- Social Security and Medicare taxes
- Federal income tax withholding
- Federal unemployment tax (FUTA)
You might also have to pay property and sales tax.
Open a Business Bank Account
It's good practice (and, in some states, necessary) to open a business bank account and get a business credit card for your fish farm operation. A business bank account keeps your personal and business assets separate, which can be important if you are sued. It also makes it easier to track your business income and expenses for tax purposes.
With a business bank account and business credit card, you can also build up a positive credit history for your operation, making it easier to apply for loans and expand lines of credit.
Apply for Fish Farm Permits and Licenses
A fish farm may have to apply for various local, state, and federal registrations required for businesses. They may need a sales tax permit and occupancy permit, among others. They may also have to hold a National Pollutant Discharge Elimination System permit depending on how their business is set up.
The U.S. Small Business Administration (SBA) has a guide to licenses and permits that you might need from federal and state agencies, each one commanding different fees.
Fish Farm Insurance
For protection's sake, a fish farm should include various types of business insurance. These could include:
- Liability insurance: This protects the business if someone is injured or made ill by their products.
- Workers' compensation insurance: This covers expenses such as medical bills or lawyer's fees if an employee gets hurt while working.
- Commercial property insurance: This protects the business from property damage.
- Commercial car insurance: This protects any vehicle owned by the fish farm business and covers expenses if the vehicle gets into a crash.
Let People Know Fish Is for Sale
To keep your fish farm business afloat, you'll need to embark on a steady program of marketing and promotions. The marketing plan could include word of mouth from happy customers (perhaps rewarded with branded merchandise, such as pens or T-shirts with your logo on it), direct mail, and online and offline advertising.
If you want your business to be professionally branded, it's easy to hire experienced graphic designers, web designers, and branding consultants through a job platform like Upwork, which matches businesses like yours with independent professional talent.
These days, it's essential for all businesses, including aquaculture operations, to have a website to promote themselves, take orders, and communicate with customers. The site could be built by a professional web designer or you might elect to do it yourself using a template-driven web design platform like Squarespace, Wix, or Weebly.
Part of your online marketing strategy should include links from your site to your social media channels, which you should tend to regularly by posting updates about your business, responding to queries, and monitoring online conversations about your business and the aquaculture industry. Your social media strategy should align very closely with your business goals.
Running Your Daily Fish Farm Operations
When running the daily operations of your aquaculture business, there's more to it than feeding fish, cleaning tanks, and fulfilling orders. You'll also have to take care of administrative and financial tasks. If you have staff, for example, you'll need to be able to set up payroll and calculate payroll taxes.
Of course, you'll also need an accounting system to keep track of your expenses and income, giving you a detailed look and a broad overview of your financial picture and helping at tax time.
Sending quotes, providing receipts, generating packing slips for shipments, and requesting deposits for large orders are some of the other tasks you may need to do regularly.
Fish Farm Help Is Close at Hand
Running a fish farm is physically demanding and requires your complete attention. It is good to have a small business partner who can help you with much of the other work needed to keep your company afloat.
With the Skynova suite of business templates and business software products, you can get proven and cost-effective help in a wide range of essential services, including invoicing, accounting, requesting retainers, providing packing slips, confirming orders, and much more.
Skynova will work with you as you grow from a small fry into a big fish.