Start a coral farm by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your coral farm. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a coral farm?
Coral farmers who start small may only require a few tanks for propagating their frags. Your main components will include the tanks, lighting systems, and water pumps and filters. You’ll also have some incidental costs for added electricity, water testing and treatment supplies, and food for the corals. Finally, you must budget some initial money to acquire mother coral pieces, from which you’ll propagate new colonies.
What are the ongoing expenses for a coral farm?
Coral farming requires the maintenance and periodic replacement of water tanks, pumps, and filters. It also incurs utility fees for water usage and electricity to run tank lights. Purchasing new starter corals and expanding your growing facilities also can impact ongoing costs, but a coral farm can operate successfully at a relative size for quite a while. If you plan to install corals for your customers, you also must budget for your service vehicle and equipment maintenance costs.
Who is the target market?
Ultimately, you’re looking to sell your coral to customers who own fish tanks. But, your initial target market should be the distributors and pet shops who can help sell your coral. Most tank owners are male, between the ages of 35 and 70.
How does a coral farm make money?
Coral farms generate revenue from the sale of viable coral pods or pieces to wholesalers, retailers, and independent clients. Different coral species command varying prices.
How much can you charge customers?
Coral prices depend on the species. It’s easier and faster to propagate some corals, which makes them less valuable albeit with a higher turnover rate. Other prized corals can sell for extraordinary prices. On average, corals retail in the $30 to $50 range. But, some species can easily cost hundreds or even thousands of dollars. Wholesale prices will, of course, be considerably less.
How much profit can a coral farm make?
Coral farming alone probably won’t make you rich — initially. If you’re successful, you might earn $25,000 annually. But, you can offset quite a bit of your expenses with minimal overall effort by combining a coral farm with a related business.
How can you make your business more profitable?
In today’s digital world, you may consider selling your corals online and bypassing wholesalers all together. Of course, this requires much more advertising as well as a safe and effective shipping method. But, online sales provide a great way to generate more revenue for your business.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your coral farm is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Read our Best Banks for Small Business guide to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Recommended: BlueVine is an online bank with free business checking and no hidden fees. Great for businesses who do not often deal with cash.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a Coral Farm Business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply. For more information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a coral farm
Coral farms don’t usually advertise to the public because most sales happen at the distributor level. You should obtain purchase commitments from distributors and wholesalers before you begin to grow your coral. Your best advertising will be your ability to talk to potential and existing customers in person at trade shows or online via email, PMs, and page posts. While ads in trade magazines can help establish your name, face-to-face interactions are very important in this type of business.
When you start out, you should develop a webpage and a social media presence through which you can share pictures of your coral and communicate with customers and prospects. Leaving business cards and flyers in local pet shops also can provide an inexpensive method for generating business.
Coral farms that grow rare or exotic species represent an exception. Customers of these businesses usually require less advertising and more of a personalized, private exchange. Your website should have extensive photographs to show both your beautiful coral as well as a bit about yourself and your professionalism.
How to keep customers coming back
Your ability to consistently produce quality specimens will be your most important customer retention strategy. Your demeanor and business acumen also counts. In a business with such a specific product, you have built-in customer interest. The defining qualities of your business stem from how you conduct yourself and treat your customers after each sale. Follow up with customers, be a student of your industry, and proactively work to raise healthy, vibrant corals.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Coral Farm In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Coral farming involves controlling and monitoring water tanks used to propagate various coral species. A person with a strong attention to detail and the ability to create and follow schedules will do well. Having an interest in fish tanks and their inhabitants also helps. Prior experience in pet and aquatic shops can prove beneficial as well because you may have more access to distribution sources and coral buyers. In fact, many coral farms are extensions of existing aquatic businesses.
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What happens during a typical day at a coral farm?
Coral farming is a relatively slow and steady process. Day after day, these little creatures feed, absorb light, and add to their living structures. The conditions must remain constant in order to promote the best growing environment. Therefore, most days involve checking and maintaining water tank conditions for your reef builders. Because the systems act as mini ecosystems, careful attention to factors like light, nutrients, the pH balance, as well as water levels and overall quality are key to driving continued success.
What are some skills and experiences that will help you build a successful coral farm?
Coral farming targets a niche audience of fish tank enthusiasts and commercial applications. Establishing a coral farming business requires sufficient knowledge of the market as well as the existing buyers and suppliers.
If you have work experience in the aquatic pet and habitat field, you’ll have a better understanding of both animal and customer needs. A firm understanding of the biology of your coral also will help you maintain healthy, viable specimens that are ready for transplant. In addition, you’ll need some business and marketing knowledge to assist you in creating a name and reputation for yourself within this field.
What is the growth potential for a coral farm?
As coral reefs around the world continue to shrink, sustaining and propagating various coral species is an important service to the planet. Additionally, live tanks make popular features in homes, restaurants, hotels, and other residential or commercial settings.
Because business owners can contain this type of farming in modestly sized tanks, they can cultivate coral in residential settings while retaining the ability to drive growth and gross profits. But, consistency is critical for success.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a coral farm?
While closely associated with the fish tank and aquatic pet industry, coral farming is somewhat specialized in scope. If you aren’t associated with people in this field, seek out advice from industry professionals and discuss the overall nature of the business. If you already work in this industry, stay active and engaged through trade shows and exhibitions as well as the numerous professional and social networks fascinated with coral and coral propagation.
As previously noted, many coral farms operate as part of a business that specializes in other aspects of fish tank and aquatic life maintenance. Creating specialty tanks for high-end customers won’t happen for everyone, but there’s a solid market for businesses that can handle a client’s complete needs in one spot. Providing tank installations and maintenance as well as propagation of the aquatic inhabitants will allow for greater customer satisfaction.
How and when to build a team
You can run a coral farm alone or with a small team, depending on the size of your growing operation. If you begin modestly, you should be able to use a team of three people to successfully grow, harvest, and transport your corals. Growing requires little work itself, but the ongoing cleaning and preparation require diligence. Choose team members who share your attention to detail because sloppy work may endanger the health of your corals, which could undermine your entire operation.