How to Start a Coral Farm

Start a coral farm by following these 10 steps:

1. Plan your Coral Farm
2. Form your Coral Farm into a Legal Entity
3. Register your Coral Farm for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Coral Farm
6. Get the Necessary Permits & Licenses for your Coral Farm
7. Get Coral Farm Insurance
8. Define your Coral Farm Brand
9. Create your Coral Farm Website
10. Set up your Business Phone System

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.

Exploring your options? Check out other small business ideas.

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 will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

What will you name your business?

Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Business Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

When registering a business name, we recommend researching your business name by checking:

• Your state's business records
• Federal and state trademark records
• Social media platforms
• Web domain availability.

It's very important to secure your domain name before someone else does.

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.

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your coral farm is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

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!

There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.

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.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money 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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

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.

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.

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.

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.

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.

Not sure if a coral farm is right for you? Try our free Business Idea Generator and find your perfect idea.