Opening a dive shop

[Talon]

Steve.... I'm sure your customers thank you for that also!!!!

 

[Jim Baldwin]

I hope this is in the right forum.

I was just wondering what are the realistic costs of opening a dive shop from scratch. I have an idea for a great location, but will not tell in case someone decides to beat me to it. I know online shops are giving the lds a run for the money, but you still have to have a structure to get proper training. This project would be a few years into the future, I would like to adjust myself that I would be in a position to do such a thing when the time is right. As you don't know the location obviously you can't guess property value, but all things being equal. Also what all is involved. I know you would have to line up manufacturers and some sort of certifying agency. Then you have costs like a compressor and all the computers needed to run the sales.

Anybody wanna take a bite at this one?
Thanks
Tim

Tim,

Dan Brooks, a good friend of mine, just opened a dive shop in Bossier City, LA.
The only other shop was across the river in Shreveport and they had been there for nearly 30 years. In that time they had managed to make a lot of people mad concerning, sales, classes and trips.

Dan opened his store, Red River Scuba, this summer. Check out his website and drop him an email. He and his wife both have other incomes and are not counting on the shop to provide them with their only source of income.

Dan is teaching a lot, putting trips together and selling and servicing gear and establishing himself as a customer friendly store. If you want to get a good idea of start up costs as well as some of the pitfalls, Dan might be willing to share that information with you. Drop him an email and find out.

 

[SDAnderson]

On a standardized basis, it's impossible to come up with anything remotely approaching firm numbers. Of course, that won't stop anyone from speculating, will it?

Shops aren't all the same, regions aren't all the same, the devil is in the details. In the interest of furthering the conversation, here are some start-up capital projections (how much you'll need to have in the bank before getting started) for a hypothetical shop. Some of the assumptions are that you will need to install an indoor heated pool (I live in Chicago) and that the shop will have a small service department and about 1500sf of retail floor space.

Your results will vary:

125,000 Leasehold Improvements (includes a pool & fill station)
60,000 Store Fixtures and Furnishings (1500sf retail space @ $40 per sf)
75,000 Inventory (includes repair)
15,000 Rental Inventory
15,000 Organizational Expenses
10,000 Marketing 1st Year
50,000 Owner Salary 1st Year
50,000 Other Salaries 1st Year
25,000 Professional Fees, Insurance, Memberships, etc.
50,000 Rent
15,000 Utilities
15,000 Operating
55,000 Miscellaneous (10%)
25,000 Deposits

585,000 First Year Capital

 

[Brandon]

What's the easiest way to have a million dollars in the dive shop business?

Start with two million.

-Brandon.

 

[HowardE]

On a standardized basis, it's impossible to come up with anything remotely approaching firm numbers. Of course, that won't stop anyone from speculating, will it?

Shops aren't all the same, regions aren't all the same, the devil is in the details. In the interest of furthering the conversation, here are some start-up capital projections (how much you'll need to have in the bank before getting started) for a hypothetical shop. Some of the assumptions are that you will need to install an indoor heated pool (I live in Chicago) and that the shop will have a small service department and about 1500sf of retail floor space.

Your results will vary:

125,000 Leasehold Improvements (includes a pool & fill station)
60,000 Store Fixtures and Furnishings (1500sf retail space @ $40 per sf)
75,000 Inventory (includes repair)
15,000 Rental Inventory
15,000 Organizational Expenses
10,000 Marketing 1st Year
50,000 Owner Salary 1st Year
50,000 Other Salaries 1st Year
25,000 Professional Fees, Insurance, Memberships, etc.
50,000 Rent
15,000 Utilities
15,000 Operating
55,000 Miscellaneous (10%)
25,000 Deposits

585,000 First Year Capital

While this is an interesting business model... A good portion of your expenses seem inflated. Also $40/sf for rent can get PRIME retail frontange in many smaller cities... Probably not in Chicago, but there's pleanty of places where prime retail space goes for $15 - $25 /sq ft NNN.

I would also hope that there's income coming in to offset these expenses... Startup vs. 1st year is a different thing alltogether.

 

[HowardE]

Boy Howard,

You almost sound *Grumpy* today

I just had a lovely chat with the owner of A1. After telling me about his trip to the Baja, and Coz, he then was wondering if I was interested in hitting Fuji with them this year... He's going...

So, yes, dive shop owners DO get to dive even if I agree that owning a business can be VERY time consuming.

Wasn't trying to sound grumpy... just realistic.

 

[Brewone0to]

One might could watch for and consider buying out another shop.This could help cut some of the stock costs and get a jump on some of the odds and ends items that get overlooked while plotting/planning opening costs.

 

[Tom Winters]

I didn't own a dive shop - I knew too much about the economics of bricks-and-mortar (B&M) ownership to NEVER go near owning one.
I did run a dive business that made me a nice pile of cash though. All perfectly legal too. Honest!, although a lot of it was done in Japanese.
If you are so hot to own your own shop(s) like Howard does at least get into something that you can make money at.
Oh, and stay away from restaurants too. Dolly Parton had a restaurant property that she kept next to the first dive shop I briefly worked at SOLELY to provide a place to provide business losses. This was after that tv show "9to5" was cancelled and ABC had to keep paying her millions upon millions of dollars. She is actually a very sweet lady who knows more about bidness than any 100 random Ha'va'd MBAs.
There are lot more dry cleaner millionaires than dive shop millionaires as a percentage of industry participation.
Once you do your homework with an enlightened eye, you will run like hell from any chance of dive shop ownership unless you're one of those inevitables who just had to see it for himself.
This advice was free - you have no idea what my corporate consulting rate is and no dive shop could ever dream of paying it either.

 

[SDAnderson]

While this is an interesting business model... A good portion of your expenses seem inflated. Also $40/sf for rent can get PRIME retail frontange in many smaller cities... Probably not in Chicago, but there's pleanty of places where prime retail space goes for $15 - $25 /sq ft NNN.

I would also hope that there's income coming in to offset these expenses... Startup vs. 1st year is a different thing alltogether.

I'm using a total sf of about 3500 for retail space, pool, classroom, and repair and storage at less than $15 per sf rent - thus the $50,000. That's a very bare bones number in metro-Chicago - you won't be getting Class A or B space.

The $40 figure is a per sf number for fixtures and furnishings, pretty much the standard for modern retail space. You can spend less on the carpeting, display cases and racks, lighting, video and audio, tables and chairs, ceiling tiles, interior and exterior signage but the resulting down-scale image is an obstacle to generating the kind of revenue a shop requires. Scuba isn't a big enough business to allow for the Wal-Mart volume model to operate efficiently, thus success in a bricks retail setting depends upon successfully exploiting a niche. The ideal customer must have a lot of disposable income, should be interested in the shop as a value-added resource and have little price sensitivity. Decorating the shop on the cheap won't appeal to the market you need to target and will draw trade that is better foregone.

As to income, that's the kicker. I haven't been able to comfortably project a sufficient revenue stream to offset the expenses - and the fact that more than half the dive shops in metro-Chicago have gone out of business in the past few years would seem to bear witness to an inherent imbalance.

 

[HowardE]

I haven't run the numbers either, but having run models on several different locations over the years, I usually go with a 2-3 year plan for break even point, and then I'm happy if I hit it sooner