Hi everyone.
The reason I am writing this post is because I have sold my Pet Shop in Pretoria. I am still getting phone calls from my customers daily because I have sold. I want to to assure every one that although I do not plan on opening a new shop soon, I am still packing my substrates that you have come to expect from me, except at better prices. This however is not an ad that can be viewed in the classifieds.
I wanted too share my experience with people who are either
someone considering starting their own pet shop
or
someone thinking that pet shop owners are just out to rob us from our hard earned money
My experience that I am writing about is purely based on my own shop and not that of my friends or any other pet shop.
Over the past couple of years I have learned so much from people in the trade and especially on this forum, about this trade and how sensitive it is, the politics involved and above all the amount of money to be made in it. (A little insight if you will) This is not only reptiles but the entire pet trade. I've decided to write something to shed a little light on the subject of having a pet shop, some of the pro's and con's. Some of the highlights and some of the little things that creep up and want you to just give up.
When I decided to open shop I had considered many things as I have been in management my whole life, since my first job right up to now in one way or another I have always found myself in a management position. After much research I decided to buy a pet shop and quit my job. It was a struggling shop, owned by a person that had it as a second income. I bought the shop and paid more than I should, but that you only learn once you own the place. None the less with my passion and experience in management the shop had a remarkable turn around from month 1. In our first month we had nearly doubled the turn over from the previous year. It continued like this for the whole period that I owned the store. I have made many mistakes during this period, I have learned a lot from each mistake and never repeated it. The business continued to grow but our living expenses were too high due to the salary that I was earning before I bought the shop. I have earned a salary nearly half the turnover of the store.
The store was starting to feel the pressure of me drawing just enough too cover our expenses and a little bit for food etc. I needed to think of something new to add to the shop, something with a low in put but high return. I had a lot of help from friends that has been in the industry far longer than me, with many contacts I did not know. So with their help I started mixing and packing my own substrates. I learned how to build proper high quality reptile cages, built up a lot of new contacts for different products. I started buying less and less from the big suppliers and more from the small guys. The quality was noticeably better and the prices lower. I returned this to my customers and my prices on some products became much less. I was selling more and more of certain products. The turnover increased but not enough, I had too think of something else. The shop we have had, had reached a peak and the shop was literally too small for me to expand in any way. I couldn't add some essential products that was needed as we just did not have any space. The rent and other expenses was starting too take its toll, with my drawings, it was starting to look less and less sustainable and I decided to start looking for business outside in the form of wholesale as I could offer products to pet shops at far less than what they were paying.
By this time my hobby became my job, I was working with T's and reptiles and fish and other animals the whole day, then go home and take care of all my animals at home, then I can only start spending time with my family. I really enjoyed working with my snakes and lizards, but the way it was going It was becoming a chore rather than a hobby. I started selling my own animals as I was starting too neglect them. I went down from close to 70 reptiles to 9 and I am still selling the last. Only to keep my two crested gecko's and veiled chameleon.
I was earning almost half of my turnover when I was working 9 hours a day for someone else.
I will show some hypothetical figures to explain some of the finances in running a pet shop, this should help you understand some of the prices on the shelves.
Lets look at a hypothetical small sized pet shop that has a variety of animals and the products for sale. (The figures in no way represents the true expenses of my store, although I will work on the average GP (Gross profit) in the industry)
I will try and use only layman's terms so that everyone can understand.
I will start with the fixed expenses first to calculate the break even point (sales to make before the owner can take even R1)
Rent R10'000 (some rentals go up to close to R100 000 or more. but we are looking at a small store say 30m2)
Telephone R1'500
Salaries R4'000 (Lets say only one person is needed to work in this shop)
Vehicle R2'000 (You managed to get a good vehicle and a low monthly repayment)
Variable expenses is everything that will change monthly. These are very difficult to plan in advance but I will add them as if they are fixed expenses, except for the stock
Food for animals (hypothetical cost prices)
10 baby snakes = 40 pinks/month = R120
5 small snakes = 20 mice/month = R80
5 large snakes = 20 rats/month = R200
Rabbits = 10kg pellets/month = R50
Birds = 5kg seed/month R50
Fish = R100/month
Spiders = R100/month
Feeder rats and mice = R100/month
Total feeding bill per month R800
This gives us a total of R18300 -
Lets work on a 50% GP that will make the break even point R36'600/ per month
Lets say the owner wants to draw R15'000 per month which is about average of what the expenses are for a small business owner.
This now makes the total expenses R18300 + R15000 = R33300 and a break even of R66'600.
Basically with a 50% GP once you have calculated your expenses you will have to make double that amount other wise you will not be able to replace your stock that was sold.
You will still need to plan for unexpected expenses like vet costs etc. Then you will need to plan for losses. Animals dying, products expiring etc.This all adds up, so basically take your total expenses and add another 20% to that for unexpected expenses.
So it now becomes R39960 for expenses and break even point is now at a staggering R79920
Dropping your prices will drop your GP which means that your break even point goes up and you need to sell more. It is not a guarantee that people will buy more from you if your prices are less. This sometimes leads for short term price wars that kills the smaller shops. Although not all customers care that much about price. Quality of the service plays a huge role.
Lifting your prices means that you will need to sell less to break even, but this will also scare some customers away. So you will need to offer something else in return for the higher price. This is usually in the way of service, but remember that staff that can offer better service is also more expensive.
This should give a little bit of insight into the business side of pets. Why are there so much money in this industry? because it makes us feel good when we buy things, it makes us feel like better people when we buy things for our pets. Its a feel good product like any other and that's why people spend money in this industry. Don't believe me? how do you feel when you start chatting to your friends about your new snake, new aquarium, go and play with the new puppy etc? How does it feel when you go and buy something for your pets, we treat them like our kids and part of the family as we should. But there is money involved and a way for some one to put food on his family's table tonight.
I really don't care if a person in any business makes a lot of money, everyone should be able to make a living and thrive. I feel that if someone uses their initiative and hard work, what they make with it is theirs, as long as they do it honest.
I am starting a nursery in August and my focus will be on plants. I will one day again keep my reptiles as a hobby. But for now I will enjoy my break from it all. I hope you found it a little insightful and that when you go to a pet shop again you'll understand why the prices are what they are. Remember that you do not have to pay that, if you feel it is over priced either speak to the owner/manager for discount, if they do not entertain discount take you money and spend it somewhere else. You are bound to found what you are looking for cheaper. If you are comfortable with a shop and their prices are fair by all means support them.