Do you want to start a shrimp farming business? If YES, here is a complete guide to starting a shrimp farming business with NO money and no experience plus a sample shrimp farming business plan template.
If you have ever tasted boiled, smoked, or fried shrimps, then you would agree that shrimps indeed are a great asset when it comes to culinary adventures. Shrimp is known as one of the world’s healthiest sea foods and it is eaten on all the continents of the world.
Its antioxidant and anti-inflammatory content makes it most desirable for those who are careful about their cholesterol intake. Shrimp is classified as a marine creature and it is easy to come by especially in coastal areas and the riverside.
Shrimp farming is known to be a profitable business that has evolved from a small-scale industry to a global industry in most countries where it is carried out. Countries like the United States, China, Japan, Thailand, and even South American Countries have been farming shrimps on large scales for a long while.
If you are looking to go into the seafood business, the good news is that you can’t get it wrong with shrimp farming; this is especially if you live in the coastal areas. It is easy to start, cheap to maintain and it takes a shorter time to get a good return on your investment if you know the ropes.
Starting a shrimp farm business comes with its fair share of challenges, but that does not rule out the fact that it is indeed a profitable business venture. An aspiring entrepreneur can either choose to start a shrimp farm on a small scale or a large scale depending on his or her financial status. If you are interested in starting a shrimp farm business, then you should pay attention to this article.
Steps to Starting a Shrimp Farming Business
1. Understand the Industry
Companies in this industry farm shrimps in controlled aquatic environments. Industry operators use some form of intervention in the rearing process to enhance production, such as holding in captivity and protecting them from predators, pests, and disease. Ideally, shrimp farms require temperatures that are above 25º C during production seasons.
The Fish and Seafood Aquaculture industry that the shrimp farming business is a part of has experienced slow growth over the last half-decade. This is because the vast majority of industry revenue is derived from the sale of fish, mollusk, and crustaceans that will be processed into food products.
The success of this industry is tied to levels of seafood consumption. Per capita seafood consumption in the United States has declined in recent times, putting a strain on fish and seafood farmers. Nevertheless, with the recent increase in the price of seafood, combined with the healthy export market, the revenue generated in the industry is expected to grow accordingly.
The Fish and Seafood Aquaculture industry is indeed a fast-growing industry and pretty much active in countries such as the United States of America, Australia, Japan, China, Germany, Singapore et al. There is no single fish and seafood/shrimp Farm Company that has dominate market share in the industry hence smaller fish and seafood/prawn farms business can successfully make a profit.
Statistics have it that in the United States of America alone, there are about 2,807 registered and licensed fish and seafood farms (shrimp farms inclusive) businesses responsible for employing about 10,440 people, and the industry rakes in a whooping sum of $1 billion annually. The industry is projected to enjoy 0.3 percent annual growth.
A recent report published by IBIS World shows that the Fish and Seafood Aquaculture industry generated 27.4 percent of revenue through the sale of farmed seafood (shrimp inclusive) in 2016. Prawn is among the popular forms of seafood eaten in the United States.
The report stated that they are also relatively easy and inexpensive to farm and their farming does little damage to the environment in which they are raised. They are primarily raised in Mississippi, Louisiana, and other parts of the Deep South where they have been cultivated on farms since the 1960s.
One thing is certain when it comes to seafood cum shrimp farming if you can conduct your market research and feasibility studies, you are more likely not going to struggle to sell your farm produce (shrimps) because there are always food processing companies and consumers out there who are ready to buy from you.
Some of the factors that encourage entrepreneurs to start their shrimp farms could be that the business is easy to set up and they can easily get support from the government; you can start your shrimp farm in your compound if you live in a rural community/farming community. All you need to do is to purchase the first set of shrimps, purchase shrimp farming tools and then build your ponds.
Despite the fact that shrimp farms have been in existence from time immemorial that does not in any way make the industry to be over-saturated; shrimp farmers are exploring new technology to continue to improve the farming process. The fact that there is always a ready market for shrimps and other seafood makes the business evergreen.
Over and above, there are few barriers to entry into the shrimp farm industry. Usually, all inputs are readily available. In the nearest future, players in this industry may face the highest costs associated with accessing technology, especially in relation to genetic modification engineering in seafood breeding.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who consume shrimp is not restricted to a group of people. People of different races and cultures consume shrimp hence the market is all-encompassing.
So, if you are looking toward defining the demographics for your shrimp farming business, then you should make it all-encompassing. It should include households, hotels, restaurants, and businesses that rely on the supply of shrimp.
3. Decide Which Niche to Concentrate On
There is no niche area in the shrimp farming business, every player in the industry simply farms shrimps but some may decide to go into shrimp processing and packaging as against selling directly to grocery stores or in a farm market.
So, if you are looking toward starting your own shrimp farming business, then you should clearly define your market so that you will be able to know how to get your shrimp across to them.
The Level of Competition in the Industry
No matter the line of business you decide to pitch your tent, you are still going to compete with others who are in the same area of business, and the shrimp farms business is not an exemption.
The level of competition in the shrimp farms industry to some extent depends largely on the location of the business and of course the capacity of your shrimp farm. If you can successfully add shrimp processing and packaging to your shrimp farming business, you are likely going to experience little or no competition.
For instance, if you are the only shrimp farm in your location that is into shrimp processing and packaging, you can successfully monopolize the market for a long time before you start having competitions.
It is important to also state that the competition in the shrimp farm industry depends on the scale of your shrimp farms. There are shrimp farms in the United States that are competing with global shrimp farms and there are shrimp farms in the United States that can only compete at the local level.
4. Know Your Major Competitors in the Industry
In every industry, there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long while and so are known for that, while others are best known for how they treat their customers.
These are some of the leading shrimp farms in the United States of America and in the globe;
- Blue Ridge Aquaculture, Inc.
- Wood’s Fisheries – Port St. Joe, Florida
When starting a shrimp farm business, you just have to get your costing cum economic analysis right if your intention of building the business is to generate profit, grow the business and perhaps expand the business and start exporting processed and packaged shrimps within your country and to other countries of the world.
When conducting costing and economic analysis for your shrimp farm business, you just have to critically examine these key factors; access to the market, access to cheap labor, and of course good climatic condition. As a matter of fact, you would have to continue to review these key factors at regular intervals while running your shrimp farm business.
As a shrimp farm owner, you just have to have a proper grasp of your competitive landscape if indeed you want to maximize profits and be on the frontline of the industry.
It is important to note that medication/treatment and feeds cost is one of the most important factors contributing to the overall cost of a shrimp farm business and should be considered as a major factor when carrying out your costing and economic analysis.
5. Decide Whether to Buy a Franchise or Start from Scratch
When it comes to starting a business of this nature, it will pay you to start from scratch as against buying a franchise.
Besides, from available research conducted, there are no known fully operational shrimp farms in the United States of America that are into franchising; most players in this line of business are adopting strategies that will help them sell their shrimps beyond the city, state, or country where their farms are domiciled to other parts of the world as against selling franchise.
Besides, it is easier to start and run a shrimp farm from scratch to profitability without leveraging on a known brand name. People will patronize your shrimp based on accessibility and pricing as against relying on a brand name. Please note that most of the big and successful shrimp farms around started from scratch and they were able to build a solid business brand. It takes dedication, hard work, and determination to achieve business success.
6. Know the Possible Threats and Challenges You Will Face
If you decide to start your own shrimp farm business today, one of the major challenges you are likely to face is the presence of well-established shrimp farms in your target market location. The only way to avoid this challenge is to create your own market; concentrate on households, individuals, and also small restaurants and hotels that need shrimp.
Other threats and challenges you may face when you start your own shrimp farming business are a global economic downturn that can impact negatively on household spending, bad weather cum natural disasters (drought, epidemics), unfavorable government policies, and the arrival of a competitor (a shrimp farm or even fish and seafood farm that are also into farming shrimps) within the same location.
There is hardly anything you can do as regards these threats and challenges other than to be optimistic that things will continue to work for your good.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
When considering starting a standard shrimp farming business, the legal entity you choose will go a long way to determine how big the business can grow. Generally, you have the option of either choosing a general partnership, a limited liability Company which is commonly called an LLC, or a sole proprietorship for a business such as a shrimp farming business.
Ordinarily, sole proprietorship should have been the ideal business structure for a small-scale shrimp farming business especially if you are just starting out with moderate start-up capital. But people prefer limited liability Companies for obvious reasons.
As a matter of fact, if your intention is to grow the business and sell your shrimps all across the United States of America, then choosing a sole proprietor is not an option for you. A limited Liability Company, LLC, or even a general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorship and general partnership. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder’s meetings, and other managerial formalities.
8. Choose a Catchy Business Name
Generally, when it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Typically, it is the norm for people to follow the trend when naming their business.
If you are considering starting your own shrimp farming business, here are some catchy names that you can choose from;
- Zach Brownstone Shrimp Farms Ltd
- Crest Kent Shrimp Farms, LLC
- Dallas & Sons Seafood, Inc.
- Victor Acapus Shrimp Farms Ltd.
- Richard Dabber® Prawn Farms, LLC
- Yodel Nest Shrimp Farms Ltd.
- Agnes West Seafood, Inc.
- R Samson Shrimp Farms, Inc.
- Mike Townsend Seafood, Inc.
- Gateway Shrimp Farms, LLC.
9. Discuss with an Agent to Know the Best Insurance Policies for You
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. Thus, it is imperative to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your shrimp farm business.
Here is some of the basic insurance covers that you should consider purchasing if you want to start your own shrimp farming business in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Animal Mortality Insurance
- Farm Equipment and Auto Insurance
- Commercial Agribusiness Insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own shrimp farming business, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successfully run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you or even production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subject to the review of attorneys as required by USPTO.
11. Get the Necessary Professional Certification
You should work towards acquiring all the needed certifications in your area of specialization. You are strongly encouraged to pursue professional certifications as it will go a long way to show your commitment to the business.
These are some of the certifications you can work towards achieving if you want to run your own shrimp farm business;
- ASC Certification
- Membership of the Society of Aquaculture Professionals (SAP)
Please note that the average local shrimp farmer in suburbs in the United States does not have certifications and that does not in any way stop them from growing their shrimp farms to enviable heights.
12. Get the Necessary Legal Documents You Need to Operate
The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a known fact that you cannot successfully run any business in the United States without the proper documentation. If you do, it won’t be long before the long arms of the law catch up with you.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own shrimp farming business in the United States of America.
- Business and liability insurance
- Commercial Vehicle Operator’s Registration for the distribution truck
- Appropriate driver’s licenses for drivers
- Assistant’s licenses for assistants
- Health Inspection Certificate
- Proof of ownership, proper identification, and vehicle license
- Tax Payer’s ID
- Fire certificate
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Employee’s Handbook
- Operating Agreement for LLCs
- Farm Partnership Agreement
- Operating Agreement for LLCs
- Insurance Policy
13. Raise the Needed Startup Capital
Starting a standard and well-equipped shrimp farming business can be capital intensive especially if you choose to launch a large shrimp farm with the capacity to supply shrimp beyond your immediate community.
Securing a large farmland, building well-secured and conducive ponds, purchase of the first set of juvenile shrimps and shrimp farming tools/equipment are part of what will consume a large chunk of your start-up capital, but if you choose to start the business on a small scale, you may not have the need to go source for fund to finance the business.
No doubt when it comes to financing a business, one of the first things and perhaps the major factors that you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors, and your friends to invest in your business.
Here are some of the options you can explore when sourcing start-up capital for your shrimp farm business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from government, donor organizations, and angel investors
- Source for soft loans from your family members and friends.
14. Choose a Suitable Location for your Business
Starting a shrimp farm business comes with its own challenges; it is a business that cannot be situated in any location of your choice. As a matter of fact, you will not be allowed to start a shrimp farm in a residential estate in the United States of America, Canada, the United Kingdom and Australia. You can only be allowed to start a shrimp farm in an area designated for shrimp farms and it is usually around coastal or swampy areas.
It cannot be overemphasized that the location you chose to construct your shrimp pond is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people with the required purchasing power, and a location that has minimal predators and the right climatic condition for the types of shrimps you intend raising.
If you make the mistake of renting or leasing farmland for your shrimp farming business in a location that is prone to predator attack and has poor climatic conditions simply because it is cheap, then you must be prepared to spend more on protecting your shrimps and welcoming potential customers.
15. Hire Employees for your Technical and Manpower Needs
When it comes to starting a standard shrimp farm business, you will need to construct safe and standard ponds (indoors or outdoors), ensure a sufficient supply of water, acquire shrimp harvesters, multi-functional shrimp pumps, and other shrimp/seafood farming tools. This equipment can be purchased as fairly used if you have a low budget.
When it comes to choosing between renting and leasing farmland for your shrimp farm, the size of the shrimp farm you want to own, and your entire budget for the business should influence your choice.
If you have enough capital to run a pretty large and well-equipped shrimp farm, then you should consider the option of a long lease or outrightly purchasing farmland; when you lease or purchase farmland, you will be able to work with long-term planning, structuring, and expansion.
As regards the number of employees that you are expected to kick start the business with, you would need to consider your finances before making such a decision.
Averagely, when it comes to starting a standard shrimp farm business on a large scale, you would need the services of the following professionals; Chief Operating Officer (you can occupy this position), General Farm Manager, Accountant/Cashier, Sales and Marketing Executive, Field Employees, Cleaners and Security Guards.
Over and above, you would need a minimum of 5 to 10 key staff members to effectively run a medium-scale but standard shrimp farm business. Please note that there will be times when you are expected to go out of your way to hire experts to help you handle some job functions.
If you are just starting out you may not have the financial capacity or required business structure to retain all the professionals that are expected to work with you which is why you should make plans to partner with vet clinics around you.
The Service Delivery Process of the Business
When it comes to the operational activities of a shrimp farm, the process is simple and straightforward; as a matter of fact, a shrimp farm can successfully run on an auto-pilot with little or no supervision from the owner.
Basically, when the ponds and the required facility have been put in place and the juvenile shrimps placed inside, then every morning and evening and perhaps afternoon, the shrimps are fed and once in a specific period, the water in the pond is changed.
Once the shrimps are matured, they are harvested with the aid of shrimp harvesters and then sold to buyers or they are transported to farm markets or to hotels and restaurants et al as requested.
16. Write a Marketing Plan Packed with ideas & Strategies
As a shrimp farmer, you would have to prove that you have the capacity not only to manage a shrimp farm but also to supply shrimp in commercial quantities and on a consistent basis. So, if you have plans to start your own shrimp farming business, it will pay you to first build your capacity before sourcing to supply shrimps to larger hotels or food processing and packaging companies that require shrimps from shrimp farms.
The fact that the entry barrier for starting a small-scale shrimp farming business is low means that there is bound to be more players in the industry no matter the location you choose to start yours. In essence, you must come up with creativity and innovations if you must carve out a market for yourself within the available market in your community, city, state, or country.
So, when you are drafting marketing plans and strategies for your shrimp farming business, make sure that you create a compelling personal and company profile. Aside from your qualifications and experience, it is important to clearly state what you have been able to achieve in time past as it relates to the industry you intend to start your business. This will help boost your chances in the marketplace when marketing your shrimps.
Please note that in most cases, when you bid for a supply of shrimps from hotels or food processing and packaging companies who are in need of shrimps, you will be called upon to defend your proposal, and so you must be pretty good with presentations.
Here are some of the platforms you can utilize to market your shrimp farm and its produce;
- Introduce your business by sending introductory letters alongside your brochure to households, hotels, restaurants, food processing and manufacturing companies that make use of shrimps, groceries stores, and related businesses in the United States (if you are just starting out, you may want to concentrate on start-ups and smaller businesses).
- Promptness in bidding for shrimp supply contracts et al.
- Open your shrimp farm with a party so as to capture the attention of residents who are your first targets
- Engage in roadshows in targeted communities from time to time to sell your shrimp.
- Advertise your shrimp in community-based newspapers, local TV, and radio stations.
- List your business and products on yellow page ads (local directories).
- Leverage the internet to promote your shrimp farm.
- Engage in direct marketing and sales.
- Encourage the use of Word of mouth marketing (referrals).
- Leverage on the internet to promote your business (when you blog regularly on key issues as it relates to your business, people will consider you an expert in the field).
- Join local chambers of commerce and industry around you with the main aim of networking and marketing your products; you are likely going to get referrals from such networks.
- Engage the services of marketing executives and business developers to carry out direct marketing for you.
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and brand-boosting cum promotion to continue to appeal to your target market. Your corporate identity has a lot to do when it comes to building a business that is profitable and can last long.
Here are the platforms you can leverage to boost your brand awareness and create a corporate identity for your shrimp farming business;
- Place adverts on both print (newspapers and magazines) and electronic media platforms
- Sponsor relevant community-based events/programs
- Leverage the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your business
- Install your Bill Boards in strategic locations all around your city or state
- Distribute your fliers and handbills to target areas
- Contact households, hotels, restaurants, food processing and manufacturing companies that make use of shrimp, groceries stores, and related businesses in your target areas by calling them up and informing them of your shrimp farm
- List your shrimp farm in local directories/yellow pages
- Advertise your shrimp farms on your official website and employ strategies that will help you pull traffic to the site.
- Ensure that all your staff members wear your branded shirts and that all your vehicles and trucks are well branded with your company logo et al.