Dive Shop Financials

[azhar]

Hi,

Not sure if this post should be here but here it goes. I m starting out with dive shop in Pakistan. I want some of dive shop owners advise on managing dive shop finances like

• In calculating dive cost what is your break up? What elements you account for besides shop rent, utilities bill, instructor cost, air cost, boats and equipment depreciation.
• Calculate a dive breakeven point? Like how many divers for a trip to be cost effective?
• How do you manage all? Besides fancy dive shop software's...Any excel sheet format you willing to share.

Thanks

Azhar

 

[DivemasterDennis]

You need more input than scubaboard responses. If you are affiliating with and agency like PADI, they have tos of resources for you. If you are an independent, I suggest you get acquainted with other local shop owners ( if there are any near you). You raise questions that business school classes lasting a full year address at a beginning level. Perhaps you should acquire a little more business management backround before starting your venture. Your chances of succeeding without a proper business plan, financing, marketing plan, and budgeting are not good.
DivemasterDennis

 

[Lorenzoid]

Dennis' concerns are valid, but I suppose success will also depend on how much competition there is and how long the owner can keep putting money into the business before it turns a profit. If this is the only dive shop in a region, and if the owner has enough money to put into the operation, the owner could probably get away with lax business practices for quite a while. Not every business owner in the world had a background in business before starting, and some businesses can survive even if operated in less than what we in the US might call an efficient manner. I like the OP's boldness and hope he succeeds.

 

[azhar]

Dennis your concern is valid, however as Lorenzoid pointed out there is not much competition, the number of dive operators are limited few, operating on 2-3 limited sites. We are in operation since last 4 months, certified 30-40 divers ranging from OWD, AOWD and 3 DM. In begining our focus was mostly on selling training but we have realized that our certified students need to log dives and be active.
Hence we have started on "fun dive" trips comprising of 2-3 under training students along with 2 to 4 certified divers. We are operating with business and financial plan however the scale is not large as it would be with dive shop at popular dive destination. Therefore I m looking for practical aspects, small things which dive shop miss to take in account for in beginning while calculating costs, determining group size etc etc. Simply an insight on how you guys do it? or as you guys in US might call "in efficient manner"

 

[fjpatrum]

You need more input than scubaboard responses. If you are affiliating with and agency like PADI, they have tos of resources for you. If you are an independent, I suggest you get acquainted with other local shop owners ( if there are any near you). You raise questions that business school classes lasting a full year address at a beginning level. Perhaps you should acquire a little more business management backround before starting your venture. Your chances of succeeding without a proper business plan, financing, marketing plan, and budgeting are not good.
DivemasterDennis

It doesn't take an MBA to run a successful business. Hell, it doesn't even take a real education. It does take practical smarts and (sometimes) the occasional help from other business owners who've made mistakes and are willing to share them. Looks like that's what the OP is doing.

OP, I don't run a dive shop but things I've seen listed as trip break-outs: Fuel for boats and vehicles, food costs (if provided), hotel costs (if necessary). Consider maintenance requirements for any rental equipment. How much time and cost to service, how often it will need servicing and replacement costs. How you "weight" these different considerations is where the real magic comes in but after a few months of doing trips you should start to get an idea of where you're too high and too low.

Shop around to other shops in your general area you think are doing well, either financially or with customer satisfaction, and see what they're booking for trips and general costs.

The last piece of advice I would have is create your own niche. If everyone else is a rec shop going to the same locations, see if you can find another location and be the only operator going there. Don't try to compete on price alone, that's a losing game for all the businesses in your area.

 

[Searcaigh]

The last piece of advice I would have is create your own niche. If everyone else is a rec shop going to the same locations, see if you can find another location and be the only operator going there. Don't try to compete on price alone, that's a losing game for all the businesses in your area.

Absolutely!

At OP, I would like the opportunity to dive over in your neck of the woods but the last time I was in Karachi was in 2001 and given that one of my key customers there was assassinated I have not gone back.

Good luck on your business venture and if you want to see how not to run a dive op there is one on the UAE east coast that is a perfect example.

 

[SmacA]

First of all good luck in your new venture!

As has been said, not really a question for Scubaboard, but like any business:

- Determine your USP (or niche). In fairness one of these could just be you have the fanciest marketing !! Location may be another.

-Remember: Cash flow is king.

- Keep on top of your books. Enter invoices/receipts when they land, don't let them pile up.

- Speak to an accountant. For example, depreciating assets can be done in a number of ways, choose the most tax efficient one your accountant will let you get away with

- Remember to pay yourself.

Simon

(Disclaimer: I don't own a dive shop. However I currently own 2 businesses: a 75 person software house, and a 5 person cafe. The above rules apply equally to both )

 

[azhar]

Absolutely!

At OP, I would like the opportunity to dive over in your neck of the woods but the last time I was in Karachi was in 2001 and given that one of my key customers there was assassinated I have not gone back.

Good luck on your business venture and if you want to see how not to run a dive op there is one on the UAE east coast that is a perfect example.

Very tragic but sad thing is that this is reality in Karachi. If only law enforcement can be improved in city a lot can get better. Hoping for best in future though and looking forward to diving with you when it does

First of all good luck in your new venture!

As has been said, not really a question for Scubaboard, but like any business:

- Determine your USP (or niche). In fairness one of these could just be you have the fanciest marketing !! Location may be another.

-Remember: Cash flow is king.

- Keep on top of your books. Enter invoices/receipts when they land, don't let them pile up.

- Speak to an accountant. For example, depreciating assets can be done in a number of ways, choose the most tax efficient one your accountant will let you get away with

- Remember to pay yourself.

Simon

(Disclaimer: I don't own a dive shop. However I currently own 2 businesses: a 75 person software house, and a 5 person cafe. The above rules apply equally to both )

Noted..good point on depreciation methodology, need to consult on that.

OP, I don't run a dive shop but things I've seen listed as trip break-outs: Fuel for boats and vehicles, food costs (if provided), hotel costs (if necessary). Consider maintenance requirements for any rental equipment. How much time and cost to service, how often it will need servicing and replacement costs. How you "weight" these different considerations is where the real magic comes in but after a few months of doing trips you should start to get an idea of where you're too high and too low.

Shop around to other shops in your general area you think are doing well, either financially or with customer satisfaction, and see what they're booking for trips and general costs.

The last piece of advice I would have is create your own niche. If everyone else is a rec shop going to the same locations, see if you can find another location and be the only operator going there. Don't try to compete on price alone, that's a losing game for all the businesses in your area.

Thanks I have completely overlooked on servicing cost that I will need to incur in future.

You are right on niche and this is what exactly we are doing, we are not diving on same locations, did a good few months scouting before starting out and found new spots and continue on doing that. We got a huge coast line which is 99% unexplored mainly due lack of initiative. We got lakes at high altitudes up in northern part which no one have dived up till now!! So potential is huge.