Proposed Business Questions

[LakerPride]

I have been approached by an acquaintance with the idea of opening a dive shop. I would be handling a lot of the financials but before I get involved I wanted to get a few questions answered.

I know why he wants me involved, here in the US there are some good incentives for being a Veteran Owned business, I bring that ability. Also I have experience with SCUBA so I understand the community. Last, I am the "deep pocket" as far as he is concerned, which I can say I am not, but I do have more liquid assets than he does. OK so here is a bit of info:

We are in the Sault Ste Marie, MI area. There are NO dive shops here, the closest one is almost an hour away. With one exception, there is one on the Canadian side of the border, which I have heard a lot of bad things about, but it's purely hear-say. They only offer ACUC, and do not promote any sort of extended training, or entry to tech levels.

My proposed partner is an MSDT with PADI, also he is a former commercial diver.

So the plan is to open a PADI dive shop, which we have done a lot of research on our location so we are sure of a customer base seasonally. But he also wants to include some commercial diving such as welding, ships husbandry, and recovery/light salvage, since we are in one of the busiest shipping lanes in the world. I am not so sure of the commercial route as I have no experience with it. I have sat down with the only other business in the area that offers any type of commercial diving and they contract a diver to come in each year after the ice break up. They do not offer recovery, and do mostly drydock work.

The recreational side of the business would revolve around the 40+ wreck sites nearby. Also we would focus on supporting tech divers, as there are no blenders around, and no charters that support deco dives. The nearest one is at the opposite end of the lake 400 miles away, and the other is in Traverse City on Lake Michigan.

I have a lead on an waterfront structure, an old gas station, with 60' of dock space for the boat at a good price because it was a foreclosure. I have read the other threads about the dying industry, it is my belief that we need to be small, efficient, and focus on customer service. I do not want to build an empire, but I would like to establish a successful business the opens up the area to reliable charters and instruction. What do you all think?

 

[oly5050user]

I have been approached by an acquaintance with the idea of opening a dive shop. I would be handling a lot of the financials but before I get involved I wanted to get a few questions answered.

are you planning to work there or be a "silent partner"..and are you prepared to possibly lose all the $ you put into project?

I know why he wants me involved, here in the US there are some good incentives for being a Veteran Owned business, I bring that ability. Also I have experience with SCUBA so I understand the community. Last, I am the "deep pocket" as far as he is concerned, which I can say I am not, but I do have more liquid assets than he does. OK so here is a bit of info:

how much experience do you have in the local scuba community? As far as deep pockets please realize that this will require an investment of $100,000.+ to do this right with inventory,store fixtures,compressor/bank,then you have insurance costs.

We are in the Sault Ste Marie, MI area. There are NO dive shops here, the closest one is almost an hour away. With one exception, there is one on the Canadian side of the border, which I have heard a lot of bad things about, but it's purely hear-say. They only offer ACUC, and do not promote any sort of extended training, or entry to tech levels.

Perhaps there is a reason why the other shop does not offer extended training as very few divers get into it for a facility to earn money at it.

My proposed partner is an MSDT with PADI, also he is a former commercial diver.

Any experience actually working or managing a successful dive shop or any kind of retail business?

So the plan is to open a PADI dive shop, which we have done a lot of research on our location so we are sure of a customer base seasonally

.
For location I would choose an area that has an affluent customer base, perhaps with a household income around $100,000+ .Does not have to be on the water.

But he also wants to include some commercial diving such as welding, ships husbandry, and recovery/light salvage, since we are in one of the busiest shipping lanes in the world. I am not so sure of the commercial route as I have no experience with it. I have sat down with the only other business in the area that offers any type of commercial diving and they contract a diver to come in each year after the ice break up. They do not offer recovery, and do mostly drydock work.

Again think of insurance and workmans compensation insurance

The recreational side of the business would revolve around the 40+ wreck sites nearby. Also we would focus on supporting tech divers, as there are no blenders around, and no charters that support deco dives. The nearest one is at the opposite end of the lake 400 miles away, and the other is in Traverse City on Lake Michigan.

is someone experienced with gas blending? Experienced with tech type diving?

I have a lead on an waterfront structure, an old gas station, with 60' of dock space for the boat at a good price because it was a foreclosure. I have read the other threads about the dying industry, it is my belief that we need to be small, efficient, and focus on customer service. I do not want to build an empire, but I would like to establish a successful business the opens up the area to reliable charters and instruction. What do you all think?

Old gas station can work,take out the lifts and install a pool.If you can do that and no one in the area has their own pool you would have a better chance of success. As to the 60' of dock,thats very cool, but do the partners have a USCG captains licence to operate a boat for hire? Add in cost of boat / insurance/fuel/upkeep,etc
With the description you have put up here I would think that my initial estimate of what you would need to invest is way too low for the operation you describe. More like a minimum of $225,00.-$350,000. to get started.

---------- Post added April 2nd, 2012 at 01:46 PM ----------

My estimates are all really low ball estimates.all depends on what the property/boat/construction costs are .Can be 2 or 3 times my posted number..The old joke in the scuba industry is "You can make a million dollars in this business.You need to first start out with 2 million!"
Facility I teach out of now is considered a small operation with an indoor heated pool on site.Not near the water, boats (not owned by the facility but chartered) are 20 minutes to hours away from here.Cost of facility property alone WITHOUT ANY INVENTORY/COMPRESSORS OR INVENTORY is over 1 million invested.

 

[LakerPride]

My partner and I have boats, his is a 36' pilothouse, mine is a 28' center console. He is a blender and I am learning. He does some tech diving, I would like to but I am still learning so it will be a year or two before I venture into it. The gas station can be bought on an acre lot for 125K, and it is in awesome condition. I agree with the pool, I recommended that right away. Build a pool and enclose it so we can teach all winter. No one around here has a pool. The old lady that runs the other shop reportedly loses a good bit of business because she won't teach anything but ACUC. Also she will not take PADI divers unless they take a refresher course, even if they are a current diver.

I am a little concerned about the retail side just because I know a lot of it has shifted to the internet.

I am a novice all around but he has been diving around here for almost 20 years, and in the Gulf for 5 years before that. I am prepared to gamble, but not to go down in flames, which is why I want to do as much investigation as possible before signing the check and hanging the sign!

 

[oly5050user]

My partner and I have boats, his is a 36' pilothouse, mine is a 28' center console. He is a blender and I am learning. He does some tech diving, I would like to but I am still learning so it will be a year or two before I venture into it. The gas station can be bought on an acre lot for 125K, and it is in awesome condition. I agree with the pool, I recommended that right away. Build a pool and enclose it so we can teach all winter. No one around here has a pool. The old lady that runs the other shop reportedly loses a good bit of business because she won't teach anything but ACUC. Also she will not take PADI divers unless they take a refresher course, even if they are a current diver.

I am a little concerned about the retail side just because I know a lot of it has shifted to the internet.

I am a novice all around but he has been diving around here for almost 20 years, and in the Gulf for 5 years before that. I am prepared to gamble, but not to go down in flames, which is why I want to do as much investigation as possible before signing the check and hanging the sign!

sounds like you understand some of the risks involved..both of you should get USCG captain license and for yourself at a minimum before taking out people a Dm rating so that you can get additional liability insurance
True, internet sales are here to stay and the only thing you can do is offer superior service. We have a few offers here in Westchester NY to keep sales in house.One is if student buys re/bcd/computer from us any time they wish to use pool there is no charge for it.Lets see internet dealers offer that. Another is if student purchases package of reg/bcd/computer from us during or shortly after ow class then fee paid for course is applied to sale.This way the class is free. We also match price from any authorized dealer.

 

[LakerPride]

I have just arranged with him to complete my DM, that was exactly what I was thinking. Anything I can do to be more of an asset! I have been thinking about attending classes to be able to work on gear so that we will be able to service all types of equipment. Also I thought we may also run another seasonal business out of the same space during the winter. Down the road from me there is a Golf Course that is basically open year round, during the winter they offer cross country skiing so I wondered if that was an idea we could use. Not cross country skiing of course but a winter activity.