Opening a new business in today’s economic climate resemblances gambling. 50% of the new businesses don’t make it after their second year, leaving entrepreneurs in debt and depression. Although some businesses seem more profitable than others, it depends on each state’s taxation system and the entrepreneur’s knowledge to turn a simple dream into a sustainable company.
If you’re looking to sell small animals, accessories, and even the coolest tanks backgrounds for fish pets, you should take a closer look at the pet market today and see if it would be a good investment.
What are the profit margins?
According to official data, the pet industry earns an estimated profit of about $600 million annually, on revenues worth over $16 billion. However, contrary to what you may expect, almost 60% of those activating in the pet industry are considered non-employers, meaning they act as a one-man company without any other paid employees.
Moreover, 83% of the businesses in the field have four or fewer employees. The rest of the industry is divided between huge companies like WalMart and PetSmart and small entrepreneurs, striving to survive in a competitive market.
IBIS World estimates that the average profit margins in the pet industry are around 4.4%, with a steady increase of 2-3% annually in the past five years. Even so, starting a new business is a complicated process, so you’ll need an additional source of income for at least two years before you can cash-in from your company.
Smaller pet stores can focus on niche-market products such as high-end foods or accessories that most big chains don’t store. And, since more and more owners are looking after their pet’s diets, organic foods will prove a profitable investment both in the short and the long term.
What else can you sell?
Apart from organic food, treats, and snacks, you should also bet on clothes and accessories for dogs and cats.
Stylish vests, pants, and boots have become the norm of many pet owners who want to dress their pawed friends to match their outfits. Seasonal clothing like raincoats and winter boots are also in high-demand, especially for those living in the North, where the winters are long and cold.
Grooming products and accessories such as beds or fancy cages for smaller pets may also prove a smart investment as they will bring you good profits.
Although it is still legal to sell animals in most pet shops across the country, you need to take a look at the current legislation and see if there are any exceptions. Many animal welfare organizations are trying to ban the selling of live animals that are kept in pet shops and convince people to adopt instead of buy.
To avoid any misunderstandings, we would suggest limiting your business to selling pet accessories, food, cages, and other items instead of living animals. Smaller animals like gerbils or Guinea pigs may not need a pedigree but when it comes to cats and dogs, the new owner will need all the necessary information on the pet.
Keep in mind that some animals like groundhogs cannot be legally kept as pets, while others require experienced owners. In some cases, people might worry about the conditions in which animals are kept, including hygiene and personal health.
All animals require documents while cats and dogs will also need shots and regular visits to the vet to make sure they are in good health. All these can add up to your costs, so it might be better to stick to animal accessories if you want your pet shop to thrive.