Fishing may be your favorite pastime, but it can be the source of a profitable business, too. Starting a bait shop can help you provide a much-needed service, connect with other fishermen, and support your local fishing community. Running a bait shop requires some fishing experience and bait knowledge, but if you have a good sense of what’s in demand in your area, chances are you can build your business into a profitable operation.
Bait shops, commonly called bait and tackle shops, sell a variety of bait to fishermen. These shops may sell live bait like worms, crickets, and minnows, frozen bait, or a variety of both. Most will also sell hard goods like line, hooks, lures, rods, reels, nets, tackle boxes, and other accessories. They offer convenience, allowing fishermen to stop in on their way out to the ocean or lake, and many shops are conveniently located near popular fishing areas. Bait shops are usually open for long hours to accommodate the most popular fishing hours, especially on weekends.
Most bait shops don’t just sell bait; many also sell essential tackle and other supplies. Many shops also sell snacks and drinks, giving fishermen a convenient spot to get everything that they may need for the day.
Grand View Research reports that in 2019, the global fishing equipment market reached $15.2 billion and was expected to continue to grow in the coming years. This growth is driven by an increased interest in outdoor recreational activities and more people participating in these activities when traveling or going on vacations.
According to the 2019 Special Report on Fishing released by the Outdoor Foundation and the Recreational Boating & Fishing Foundation, fishing continues to grow in popularity. In 2018, 49.4 million Americans participated in recreational fishing, including 9.4 million who started fishing for the first time. During 2018, fishing participants took part in 883 million outings and averaged 17.9 fishing days during the year.
Freshwater fishing proved to be the most popular in 2017 and 2018, and in 2018, 39 million people participated in freshwater fishing. Saltwater fishing was the second most popular option, with 12.8 million people participating. The popularity of these types of fishing suggests that bait shops should have access to large amounts of potential customers, both now and in the future.
Many trends are shaping the bait shop and fishing tackle industry. According to the Fishing Tackle Retailer, the trade war with China has proven to be a challenge for bait and tackle shops. With fishing already facing a 10% excise tax, the additional 10% tariff on imported Chinese fishing tackle can drive up prices or eat into profits.
Amazon also poses a threat to small shops. The retail giant has already ventured into many industries, and Amazon is likely to become involved in the bait and tackle industry in the future.
Bait and tackle shops are also under pressure to go green. Anglers are particularly aware of the harm that plastic can do to the waters and our environment, so stores should make an effort to reduce plastic use and waste. Using paper bags instead of plastic, recycling boxes, and packaging, and using compostable materials can reduce plastic use. A store can also make an effort to stock more locally made or USA-made products to reduce the emissions and waste when importing products from overseas. Stores can even set up a second-hand area to sell gently used products, extending their lifespan.
Bait stores will market to fishing enthusiasts, though many different types of people can make up that target market. Professional fishermen will naturally be a part of the store’s market, but more casual and first-time recreational fishermen will also make up part of the customer base. If a store specializes in certain types of bait, like bait for saltwater versus freshwater fishing, that will further define its target market.
Skills, experience, and education useful in running a bait shop
Starting a bait shop store doesn’t require a business degree, but certain skills and advantages can help the shop succeed.
Fishing experience. Fishing experience and knowledge is a must for any bait shop owner. This experience will help a shop owner make wise purchase prices and give customers quality advice and recommendations.
Knowledge of local fishing spots. Familiarity with local fishing spots can allow a shop owner to recommend appropriate products and bait to customers who are new to fishing or new to the area. This knowledge adds value to what the shop can offer customers.
Awareness of fishing industry trends. A shop owner who stays aware of industry trends can make wise inventory purchase decisions and stock products that customers will want.
Customer service skills. Customer experience matters so much in small shops, and strong customer service skills can help turn first-time customers into returning customers.
Management experience. A bait shop owner who has previously hired, trained, and managed staff will be better prepared to staff the shop with quality employees who can help build the business.
Costs to Start a Bait Shop
One of the benefits of starting a bait shop is that it’s possible, to begin with a tiny, affordable shop and then grow that into a larger operation once it’s successful. A small shop that stocks bait and a few fishing supplies cost about $5,000 to start. A larger shop with a greater selection of bait and inventory can cost $25,000 or more.
Common startup costs for a bait shop include:
- Initial inventory including live bait and fishing gear
- Equipment like refrigerators, minnow tanks, and aerators
- Shelves and display units
- Cash register, computer, and other office equipment
- Working capital to cover initial costs for lease, insurance, payroll, and extra cash
Steps to Starting a Bait shop
Step 1: Write your Business Plan
After coming up with the idea, the next step in starting your business should be to write a bait shop business plan. The business plan will help organize thoughts and force you to consider all the aspects of starting a successful bait shop, including the costs to get started, what makes your shop better than local competitors, how you will market, etc.
Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.
Step 2: Name the Business
Finding the perfect business name for a bait shop can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.
Related: Tips for naming a bait shop
Step 3: Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from: sole proprietorship, partnership, corporation, and LLC. Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
Related: Comparison of Business Entities
Step 4: Select your Location
Rental costs for a bait shop will vary depending on the store’s location and size, as well as any amenities available, like off-street parking. When looking at a location, be sure to draw out a floor plan to ensure the shelving, live bait wells, and refrigeration don’t overcrowd the available floor space.
Location can be significant to a bait shop’s success, and locations that are near popular fishing spots and marinas are ideal or co-locating close to convenience stores and gas stations, which can save on rent and provide high traffic. It may be worth paying a little more for a highly desirable and high-traffic location, knowing that it can bring increased business and public awareness of the shop.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
Most states require bait shops to apply for a retail or wholesale bait dealer’s license to catch and/or sell bait. Check with your state’s Department of Natural Resources or Fish and Game Department to find out the details. Additionally, if your location is hooked into the local sewer system, approval will be needed from the environmental and/or local sewer departments to dispose of the water from your fish tanks.
In addition to licensing to sell bait, some general local, state, and federal registrations include a sales tax permit / retail merchant license, Employer Identification Number, and Occupancy Permit.
Step 6: Obtain an EIN
The EIN or Employer Identification Number (also called a Federal Employer Identification Number, FEIN, or Federal Tax Identification Number) is a unique 9-digit tax identification number assigned to a business by the Internal Revenue Service (IRS). Similar to a social security number for an individual, the EIN identifies business entities for tax purposes. The EIN will be needed to hire employees, open a bank account, register for business licenses and permits, file federal and state taxes, and more.
There is no cost for the EIN when registering through the IRS. The number is available immediately when applying through the IRS website; however, you can also register by phone, fax, or mailing IRS Form SS-4.
Related: How to Apply for an EIN
Step 7: Find Financing
Even with the low costs, coming up with a good business idea and having the skills to run it are one thing but getting the funding to start a bait shop is another. In order to get a loan, the borrower(s) will need to have good credit and be able to invest 15-25% of their money towards the total start-up costs.
Step 8: Open a Business Bank Account
Keeping your business and personal finances in separate business bank and credit card accounts makes it easier to track the business’s income and expenses.
Step 9: Get your Marketing Plan in Place
Marketing can help build up an initial customer base and keep new customers coming into the shop once established. Common marketing activities include social media marketing, online advertising, sponsor relevant community events like family fishing days, and fishing contests.
Bait shops can network with the owners of fishing tour boats and tourist services to establish referrals and even bait supply arrangements. Establishing a customer loyalty program can also help to encourage customer loyalty. Marketing costs will vary depending on the type and volume of the activity that’s performed.
Step 10: Get Insurance
A bait shop store needs several types of insurance for full coverage:
- General liability insurance helps to cover expenses like medical bills and legal fees if a customer is ever hurt while on the store’s property.
- Commercial property insurance helps to protect a business against financial losses if the store, its inventory, or its equipment are ever damaged in an event like a fire.
- Worker’s compensation insurance covers expenses like medical bills and legal fees that can result if an employee is ever hurt while working.
Many factors will affect insurance policy cost, including the store’s location, the value of the building and its inventory, and the number of people on staff. To get the most accurate idea of what to budget for insurance, request quotes from multiple providers. Then, compare the quotes and pay attention to how factors like premiums, exclusions, coverage limits, and deductibles differ.
Step 11: Hiring Employees
A shop owner may staff the shop entirely on their own when it’s just starting up, but eventually, it will be time to hire some employees. According to ZipRecruiter, bait shop employees earn an average of $28,945 per year, though salaries can range from $16,000 to $60,000.
In addition to budgeting for employee salaries, a shop will also need to include expenses like worker’s comp, unemployment insurance, paid time off, and vacation time in its budget.
Related: Hiring your first employee
Step 12: Set up an Accounting System
Setting up an accounting system for your bait shop is critical to your business’s long-term success.
Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
How much can you potentially make owning a bait shop?
Bait shops can be profitable, but many factors will affect that profit. A shop’s size, specialty, location, and profit margins will all play a role in how much the shop earns each year. A shop located in an area where year-round fishing is largely unaffected by the climate can be more profitable than a shop located in an area with a harsh winter that limits fishing.
To maximize a shop’s margins, consider not only offering just bait but also some quality tackle and fishing supply products that are in-demand in the area. Catering to tourists and avid fishermen can help maximize the customer base, and offering some products for sale online can also help drive sales.
Things to consider before starting a bait shop
Running a bait shop often requires long hours, including working from before dawn until dusk on weekends. Selling bait will account for only a portion of your income, so plan to expand your store to offer other important items, like those last-minute items a customer would pick up on their way out to go fishing. Do some local market research and see if you can identify a need that other bait stores aren’t meeting.
You’ll also need to learn about how to keep live bait alive. This can be tricky and requires the correct setup for each type of bait that you’ll carry. If you haven’t cared for live bait before, try to find the owner of a non-local store who would be willing to teach you.