How to Start a Bait Shop
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 fishing bait, or a variety of both. Most will also sell fishing licenses and hard goods like fishing rods, reels, line, hooks, lures, 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.
Running a bait and tackle business 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.
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 2021 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.
Checklist for Starting a Bait Shop
If you’re thinking about starting a bait shop, it’s important to do your research first. Here is a checklist to help you get started.
Step 1: Write a 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.
Related: How to write a business plan
Step 2: Form a Business Entity
A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a bait shop, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 3: 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 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, there are going to be some general business registrations to research. These may include business license, sales tax permit, Employer Identification Number, and Occupancy Permit.
Step 6: 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 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: 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.
Step 9: Get Business Insurance
There are several types of insurance to consider when starting a bait shop. A few of these include:
– 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.
The cost to insure a bait shop will vary depending on factors 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 10: Hire 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 11: 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.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost 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.
Some 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
How much can a bait shop owner make?
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.
What skills are needed to run a bait shop?
Starting a bait store doesn’t require a business degree, but certain skills and advantages can help the shop succeed.
Fishing experience. Fishing experience and knowledge are 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.
Are there grants to start a bait shop?
It’s extremely rare to find a grant to start a bait shop. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a bait shop?
The NAICS code for a bait shop is 451110, which is categorized under Sporting Goods Stores.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?