Hello everyone! This is my first (of many) post here at startup nation.
I was hoping to get some advice, constructive criticism, insight... (a good joke maybe?) on my business plan. Not only as it is presented here, but also of the idea in general and whether or not anyone thinks this would be a viable business to get funding for at all. I know the business is viable and expanding, but funding takes way more than that into consderation.
Here it is, thanks in advance!
- Mission Statement
Our plan is simple and straightforward; in fact, what we are doing has been done since before recorded human history all over the world and with great success.
We will purchase a fishing vessel, equip it appropriately, crew it with experienced people, and use it to harvest Yellowfin Tunafish - one of the most valuable non-restricted fish in the worlds oceans.
- Company Overview
We are a single small company in a large specialized market. We deal only in the harvesting and bulk sale of fresh high-grade Yellowfin tuna. Specifically for sushi, sashimi, and other raw dishes, and primarily for export to Japan.
- Current Situation Overview
Our intention is to purchase a fishing vessel and outfit it for harvesting yellowfin tuna, as we have done in the past. We made excellent money for years, but due to circumstances moved on to other lines of work; both of which were hobbled by the recession. We feel it would be a good time to get back on the water, since fresh yellowfin is traded on the global market, and is a globally regulated food source, we feel its as recession-proof as any line of work can be.
Our combined available assets cannot remotely cover the amount of funding we need to start a fishing company; we have no equity to secure an investment other than the equity presented by the fishing vessel we will buy with the invested money.
We do not have bad credit, large or outstanding debts, or any other issues which would deter a logical investor. We didn't lose all our money, we never had any to start with.
Currently the business owners are prepared to immediately drop any other activities, and devote all of their time to forming, managing, and operating this business.
Our plans are made and ready to be put into motion immediately upon receipt of funding. Company can be up and running in less than 2 months, and showing profit in 3 months.
Yellowfin tuna are our main product, and make up the vast majority of our income.
By-Catch fish are also caught in small numbers, but usually sell for less, making up less than 10% of the gross profit for an average trip.
Fresh fish sell for considerably more money. By having a fast rotation fish are usually brought aboard live, and thus, as fresh as possible.
We keep the fish fresh (not frozen) using an ice packing method that requires constant attention, but which yields the best product.
Yellowfin will be sold at a premium price directly to wholesale brokers who will primarily fly the fish to Japan via cargo jet. The brokers do not negotiate price, or quantity; they buy every fish off of the boat, every time, since they make money through moving high volume rather than on a per-deal basis. Customers and sales are guaranteed.
- Market Analysis
A-1 Grade Yellowfin Tuna sell for around 4-7 dollars a pound.
By-Catch fish sell for a varied amount, usually less than 2 dollars a pound.
Demand for Yellowfin has risen since the 1970's and is now at 96% of the sustainable rate of harvest capacity - meaning there are 4% more tuna available this year than last year. This is because the Yellowfin tuna breed faster and fill gaps left in the ecosystem by overfishing other species of fish, ie. they have less competition.
Yellowfin prices are expected to rise in the future for various reasons.
One is the declining population of bluefin tuna, a heavily depleted stock and the recent Deepwater Horizon spill may put bluefin on the endangered species list. Yellowfin will not face that problem due to their highly migratory nature, short lifespan and rapid, proliferant breeding cycle; and will be the next choice after bluefin for those customers.
A kind of deep sea net fishing called purse seining is the only competition for longline fishing, however there are so many ecological drawbacks to netting, such as indiscriminately catching and killing porpoise, sea turtles, juvenile tuna, and all the other by-catch, including many unwanted fish; these are all killed by purse seining. Longline fishing only kills the target species, and then only the larger specimens of them; juvenile tuna, aquatic mammals, turtles, and most unwanted by-catch, do not ever get hooked in the first place due to circle hooks, and have a reasonable chance of survival even if they do since they are dealt with on a fish by fish basis. In my opinion, the opinion of a commercial tuna fisherman, purse seining is immoral and irresponsible. It would not be surprising to see purse seining banned by most nations in the coming years, which would further improve the profit margin for longline fishing by increasing both the number of large tuna in the water, and the price of tuna in general.
There are thousands of longline boats operating in the worlds oceans, but we consider them industry peers rather than competition, since the resource we are harvesting is essentially infinite. Basically, as longliners, we are all in the same boat - even though we are all in different boats...
- Team Structure
George Wettlaufer - Captain
Michael English - Dockside Administration
Leonard Satterfeild - First Mate, Butcher, Ice Tech.
Jason Davis - Navigator, Cook, Crew Relief
All these men have real experience, and can do each others jobs, as well as their own.
- Team Dynamics
We know that our experience and hard work are crucial to success in this industry; and we will oversee all aspects of the operation, on land and at sea.
We have worked together extensively, in various capacities, including longlining, hurricane relief, tree removal, commercial sub-contracting, and general construction, and have never experienced any conflicts of personality or any other issues that could be disruptive to smooth business operation. We have known each other for decades.
The facilities required are commonplace fixtures at any commercial dock; such things as ice, bait, rigging, food, and fuel, are always available. The preference would be places where the economy is low, to save on costs while at dock.
- Operational Dynamics
The whole operation can be summed up in one paragraph. Acquire a boat, load it with supplies, and sail it into the ocean. When favorable conditions are present the crew sets out 10-40 miles of line with 1-3 thousand baited hooks descending from it. Then the line is reeled in, fish are brought into the boat, butchered, and packed in ice. When the boat is full it sails back to port. A wholesale broker meets the boat at port with a truck full of ice. The crew unloads the fish one at a time, they are weighed, graded for freshness and quality, and put on the truck. When the fish are all loaded into the truck, the broker cuts a check for the fish at the current market value. The money is divided accordingly. End of trip. Rinse and repeat.
Yellowfin are one of the most valuable and "sustainable" fish in the planets oceans. Their price per pound is second only to bluefin tuna and shark fins on the world market (both of which are restricted globally). They mature to 300+ lbs, yet they have only a 7 year life span. They eat constantly, and will eat about anything. Tuna never stop swimming, so they are mostly muscle by weight, and grow very fast. They lay a massive amount of eggs as well; 1-4 million eggs up to 40 times a year after they are 3 years old. The estimated sustainable load on the global yellowfin population is at 96%, so the yellowfin market should remain profitable well into the future with continued global management.
Because longlining utilizes specially made individual hooks, called circle hooks, it is porpoise safe, it is safe for other aquatic mammals, safe for the sea floor environment and coral reefs. Any accidental catches are easily and safely released using a hook removal tool and other specialized equipment. Also, the hooks used are made of metal that corrodes quickly and safely in salt water, giving a good chance for survival to escaped or cut loose fish. There is no more compassionate or ecologically sound means of harvesting tuna than the use of topwater longline rigging, and that is all we do.
Insurance does not exist in any useful capacity for a tuna boat, its just not cost effective to insure a 70 foot steel-hull boat against sinking, since they hardly can do so. All crew members are considered sub-contractors, and as such are required to deal wit h their own insurance needs, retirement plans, and taxes. If the boat breaks the owners fix it out of pocket.
The boat owners do not take the losses of a small catch the way the crew does, since the fuel and supplies are taken from the crew shares; so even a technical loss still profits the owners.
The only things that could damage the tuna industry at this point would be a tuna disease of epic proportions, or a sudden change in human population. Otherwise, tuna will breed like crazy and continue to be a super-healthy food source and an ecologically safe, profitable business.
- Financial Overview
All of the following figures are based off of industry averages when available, our own experience, lots of research to update ourselves, and the experience of other tuna fishermen whom we personally know. Figures are based on a standard sized boat, like what is in our price range and is the preference for economical commercial longline fishing. Smaller boats are dangerous, cramped, and unstable. Larger boats are fuel hogs, hard to find docking for, expensive to maintain, and less useful in the role of longliner. Figures are also based on not working the boat to full capacity, since a flat out hard run is not sustainable for many months at a time, and delays inevitably happen.
These are all cautious estimates.
(Numbers in brackets indicate the amount of variance for each figure)
100[80-200] fish in a trip. Average fish size 100[50-350] lbs.
14[5-20] Days per trip, 2[1-4] trips per month, 20[20-30] trips annually.
1 Set per day. 1200[800-3000] hooks per 20[15-40] mile set.
Average 10[0-100] fish in 1 set. Not including by-catch.
Average price of Yellowfin 4.50[3.25-7.50] per lb. By-catch 2.00[.50-8.00] lb.
Gas expenses around 3.00 gal. About 4000 per long trip.
Average trip = 50,000 gross profit
Per trip profit and expense breakdown:
Crew share costs - paid from crew shares at end of each trip:
Food and crew upkeep = 1500
Tackle = 200
Ice = 500
Bait = 800
Fuel = 4,000
Administration expenses: 1500
Total of standard crew expenses:
8500 Mitigated by leftovers from previous trip; probably average <6000
Boat owner expenses:
(Responsible for all ship and gear maintenance, licensing.)
Gear 1000 per trip. (Disposables, buoys, light bulbs, chemicals, 1st aid, etc)
Maintenance 1000 per trip. (fluid changes, calibration, wheel diving, etc.)
Total owner expenses: 2000 per trip
Gross Income Division:
Net Income per trip, after expenses:
1st Mate 4,000
Ice Man 3,000
Deck Hand 2,500
Deck Hand 2,500
Annual Gross return: 1,000,000
Annual Net return: 790,000
310,000 - Investors/Owners
120,000 - Administration
120,000 - Captain
240,000 - Crew x4
- Investment Strategy
Any arrangements suggested by potential investors will be seriously considered.
It is fully understood that any investor would expect significantly more in profits than their original investments value, regardless of who ends up owning the company; and that they would require those investments to be resolved quickly.
In the case of a loan the return would be fast, 6-18 months.
Our partnership does not desire a true a liquidity event; in other words, we would want to quickly buy out any temporary partners, to maintain private control of the company. In a partnership deal, we would be willing to buy the investing partys percentage, under whatever arrangement we could all mutually benefit from and agree upon beforehand.
We would also be willing to accept a permanent partner, if they were willing to participate in some meaningful way. Any experience with accounting, sales, personnel, inventory management, or any aspect of the commercial fishing industry, would be useful; but not necessary.
Thanks for your time and consideration. If you are interested in investing, or would like more details, please contact us by email or phone at:
Michael English - 850-619-3667
George Wettlaufer - 850-
Information pertaining to tuna fishing: