Buying vs Starting an Aquaculture Business

AQUACULTURE icon Giles Cadman November 8, 2022

There are two primary ways to invest in aquaculture: you can buy an aquaculture business or you can start an aquaculture business.

Allow me to start by saying that neither option is perfect. I cannot unequivocally say that one path is better than the other. I can only present my experience having done both.

So, here are the pros and cons of starting an aquaculture business vs buying an aquaculture business.

Pros of Starting an Aquaculture Business

When you start a business, you have complete control over its structure. That means you can start a business with a species that has never been commercially grown before.

You can also install and use the best and newest technology. There has been a rapid improvement is pumps, filtration and RAS systems in the past five years. If you bought a business, the existing technology would likely be older than five years, and you would therefore need to upgrade the systems.

Another major benefit is that aquaculture is so much more widely accepted now than it was even 10 years ago.

If you set up a salmon farm 20 years ago, you would face criticism from people who believed it was animal cruelty and damaging to the wild species. Now, there is so much more awareness around the benefits of aquaculture, so you will have access to funding, grants, capital, and investors that just didn't exist 10 years ago.

Cons of Starting an Aquaculture Business

But starting an aquaculture business is exceptionally challenging. It will be a minimum of three years before your first sale. In those three years, you will encounter countless problems you didn't know existed when you started out.

On top of that, you won't have an existing operating team, so you have to make one. Because aquaculture is still a new industry, it is difficult to find experienced people to hire. Staffing is hands down the hardest problem to overcome when starting an aquaculture business.

Once you have the right people, you also need lots of time and money. Everything will cost you twice as much as you think it will and take three times as long.

The costliest and most time-consuming process is the initial set-up. The licenses, permits and planning permissions take an exceptionally long time to finalise.

So, if you want to start a new aquaculture business, you need a few years to dedicate yourself fully to the enterprise, and enough money to support yourself through that time with no income.

Pros of Buying an Aquaculture Business

When you buy an aquaculture business, everything is in place for you to bring in money almost immediately. You are essential buying someone else's time because you cannot buy your own.

You will have an existing operations team, the basic infrastructure, and a market for your product. You may also have some product and a supplier.

The permits, licensing, and planning will all also be in place, meaning that you can invest in improving the operation rather than starting the operation.

Cons of Buying an Aquaculture Business

But the pros of buying an aquaculture business can also be cons. The technology will be installed and ready to use, but it will probably be outdated. Outdated water pumps will not be low energy and therefore will need be sustainable. Converting to a sustainable energy model is more expensive than installing a new one from scratch.

The system is in place but there might be disease or other problems in it that need immediately fixing. An easy way to avoid this problem is to do a thorough survey of the site before putting in an offer.

Even if you undertake a survey, there are some eventualities you cannot plan for. The team may not want to stay because they disprove of the change in management. The site may have a poor reputation from the local community or potential customers because of poor practices.

These are all problems you will need to overcome before you can start making a profit.

Should You Start or Buy an Aquaculture Business?

My business hat, the one that focusses on profitability, would always buy an aquaculture business over starting a new one. You already know the business model can work, so success is much more predictable. There will also be less hidden costs meaning you can plan better for the future.

But my entrepreneurial hat, the one that thrives on pioneering, would always start a new business. The greatest amount of profit is in the sectors of aquaculture that have yet to be discovered. But there is always a risk that it will not work.

For investors who want a more certain outcome, buying an aquaculture business provides a lower risk. For investors who have an appetite for risk, a lot of time, and money, I highly recommend starting your own aquaculture business. It's incredibly rewarding.