How to Start a Shrimp Farming Business

It’s a common misconception that all shrimp come from oceans or seas, but not so! Indoor and outdoor shrimp farms exist all over the United States. In warm water states, shrimp can be farmed in ponds, while in colder states they’re grown in indoor tanks.

Shrimp is the most popular seafood in the world, so the harvest from a shrimp farm is easy to sell. If you’re interested in entering the aquaculture industry that’s worth more than $2 billion in the U.S., you could start your own shrimp farm and make a good living.

But first, you’ll need to understand how the business works. Fortunately, this step-by-step guide is stocked with all the business insights you need to start a successful shrimp farming business. 

Step 1: Decide if the Business Is Right for You

Pros and cons

Shrimp farming industry trends

Industry size and growth

• Industry size and past growth – The U.S. fish and seafood aquaculture industry is worth $2.3 billion in 2023 after growing 1.5% annually for the last five years.((https://www.ibisworld.com/united-states/market-research-reports/fish-seafood-aquaculture-industry/))
• Growth forecast – The U.S. fish and seafood aquaculture industry is projected to grow .2% in 2023.
• Number of businesses – In 2023, 3,881 fish and seafood aquaculture businesses are operating in the U.S. 
• Number of people employed – In 2023, the U.S. fish and seafood aquaculture industry employs 10,229 people.

Trends and challenges

Trends

• Advances in indoor shrimp farming methods have increased the number of shrimp farms.
• The demand for shrimp is growing, which is good news for shrimp farms.

Challenges

• Viral, bacterial, and fungal diseases often threaten shrimp farm production.
• Shortages of aquafeed for shrimp pose a challenge for shrimp farms.

How much does it cost to start a shrimp farming business?

Assuming you have the land, startup costs for a shrimp farming business range from $35,000 to $75,000. Costs include pond construction, equipment, feed, and shrimp stock.

If you’re going to construct an indoor farming facility and tanks, costs will be significantly higher.

You’ll need a handful of items to successfully launch your shrimp farming business, including: 

• Electric aerators
• Water pump
• Feed storage facility
• Water quality kit and oxygen meter
• Harvesting equipment
• Truck to transport shrimp

How much can you earn from a shrimp farming business?

An acre pond can produce up to 1,500 pounds of shrimp per year, and you should be able to charge about $5 per pound wholesale. Your profit margin should be about 40%. 

In your first year or two, you might farm ten two-acre ponds, bringing in $150,000 in revenue. This would mean $60,000 in profit, assuming that 40% margin. 

As you gain traction, you might build ten more ponds, doubling your production numbers. At this stage, you’d need more staff, reducing your margin to around 30%. With annual revenue of $300,000, you’d make a tidy profit of $90,000.

What barriers to entry are there?

There are a few barriers to entry for a shrimp farming business. Your biggest challenges will be:

• Funding the startup costs
• Learning shrimp farming techniques

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Step 2: Hone Your Idea

Now that you know what’s involved in starting a shrimp farming business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.

Analyze your competitors 

Research shrimp farms in your area to examine their products, price points, and customer reviews.

• Make a list of shrimp farms that offer similar products. 
• Review your competitors’ products – their features, pricing, and quality – and marketing strategies
• Check out their online reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers like and dislike.
• Identify your competitors’ strengths and weaknesses. 

This should identify areas where you can strengthen your business and gain a competitive edge to make better business decisions.

Why? Identify an opportunity

You’re looking for a market gap to fill. For instance, maybe the local market is missing a jumbo prawn farm, or a bamboo shrimp farm.

You might consider targeting a niche, such as freshwater shrimp.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

You’ll need to do some research and determine what type or types of shrimp you’ll farm, as well as how you want to sell it – wholesale to grocery stores and restaurants or retail to the public from a store of your own. 

How much should you charge for shrimp?

Wholesale market prices for shrimp change periodically, so you’ll need to keep an eye on the market when setting your prices. You’ll also, however, need to consider your ongoing costs of doing business.

Once you know your costs, use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market is likely to be grocery store and restaurant managers. You can connect with them on LinkedIn or call on them directly. 

Where? Choose the right site for shrimp pond

When choosing a shrimp farm location, several factors should be considered.

1. Soil Quality: Ensure clay or silty-clay soil to retain water effectively. Avoid sandy or rocky soils as they can cause leaks.
2. Water Supply: Proximity to a clean, saline or brackish water source. Test water for contaminants or pathogens.
3. Topography: Flat or gently sloping terrain to facilitate pond construction and drainage.
4. Tidal Influence: If near the coast, consider tidal influence for natural water exchange.
5. Flood Risk: Avoid flood-prone areas. Ensure adequate protection if risks exist.
6. Accessibility: Good access to roads for supply transportation and product distribution.
7. Buffer Zones: Adequate distance from urban areas, industrial sites, or agricultural runoff to avoid contamination.
8. Legal Considerations: Check land rights, local regulations, and permits related to aquaculture.
9. Environmental Impact: Ensure minimal damage to local ecosystems; avoid areas with mangroves or other critical habitats.
10. History of the Land: Avoid areas previously used for activities that might have left pollutants or contaminants in the soil or water.

Always consult local experts or professionals when selecting a site.

Step 3: Brainstorm a Fish Farming Company Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “shrimp” or “prawns”, boosts SEO
• Name should allow for expansion, for ex: “BlueHorizon Aquaculture” and “ExpandSea Farms” over “PurePrawn Paradise” and “AquaShrimp Haven”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation. 

Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward. 

Step 4: Create a Shrimp Farming Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
• Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
• Product and Services: Describe your offerings in detail.
• Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
• Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
• Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
• Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
• Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
• Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
• Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to shrimp farms. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your shrimp farming business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts. Here’s how to form an LLC.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation. Read how to start a corporation here.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

Form Your LLC

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a shrimp farming business. You should also check with the USDA to see if farming grants are available. 

Step 8: Apply for Agricultural Licenses and Permits

Starting a shrimp farming business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

Most states require that you get an aquaculture permit from the state’s Department of Agriculture. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your shrimp farming business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as AgCode, farmbrite, or FarmLogic, to manage your shrimp stock, feeding records, harvests, and sales.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Create a website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. 

Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now” or “Order”. This can sharply increase purchases. 

Online Marketing

Some of your business will come from the casual online visitors, but you should still invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness. 

Here are some powerful digital marketing strategies for small businesses: 

• Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:
  • Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
  • Instagram: Same benefits as Facebook but with different target audiences. It’s a very good platform for creative businesses. 
  • TikTok: This social media platform has over 1 billion monthly active users and it is used primarily by a younger demographic.
  • LinkedIn: the most effective place for B2B marketers.
• Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.
• Email marketing/newsletter – Send regular emails to customers and prospects. Make them personal. 
• Start a blog – Start a blog and post regularly. Change up your content and share on multiple sites.
• Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
• Pay–per-click marketing – Use Google AdWords to perform better in searches. Research your keywords first.

Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. 

Traditional Marketing

Traditional marketing is any form of marketing that uses offline media to reach an audience. Some options that might work for a shrimp farming business include:

• In-Person Sales – Offer your shrimp at local markets and restaurants
• Cold calling – Close more sales with less stress.
• Seek out referrals – Offer incentives to generate customer referrals to new clients. 

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your shrimp farm meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your shrimp farming business could be:

• Experience the epitome of flavor with our meticulously bred, premium quality shrimp.
• Indulge in guilt-free seafood bliss with our environmentally conscious and responsibly sourced shrimp.
• Discover a taste sensation with our farm-to-fork shrimp, raised using innovative aquaculture practices.

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a shrimp farming business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in shrimp farming for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in shrimp farms. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Build Your Team

As your business grows, you will likely need workers to fill various roles. Potential positions for a shrimp farming business include:

• Laborers – help maintain ponds, feed and harvest shrimp
• Salesperson – call on grocery store and restaurant managers to make sales
• General Manager – inventory management, accounting

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Shrimp Farm – Start Making Money!

Starting a shrimp farming business takes some knowledge and an investment, but you’ll be providing tasty and healthy food to your community and making a nice profit. If you’re successful, you can expand your facilities over time and perhaps add new varieties of shrimp or fish to your offerings.

Now that you understand the business, you’re ready to start building your ponds and getting your lucrative shrimp farming business going!