Taking the bait

Legless beauties: Chapman hoists about $300 worth of night crawlers at his 11,000-square-foot-farm.

RACINE, WIS. (Fortune Small Business) -- I decided that I wanted to run my own business when I graduated from high school, more than 30 years ago. I was looking for an industry with lots of market potential, and when I saw that worm farmers in my area were shipping product to bait shops and garden centers across the nation, I started looking at worm farming.

Most farmers use a basic bed system for breeding - they toss a bunch of worms and soil inside a bin along with a few nutrients. I started cultivating three- to four-inch worms the same way.

But then I realized that I could set myself apart and respond better to customer demand if I had more control over the breeding process to produce a larger worm. So I devised a system that carefully measures and manipulates feed stock, soil quality, and the number of worms per container.

I started breeding cultured night crawlers in the early 1980s. They grow from five to seven inches and are a better livestock in terms of profit. (We also grow a variety of smaller worms for different types of fishing.) It takes 26 weeks to grow a night crawler from an embryo. During that period machines sort the castings, eggs, and worms every two weeks. We can use the eggs in the next cycle.

Production goals vary, but if I'm making a million worms every month, I'm maxing out my stock. I sell mostly to bait shops, and they tend to order between 1,000 and 10,000 worms at a time. We sell a box of 1,000 crawlers for $60. So generally speaking, if I'm moving a million worms a month, I'm pulling in about $60,000.

We don't sell much to wholesalers because there are better profit margins in selling directly to dealers. Most wholesalers prefer buying from Canadian night-crawler collectors, but when there's a drought, their prices shoot up. Ours don't.

Our overhead is minimal. Our major costs are labor and worm bedding. We don't have to do a lot of advertising. Bait shops know my company - the worms sell themselves.

Tom Chapman is the president of UNCO Industriesin Racine, Wis.