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Business Plans: So You're Interested in Pet Salons, Shops & Spas
 


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Business Bulders LED Pet Spa SignLet's start by saying that there is little difference in the term "shop" versus "salon." Most consumers sense the use of the term "salon" as being more upscale, and not necessarily a larger business than a shop. "Shop" is simply casual. So for the purpose of discussion here unless otherwise noted, we mean the same thing whether we use the term "shop" or "salon." If your interest is a pet spa this is your section too. The term "pet spa" has been around for some time but its use is on the increase in upscale areas. These businesses promote specialty services from hydrotherapy to "blueberry facials."

Salons and shops as we use the term are in "commercial locations." They do not qualify as a home-based business, and of course they are not a mobile operation although some may own a mobile and provide that extra service.

Salons and shops typically have 1 or more employees. Now that is perhaps the most common delineation between home and mobile groomers and owners of salons and shops. There are some home and mobile operations with employees, but the percentage of employers is dramatically higher among salon and shop owners. If you don't want employees, you won't have a typical salon or shop, but there are some exceptions of very small one person shops usually in 200 to 300 square foot "nooks."

Most commercial salons and shops are in a leased space. Some pet groomers acquire the funds enabling them to buy their business building which can be a terrific financial move when done correctly and eliminate the rent expense. Some commercial salons and shops are leased from a large kennel or pet store operation equipped with grooming departments.

The cash demand required to open a grooming business is typically the greatest for commercial salons and shops. If you are interested in opening a salon or shop be sure to read our Startup Cost Information Main Menu and the Salon Design Information Main Menu. Keep in mind that even the largest pet grooming salon was once a small one. Most groomers have to borrow money through a business plan and bank loan to open a salon or shop, and today the absolute shoestring startup cost is $50,000, and more often and more comfortable would be $75,000 to $100,000. The greatest cost factor is "leasehold improvements." The new location is certain to need some plumbing, electrical, flooring enhancement, carpentry and signage work to prepare for a grooming operation. These "leasehold improvements" typically require half of the money borrowed. PetGroomer.com staff have written over 100 business plans in the last few years, so we speak from substantial experience.


Photo Courtesy of MDC Romani/Clipper Vac
Work Styling Stations © All rights reserved

It is always a bit of joy when the new business owner has family and friends that are legally able to do some of the leasehold improvements at a reduced cost. Sometimes the landlords will absorb a portion of the improvements, or reduce the rent to acknowledge the investment in their property. Here's our number one rule, NEVER sign a rent or lease contract no matter how much pressure you are under unless you have clearly, absolutely have a guarantee of cash investment required as stated by your business plan, especially if it is coming from a bank or investor. If you sign a lease or rent contract and don't get your financing, you are stuck paying the rent your contracted for and that is only one caution. As consultants specializing in the process of opening new, or expanding, pet care businesses, we suggest you consider our assistance described at Grooming Business in a Box®. Even a short consultation can save you thousands, and we have a long history of doing just that as most pet groomers are first time business owners, and we learn by experience, don't we?

Everyone wants to know, what can we earn as a salon or shop owner. Well, how much do you want to earn? Except for the tiniest shop of just 200 to 300 square feet, the saying "The sky is the limit" may apply. Often mobile groomers and home groomers face a daily limit of the number of pets they serve. You can build a salon or shop to do 20, 30, 50, 75 or even 100 grooming appointments a day. We have clients in all those ranges. We started out as a small shop we grew to a 7 day a week operation grooming around 100 pets a day. The only other significant restriction is the "market area." Are there enough people and pets in your area to provide you with the number of pets you want to groom? Please refer to the Market for Grooming Information Main Menu to help make that decision.


One Person or Staffed Salon & Shop Grooming Business Plan Software & Samples

Please realize that there is no "right or wrong" or rules that say you have to grow a large grooming salon or shop. It's your choice, and it should be tied to your financial expectations and financial projections. If you want to earn a personal income (your income or "your paycheck" from the business after operating expenses) of $50,000 or more a year (prior taxes) you are going to have to grow a moderate to large salon. We do have consultation clients that enjoy $100,000 to $250,000 annual personal incomes (prior taxes) from very large salons earning business income of $500,000 to $900,000 a year (what they ring up on the cash register). These figures are grooming services only and could be higher if you factor in additional sources of revenue such as retail goods.

Let us state here an important point. In 2003, 2004 and 2005 nearly every business plan we wrote for new grooming salons and shops included a specialty retail department (retail not generally found in corporate pet stores or event Mom and Pop pet stores) and sometimes a bakery, and about 20% of the time they also offered self-service pet wash tubs in addition to full-service grooming. Having multiple sources of revenue is very important to ensure that your business income is adequate to pay for leased space, bank loans and interest and other operating expenses. What this means is that YOU MUST LEARN HOW TO PROJECT INCOME AND OPERATING EXPENSES BEFORE YOU OPEN A GROOMING BUSINESS, OR BUY AN EXISTING ONE. Our book From Problems to Profits offers some help in creating an Income Projection, however the most professional financial software for groomers is included in Grooming Business in a Box®.

If you are looking to your business to provide for your retirement, you need to build the largest business possible with a clientele that comes in often, and site it in a commercial location with a good, long lease. Make sure you have a very professional sign, and that your operation is conducive to selling, meaning that the buyer knows they can come in and take over and run the business in the same way as you. The more "systematized" you are, with a well-documented business history, the more likely you can encourage a higher appraised value, and more buyer confidence.

It's never to early to extend your grooming excellence with pet grooming business management excellence. There are two important "business books" for salon owners. Read both of the two best grooming management books, From Problems to Profits and The Art and Business of Pet Grooming. They should be in every pet groomer's library. Both can be ordered securely on-line with or without a credit card at our Bookstore.

If you meet your objectives, and your objectives are very clear and appropriate, you enjoy success regardless of operating your business in a salon, shop, home or mobile van. Have you written down your personal and business objectives yet? Do you have a business plan? If not, there are resources to assist you in this site. Please use them. I am reminded of the saying, "If we fail to plan, we plan to fail." You must discover and record your clear objectives in order to properly choose between a home, van or commercial business, and not endure the limitations of lifestyle preferences or money limitations where they exist.


Do your homework for your business!
It's also important that you create a business plan for a new business. You can be sure one will be required if you seek a business loan or investor. It's no small task but perhaps the most important task to protect your investment in your business.


Chart generated by Pet Grooming Business Plan Helper & Sampler, a Grooming Business in a Box® product.
Copyright 2007 Find A Groomer Inc. All rights reserved

You need to project your business sales income for 3 to 5 years in advance from the day you open for business (see graph above). Then you need to project the operating expenses and deduct them from your projected sales income thereby giving you an estimate of what personal income you can expect to earn from your business (see graph below). Going into business in the dark without knowing what you can expect to earn in sales and personal income is an unacceptable risks to banks or investors, and for good reason.

Continued below with more large graphics.

Chart generated by Pet Grooming Business Plan Helper & Sampler, a Grooming Business in a Box® product.
Copyright 2007 Find A Groomer Inc. All rights reserved

How much do you need to invest? That's another question that must be answered with financial planning. Some salons and shops are simple to build out while others plan to be large and add a retail pet products department and perhaps other revenue services.

The graph below shows the start-up funding required for a commercial building requiring little renovation. The groomer starts small but plans to grow to employ several groomers. It also has a modest retail department. The owner projects requirements as $46,000 in "start-up assets" and $4,000 for start-up expenses. Every business owner learns basic financial terms and you definitely need to know the difference between an "asset" and "expense." In accounting and tax reporting your assets and expenses are handled quite differently. Suffice to say that assets for a salon is major equipment like high-end grooming tables, tubs and dryers. In this example there is also inventory and furniture. If you use the services of plumbers, electricians and other contractors they might be considered leasehold asset improvements. You must get asset vs. expense determinations from a reliable certified public accountant to avoid problems with tax agencies. Certainly the start-up expenses are easier to understand. They have a short lifetime and include grooming supplies, small tools and equipment, advertising, stationery, licenses, fees to name just a few.

Refer to the chart below once more. We know that the groomer needed $50,000 to cover the purchases of assets and expenses, and some of that asset amount may be cash reserved because you run a new a business at a loss for several months until the clientele and demand increases. The chart tells us that the groomer plans to seek a loan (light yellow) of $32,000 and her investment of her own money (light blue) will be $18,000.

Remember if you need a loan or investor they are going to want to know exactly how much of an investment you need and how much you are personally putting up of your own money. Don't proceed without knowing the numbers, and have them well-documented. You are certain to be asked for that documentation. If you don't have it you will be perceived as being naive about the conduct required to start-up a business. It's okay to be naive now, but start learning more today.


Chart generated by Pet Grooming Business Plan Helper & Sampler, a Grooming Business in a Box® product.
Copyright 2007 Find A Groomer Inc. All rights reserved

There's another very common question someone is likely to ask you. Again, don't venture into business seeking loans or investors without knowing your projected "breakeven point." Below you will find the breakeven table for the groomer opening a salon business above.

Break-even Analysis (Pet Care Services Only)  
 
Monthly Units of Services to Break-even 130
Monthly Gross Sales of Services to Break-even $4,222
 
Assumptions  
Estimated Monthly Fixed Cost $4,222
Estimated Per Unit Variable Cost $0.00
Year 1 Sales of Services $45,380
Year 1 Units of Services 1,394
Average Per Unit of Services Revenue $32.55

Table (above) generated by Pet Grooming Business Plan Helper & Sampler, a Grooming Business in a Box® product.
Copyright 2007 Find A Groomer Inc. All rights reserved

Do you understand the table information? It's not too hard to figure it out once you know your projected average service fee for grooming services you expect in your business, and what your fixed costs are. Fixed costs can include interest payments on your loans to start-up the business, supplies, rent and utilities, etc. In the example above the new business owner knows her business requires $4,222 a month to meet its fixed costs of operation. Because she knew her average grooming fee would be $32.55 it was easy to divide that number into the fixed costs of $4,222. The result is 130; the groomer must sell 130 grooming services a month to meet the required bills, and that doesn't include any personal income for her (unless she included a small base salary in the $4,222 amount). You will impress others if you can share your break-even point, and think about this question. Isn't it easy to count the number of pets you groom or serve as you work through a month? Sure. Knowing that you must achieve 130 units to meet break-even is an easy way to track your progress at any time during the month. You will be better prepared should you not meet your goal, or to celebrate when you exceed your goal and start boosting your profit.

There's no simpler way to write a professional grooming salon or shop business plan suitable to present to banks than with Pet Grooming Business Plan Helper & Sampler. In fact, one of the sample plans is a complete one-person to staffed grooming business achieved by one of our clients. No one else has ever released similar information and tools customized to the needs of pet groomers. Take a look at Grooming Business in a Box®.

Talk with Other Grooming Business Owners

We suggest you come to the GroomerTALK Message Board and search the term "salon grooming" and read previous discussions of salon and shop grooming related topics. You are also most welcome to register on the Message Board and start some discussions, ask for help and make friends with salon groomers and others. Better yet, how about sharing your experiences with grooming in order to help others. That's what PetGroomer.com is about, opening up lines of communication between groomers that is still so sorely missing from our industry.

Salons & Shops as Part of a Retirement Plan

Unlike most people in the grooming industry we have substantial experience in selling medium to large grooming businesses whose selling price can make a substantial difference in the retirement of their owners. Salon and shop owners need to realize that unless they pay into self-employed "pension plans" or similar investments they will look to the sale of their grooming business to contribute to a more comfortable retirement (or career change). It's take years of planning before they sell to make the best returns.

If you plan to retire someday, you will want to do so comfortably. Pet grooming business owners can create a business that provides them with such a retirement. The stereotypical image of the average pet grooming business owner is unfortunately not adorned with the vision of selling a business that provides them with such a retirement. Today, more pet grooming business owners are at least participating in some of the few retirement programs offered by leading trade associations, or those of their individual choice.

The size of your client base is directly proportional to the value of your business. So, the more your business is worth, the more you will receive for your retirement. Use management information to build the net worth of your business. The leading source of information to grow the net worth of a pet grooming business today is From Problems to Profits. However, don't overlook other business management publications and higher education sources, and professional working relationships with a bookkeeper, business attorney, accountant and financial planner. Every home, mobile or commercial salon needs management and professional advisors. Be sure to check out the resources at your local SBA or SBDC.

What you plan NOW affects you many years from now. Just saying to yourself you will think about it later is not wise. Strategize your career in pet grooming with a map of sorts. Create a business plan, because to create one you must identify short-term objectives, and those five, ten and twenty years ahead. You are not locked in and prevented from making changes, but you will surely make less mistakes. Today's industry has far more resources to assist you than ever before, but you must take the time to learn and strategize. Be realistic and grow in stages. You will find new inspiration each time you achieve a goal, and then you go after the next one. Be more than a pet groomer, be a business person that grooms, and you will have a more profitable and satisfying career in pet grooming whether you operate in the home, in a van or a commercial location.

Is Every New Customer Potentially Worth $25,000 in New Business?

by Madeline Bright Ogle, PhD & Stephen, Webmaster for PetGroomer.com
© Find A Groomer, Inc. 1997-2006 All Rights Reserved

Just how important are client relations services compared to quality pet care services? Is it possible that they are equally important?

Yes, they are equally important. In fact, we believe it takes both superior pet care and superior client relations to earn the $25,000+ potential grooming fees income from each pet owner client. Did you say to yourself, "Wait a minute, what do they mean $25,000+ in grooming fees income from one pet owner?"

It is not the $25 or $35 service fee that you are earning today that is of prime importance (we are using very conservative figures here). A new customer turned into a loyal pet owner client is likely to use your services an average of 6 to 9 times a year. If your average service fee is $30, today’s new customer offers the potential for you to earn up to $270 in the next year. Multiply this by your average client service life expectancy (let’s assume it’s 8 years) and today’s new customer is now potentially worth $2,160. We’re not done yet. The majority of pet owner consumers are strongly affected by pet groomer referrals from pet professionals such as veterinarians, and friends and relatives using pet grooming services. It is not unusual to earn at least 5 to 10 referrals from any one pet owner over their service life with your place of business. If the new customer lives up to the goal to bring you 10 new customer referrals, that’s possibly another $2,160 for each of them over their average client service life expectancy period, or up to $21,600. No, it doesn’t stop here either. Each of these 10 referrals also will eventually could bring you 5 to 10 more referrals, and those referrals more referrals, etc. Each of today’s new customers is conceivably the source for $25,000 to $50,000 worth of business in the next ten years. This is the essence of the Madson Client Relations Program now used in whole or part in hundreds of pet grooming salons. When you value the long term worth of each new customer and regular client, you will serve them with a wide array of client services and dedicated attention (trained manager and receptionists). You place an equal importance on both client services and pet care services because you know for every service you have two clients, the pet and their owner. You do this to gain the maximum number of potential referrals from your area and to maximize your client base. This is the mind set of a business person that grooms.

Ensure that you, and your staff, look at every client as a source of dozens of appointments in the years to come, and as a potential GOLDMINE of referrals in the years ahead also. At your next staff meeting, explain how one customer can mean up to $25,000 or more in potential income. We’ve done it, and it made a difference in our staff’s performance.

In the same manner, you and your staff should understand that a poor client relations disposition and poor pet care services can result in unresolved customer service problems leading to a "lost client". The client that disappears is just as likely to spread their complaint as well as their compliments not resolved properly that leads to a lost client can turn into many lost clients.

It is not as likely for one "lost client" to result in $25,000+ in lost grooming fees income, but $2,000+ or thereabouts is very likely within a long term valuation.

Legendary pet grooming business owners share the attitude that clients relations is a priority. If your goal is not for some reason to develop such a business, you certainly want stability in order to ensure a stable source of income. Now that you know how much client relations impacts the finances of your business, perhaps you can ensure your stable income by going the extra mile for the pet owner as their pet.

Where there is attention given to customer service, there is a more pleasant work environment. Pet grooming involves the potential for great amounts of stress, and there’s nothing better than the pleasure of listening to satisfied clients and new customers to make the work day more pleasing and rewarding.

We are most proud of the Madson Client Program presented in From Problems to Profits. It is truly a benchmark strategy to excel at customer service in the pet care industry. It is of course one of the most important elements of The Madson Management System for Pet Grooming Businesses, and as that attribute implies, client relations is a priority for management. Your role as owner-manager or hired manager is to consistently supervise the content and execution of your client relations program. In this issue, we are adding enhancements to the Client Relations Program as published in From Problems to Profits and as such it’s time to further review the role of management for client relations.

In the years since we first published the original edition of From Problems to Profits we have worked with hundreds of pet grooming business owners. The most troubled business owner in terms of fulfilling management duties are the one-person operations. There are thousands of these type of pet grooming operations in the United States. Quite often their client relations suffers far more than their pet grooming which is almost always very good to excellent. However, if you are the owner -manager - groomer - receptionist all in one you probably know what it is like to be bathing a pet and have the phone ring. Fortunately many one-person operations use an answering machine to cover such instances. This remedy is only a patch. New customers are not as likely to wait for you to call back as your regular clients. To some degree, you are losing new business.

The one person operation has little time to deliver all of the potent client relations practices that we introduced in From Problems to Profits and that we adding to here. It can be difficult to find even 10 to 15 minutes to dedicate to the new customer, especially without the interruption of a telephone call or another pet owner coming in. It may not seem like you are losing money because thousands of businesses run just this way make the weekly earnings they need to survive. But there’s the key, they are in survival. Getting out of survival is to add client relations staff. Perhaps you will add a part-time receptionist in the morning, or one in the afternoon. Some high school students with training and guidance in a business like appearance make excellent afternoon receptionists.

When we suggest this first step the first response is "I can’t afford a receptionist." That may be true for a few of the thousands of one-person pet grooming operations in serious financial hardship, but that’s it. The hired receptionist MAKES you money and easily pays their way when you have an organized system like Madson’s Client Relations Program. In fact, just one small feature of the Program alone will pay for a receptionist. Want proof? See page 12 of this issue [Fall Issue of The Madson Pet Reporter]. Madson’s Preferred Client Program will contribute to the expense of a receptionist. What you get in return is the time to groom better, and a growing professional reputation by having a receptionist deliver the fruit of your Client Relations Program to clients that want to be appreciated and served as well as their pets. In fact, your opportunity to serve pet owner clients is the key to your strategy to stay in business in a world where more veterinarians, retail and super retail stores are adding pet grooming. Of course, your fine grooming bonds loyal clients but you can never take them for granted because you are simply serving their pets and not going the extra mile to make your business more friendly and convenient to the needs of the pet owner.

Today’s world is more harried than ever and pet owners not only want more customer services, they need them and at a point they start demanding them. Client relations staff is truly the foundation for the stability of your business as well as excellence in pet care services.

People love to talk about their pets, and you can’t always do that and groom pets. Sure you can place your grooming table near the entry area, but you are losing productivity so there must be a limit. Your trained receptionist is there for those pet owners that want to share stories, address concerns, buy more products because the receptionist knew how to sell your products, or enroll in profit boosting programs that increase the number of appointments. Your client relations staff makes you look good too. It’s one thing to be an award-winning pet groomer and a business owner, but the addition of staff says you are also the successful business person that grooms. Now we’re on the road to the small business "mind set" that knows there are many roles to being a groomer and a business person, and finds a way in stages to fulfill the duties and responsibilities to each role.

It not unusual for our office to be contacted by pet grooming business owners that regret they never created a business with staff. Why? Well they grew to a point where they were working full-time and long hours, and couldn’t make any more money without increasing prices or cutting back. They had no staff working for them to increase their net income from the business. They also suffered more stress by having to own, groom, manage and customer serve. For some their bodies simply wore out, if not there well-being.

The time comes for every new pet grooming business to add staff, and pet grooming staff is not always the most logical addition. It makes sense to add a pet bather, and then another master trimmer or better yet, first an assistant pet trimmer. It also makes sense to first add a client relations staff to create a growing demand for these pet groomers under your management.

Pet owners want to be served as well as their pet. We’ve covered that topic in From Problems to Profits in 1990 and again here. Since then the industry has shown that pet owner consumers do want convenience and a good percentage are being attracted to grooming departments a part of one-stop convenience stores, or even in the veterinarian clinics. We foresee no turnaround in that trend either, and that is why you should carefully read the material in this issue pertaining to how your priority for pet owner client services can overcome the competition today and tomorrow. Many of our readers have done it, but there are thousands of operations still at risk today.

Actually, we have made it easy for you to fulfill your role in client relations. The Madson Management System has been proven for 36 years now, and you have its Client Relations Program organized

and ready to go. As stated earlier, even adding the Option B appointment scheduling feature within the Preferred Client Program is likely to alone start paying for a part or full time receptionist almost immediately.

Your role as manager of your client relations program is to ensure that you first even offer client services (as opposed to pet care services), and to develop a complete menu of client services equal to your complete menu of pet care services. Really. If not, are you saying that the pet is more important than the pet owner? Ironically there are pet groomers out there that unintentionally infer by their words, actions and client services that they are doing a favor for pet owners. Instead of educating pet owners as a in how to better care for their pets as a client service, they instead scold and gossip about these pet owners behind their back. After 40 years in the industry we’ve surely know of pet owners that don’t take adequate care of their pets, but that was our opportunity to do what do best, see the potential to earn a loyal client who became such through our interest in helping them to better care for their pet. We never judged them for a moment, and instead judge the situation and let loose our superior client services through trained receptionist and manager staff. We exceed their expectations and instead of creating a human drama focused on the poor pet care heretofore provided by the pet owner, we carefully explained the options available that would resolve the pet’s condition and provide it with comfort and yet meet the pet owner’s demand for a pleasing appearance as well. We then almost surely enrolled them in the convenient Option B appointment scheduling plan and we had a budding responsible pet owner in terms of pet grooming needs.

Your role as manager in client relations is to win the business favor of everyone by knowing that your target market is an entire cross section of your community. With 60% of the households in the U.S. owning a cat or dog, what type of person wouldn’t possibly come through your door. The common ground is the pet and pet ownership. How does your business serve the common ground of the pet owning community besides grooming their pets?

Walk yourself mentally through your operation. Imagine if you were being given the full board of the Madson Client Relations Program. In stages, every pet grooming business can if they will take the first step to hire and train receptionists.

Go further than our Client Relations Program. Always look for ways you can improve and encourage and reward suggestions from your client relations staff. As you develop them put them in writing so future staff can come up-to-date with your system quickly. If you can’t think of a solution, brainstorm it with your staff of one or twenty. Perhaps you can ask your better clients for their opinions or another pet care professional associate. Call us. Find A Groomer, Inc. offers telephone management consultation and there are few challenges we have not faced ourselves, or resolved working with our pet grooming business owner clients. We’re here to help.


One Person or Staffed Salon & Shop Grooming Business Plan Software & Samples


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