Dog Daycare Opening Cash Flow Analysis

Understanding the first few months Cash Flow Situation in a newly established Dog Daycare.

Taking the previous section Dog Daycare Opening Cash Flow Analysis which discussed maintaining a cash reserve into more depth we have provided for you the actual profit and loss statements of a Dog Daycare that started in April of 2007. This Dog Daycare is using the “triple feed business model” whereas they offer Dog Daycare, Dog Grooming and Dog Boarding as standard services (Related Sections: Additional Income For a Dog Daycare Through Grooming, Additional Income For a Dog Daycare Through Boarding), and each service in turn feeds customers and revenue to the other services provided. This business model offers a lot of advantages for those that are just starting out as it provides a wider range of services from which to draw customers and generate the cash flow needed to keep the business afloat. The other advantage is that by offering a range of services it creates the ability for you to combine your services and offer a wide range of options that would otherwise be unavailable. This makes your business a lot more attractive to potential customers.

You will find that by offering these other services in combination with daycare that your business as a whole will grow quickly. For customers that are interested in grooming they now have the option of letting their dog play before and after its groom where as before the only choice was to have it locked in a crate at a standard grooming shop, your boarding business will soar as the dogs get to play during the day and your clients also have the option of having their dog groomed and bathed before picking up their pet. These other service customers will also see the value in daycare and a lot of them will become regular daycare clients. In our society of convenience people are inclined to frequent businesses that provide a variety of services in one place.

The other unique advantage to this industry is that it is common place to establish very close relationships with your customers, more so than with a traditional service business. Even closer relationships than they have with their veterinarians that they may see every couple of months. Think about how many times a week do you eat at your favorite restaurant? Or go to your local barber? Maybe a once every couple of weeks, and you may even know your favorite waitress or barbers name, but still don’t really have anything more than a professional relationship with them, as your interaction is solely based on paying for the service provided.

Your daycare customers will see you everyday, and will always take that time to listen to all the wonderful things that their dog did while it was at daycare, who its friends are, who it played with etc. Every day that you successfully provide joy for the pet they love they will grow a little closer to you and your establishment. They will establish a relationship such that they will feel guilty taking their dog anywhere else to use a service that you offer. So it is important for you to offer more than just daycare if you intend on generating serious revenue in this industry. This is covered in great other pages of this site.

Getting back on track we have provided for you in the following pages the actual printouts for the first four months of a newly established dog daycare facility along with the information on the facility and demographics for the area, with commentary and notes.

Dog Daycare Facility Information.

State: Florida

Location: Commercial in the City along a major commuter route

Services: Dog Daycare, Grooming, Dog Boarding and small amount of retail.
Size: 2600 sq/ft (600sq/ft for little dogs, 1000sq/ft for Big Dogs, 150 Sq/ft Grooming area, 400 Sq/ft boarding {four 6’x 9’ pet suites}, 200 sq/ft office, and 250 sq/ft lobby and traffic areas.)

Staffing: 2 (Husband and Wife)

*Note that your facility does not have to be huge, to be profitable. As long as you are customer service oriented with an effective management style and operate your facility in an efficient manner then the revenue will come.

Information- (Update)

The next section was not in the original manual that written some 6 months ago, since then I have contacted this same facility and they graciously provided me with some updated financial information.. (Thanks, Susan)

There is some variation between the software that they use and the QuickBooks Profit and Loss sheets below though both are from the same facility, this is normal.. A lot of refunds, credits, coupons etc.. will be handled differently by the Dog Daycare Software than it is by QuickBooks and some need not be entered into QuickBooks anyway as they have no effect on your taxable situation.

Dog Daycare Start Up Gross Profit and Check In Analysis (The New Stuff)

The chart below shows you the typical rate of growth for an effectively managed, customer service oriented, efficient facility. Keep in mind the total size of this particular Doggy Daycare is 2800 sq/ft, not huge by any means but effective. Profit is the amount of money you take home and put in the bank (AFTER TAXES), so in the beginning why pay twice the rent to have a 6000 sq/ft facility that generates the same gross as a smaller facility? As you grow your business, grow your facility...

What becomes apparent is that by advertising sparingly and networking heavily while providing great customer and dog service this Dog Daycare facility increased by it's revenue each and every month of operation. You will also notice the huge spike in revenue for December. Dog Boarding and Dog Grooming will generally be off the charts and busier than you can imagine during this month..

In the two charts below you will notice the initial customer spike in August, this is the result of a huge 3 page full color article toward the end of July coming out in a rather affluent publication in the area concerning the new dog daycare in town. This caught the attention of a local t.v. station which ran a segment on the 5, 8 and 10 O'clock news. This resulted in a number of "try it out's" bringing their dog to the facility for daycare, as a result of the press and then dropping sharply off once all the fuss died down. What should be most striking about the charts below is that after the spike, steady business continued to grow. Daycare moved into a more predictable growth pattern, while the press created a lot of new boarding customers that really grew the business (Check Outs per Month) is the total for boarding and Daycare.

The actual Check Out numbers for the first 8 months are as follows.

Total No. of Check Outs: 2,759

Total No. of Daycare Visits: 1,790 64.88% of Check Outs

When averaged out this equals around 14 dogs per day at the facility boarding or in Daycare over the course of the previous 8 months. Which for a newly established Dog Daycare operating out of a 3500 sq/ft location is pretty good, especially considering the initial 3 months were almost nil.

Dog Daycare Start Up Gross Profit Analysis (More New Stuff)

The following is the gross profit as printed out by the Software they are using for the same time period covered above. You can see the steady growth in revenue that sound management and efficient operation can generate, again there is the ever present holiday spike in December. Also you should notice that regardless of the check in drop off's in daycare (the previous two charts) in September amounting to a little over $500.00 of the monthly total, the actual gross profits rose substantially during this period as a result of offering additional services like Dog Boarding and Dog Grooming.

Profit and Loss Sheets for the first Four Months of Operation (Original Stuff)

April through May Comparison

					May 07	Apr 07	$ Change	% Change
	Ordinary Income/Expense
			Income
				Retail	475.99	254.00	221.99 [1]	87.4%
				Daycare	1,424.73	963.52	461.21	47.87%
				Grooming	1,798.97	488.99	1,309.98 [2]	267.9%
				Boarding	1,095.00	449.91	645.09	143.38%
			Total Income		4,794.69	2,156.42 [3]	2,638.27	122.35%
			Cost of Goods Sold
				Cost of Goods Sold	353.27	86.34	266.93	309.16%
			Total COGS		353.27	86.34	266.93	309.16%
		Gross Profit			4,441.42	2,070.08	2,371.34	114.55%
			Expense
				Automobile Expense	111.01	74.07	36.94	49.87%
				Bank Service Charges	87.57	15.02	72.55	483.02%
				Commissions [4]	643.98	74.00	569.98	770.24%
				Donation	15.00	0.00	15.00	100.0%
				Equipment Rental	0.00	26.22	-26.22	-100.0%
				Error on Purchase Order entry	0.00	9.82	-9.82	-100.0%
				Marketing & Advertising [5]	326.15	522.71	-196.56	-37.6%
				Merchant Fees	0.00	0.00	0.00	0.0%
				Miscellaneous [6]	0.00	270.07	-270.07	-100.0%
				Office Expenses [7]	-25.23	637.32	-662.55	-103.96%
				Repairs [8]	0.00	400.00	-400.00	-100.0%
				Sales Tax	0.00	3.59	-3.59	-100.0%
				Travel & Ent	26.73	10.59	16.14	152.41%
				Rent	1,700.00	1,700.00	0.00	0.0%
				Utilities	448.36	572.68	-124.32	-21.71%
			Total Expense		3,333.57	4,316.09	-982.52	-22.76%
	Net Ordinary Income				1,107.85	-2246.01	3,353.86	149.33%
	Other Income/Expense
		Other Income
			Other Income		0.00	300.00	-300.00	-100.0%
		Total Other Income			0.00	300.00	-300.00	-100.0%
		Other Expense
			Business Expense		2.84	0.00	2.84	100.0%
			Other Expenses		41.19	0.00	41.19	100.0%
		Total Other Expense			44.03	0.00	44.03	100.0%
	Net Other Income				-44.03	300.00	-344.03	-114.68%
Net Income					1,063.82 [9]	-1,946.01 [10]	3,009.83	154.67%

[1] This company only carried a small retail section, consisting of collars, leads, and home baked dog treats. Yet as the number of customers increased in May so did the amount of impulse sales at the counter.

[2] While Daycare was still a bit slow in May, Grooming carried the company as the ability to let the dogs play and socialize in a cage free environment before and after grooms brought in a lot of customers.

[3] This is the total amount that was generated the first month. The second month in business shows a 122.35% increase in sales, and a 154% increase in net profit with only a 22% reduction in operating costs

[4] This is the Groomers Commission, 50% on any Grooms that she performed. During this period you should be watching and learning, so as you can do this yourself.

[5] The majority of your advertising will be spent during the first to months to get the word out that your in business, do not expect people to just beat a path to your door if you fail to let them know you exist. In April advertising consisted of print ads in the local newspaper, and flyers that were printed up and handed out to the local vets. In May advertising consisted of purchasing a banner and newspaper advertisement

[6] These are the miscellaneous items that needed to be purchased, shampoo, nail clippers, mop and bucket, towels etc.. pre opening.

[7] Purchased an updated office computer at our request to handle needs of a busy facility. They originally were trying to use an outdated computer they received from an office surplus store as it was cheap, (it crashed 4 days into operation of the business)

[8] Additional items, that were needed for the business to function properly, added double gates at our request to the outside area to lesson the chance of escape

[9] Although $1063.82 may not seem like a lot, it’s over $3000.00 more than the previous month. It is also highly successful to be turning a profit in the second month.

[10] This is normal during the first month of operation and the reason that you should have cash reserves.

May through June Comparison


					Jun 07	May 07	$ Change	% Change
	Ordinary Income/Expense
			Income
				Retail	552.35[11]	475.99	76.36	16.04%
				Daycare	2,052.35	1,424.73	627.62	44.05%
				Grooming	3,189.40[12]	1,798.97	1,390.43	77.29%
				Boarding	2,283.30	1,095.00	1,188.30	108.52%[13]
			Total Income		8,077.40	4,794.69	3,282.71	68.47%
			Cost of Goods Sold
				Cost of Goods Sold	262.47[14]	353.27	-90.80	-25.7%
			Total COGS		262.47	353.27	-90.80	-25.7%
		Gross Profit			7,814.93	4,441.42	3,373.51	75.96%
			Expense
				Automobile Expense	163.90	111.01	52.89	47.64%
				Bank Service Charges	107.97	87.57	20.40	23.3%
				Commissions	35.62 [15]	643.98	-608.36	-94.47%
				Donation	0.00	15.00	-15.00	-100.0%
				Insurance	876.89 [16]	0.00	876.89	100.0%
				Marketing & Advertising	0.00	326.15	-326.15	-100.0%
				Office Expenses	27.65	-25.23	52.88	-209.59%
				Repairs	165.66 [17]	0.00	165.66	100.0%
				Sub Contract	70.00	0.00	70.00	100.0%
				Travel & Ent	12.80	26.73	-13.93	-52.11%
				Rent	1,700.00	1,700.00	0.00	0.0%
				Utilities	490.00	448.36	490.00	100.0%
			Total Expense		3,650.49	3,333.57	765.28	26.52%
	Net Ordinary Income				4,164.44	1,107.85	2,608.23	167.6%
	Other Income/Expense
		Other Expense
			Business Expense		0.00	2.84	-2.84	-100.0%
			Other Expenses		82.54 [18]	41.19	41.35	100.39%
		Total Other Expense			82.54	44.03	38.51	87.46%
	Net Other Income				-82.54	-44.03	-38.51	87.46%
Net Income					4,081.90	1,063.82	2,569.72	283.7% [19]

[11] While retail did not grow dramatically during this month, we were able to provide the owner with a different supplier to lower cost and advised them to only sell those items that move quickly and provide a great markup, as unsold items tie up capital.

[12] Again Grooming provided significant revenue for this company during the month of June, while having let the groomer go this translates into a 100% of the income going to the company

[13]At the end of the third month in business boarding is beginning to take off as customers love the idea of their dogs being allowed to play and socialize during the day as opposed to being crated or caged the entire time.

[14] By utilizing our advise to change suppliers this facility owner realized a 25% reduction in cost for retail items.

[15] By Shadowing the groomer for the previous 2 months, this owner was able to learn the basics of grooming and take the task on themselves, and with that 100% of the profits from the grooming portion of the business

[16] We advised this operator that is would be in their best interest to purchase Business Liability insurance to protect themselves in the event of an accident should happen. It is a fact of this business that eventually a dog will injured or die while in your care, and most of the time through no fault of your own.

[17]Murphey’s law applies here as there was a problem with the plumbing and a contractor had to be called to clear the line.

[18] Miscellaneous items, such as lunch with the local animal rescue league director and humane society chairman

[19]As you can see this business is starting to do well, with another over 280% increase in profits.. At this point the owners have still yet to take a paycheck, yet there is enough available for a small salary. You should also be replenishing your reserve funds by now and establish an account into which you deposit 10% of your profit for company savings. You should also be paying back yourself for capital that you spent to open the business as well as any loans.

June through July Comparison

				Jul 07	Jun 07	$ Change	% Change
Ordinary Income/Expense
		Income
			Retail	744.79	552.35	192.44	34.84%
			Daycare	3,026.38	2,052.35	974.03	47.46% [20]
			Grooming	2,968.98	3,189.40	-220.42	-6.91% [21]
			Boarding	3,210.00	2,283.30	926.70	40.59%
		Total Income		9,950.15	8,077.40	1,872.75	23.19%
		Cost of Goods Sold
			Cost of Goods Sold	225.21	262.47	-37.26	-14.2%
		Total COGS		225.21	262.47	-37.26	-14.2%
	Gross Profit			9,724.94	7,814.93	1,910.01	24.44%
		Expense
			Automobile Expense	193.33 [22]	163.90	29.43	17.96%
			Bank Service Charges	186.12 [23]	107.97	78.15	72.38%
			Commissions	0.00	35.62	206.92	580.91%
			Depreciation Expense	0.00	0.00	0.00	0.0%
			Insurance	0.00	876.89	-876.89	-100.0%
			Licenses and Permits	50.00 [24]	0.00	50.00	100.0%
			Marketing & Advertising	70.00 [25]	0.00	70.00	100.0%
			Office Expenses	31.45	27.65	3.80	13.74%
			Refund	14.00	0.00	14.00	100.0%
			Repairs	232.02 [26]	165.66	66.36	40.06%
			Sub Contract	220.00 [27]	70.00	150.00	214.29%
			Travel & Ent	0.00	12.80	-12.80	-100.0%
			Rent	1,700.00	1,700.00	0.00	0.0%
			Utilities	452.18	490.00	-37.82	-7.72%
		Total Expense		3,149.91	3650.49	-258.85	-14.9%
Net Ordinary Income				6,333.30	4164.44	2168.86	52.08%
Other Income/Expense
	Other Expense
		Other Expenses		65.67	82.54	-16.87	-20.44%
	Total Other Expense			65.67	82.54	-16.87	-20.44%
Net Other Income				-65.67	-82.54	16.87	-20.44%
			Net Income	6,510.17	4081.90	2185.73	53.55% [28]

[20] At end of the 4^th month Daycare has actually caught up to the other services and is showing a 50% increase in sales over the previous month. This is a company destined for success

[21] By releasing the groomer and taking over the grooming business themselves, some clients were lost which is not a negative and par for the course. The business is still making over $3000.00 per month without having to split it 50/50 with a groomer

[22] Gas costs money and you should bill your company for the costs of coming back and forth to work as well as any repairs made to the vehicle while it is being used for company business

[23] This reflects the cost of accepting credit cards for the business, generally a fee of .25 cents per transaction and 1.25% of the total transaction will be assessed by the credit card processing company

[24] County Business license tax

[25] One small news paper add was placed to build up grooming customers.

[26] Privacy screening for the parking areas

[27] Temporary help was hired on the weekends. It is important that if possible sub contract out the help as you will not be responsible for social security, or workers compensation.

[28] Closing the fourth month this company is still increasing it’s sales by 50% this should begin to level off around month 6 at which point profits will only grow by around 15% per month. But as you can see this company is well on its way toward success.

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Wed, 10/16/2013 - 22:01

Anonymous (not verified)

Employees?

I noticed that she does not have employee wages listed in her fixed expenses. Was she able to open and operate the dog daycare without any employees? Once she started providing grooming in-house, who was watching the dogs?

Tue, 10/29/2013 - 16:42

Bandit

Offline

Joined: 05/03/2008

Posts: 260

Re: Employees?

Your are correct, as stated at the top of the article this was a husband and wife team. Also as stated the in the article the detailed financials only covered the first four months of operation April-July (during which it was just the husband and wife operating the store). A rather frugal move until they built up sufficient clientel to off set the cost of hiring employees. The financial information after that is printed from the software which pretty much only shows gross numbers, not net numbers. I do know, however, that as the business grew that they hired two employees in September, to "watch the dogs, and function as general purpose kennel hands". I also know that the store is still open to this day and last years figures showed gross sales of around 600k. I am more than happy to answer any questions, if you need me to point out anything else from the material that you failed to comprehend just let me know.

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