Managing Seasonal Fluctuations
“Typically, January through April are the slower months, with things picking up around the summer months and holiday season,” explains Ashlee.
“The best way I have seen owners handle the slow periods is to differentiate their business, offering daycare, grooming, training, etc, in addition to boarding. This helps to keep the income a little steadier throughout the year,” Ashlee says.
Chelsea adds: “It’s important to recognize the business’s distinct slow and busy trends so that owners can allocate profits from busy periods to help cover payroll, supplies, and operational expenses for the slower periods. There is a lot to learn from companies in other industries about how to boost profits during slow periods – such as providing off-season specials, discounts, and supplemental activities not offered in peak season.” To keep up with trends, please review industry pet trends.
Timeline to Profitability
“This can vary greatly depending on the size and location of the business. A smaller facility run completely by the owner will likely be profitable more quickly than a large facility with a big loan payment and multiple employees,” says Ashlee.
Chelsea adds: “Many startup businesses shouldn’t expect to see a large return on investment for the first several years – but that doesn’t mean they shouldn’t see profits during that time. If they have planned wisely, aligned with their local market value, and offered needed services professionally, pet care businesses should turn a profit fairly quickly.”
The key is reinvestment. “All additional income from those early months and years should be invested back into the business to build a strong foundation for years to come,” Chelsea says.
Funding Your Dream
“Loans provided by the Small Business Administration are the obvious choice for many pet care startups. SBA-preferred lenders will have a deeper understanding of the intricacies of the pet care industry than lenders at traditional banks. Taking it one step further and finding a lender specializing in pet care loans will ensure you have someone who thoroughly understands the borrower’s unique needs,” Chelsea says.
Ashlee looks for:
- “Establishing what makes them different from the competition and doing their research on the market they are looking to enter.”
- “Knowing their numbers inside and out, with well-thought-out projections.”
- “Having the backing of a consultant or someone who has already been successful in the pet care space is a big plus.”
Read more on financing your pet care business.
Buying Existing vs. Starting from Scratch
Existing businesses provide ready-made clientele, processes, and locations. But Ashlee cautions: “We always advise potential buyers not to accept poor or outdated financials, because without them, you cannot get a good picture of how the business operates.”
“Past revenue is critical in the valuation process. Anytime we have a buyer of a business, we do a third-party valuation to ensure they are paying a fair price. These valuations are largely based on past revenue, usually the last 3 years. Typically, it will be based on a multiple of EBITDA. The stronger the business, the higher the multiplier,” Ashlee says.
Building Your Advisory Team
“Build a team of experts and do your research. Find people (lawyer, consultant, banker, etc.) who are experts at what they do to help guide you through the business side, but also do as much research as you can. No one expects you to be an expert in all facets of the business side, but you should know the basics and have a good idea of where your business stands at any point in time,” Ashlee says.
Overcoming Misconceptions
Chelsea dispels a common myth: “In my experience, the most common misconception people have when looking to buy a kennel or pet resort is that it is unrealistic or unachievable for the average person. I want people to realize the potential they have, using the incredible modern resources and education freely available to them, which now gives anyone the ability to access their dreams of kennel property ownership.”
Ashlee addresses another: “That it is similar to buying a house, where you are qualified up to a certain number, and that is universal. The number one thing we look for is the business’s cash flow, which varies from location to location. You could have one business that costs $1 million and cash flows beautifully, and another that is $200,000 that can’t produce positive revenue. A lower cost doesn’t necessarily mean an easier approval.”
Final Advice
Chelsea shares: “Let your passion for pets fuel your business idea. That passion will help drive you through the parts of business ownership you may be hesitant about or not enjoy doing. It’s also important to let facts be your friends – we know how profitable this industry is and the rate it continues to grow.”
Ashlee adds: “It may never feel like the ‘perfect’ time to start, but it’s never too early to reach out and begin the process. The sooner you connect with your team of advisors, the more time you’ll have to set yourself up for success. Also, as I mentioned, no one expects you to be an expert in all aspects of finance, law, etc., so utilize the team you have built! Trust them, ask questions, and follow their guidance closely.”
Taking the Next Step
The pet industry continues to boom. You might be interested in operating a pet resort or managing a boarding facility; there’s ample opportunity for the prepared entrepreneur.
With proper planning, financing, and passion, you can start a business that benefits both animal owners and their beloved pets. Reach out for more information. We’d love to hear from you!
