Will Your Business Crash and Burn?

When we decided to purchase a Doggy Daycare in Denver, it quickly became apparent that finding a startup business that had only been in business a few months was the quickest way to get into the already crowded market, with a Doggy Daycare on practically every corner in the Denver.  The licensing and permitting process both with the city and state made it difficult to find a location near a densely populated area that needed this type of pet service.  We also realized that the start up expenses are high with all businesses, a lot of working capital is always required and based on our research, many Doggy Daycares are not profitable for the first three years, with 40% not making it past the first year. How could we possibly start up The Pooch when we weren’t even experts in this industry?  What did we have that other kennel owners might not have?  We knew from the beginning what the secret of being profitable was and were able to build a strong thriving business.  Thankfully, we ended up being part of the small percentage of all U.S. businesses that are able to keep their doors open past the first year or so.

It’s hard to believe, but 90% of all the businesses in the U.S. are companies with less than 20 employees.  On top of that, 8 out of 10 small businesses fail within 18 months from startup, according to Bloomberg Financial.  Why do so many crash and burn and what is the primary reason they don’t succeed?  Many of these small “Mom and Pop” businesses are run by couples, just like we did.  Some have help from their parents who may have started the business and many have their children involved. Some of these businesses have been owned by generations of the same family but struggle with the ever increasing reporting requirements and layers of taxes and fees at the city, state and federal levels.  Many wonder why they ever went into business, they question if they even enjoy owning a small business any more, the increase in minimum wage to $15 per hour would put many of them out of business, and often the basic reason for failure is not having enough cash to pay the bills.  

But before all of these problems start surfacing, there are always cracks in the foundation of a business which could be repaired before they even put up the “Open” sign on their door.  There are basic steps that must be followed carefully to create a strong, successful, vibrant, and profitable business.

Be Sensible:  Understand what it will take to break even…not make a profit, just break even.  Too many entrepreneurs assume that they will “get rich quick,” but the critical measurement is understanding how quickly you can get to the “break even” point.

Be Different:  Figure out how to make your business unique and how you can get it to stand out in a crowd of many other businesses just like it.  We spent very little money on marketing and instead depended on word of mouth from our customers and established a strong relationship with a local veterinarian, Dr Shelly Sandel, the new owner of Northfield Veterinary Hospital.  We went to dog parks, talked to dog owners and listened to what they liked about their Doggy Daycare and what they didn’t like.  We had done that ourselves for years, so we knew what was important to us and made sure that our new business was different than many of our nearby competitors, some with much fancier buildings than what we were renting.

Listen:  Walk a thousand miles in your customer’s shoes.  Your customer holds the key to your success, so listen to them.  Ask yourself, and that of your customers what is really important about this type of business and why someone would come to your place versus the one down the street.  If you truly build your business based on listening to your customer’s desires, how can you fail? But, don’t forget to keep listening and communicate effectively through emails, texts or other ways to reach out and talk with them at least once a month.

Be Profitable:  Now that you’ve established a higher level of service than your competition delivers, do not be afraid of pricing your service or products at a higher level than that of your competition and make sure that you always deliver the best service possible.  The worst thing we ever saw other kennel owners do, was start discounting their services.  What kind of message does that deliver?  That perhaps their business was providing a “discounted service?”  Is that what you want to communicate as a business owner no matter what happens in the economy or market?  Find another way to keep your business strong when the economy dips, don’t become the “Blue Light Special.”  I sure don’t want my dogs staying at one of those places!

Follow the Plan:  Most businesses don’t develop a strong business plan, measure the results and understand the profit and costs per product or service.  In the kennel business, few kennel owners realized that just like a hotel, there are a certain number of “dog days”, so you need to measure your vacancy rate and understand how to manage your inventory and understand the revenue and expense of each dog day.  This can be done in every type of business, from retail to manufacturing and everything in between.

small businessLead to Succeed:  Wake up and realize this is your baby.  You dreamed up the idea, thought about for months or possible years, so it’s your responsibility to lead with conviction, including cleaning up the nastiest of problems or in the case of a kennel, the sky’s the limit on what might need to be cleaned up on any day.  The most important thing as a leader is to truly understand what is the most important thing about your business.  You must communicate what your values and morals are to yourself, your customers and your staff first and foremost.  They are more important than volume, profit, or any other factor in your business.  Post a huge sign on your wall, your website and any other place you can think of that shows what you stand for and be proud of yourself and your baby, the business that you grew from the first day you put up the “Open Sign.”

Don’t make the mistake that most businesses do, believing that you know all the answers and no one out there can possibly make a difference in your business.  Believe me, you are too deep in the weeds most days to be able to see which direction to go!

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