Many Doggy Daycares have closed their doors before they have even ordered their business cards. The rate of small business failures in the U.S. is staggering and especially in this popular “second career” business of working with pooches. As a result, many people think that buying into a Doggy Daycare franchise will be the guaranteed way to safely enter this new business trend. There are several Doggy Daycare franchises you can buy into that attract new owners who don’t have a business background or who aren’t confident enough to do it their own way. Be prepared for a non-stop flow of cash out of your checking account that never ends. Your business might dry up, but not their increasing demands for your cash!
We looked into this concept when one Doggy Daycare franchiser was just starting out themselves, and their entrance fee was “only $50,000.” This was years before we started The Pooch and we were still in the scouting out the possibilities phase. A franchise profit sharing formula is based on the top line, or gross sales, rather than from the bottom one, or net cash flow. That is a dead giveaway on why you should avoid buying a franchise at least in this industry.
They want to be part of the sales numbers, which should be the biggest number in your business. But they want nothing to do with your risk, the costs that can make it impossible to survive if your bottom line isn’t strong enough. They’ll take a big fee up front, take their cut of your sales dollars, force you to pay their marketing fees even if you don’t need them, then tighten the screws and up the pain even more. Some corporate guy says, “Let’s change the lobby colors or entrance theme across the country. Yeah, what a great concept! Pay up $25K now, Ms. Franchisee. What, you don’t have $25K? Well, you just lost your franchise. Close your doors, you are finished.” Any money back? Nope, you didn’t fulfill your franchisee obligations to go along with their new color whims.
They wanted no part of our business risk, only our upside. Add in the fact that we could make no decisions on how we marketed the business or how we even “looked” from the front door to what type of poo cans we used, and it was just way too restrictive for our tastes. We decided to spend some time taking classes to learn about the industry and developed a business plan to do it our way. This step is what a lot of owners forget to do. You must have a plan to get through the profitable times as well as the tough ones.
The phrase we always heard from our envious friends still working their 9 to 5 jobs, was “It must be so fun and easy doing what you do all day.” It was a lot of fun, but certainly not easy. Potential owners that want to get into this labor intensive business don’t realize that not only do you have to love pooches and all of their “business” a lot, a really, really lot, you must have business smarts out the wazoo.
Many of the Mom and Pop facilities are owned by people who are a bit older and are thrilled to make this change in their career path. Many have never owned a business and some don’t even know how to balance their own checking account. They only want to quit working in their boring corporate world or the stressful nursing world or their “pulling out their hair” advertising world and actually work somewhere making their own decisions and living in their own safe and secure loving doggy world. What many do not realize in the beginning, is just how hard it is to get started when the money is barely trickling in and doesn’t begin to match the money pouring out.
That’s the problem with almost every client I worked with during my consulting business for over twenty years. Small business owners never anticipate what is lurking around the corner when you least expect it. We plan to share business support in this blog so stay tuned! Isn’t the lack of cash reserves the biggest problem in our personal lives as well?
Never enough cash. It’s everyone’s problem.