Many people have a strong desire to operate a business in their home. They eliminate regular work commutes and can set their hours. Some groomers prefer to be closer to their family especially while raising young children making a home based business ideal. Operating a home business is clearly an appealing working lifestyle choice but there are some potential disadvantages you should consider.
First, the home based pet grooming business rarely earns the “net worth” of a commercial salon business. Commercial locations generally have a much higher market value, including the value of a long lease or equity in the real estate when you own the commercial building. Commercial locations generally build a much larger clienteles, an important factor in setting the market value of a business. Net worth is important because one day you will sell your business and the income derived can provide a more comfortable retirement, or a career change if that is your desire. However, a large valuable business is not always the goal of the home based groomer.
From our experience, there is only a small percentage of buyers with an interest in buying a home-based pet grooming business including the property, but they are out there. So home groomers ask if they can keep their property but sell their clientele. The answer is “Yes” but again the demand is small, but not unheard of at all. When you consider the buyer faces the obstacle of transferring the existing clientele to a new location, and still has to pay for the build out the new location, it becomes obvious why there are few sales of home-based pet grooming businesses unless the property is a part of the sale.
There are additional obstacles. Be sure to check with your local and state regulations to ensure that you can operate a home-based pet grooming business. We know with certainty that there are areas within the U.S. that prohibit home-based pet grooming businesses. As an area becomes more populated with high density housing, the likelihood of increased restrictions on home businesses is almost certain.
Even if a home based grooming business is allowed in your area, how will your neighbors accept the business? They can be a problem and ask the local regulators to stop your operation for reasons generally derived from increased traffic and noise created by your home business.
Make sure you have at least 300 square feet for a small home business. Keep your neighbors happy by soundproofing the work area. Keep windows closed. You will likely need air conditioning to compensate. If you have a yard area for dogs, strictly limit their barking and pickup pet waste frequently during the day and after you close for the day.
Consider the extra traffic you are bringing in to your area. Neighbor complaints have been a common reason for some home-based pet grooming business having to close down, or for commercial codes that prevent operating a pet grooming business in the home. Personally we have known of cases where neighbors got together and easily shutdown a home grooming business where noise and traffic problems were substantiated. Some home groomers have worked around traffic related problems by picking up and delivering the pets they groom.
If you are a renter, ensure very clearly that your landlord will cooperate with your intent to operate a home business and the required building improvements. Don’t underestimate the demand for water and other utilities.
Home-Based Grooming Business Plan Software & Real Samples
Home groomers need insurance for their business in addition to regular homeowner coverage. Ensure that you can find the necessary insurance coverage for both the household and the business.
Starting a pet grooming business in the home typically costs less, even much less, than a commercial location. For that reason alone, persons not willing to take out a loan, or seek out an investor, for a mobile van or commercial location often turn to a home business. Many home-based pet grooming business owners are excellent groomers, but they are in a professional business sense sometimes more appropriately characterized as a business hobbyist in comparison to the business owner and manager set out to develop a commercial salon with several employees. If your desire is to work in your home, you will not mind the obstacles or limitations of a home-based pet grooming business.
There is almost nothing in the way of books on managing a home grooming business, however, business management principles are business management principles. Therefore, read both of the two best grooming management books, From Problems to Profits and The Art and Business of Pet Grooming. Both can be ordered securely on-line at the PetGroomer.com Pet Bookstore.
In some areas regulations for home based businesses may restrict hiring employees. Again, check with your local regulators.
We have been management consultants for decades helping people start pet care businesses of all kinds. In relation to home grooming, the worst mistake we have seen is the home groomer assuming that they can operate a home business without worries because they know other home groomers in the surrounding areas working in their homes.
Do your homework for your business! Many home groomers have invested thousands of dollars remodeling a home grooming business only to find out later they have to shutdown, and move the business to a commercial location. Don’t go by what friends and family say alone, do your homework. Usually that means talking with Town or City Hall government and the County government. Never forget that the closer you live to neighbors, the more likely your business could disturb them and they have rights that may prevail over your having a home business affecting them with noise and/or traffic.
Chart generated by Pet Grooming Business Plan Helper & Sampler, a Grooming Business in a Box® product.
Copyright 2007-2015 Find A Groomer Inc. All rights reserved
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. You will 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 will 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.
How much do you need to invest? That’s another question that must be answered with financial planning. Fortunately home grooming businesses are known for reasonable start-up costs compared to a commercial locations, but that’s not a rule. Converting a garage or outbuilding must be approved by your local building codes too.
The graph below shows the start-up funding required for an extensive renovation of an outbuilding on the groomer’s property. She required about $23,000 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 home grooming business is major equipment like high-end grooming tables, tubs and dryers. If you use the services of plumbers, electricians and other contractors they might be considered asset improvements. It gets a little more complicated because you are also improving the property you own; you had better get 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. Finally refer to the chart below once more. We know that the groomer needed $27,000 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 $20,000 and her investment of her own money (light blue) will be $7,000.
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 2007-2015 Find A Groomer Inc. All rights reserved
Chart generated by Pet Grooming Business Plan Helper & Sampler, a Grooming Business in a Box® product.
Copyright 2007-2015 Find A Groomer Inc. All rights reserved
There’s another very common question someone is likely to ask you. It’s a financial questions. 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 home business above.
Break-even Analysis (Pet Care Services Only)
Monthly Units of Services to Break-even: 53
Monthly Gross Sales of Services to Break-even: $1,633
Assumptions
Estimated Monthly Fixed Cost: $1,633
Estimated Per Unit Variable Cost: $0.00
Year 1 Sales of Services: $23,666
Year 1 Units of Services: 761
Average Per Unit of Services Revenue: $31.10
Figures 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, utilities etc. In the example above the new business owner knows her business requires $1,633 a month to meet its fixed costs of operation. Because she knew her average grooming fee would be $31.10 it was easy to divide that number into the fixed costs of $1,633. The result is 53; the groomer must groom 53 pets 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 $1,633 amount).
ou 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 as you work through a month? Sure. Knowing that you must groom at least 53 pets 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 home grooming 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 home grooming business renovation of a garage 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 Home-Based Grooming Business Owners
We suggest you come to the GroomerTALK Message Board and search the term “home grooming” and read previous discussions of home 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 home groomers and others. Better yet, how about sharing your experiences with home 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. ♦
