Profitability Analysis: Are Dog Daycares Profitable?
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The dog daycare industry can be profitable, with profit margins varying based on factors like location, service quality, and pricing strategies. In areas with a high demand for pet services and a sufficient customer base, profit margins tend to be more favorable. Maintaining operational efficiency, managing costs, and offering exceptional care are key components in maximizing profitability within this industry.
Dog Daycare Industry Overview
If you’re considering opening a dog daycare, know that you’re entering into a popular and growing business space. The pet daycare industry was valued at $1.2 billion in 2021, with a compound annual growth rate of 6.8%. The industry may grow to as much as $2.02 billion in 2030. This growth is attributed to more pet owners, more pet service providers, and more “pet humanization” – meaning pet owners are treating their furry friends like people, seeking the best possible care for their dogs while they’re away. While at the beginning of the COVID pandemic many dog daycares closed, pet ownership jumped up and as the world reopened and owners went back to work, they needed places to stash their beloved pets.
Understanding Dog Daycare Profit Margins
Dog daycares can have multiple revenue streams that can balance out the costs of starting a dog daycare. Not every successful dog daycare needs every possible revenue stream.
Dog Daycare Revenue Streams
Dog Daycare Services. Dogs stay at your facility for a set number of hours but do not stay overnight. Dogs can play with each other, eat meals, and rest.
Dog Boarding Services. If you offer dog daycare and have the space for kennels and beds, you might consider adding boarding as a service. Dogs stay in your facility overnight for days, weeks, or even months at a time. This can become more lucrative around the holiday season, when owners might need to travel more frequently.
Dog Grooming Services. Some dog daycares also offer grooming services as well — haircuts, nail trimmings, washing and blowdrying services, and more.
Dog Training Services. If you’re employing certified trainers at your dog daycare, you can offer training services as an add-on, or upsell. Dogs can learn basic commands, obedience training, or other skills while they’re at your facility.
Retail Products. You can sell products at your daycare so pet parents can take the fun of your daycare home with them. Dog daycares often stock treats, food, clothing, branded merch, (also a fun advertising tactic) and toys, which can all add up to significant profits for your dog daycare.
If you are adding one or more of these services, great pet business software is essential to help ensure each line of business is a success. PetExec helps you on every step of your business journey, from legal documents to payment capture to retail inventory management to signing in dogs as they arrive.
Dog Daycare Costs
While opening a dog daycare presents a tremendous opportunity, there are also several cost factors to take into account.
lRent or a mortgage. If you start a daycare in a dense urban environment, you may have many clients who will want to use your service. However, rent or a mortgage on one of those properties can be expensive.
Salaries for Staff and Contractors. In order to hire competitively and retain staff, you will need to compensate staff appropriately, and even better, provide benefits like health insurance.
Utilities. Expect to pay for electricity and of course, water bills for all those thirsty pups!
Marketing. Marketing can look like many different tactics, but you might need to utilize channels like direct mail, social media advertising, Google advertising, search engine optimization, branded merchandise, a referral program, and e-mail marketing.
Supplies. In addition to the inventory you might hold if you sell retail products, you’ll need to purchase any equipment dogs will use in your facility such as beds, cots, water bowls, and agility equipment. And if any of that equipment breaks you might be spending on repairs as well.
Insurance. While insurance costs vary from state to state and from plan to plan, you want to protect yourself from any liabilities, which will cost you.
How much do dog daycares make?
Dog daycares’ incomes can vary based on the services you provide, how much you charge for them, the demand for the service in your neighborhood, and your ability to stick to a budget. The following factors are important to keep in mind if you start a dog daycare business.
Contributing Factors to Profitability
Proper Staffing & Training: Dogs can’t talk, but their owners can, and if they aren’t happy with the quality of your service, they may not choose to return. Making sure your staff is happy, well compensated, and well trained is necessary to ensure they give their best to the dogs every single day.
Facility Management. Attending to problems in your facility such as leaks, malfunctioning air conditioners and heaters, and more before these issues become bigger problems is tantamount to keeping your profitability in check.
Accounting & Financial Management. This can look like proper bookkeeping and paying your vendors and staff on time.
Marketing and Brand Management. Your marketing efforts will have to focus on acquiring customers at a cost that is lower than your operational costs. You’ll also want to retain your customers through e-mails, SMS marketing, and loyalty programs to keep your customers coming back for more. It’s often less expensive for you to retain older customers than it is to acquire new ones through spending on social media and Google ads.
Quality and Diversification of Service Offerings. Especially if you’re in a geographic area with a lot of dog daycare options, ensure that your services are in fact the best by figuring out what sets you apart from your competitors. Do you sell better treats than the other companies? Do you charge less for a day of daycare? Do you have more services than the others by offering grooming, training, and boarding?
Dog daycare owners have to wear a lot of hats in order to have a successful business, but you may not be as strong in some of these areas as others. Great pet business software like PetExec can assist you with marketing, financial management, and much more.
Commonly Asked Questions
How to start a doggy daycare?
You can start a doggy daycare with these eight steps.
- Perform market research to see what your community needs: are you going to be the first dog daycare in your town? The fifth? What are incomes like in your area and what are folks willing to pay for services?
- Create a budget. You’ll think about what the upstart costs are, what rent or a mortgage would cost, how much you can afford to spend on marketing, and how much you’d have to charge to cover all of these costs.
- Write a dog daycare business plan. If you want your business to get acquired someday, this is a great step for you. Otherwise it’s helpful to lay out your executive summary, competitive analysis, company description, services, marketing plan, financial summary, and your staff.
- Plan out the dog daycare location, ensuring you have enough space for play areas, feeding areas, water drinking areas, and more.
- Ensure legal compliance with any laws and regulations in your area.
- Ensure health and safety compliance and obtain a facility license.
- Create a marketing plan, website, social media profiles, a discount or loyalty program, and any other marketing efforts.
- Hire kind and talented staff like a receptionist, business manager, employees who look after the dogs, dog trainers, and marketing staff.
How much does it cost to start a doggy daycare?
Starting a doggy daycare can have variable costs based on your location and business size. But when you write a business plan you can figure out your estimated revenue, your fixed costs (monthly costs like rent, insurance, and banking fees), your variable costs (utilities, dog toys, cleaning supplies, marketing supplies, and advertising fees), and your one-time costs (paying for equipment, training, permits, and licenses.)
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