Starting a Doggy Daycare

[Clare]

A friend and I want to start a doggy daycare on a major commuter route into a large town/small city. There are currently NO existing dog daycares in our area of interest. We have two investors willing to give us some start up cash. We're looking at an easy 20-25 dogs per day for day care with no boarding offered initially. In subsequent years we would add boarding, training, grooming and other logical services.

I have found some doggy daycare planning tools online and have downloaded some for financial planning and feasibility. I know that we need a detailed business plan and some estimated cost analysis.

We are planning to meet with a bank soon to start going over numbers.

A. What should we have ready before we go to the bank?

B. What should we expect for questions?

C. Should we be considering paying an accountant and/or a lawyer?

D. What other advice do you have?

Thanks,
Clare

[ACB123]

The key to your successful pitch is a solid business plan. You should try to set up a meeting with a local representative from SCORE in your area. Without that you won't stand a chance.

You also need to be able to forecast your revenues and expenses for the first 6-12 months and possibly 12-24 months. Most banks want to get their money in and out of a venture as quickly as possible and they want to see how you're going to be doing at least 1-2 years down the road.

You'll need your lawyer when it comes time to register your company. I would see if you could get a free consulation with a CPA regarding projected expenses and taxes you need to consider in your business plan.

Also have a mock up of your marketing materials ready to show your lender.

Good luck.

[bizdev]

Don't even think about walking into a bank without your completed business plan. You will not be taken seriously if you don't have your business plan in hand.

You can also speak with the counselors at your local SBDC (Small Business Development Center) for advice with the business plan. There is usually an office at the local college. Their services are free. They will also point you to banks favorable to start ups. However, getting a loan these days is next to impossible.

Some of the basic requirements for a business loan are industry experience, strong collateral, excellent credit and your own cash infusion (20% of your cash start up needs).

You don't need a lawyer to register your business (done locally through your county offices). But you should take advantage of the free consultations with both an attorney and an accountant. You need to decide on your business structure (sole proprietor; partnership; LLC; etc) early on.

You sound like you have a good head on your shoulders. You know to keep your initial startup to the basics and add on services later as you are able. Excellent strategy.

(Check out my signature if you will be needing funding.)

[Mega B]

I dont have a clue about this Doggy business but just a couple of question do you have the premises to look after them during the day as you dont mention anything like that and also what about the noise aspect with the locals,if you are out of town and have property you wont have a issue i guess.

[Clare]

Thanks for the advice guys.

We are working on the business plan and using sba.gov to get our structure and examples. We have software for financial planning and looking forward 5 years. We are looking at a profit by the third year, our investors paid back in 4 years and the bank would be paid off in 7 years.

As we are partners I think we'll become an LLC. We also have two co-signers for the bank loan with excellent credit and collateral. (Same people as our investors.)

The property we are looking at purchasing with the bank loan, is a large plot of land (about 6 acres) with an existing house and small commercial building. The entire lot is open fields. We will have plenty of room for the dogs and will be with them from when we open at 7am till we close at 7pm. The noise won't be an issue because of the large acreage. There are few neighbors.

After we get our business plan together, who do we have review it? Would someone from SCORE do that? I found a local office near me.

We have a piece of property in mind that we would like to get, do we specify that when we talk to the bank? Does a bank business loan cover the purchase of the property to be used?

Thanks again everyone. This site and it's users are so helpful.

Clare

[bizdev]

I would suggest you go to the SBDC (Small Business Development Center) rather than SCORE to review you business plan. There is usually an office within most colleges.

Yes, do have all the info you can get on the property and include in the business plan. Just get the info from a realtor. And yes, the business loan can cover the property. However adding property to the deal makes it a much higher loan amount which in turn makes it that much more difficult to qualify. If you can somehow manage to buy the property with a regular mortgage loan (separate from the business loan) it still makes it difficult to qualify for the business loan because now you have that huge debt that the bank will frown upon. It's a catch 22.

[Clare]

Thanks for the great advice. I'm not sure if my local colleges will have a Small Business Developement Center, but I'll look.

Because of the size of the land and the openess of it, we're thinking of putting in two small wind-turbines (SkyStream). Not immediately, but down the road when we have more funds. And possibly solar panels. Should we include this projection in our business plan? Is that something that would appeal to a bank?

Thanks again.
Clare

[DerekS]

I would strongly suggest looking at the rates offered on the business loan vs the rates for a commercial mortgage. Even at the higher interest rate you'd get for an investment property, you may still make out because mortgage rates are so low.

I would not include anything about the possibility of green energy on the property- you don't want to muddy the business plan by throwing in details about a "maybe" project which will shift focus away from your primary business activities. Solar panels and wind turbines are a whole other animal, expensive to get up and running, and usually a nightmare for most lenders (except ones who specialize in sustainable projects.) Down the road it may be advantageous to contact a company that does all the work (securing financing, setting up the equipment, etc) and having them lease the land for the panels/windmills. That would be a great source of passive income, without having to get your hands dirty.

Good luck.

[bizdev]

Excellent advice on both counts Derek.

[Clare]

So we look into a commercial mortgage to purchase the property and then go to the bank for a separate business loan? Wouldn't the existance of the first hinder our chance of the second? But if we can't get the business loan then we don't need the property. And if we can get the business loan, but then we can't get the property..... well you see whre I'm going. Wouldn't be beneficail to have them all rolled into one?

Thanks.

[bizdev]

Originally Posted by Clare

So we look into a commercial mortgage to purchase the property and then go to the bank for a separate business loan? Wouldn't the existance of the first hinder our chance of the second? But if we can't get the business loan then we don't need the property. And if we can get the business loan, but then we can't get the property..... well you see whre I'm going. Wouldn't be beneficail to have them all rolled into one?
Thanks.

That's why I called it a catch 22.
I have actually been in this situation. A few years ago I applied for an SBA backed loan for a business that included the purchase of a building. I structured the business plan and loan application to include the purchase of the property along with the start up capital. You can go ahead and do the same in order to start the dialogue with the bank. If they like your business idea they will want to work with you and will advise you which way you should go.

And don't be afraid to shop around. If one bank turns you down, try the next one. The SBDC counselor will advise you of which banks are favorable to start ups.

[Clare]

UPDATE:

We went to look at the property yesterday and signed papers for our Buyer's Broker. We loved the space and wouldn't have to do any building construction, only internal work and outdoor fencing. So that cuts down on our costs. So we're sure about the lot. Now we're on to finalizing the business plan, getting our graphs together, and then setting up a meeting with ... someone to go over it with us.

The lot is C3 zoned so it looks like we won't have to go through too much heavy permitting for the daycare to be allowed. But I am unsure what licenses and such we need to obtain to make sure we can open.

A work in progress.....

[bizdev]

You're making incredible progress! How exciting.

Keep the business plan short (aim for 20 pages or so), concise and simple. The executive summary will be your most important page so make it strong. The lender needs to be wowed right from the get go in order to be interested enough to keep reading with interest. The executive summary need only be 1 to 2 pages.

Did you find a SBDC office? They would be best for reviewing the business plan.

As for licenses, go online and look up your state's government website and search business license to see if you will be required to be licensed (likely yes). Call your local county/city offices to require about local permits. You'll need to register your business name with your county and register with the state for tax purposes (income; sales).

Keep us posted!

[Clare]

New Update:

We're meeting with our local SBDC office today at 3pm. Hopefully it all goes well! I'll post after and let you know what they say. Keep your fingers crossed for us!

Thanks!

Clare

[Aurora]

I just want to add that my grandmother owned a doggy daycare/grooming store for 8 years. She named it Doggie Den and it was very very sucessfull! One of her biggest selling points was that it was an open floorplan with a white picket fence and fake grass carpet...it was sooo cute....the pet owners absolutely loved the fact that they could see what was going on (nothing to hide) and that the dogs were happy and played with. She provided pet grooming, boarding, adopted out pets etc. Just a little 'fyi' .... I wish you all the luck cause I know you can do very well in this biz