Top 10 Take Aways of the Annual Pet Services Financial Survey
By Susan Briggs
This past spring, International Boarding and Pet Services Association (IBPSA), in conjunction with business consultant, Crystal Canine, commissioned an online financial survey of 109 pet care service business owners based on their 2015 financials. Compared to the prior year’s survey, the results indicate that the pet care services industry — primarily pet boarding facilities — is beginning to feel the effects of increased competition, thanks to the multi-billion dollar industry lure and growing popularity of online pet sitter listing services.
While the bar to enter the pet care services industry remains low, the bar for long–term sustainability is rising thanks to the increased competition. Despite this, survey data reveals that many in the industry may not be maximizing their revenue opportunities.
“Pet care services has been an easy–to–enter, rather unstructured industry, but if its members want to move into long-term prosperity, they need to get serious about the business details,” said Carmen Rustenbeck, Executive Director & Founder of IBPSA. “Staff training and certification as an investment, understanding financials as a planning tool, setting yourself apart with complementary services, and implementing marketing strategies to make certain everyone knows about your certifications and services, must be as integral a part of a business as high–quality pet care.”
Industry benchmarks provide a great opportunity to take a big picture view of your business compared to averages. This annual peek into the industry offers interesting insights and helpful benchmarks for pet care facilities to utilize when planning and forecasting. The survey results also help spot trends and identify where the industry as a whole is headed. The following highlights ten key insights from the report. So, how does your business compare? What are the trends and takeaways for your business? Let’s count them down.
10. Small Niche Business is on the Rise – Bigger is not always better as the median facility size is 4,400 square feet and the most frequent survey response was 3,000 square feet. This could be a result of an increase in home-based businesses that represented 33% of respondents. As clients seek more customized care options and building and renovation costs continue to rise, the trend of small niche service providers is expected to continue to grow. But what if you’re not home-based? What if you have a large, professional facility? This “smaller” trend could be incentive to not only assess your customer service (Does it feel intimate and personal?), but to make sure you are effectively conveying to your clients and community the benefits of a staffed and trained pet boarding facility.
9. Staff Training Investment Grows – Business owners are recognizing the importance of investing in training their staff as this category was one of two that increased significantly over the prior year. If, as indicated below, payroll is the largest cost category, then getting the most value out of that cost is crucial. The staff training trend is expected to continue due to increased competition, an industry focus on providing quality care, and the newly available professional independent certifications.
8. Wages – Payroll continues to represent the largest cost category with the median spending 45% of revenue on wages. The most frequent response was 50% and confirms the survey response of 46% that pay $1.01 or more above minimum wage to their entry–level staff. Increasing minimum wage rates will continue to challenge business owners to manage this metric.
7. Ancillary Services Have Room to Grow – Very little incremental income is provided from services outside the “big 3” of lodging, dog daycare, and grooming. Increasing sales of other services like dog training, retail sales, and dog walking are opportunities to increase revenue in your existing space.
6. Excess Capacity Exists – The highest occupancy result was dog lodging with a median of 60% with dog daycare following at 48% and cat lodging far behind at 18%. The challenge for business owners is finding ways to utilize the excess space capacity in off-peak seasons to earn higher revenues per square foot.
5. Profit Percentages Over 10% are Hard to Achieve – The median range of profits of our survey participants was 11%–15%. Of particular concern is that 11% of respondents reported a net loss and 48% of all respondents earned 10% or less in profits. Industry trends revealed in the survey will continue to pressure the bottom line so owners need to be diligent in monitoring this metric.
4. Analyze the Discounts You Offer – The average discount offered is 18% with the highest discount offered being for multiple pet boarding. The industry average discount percentage is higher than profits earned (as shown, above), so this is an easy opportunity to increase revenue and your own pay. Discounts should be a win for your business and your clients, so consider shifting them to reward behaviors that benefit your business such as offering discounts for boarding during off–peak periods.
3. Raise Rates if Your Business Is Over 10 Years Old – The survey pointed out a pattern of older businesses pricing lower than average in their market. The takeaway? Make it a practice to annually complete a pricing analysis and raise some rates in your business to ensure you are covering your costs and making a profit. Price for the quality of care you provide, not the appearance of your facility.
2. Dog daycare is a commodity – A third of daycare providers have capacity for over 50 dogs per day and, for the majority, there is excess capacity. The median rate charged is just $25 which is likely evidence of increased competition. This figure is particularly striking as, by way of example, it’s the same rate charged at pet care facility Urban Tails in Houston, Texas, when it first opened in 2000—16 years ago. The survey results offer evidence that customers are price shopping for daycare services. So, what should you do? Try not only changing your financial model, but also improving your program so dogs have more fun, staff enjoy their jobs and you make more money.
1. Increase your pay – The median pay of business owners was $57,000 in 2015, down significantly from 2014. Only 25% of owners paid themselves $80,000 or more last year. Business owners frequently pay themselves last with what is leftover. A better strategy is to pay yourself first, and then adjust your business model to operate with the money that is left for all other expenses.
Ultimately, communities need high quality pet care centers, they not only provide expert care for individual pets, but they are frequently relied upon in times of community crisis and are often sources of aid and support for local shelters and rescues. To ensure the long-term viability of your business it’s important to stay on top of industry trends. The best takeaway from the results of this survey? Along with challenges in this industry there are also promising opportunities to increase profits and your own salary.
The business owners that will lead the pet care services industry in the future are those that understand the details of how they make money and the profitability of each key service. Setting financial goals and spending time each month reviewing your financial results is an important step to take to ensure your business thrives and continues to provide an exceptional quality of pet care.
Because the information gleaned from the survey is vital to keep our industry moving forward—and upward—IBPSA and Crystal Canine are committed to continue providing key insights, along with education opportunities, to ensure pet care services remains a strong, viable business choice.
Look for announcements in April of next year to participate in the next survey and, in the meantime, take advantage of all the information contained in this year’s 80+ page survey report now available through ibpsa.com or crystalcanine.com.