There are many ways to determine whether or not a business venture is successful, and they all depend on the honest and accurate perspective of the entrepreneur.
Half of all new businesses fail within the first five years. That is a horrifying statistic to consider, both for the wannabe entrepreneur and the newly established business. But let us look at the other side of those statistics with a somewhat more positive—and accurate—spin.
From the opposite point of view, 50 percent of new endeavors are still in business after five years, and the half that “fails,” according to the Small Business Administration (SBA), is made up of those that closed their doors for any number of reasons, which might mean it was successfully sold, the owner started a new business with a different focus, or they retired after a successful career. It may well be closer to 60 or 70 percent of startups that succeed in reaching their goals, and the longer a business exists, the less likely it is to fail. However, longevity is hardly a guarantee of success.
A love of pets motivated many of us groomers to enter the industry, as opposed to a purely business decision. And although that love of animals is a positive to our pet-loving customers, it has to be backed up with business savvy too—including the ability to gauge the success of your grooming business.
So, just what are the indicators of a healthy business, and how are you doing at reaching them?
Can You Pay the Bills?
This question is more far-reaching than it might seem, but answering it fully and honestly is one way to gauge how successful your business is.
If the money is in the business account to pay a bill when it comes in, that is one measure of success. However, it does not necessarily tell you if you will be able to pay future bills. To determine if you are operating at a net profit, you need to know your gross income and all of your costs. I mean everything—consumables (shampoo/ear cleaner/clipper oil/paper towels/etc.), labor, rent/mortgage, utilities, payroll, all equipment from dryers to pooper scoopers. Everything.
If you do not know exactly how much it costs to run your business, you will never know if you are succeeding. You may be able to pay bills as they come in, but never get ahead. You can figure it out any way that seems right to you—per diem, per dog or per week—but you must have something to balance your gross income against.
If you are charging $60 to groom a Bichon, but it is costing you $55 to pay for the groomer/bather, shampoo, marketing, rent, water and electricity to do that job, it is hardly worth being in business. If you can increase the price to $90 or reduce the costs to $35, that would be a different story. But first you have to know, and that means keeping records—good ones.
Jim McConnon, professor of economics at the University of Maine at Orono, advises developing a recordkeeping system that is comfortable to you. “Seek out professional development around that goal; a course, an extension workshop, etc., that will help you understand the language of recordkeeping,” he says. “Webinars, online research, adult education can all help. The whole idea is to be motivated to keep records.”
The most important part of recordkeeping is to have a receipt for every job and expense because that’s step one: creating a paper trail for everything that goes out of or comes into the business. Then, as those paper files fill up, post them to a ledger on a weekly or monthly basis.
I used to jot down each day’s gross in my appointment book, add it up weekly and then monthly. This allowed me to flip back and compare monthly and annual revenues. But that was in the late 1980s; it’s a lot easier now, so take advantage of the technology that’s available. There are many products designed for tracking and managing financial records for small businesses, so it should be easy to find one that suits any groomer’s particular needs. Of course, they all have advantages and disadvantages.
McConnon suggests using comprehensive recordkeeping as a basis for a business’ financial management, but you need to understand a financial statement to do that. So, you will have to find a small-business class and take it, or look for professional assistance.
“A small business is busy; there’s not a lot of time to reach out, and you end up feeling you have to do it yourself,” he explains. “You are not alone. There are resources that can help, and you should seek out that support.”
A CPA (certified public accountant) or any professional accountant can help you set up a good system. Many small business owners need to wear many hats, but remember that you are not an expert at all aspects of business. Do you remember what the last client whose owner decided to groom at home looked like? Spend the money for a good accountant, lest your books end up like that dog. Investing in an accountant to function as an advisor may be worth a lot more than it costs.
Are You Meeting Your Goals?
Clearly, if you are paying the bills, you are meeting the goal of staying in business. However, setting more specific benchmarks can be helpful.
A good business plan should include such specific goals, and it should be re-evaluated and re-written as those goals are met and change. A good business plan is like a road map; follow it, but know that there may be detours and route changes along the way.
There are 10 questions that every salon owner must ask themselves in order to truly understand whether or not they are meeting their business goals:
1. Are you following your business plan and is it current?
Re-evaluate your business plan regularly—every six months or as needed.
2. Do you have specific benchmarks to meet?
Think of what you want to accomplish. Having something concrete to aim for makes it easier to move along and more satisfying when you can point to specific goals achieved, while always setting new ones.
For example, a new business may want to measure success by how many new customers they gain each month. On the other hand, a more established business may need to be assured that repeat business is a large percentage of their income. Perhaps you are turning around a business that has been through difficulties; a benchmark in this situation might be reducing the customer complaints by 50 percent by a certain date.
That brings us back to good recordkeeping; you need to have a way to tell whether a customer is a first-time or repeat customer and to track complaints accurately in order to gauge whether or not you are meeting those goals.
3. Are you meeting the right goals? Are your benchmarks real indicators of success?
The number of dogs done each day may not be a reliable indicator of financial success. If prices are low and expenses high, you may not be able to do enough dogs to succeed and instead should turn your eye to how to increase the bottom line.
4. Have your goals changed, and if so, have you added them to the plan?
A full appointment book may have been your goal at one time, but if that’s achieved, maybe you are looking at retirement planning now.
5. Do you know who your customers are, and why they are patronizing your salon?
Is it cost, convenience, speed, scissor finish, empathy or some other reason that is driving traffic to your business? If clients recommend you, what are they saying about the business? It is important to know if the image you are projecting is the one you want. How did new customers hear about you? You won’t know when to change marketing strategies if you don’t know.
6. Are your customers happy?
This question is key, and there is one easy way to answer it—ask them. Surveys are easy. You can have clients return them through the mail, so the process is anonymous, or offer some incentive like a prize drawing. Ask questions that will produce the type of answers you need. For example, “What are the top five benefits to having your dog groomed here?” “How does our pricing compare to other salons?” “What could we do better?” Loyal customers want you to succeed and will do their best to help.
7. Are your employees happy?
Besides the customers, they are what make your business successful. If you have good employees, find ways to keep them at all costs. If you do not, find ways to change that.
8. Do you know your industry?
What trends have emerged in the last year or two (Asian Fusion, coloring, other new add-ons)? Should you change anything based on that? Are your customers asking for any services that you currently do not offer? Should you add them?
9. Are you putting your goals in the right context?
Be careful to evaluate your goals and success through your own requirements and not filter them through the eyes of others. For example, basing your prices on other similar establishments is not good business. While you need to stay within reach of local customers’ ability to pay, pricing to compete directly with another business can lead to disaster. You don’t know what the competition’s overhead or goals are, so suit your own instead. Raising prices to meet the competition may result in driving too large a segment of your target market elsewhere. Lowering them for the same reason may put you out of business.
10. Are you staying on top of your business?
Keep up with changes. Continue to learn, both about grooming and business. If you don’t stay current, you will fall behind. If you don’t analyze your success, you won’t be able to change failures. The more you understand about yourself, the pet industry and how business works, the more you will succeed. Read every trade magazine you can get. Go to trade shows, seminars and dog shows to stay up to date. Join online forums for business owners, all kinds—many business practices are fairly universal.
The Real Bottom Line
Perhaps the most important question that small business owners should ask to gauge success is, “Am I happy?”
Are you getting what you wanted out of the business when you started it? That’s something you can’t find an answer for on the Internet or in a class. You have to look into your own heart for that one.
What a business owner wants can vary wildly. Some people go into business to make a lot of money. Others simply have an idea, and in pursuing it, create a business. Many businesses began because someone wanted to make a living, hopefully a decent one, doing what they love or providing a service or product they saw was needed.
“Paying bills shouldn’t be why we go to work every day,” says Addison Chase, owner of Chase’s Daily, a small, exclusive restaurant in Belfast, Maine, who knows the value of enjoying what you do for a living. “If you don’t love what you are doing, you’ll run out of energy way too soon. Most small business owners probably didn’t start up to make a lot of money, although you may. Probably even Bill Gates started by just following his own interests.”
In Chase’s case, much of the enjoyment comes from working with people they love. He and his wife Penny operate a farm that provides produce for the restaurant and a companion farmer’s market housed in the back. Their daughter Meg runs the farm and manages the restaurant, their daughter Phoebe bakes the renowned bread and desserts that are available at the counter, and Penny cooks. Addison works on the farm and greets people at Friday night dinners. And it all began because Addison and Penny wanted a way to do what they all love doing—growing, selling and cooking quality vegetables—in a comfortable environment, together as a family.
Many small business people in and out of the pet industry believe that personal goals and loving what you do are tied together with business goals. Veronica Boutelle, MA Ed., CTC, author of How to Run a Dog Business and founder of dog*tec, a business that helps people start, grow and succeed at their dog-oriented businesses says, “For many of our clients, personal goals like helping dogs, educating the community, or a flexible schedule are more important than financial ones. As consultants, it’s our job to keep eyes on both kinds of goals. We want to see our clients make a good living, but we also want to see them enjoy the personal satisfaction of making a difference for others and making themselves happy.”
When evaluating your business success, do it creatively. If you are making the money you need but don’t have enough time for yourself, it may not be quite the recipe for success that you are looking for. Find ways to change that. Boutelle suggests looking at all the various hats you wear as a business owner, picking one you don’t like, and delegating those responsibilities.
Perhaps hire a receptionist for a few hours in the morning, or a bookkeeper to keep those records accurate, or a bather. One of Boutelle’s clients followed her suggestion to hire someone to do some of her housecleaning and gained the time she needed that way; another hired someone to clean the salon and do laundry at night. Morale and productivity improved when tired groomers could simply tidy their own area and tools and go home.
The problem isn’t always what you think it is, so be sure you have identified it correctly. Perhaps “I need a bather” is really “I need a few more hours a week”.
Part of being happy with yourself as a business owner is realizing it is not possible to be perfect. And that’s OK, because it is not important. What is important is learning from your mistakes and making appropriate changes.
Chase’s Daily started out with the family selling produce at a local farmer’s market. While successful, it did not provide them with everything that they wanted from a business. The purchase of a building and the creation of the restaurant did, while also providing more employment to the local community— something else that is important to the Chase family.
There’s a saying, “If the boss ain’t happy, nobody’s happy.” It’s true. If the owner has lost passion or joy in what they are doing, it will spill over to employees and to customers. No one likes being in an unhappy environment.
If you are not happy with your business, figure out why and how to change it, because the greatest measure of a business’ success is whether you believe you are successful.