tailwagging paychecks · you should set up a business bank account and select a bookkeeping system...

TAILWAGGING PAYCHECKS:5 S T E P S T O A B E T T E R

P E T C A R E B U S I N E S S

By The Dog Gurus

Copyright © 2018 • TheDogGurus.com 2

You got into the pet industry because you love dogs. You love to care for them and understand their needs. You adapt your business to be sure the dog’s safety and care is your main priority. Simply put..you love being in the company of dogs and love to get their tails wagging! Imagine if you spent just as much time working on the financial aspects of your business. Not only will your paycheck be bigger, but you’ll be able to make even more dogs happy.

To have a productive business, you need financial stability that comes from sound planning. The following 5 steps can help you begin or improve your pet care business.


Step 1: Lay the Foundation

As much as you may love what you do, being financially savvy is vital. Your business needs a stable financial foundation that can come from clearly establishing the role of chief financial officer (CFO) of your organization. Next you should set up a business bank account and select a bookkeeping system to track your assets, expenses and income effectively.

Hire an experienced financial team, including a bookkeeper and a CPA, to complete daily financial tasks, serve as your tax advisor, and balance your books. The CFO, which may be you, will then have more time to analyze your financial situation and plan for increased growth.

The appendix (at the end) includes a chart of key accounting processes, recommended frequencies, and the most appropriate person to handle the task. If you need a primer on the basics of accounting or how to read financial statements you can refer to our ebook Counting Noses.


Step 2: Use Data Effectively

Since pets can’t speak, at least not in words, you have to determine what they need based on appearance, behavior, and overall health. Similarly, you need to have evidence, like data, to check the health and needs of your business. Enter good data into your accounting system so you can analyze it. Many business owners make the mistake of not having enough detail about revenue, expenses, liabilities, etc.

Accountants use a chart of accounts to track cash, revenues, and purchases (see the Appendix for a sample chart showing a typical pet service business system). Create separate accounts for each revenue source and cost so that you have the option of breaking down profits by service.

Be sure to keep your accounting system up to date even though you probably enjoy the pets more than the numbers. At a minimum, enter income and expenses on a weekly basis. A good rule of thumb is to have each month’s numbers entered by the 5th of the following month.


Step 3: Analyze Carefully

Pets cannot take themselves for a walk or trim their own fur. A pet groomer needs to take care of a pet often to keep the pet in good shape. Likewise, when you regularly analyze your financial performance, you can make improvements quickly. You should check your financial statements regularly but understand that simply checking them does not give you a full picture.

If you have just started your business, you will need to analyze your data by comparing actual results to your business plan forecast. On the other hand, if you already have a pet business, comparing current data to your budget or previous period allows you to see your business health.

Comparing data within your business is important so you can identify if your business numbers show improvement, investigate why they are better or worse, then determine what changes you can make.

In addition to your financial data you can also gather performance data of your key services as well. Some of these key measures may include number of pets attending daycare or grooming, and lodging occupancy. Monitor trends in this data and If, for example, you often have open appointments for grooming on Wednesdays, you might offer Wednesday daycare clients a special to try grooming on their next visit. The Appendix includes a sample Key Measures Monthly Performance Report Card Template to help you organize your performance data.


Step 4: Take Action

If you have a dog, you know they need outside time. If you have to open the door frequently, you might improve the situation through installing a dog door. Financial planning should lead to changes in your company whether you have profits or losses. The advantage of monitoring your business carefully is you can make good changes quickly. To improve your business, you need to change your cash flow by either increasing revenue or reducing expenses.

Do you know which services or products contribute the most to your bottom line? Do you know which service or products are not profitable? When you track and analyze your business data you can figure out which services and products you should continue and which you should change or improve.

Focus on growing your revenue stars and adjust low performing services by raising rates or lowering costs. Check out our Appendix that includes action steps to reverse a negative trend in revenues.

It is a good idea to set a budget each year for your pay increases to prevent payroll costs from increasing more than you expect. Also be sure to review vendor contracts and supply costs annually for opportunities to save money.


Step 5: Schedule

Pets do well if they are on a regular schedule. Similarly, businesses should schedule planning and reviews to regularly make business decisions. For example, you could annually review your pricing list and employee pay. Each month you could schedule a different business task to keep your business in good health (a sample schedule is included in the appendix).

Most importantly, to keep track of your business performance, schedule a time for your CFO duties. If distractions are a problem, you can either shut your office door for a set amount of time or find a quiet, remote office. Having a small reward, such as a favorite beverage or food, can help to motivate you through analyzing your business results.

When you established your business, you may have had a great plan. But over time you need to make changes to keep tails wagging at your business. The more you know about how to run a great business, the more effective you can be as CFO. Setting up a good structure to manage your finances, inputting data, analyzing it, and making changes all work to create a sustainable business as well as a good paycheck.

Appendix


Step 1: The Foundation – Accounting Process Responsibilities

Excerpt from Counting Noses


Step 2: Good Data – Pet Services Sample Chart of Accounts


Step 3: Analyze – Sample Key Measures Monthly Report Card Template

Monthly Performance Report Card Template

Current Month

Prior Month % Change Same Month

Last Year % Change

Occupancy

Dog Boarding 42% 52% -24% 40% 5%

Daycare 68% 65% 4% 72% -6%

Grooming 81% 89% -10% 75% 7%

Revenue per Pet

Dog Boarding plus activities

44.20 45.60 -3% 43.10 2%

Dog Daycare 19.65 20.40 -4% 18.60 5%

Units Serviced

Dog Boarding 968 1,148 -19% 936 3%

Daycare 867 897 -3% 843 3%

Grooming 368 405 -10% 312 15%

Training 55 72 -31% 78 -42%

Other

New Clients 27 43 -59% 35 -30%

Average Client Sale $98.68 $102.56 -4% $93.71 5%

Client Recovery Expense

$125 $195 -56% $80 36%

Excerpt from Financial Health Check-up Series Course


Step 4: Take Action

The pet industry has peak and low periods, so comparison of sales by department to the same period of the prior year provides more information on whether sales are growing, staying flat or decreasing. For new businesses, an alternative is to compare sales by department to the prior month or quarter to determine growth rates.

The table below provides a sample report of sales by department for Purely Positive Pet Care comparing current month sales to prior month.

Department Current Month

Prior Month

Change INC/(DEC) % Change

Boarding $33,600 $28,720 4,880 17%

Dog Daycare 18,890 17,985 905 5%

Grooming 7,390 6,680 710 11%

Retail 5,940 6,425 (485) (7.5%)

Training 3,215 4,830 (1,615) (33.4%)

Total $69,035 $64,640 4,395 6.8%

At first glance the 6.8% increase in sales over prior month is positive. However, looking at sales by service provides key information that boarding

revenue increased 17% while training revenue decreased over 30%. Understanding reasons for each service revenue change is important. Your role as CFO is to plan action steps to reverse the decline in training which

could include a focused marketing campaign for next 60 days.


Step 5: Schedule – Financial System Annual Calendar

Financial System Annual Calendar

Month Action Items CommentsJanuary Your Financial Team Are you in right role? Do all team

members provide the support you need?

February Pricing Analysis(see month 2 Guide Sheet) Schedule adjustments for current year

March Review Key Measures set(see month 3 Guide Sheet)

Is each measure helpful in decision making; should you add new ones?

April Quarterly Review(see month 4 Guide Sheet)

Compare 1st quarter to budget and same period of prior year

May Employee pay increases (see month 5 Guide Sheet)

Provide wage increases to all eligible employees

June Vendor Contract Bidding Plan(see month 6 Guide Sheet)

Review master vendor list and schedule bid requests for next quarter

July Quarterly Review(see month 4 & 7 Guide Sheet)

Compare 1st six months to budget and same period of prior year. Make adjustments to goals and budget for second half of the year.

August Calculate Profitability by Service(see month 8 Guide Sheet)

Make adjustments in pricing, discounts or costs for services that fall short of profitability goals.

September The Right Service Mix(see month 9 Guide Sheet)

Take a fresh look at your service mix and analyze for fit to business goals, client needs and wants, and competition

October Annual Budget Planning(see month 10 Guide Sheet)

Create your operating budget and capital plan for the next calendar year

November Quarterly Review(see month 4, 7 & 11 Guide Sheet)Employee Pay Review(see month 5 Guide Sheet)

Set or review key benchmarksReview wages and adjust as needed within annual budgetSchedule your financial analysis time on calendar for next year

December Prepare Cash Flow Forecast(see month 12 Guide Sheet)

Identify cash flow components for next year

Excerpt from Financial Health Check-up Series Course

tailwagging paychecks · you should set up a business bank account and select a bookkeeping system...

Documents