We may be approaching recessionary times, but Amy Nichol's business isn't going to the dogs, because the dogs are still going to the business.
Dog owners are more likely to cut back on their daily Starbucks fix than to pull their dogs from doggy daycare, the founder and CEO of Dogtopia claims.
"Dogs may not have credit cards yet, but they do have lines of credit," Nichols says, and we all know dogs as social beings would rather spend their time and owners' discretionary income romping with peers than at home locked in a "kennel." Call it what you will, it's still a cage.
Americans spend more than $41 billion a year on their pets, but still Nichols was turned down by six banks when she tried to launch her doggy daycare business in 2002. The seventh bank decided to take a chance on her, after requiring the young entrepreneur to get life insurance. Along with the loan, she used the profit from the sale of her house to finance her business. Nichols pulled her own building permits and friends helped paint and build her first center in upscale Tysons Corner, Virginia. In its second year, that unit grossed over $1 million. She never borrowed again.
In 2005, Nichols franchised Dogtopia nationally. Her first six franchisees were former customers. To date there are 34 centers open, including two company-owned units, with plans to have more than 50 up and running by 2009.
Sixty to 70 percent of the revenue comes from daycare, with boarding pulling in 20 percent, spa services 5 to 10 percent and retail 2 to 3 percent.
At the Tysons Corner location about 100 dogs attend daycare daily, with a ratio of 15 dogs per human. It's not cheap – a 30-day pass runs around $800. Dogs are prescreened for temperament and lack of sexual interest (neutered, in other words) and placed in three different groups depending on their size and activity level – the "romper room" for little dogs; "the lounge" for laid-back dogs and the "gym" for large, active dogs.
Nichols has built her business into what she refers to as the "cool kids club." "People want to be associated with exciting brands," she says. "Make franchisees feel proud they're associated with you."
Customers also want to be part of that cool kids club, especially the Dog of the Week promotion, where the dog's name is written on the chalkboard in the lobby. The winning dog's picture and brief bio are posted on the Web site and the owner receives a magnet for their car that says, "My dog was Dog of the Week at Dogtopia." "It looks silly," Nichols admits, "but I'm always asked, 'How do you pick?' And I always say, 'It's attendance based.'" Plus it's "pretty cool when I see the magnets while sitting in traffic," Nichols says.
One of her lessons learned was to outsource what you can. She uses The Findley Group for franchise sales, Windsor Realty for site location and Fishman Public Relations for PR. Finding locations can be challenging because of zoning, and sites need to be located off major arteries. "They have to be convenient, but not in strip malls where people bother you to see the dogs," she says.
Being around dogs all day is rewarding, the former technology executive says – about half capacity should pay all your bills – but it's not all play time. "It's hard work, lots of cleaning," she says. "Employees have to love dogs. You can tell after the first day if they're going to make it."
And while franchisees need to be business minded, they also need to know what it's like herding dogs all day. "They need to appreciate how the business started: in the playroom cleaning up," Nichols states.