there that Americans spend more money on their pets than they do on their kids. Whether this is true or not is anyone’s guess but after you hear about how one of my clients is taking a huge bite out of the pet care industry, you will definitely believe this crazy stat. More importantly, I’ll walk you through the numbers on how she’s doubling her profits
The client’s name is Elizabeth and she owns a dog boarding, grooming, and training facility in Newport Beach, California. She had a problem that lots of business owners face. She wasn’t able to keep up with the high demand for dog boarding and had to turn away customers because the facility was too full.
Elizabeth started her business in 2014 after getting laid off from her job. Last year, Elizabeth’s business did $715K in gross sales.
Now let’s take a look at the numbers. Elizabeth charges $30 per dog per day for boarding. Her current setup has enough space for a maximum of 50 dogs at a time. This means the max revenue she is able to generate is $1500 per day.
If she is 100% booked for every day of the month, she would generate a maximum of $45K in revenues per month.
With so much demand, Elizabeth can raise her prices but she wanted to stay competitive with the rest of the market so she decided to increase capacity instead. In order to do that, she would have to take over vacant space next door and build it out. Total cost of the buildout would be $200K.
Elizabeth did not have $200K so she engaged us to get the financing for her buildout. Now typically in a scenario like this, I would get the client a fixed term business loan, however, because Elizabeth has huge margins and high ambitions, I set her up with this business line of credit with Opus Bank Instead.
She can draw on the line to pay contractors as her build-out progresses. Once the project is complete, her line of credit would have close to $200K balance. She would have an interest only monthly payment of $1416.
Now let’s take a look at what her pet palace can do AFTER the buildout. She now has capacity to board 100 dogs at a time. This increases her daily expected revenue to $3000. Assuming that she is booked solid every day of the month, her gross income just from boarding would double to $90,000!
After factoring in the increased operating cost, Elizabeth would generate an extra $25,000 per month in profit. At this rate she can pay off her $200K business line of credit within 8 to 12 months. Once the line is paid off, she would be ready to strike again with the entire $200K available again. Perhaps to set up a new location in the next town over or perhaps to expand her current operation again. Whatever’s clever.
The bottom line is that she now has a permanent financing solution in place and will never have to worry about how she’s going to grow her business ever again.
You might be wondering what factors are required to get this type of funding. It’s a combination of 3 things that determine success.
Remember these three rules and you’ll be well on your way to successful funding. If you have additional questions or would like to learn more about financing your business, visit applymidwest.com. Who knows, maybe the next video I do will be about how you doubled your profits.
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