Yesterday we began our planning and research process. In our example, we are starting a luxury dog-walking and pampering service business based in St. Louis. We determined that we have 11,756 high income households who own dogs. Now let's find out what that means to us.
In this instance, we have owners who will be our customers - they are the ones paying for service. But each owner may have more than one dog. So we need to figure out how many dogs are available to be serviced. In the case of your business, this might be number of children, cars, computers, telephones...any thing that may be owned in multiples.
7. Determine how many things are available for service. (This step might not apply to your business) If we search again for "how many people own dogs in the US", we find out that the average number of dogs per household is 1.7.
If you wanted to get more specific, you could calculate the total number of 1 dog households, 2 dog households and so forth. That information is also available. For the purpose of this exercise the average number will work.
So 11,756 high income households multiplied by 1.7 dogs per household = 19,985 dogs in high income households.
8. Consider how large you want your business to be. If you are the only employee and you want to work 40 hours per week. You need to determine how many dogs you can service in that time.
Lets assume you are working a 40 hour week at your new dog walking business. Each dog you service gets walked for 30 minutes and there is 30 minutes of prep time for pickup and dropoff. If you can walk 4 dogs simultaneously, then you have 160 dog walking time slots available each week (40 hours multiplied by 4 dogs per hour).
Hopefully you have some experience in this industry and you're not just blindly starting a dog walking business. Your experience is key in knowing how frequently you will be servicing the same clients. For example, if you need to service each dog you walk 3 times per week, then you are only able to service 53 dogs (160 walking slots divided by 3 walks per week). Alternatively, if you need to walk each dog 5 times per week, then you will only have 32 slots available. Or perhaps each dog is only walked once per week, so you have the full 160 slots available. More than likely it will be a combination of these based on the needs of the dog owners. But whatever the frequency, you will definitely not be able to service more than 160 dogs per week.
9. How much are you going to charge? At this point you should have a good idea of who your local competition is and how much they are charging. When you are just starting out, you are not going to be able to charge the highest rates, even if that's what your competitors are charging. You lack experience and reputation. Likewise, you don't want to undercut your competition's prices by too much because you will lose perceived value and appear to be an amateur.
I searched "dog walking rates" and find the typical charge is $15-20 for a 30 minute walk.
If we can do 160, 30-minute walks in a week and we charge $20 per walk, that is $3,200 per week.
WHOA! Who knew dog walking was such a lucrative business?!
Now before you start shopping for a vacation home, let's consider that this is the maximum amount of money we can ever make if we are working alone, working 40-hours every week, and have a full schedule for 160 dogs every week. Also, we have not yet accounted for any expenses associated with our business.
What we have learned from this calculation is that with 19,985 available dogs in our market and only 160 slots to walk them, we need a very small MARKET SHARE to fill our schedule (Market Share = The percent of your customers compared to the total available market). In fact, our market share only needs to be .8% to fill our schedule (160 slots divided by 19,985 available dogs in our market). Assuming our expenses are not more than $3,200 a week, this definitely seems like a feasible plan.
That's enough math for today. In the next post, we will work on estimating our expenses.
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