How to Calculate the Break-Even Point for Your Doggie Daycare
Last Updated: March 26, 2018
1. Calculate your initial investment and monthly loan paymentsTo start any business, you're going to need to make an initial investment. Starting a doggie daycare and pet boarding business requires a rather substantial investment, both in equipment, like kennels, as well as real estate to house your boarding business. Sit down with your business team and figure out how much you're going to need to invest in order to start your business. These are not your MONTHLY costs, these are your fixed costs that you will incur before you start your business. Things like lawyer fees, real estate fees, cost of opening a bank account, investments in equipment, etc. Let's round this number to an even $5,000.
2. Figure out your monthly expenses for your businessAfter you're defined your businesses fixed costs, you're going to need to figure out how much money you'll be spending to run your business every month. This will include things like the cost of pet food for your boarding pets, employee salaries, the rent you pay on your property, and any insurance you need to pay for your business (and you'll need insurance). You might not have to worry about employee salaries at the start, but make sure you take into consideration that you'll eventually want to hire someone to help you run your business. We'll use another round number for $1,000 per month in expenses.
3. Forecast your monthly earnings, using conservative numbersNow comes the fun part of figuring out how much money you're going to earn from your business. As the headline says, make sure to use conservative numbers so that you don't get too ahead of yourself. Let's forecast that you have three daycare pets per day and you have two weekend boarders. If you're charging $15/day/pet for daycare and $25/night for boarding, you're going to make $225/week from daycare and $100/week from boarding. That's $325/week in revenue for the week. When you calculate four weeks in the month, you come out with $1,300 per month in revenue.
4. Arrive at your financial break-even pointNow that we have our fixed investment, monthly expenses and monthly revenue, we can figure out the break-even point for your business. This calculation will take into account paying off your initial investment before paying yourself a salary. If you're spending $1,000/month and earning $1,300 month, you're going to have $300 extra each month that you can pay towards your initial investment of $5,000. 5,000 divided by 300 comes out to 16.6 months. That's how many months you'll have to work before you pay off your $5,000 investment. However, since your business will most likely continue to grow in revenue, you can figure that you'll earn an extra $100/month every consecutive month. Using this increased revenue, you go from paying off your initial investment in 16.6 months to paying off your investment in 8 months (with $200 left over).
These are very rough numbers, but it gives you a good idea of how to get started with calculating your future doggie daycare's breakeven point. You're going to have to include other expenses and sources of revenue, but when this will give you a good starting point.
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