Small Business Tips: Expand Without Going Bankrupt

by Dawn Fotopulos on January 17, 2012

We speak to hundreds of small businesses every month. Our small business tips will share with you what these businesses have learned. Every small business needs to navigate the shoals of this shaky economy. Here goes;

Meet Sharon, an expert dog groomer who has been running her own dog grooming business for twelve years. She quite good at what she does and has a loyal customer following.

One customer told me, “I always know when Sharon does the grooming. My dog looks so much better”. In some families, they care more about their dogs than they do their relatives.

Sharon is also uniquely qualified to do this work. Not only does she have training in both large and small, long and short haired dog grooming, but she also has a “Vet Tech” degree.

This qualifies her to check the animal for any diseases or issues affecting the dog’s health and well-being.  She told me she found skin cancer on one animal and various diseases on others. Her early detection saved the animals’ lives  and the owners much heart ache.

For dog owners, having a groomer who can flag you when to go to see a veterinarian is a big plus. Even if you had to spend more money to go to Sharon instead of another groomer, you’d probably do it because she’s such a good diagnostician. When our dogs are happy, we’re happy.

So here we are in 2012, and Sharon is tired. She wants to spend less time washing and scissoring dogs and more time managing the marketing and the books.

The business is set up in her garage that was renovated to accommodate washing, drying and clipping large, long-haired animals. Her workspace is an extension of the home she lives in with her husband and three children.

Her household pays the insurance, the lights and garbage collection for both her home and her business. But her work space feels too small.

Sharon can only groom one dog at a time and that limits her income per hour.

The business has one part time employee, Emma, who washes the dogs and keeps the facility clean while Sharon does the work that requires greater experience.

The average sale per dog is $90 for 1.5 hours of work or $60 per hour. Emma earns $10 per hour.

Sharon told me she wants to buy an additional  home in a more populated area, with a larger garage that would house her dog grooming business.

She believes this will provide easier access to more potential customers and more space to expand.  The house would be rented out to Emma (the part time employee) and Emma’s mother who is on social security.

Sharon believes the rent from Emma’s mother would cover all the costs, including the mortgage, to own this second home.

She also believes it would be a great boon to Emma since she would only have to roll out of bed to get to work every morning.

Here’s Sharon’s Plan:

  • Find more customers in this new area to increase revenues.
  • Move her location of operation closer to the town center where she believes the population is more concentrated and she has a larger pool of potential customers.
  • Buy a foreclosed home with large garage in this new area so the business can work on two dogs or three dogs at a time (more revenue per hour). This requires either a new loan on her home or a bank loan against the income of the business or a loan from relatives.
  • Emma’s mother, who would be paying the rent on the house, is receiving a predictable income so Sharon believes, she would not have to worry about whether the renter is paying the rent on time.
  • Train Emma to learn how to do higher-order tasks including scissoring the dogs (making poodles look like topiaries) and cleaning their teeth. Emma is open to learning new skills.
  • Sharon believes this would free her up to do less back breaking, hands-on work.

It all sounds great, right? What could wrong?


In this series of articles we will take you through the real risk Sharon is taking on if she pursues this plan.

We’ll also provide some small business tips on how she could reach her same objectives without, literally, betting the farm.

Read our small business tip about how Sharon should think about training Emma and how the timing of it could make or break the business.

Read our small business tip on when to rent or buy a larger space and location.

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