Happy Pup Happy life venture suggests a business model that will allow for the recurring revenues. The business objective is the multinational operation with several branches in various states. The main idea of increasing the profitability of the present business model is to check its gross profits and factors that cause its increase and reduction. The suggested business model of Happy Pup Happy life venture examines the possible costs and prices of the business. The general price structure of the company is shown in Table 1.
Table 1 – The price structure of Happy Pup Happy Life venture.
The company will receive $16 for one small dog half hour walk, $21 for two small dog half hour walks, and $26 for three small dog half hour walks. The fee for additional small dogs will be $9. Thus, for five walked small dogs a day the company will receive $44. By analogy, for five walked medium and big dogs the company will receive $53 and $60, respectively. The daily revenue that is obtained by dog walking will amount to $157. This figure will double for the hour walks.
Half hour pet sitting price is $21 for one visit a day, $40 for two visits a day, and $59 for three visits a day regardless of a number of dogs. By analogy, an hour pet sitting price is $37 for one visit, $73 for two visits, and $107 for three visits a day. Given that the company will provide three half-hour visits and three hour-visits a day, the total daily revenue will be $166.
Thus, the company’s canine walking and sitting services will bring a $323 revenue a day. All numbers are provided in Table 2.
Table 2 – The total daily income for canine walking and sitting.
Assuming that the cost of the canine walking and sitting services is $150, the company will have a gross profit of $173 (calculated difference of the daily revenue and cost of services).
Consequently, the present business model will have a gross profit margin of 53%. The formula and calculation are given below:
Gross profit margin = (revenue – cost of sales) / revenue = 323 – 150 / 323 = 53%
The business will generate revenue by increasing its customer base. It has to offer services to as many people’s dogs as possible. According to the present business model, the increase of the recurrent revenue may be achieved through the automation of service. At first stages, the company’s promotion will be realized through fliers and paper notices, but later the company will launch a mobile application and internet website where it will offer its services to many people. Furthermore, the move will reduce the service costs while maintaining the revenue constant. Precisely, the mobile application and the website will introduce a recurrent revenue.
The launch of the virtual application will boost the gross profit margin. Assuming the cost of services will be reduced to $100 due to automation, the company’s gross profit will be calculated in the following way: 323 – 100 / 100 = 69%
Thus, the introduction of the virtual internet strategies to the business model will ensure the profitability of the present model by increasing the chances of making more profits. As it is shown above, the reduced costs of services will significantly increase the profit margin to 69%.
After six months from opening, the business may be expanded by the introduction of grooming and veterinary care services for dogs.
The prices for grooming services are shown in Table 3.
Table 3 – Grooming services.
Given that the facility will provide grooming services to eight dogs a day (small, medium, big dogs and a small poodle in good condition and small, medium, big dogs and a small poodle in bad condition), its daily revenue will be $860. All numbers are provided in Table 4.
Table 4 – The total daily income for grooming services.
Assuming that the cost of the grooming services will be $320 including all the necessary equipment (clippers, blades, scissors, combs, brushes as well shampoos and other substances), these services will have a gross profit of $540. Therefore, the gross profit margin will account for 63%: 860 – 320 / 320 = 63%
The facility will also provide the multifunctional veterinary care that will include consultation services, 5-in-1 vaccination, anti-rabies vaccination, deworming, anti-flea treatment, skin scrapping, and ear cleaning. The price structure of all veterinary services is shown in Table 5.
Table 5 – Veterinary care price list.
Assuming that the total cost of these services is $100, and that the company will provide one of each services per day, a gross profit will account for $180. Therefore, the gross profit margin will be 64%: 280 – 100 / 100 = 64%
The total gross profit of the company after its business expansion is calculated by summing up the gross profits of dog walking, vocational, grooming and veterinary care services as well as the total cost of these services. All numbers are given in Table 6.
Table 6 – Total gross profit.
The total gross margin of the business will be 64.46%: 1463 – 520 / 520 = 64,46%
On the whole, the amount of revenue will remain constant, and the cost of services will plummet due to the fact that some of the money should be invested only at the initial stage (e.g. grooming and walking equipment acquisition). The decreased cost of services will give the present business model higher chances for keeping the profits within. The increase in the company’s revenues will be realized through the launch of the mobile application and website where clients will be able to put their requests and all the necessary information as well as learn current prices for the company’s services. The launch of the application will extend the market share of the company and will allow it to reach the other parts of the word apart from Richmond, DC and Fredericksburg, Virginia metropolitan areas. Thus, the present business model of Happy Pup Happy life venture shows the profitability of the project.