568: The Rising Costs of Business
Brought to you by: Pet Sitters Associates. Use ‘Confessional’ at checkout
Running a pet care business is getting more expensive, and simply raising prices isn’t always an easy option. In this episode, we break down the factors driving up costs—rising labor wages, increased overhead, and shrinking profit margins—and explore what pet sitters can do to maintain profitability. From improving operational efficiency to refining service offerings, we discuss strategies to stay ahead without sacrificing quality or burning out. If you’ve been feeling the financial squeeze, this episode will give you actionable steps to take control of your costs and future-proof your business.
Main Topics:
The impact of rising labor costs on pet care businesses
How to optimize pricing while staying competitive
Streamlining operations to improve profit margins
Smart marketing strategies to attract premium clients
Reducing inefficiencies in scheduling and service areas
Main Takeaway: “It’s not just about raising prices, it’s about optimizing everything else in our business to make sure we can do that with our actual revenue-generating services.”
Business costs are increasing, but that doesn’t mean your profit margins have to shrink. Instead of simply raising rates and hoping for the best, we need to focus on efficiency. Are you optimizing your schedule to reduce drive time? Are your employees as productive as they can be? Are you offering premium services that justify higher pricing?
If you’re not actively adjusting your operations, you may be losing money without realizing it. Every inefficient process, every underpriced service, and every unnecessary expense eats away at your bottom line.
By focusing on profitability through efficiency, you can take control of your expenses, maintain competitive pricing, and continue offering high-quality services.
🚀 What’s one area of your business you could optimize today?
Executive Producers:
Adriana
Barbie
Beck
Erica
Jan
Janie
Jenny
Julie
Kathryn
Keith
Liz
Lori
Lucy
Sarah
Savanna
Scott
Theresea
Yvonne
Links:
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A VERY ROUGH TRANSCRIPT OF THE EPISODE
Provided by otter.ai
SUMMARY KEYWORDS
Pet sitter confessional, Patreon support, executive producers, rising costs, minimum wage, profit margins, labor costs, operational efficiency, overhead expenses, client acquisition, premium services, personalization, automation, route planning, client referrals.
SPEAKERS
Collin, Meghan
Meghan 00:02
Hi, I'm Meghan. I'm Collin, and we are the hosts of pet sitter confessional, an open, honest discussion about life as a pet sitter. We appreciate you joining us today for episode 568, we will also want to thank pet sitters associates and our Patreon people for supporting the show. Welcome ally, our newest Patreon supporter. Thank you for loving the show and wanting to give back. A few weeks ago, we had sent out a survey, and we heard you guys, loud and clear. You said you wanted more content. One of the only ways that we're able to do that is by your direct support. Through Patreon. We have two levels, the dachshund level, which is $5 because Dachshunds are small and cute, and then the Great Dane level, which is $15 a month. One of the benefits of the $15 a month is to get an executive credit. So our executive producers of today's show are Adriana, Barbie Becky, Erica, Jan Janie, Jenny, Julie Katherine, Keith Liz, Lori, Lucy, Sarah, Savannah, Scott, Theresa and Yvonne. Thank you all so much for finding value in the show. If you would like to join them in being an executive producer, you can go to pet sitter, confessional.com/support, to see the ways you can help it out. This is no surprise, but costs continue to rise around us. It's making things a little bit difficult as business owners. You know, in the past, the solution was that we needed to raise our prices to offset the expenses that we were incurring. It was pretty simple, no brainer, but now that's getting harder to do. This is partially because clients aren't on board with as aggressive price increases as they previously were. When times are good, when the economy is thriving, they don't really care as much about a big price increase. Also, when there are so many new hobby temporary sitters out there offering cheap services, it's pretty easy for clients to go find a more affordable option, especially when college kids are home for the summer or kids out of school during the holidays. Clients sometimes gravitate toward those options. So we operate our business in Missouri, and we just had a new minimum wage law go into effect. It's a pretty aggressive increase, and though we have always paid above minimum wage, our staff have started to ask questions about getting a commensurate increase. So we've had a lot of company discussions about that. Also, if there's a Costco in your area, they just raised their minimum to about $32 an hour. We as pet sitters and dog walkers, we can't really keep up with that, because on top of that, we would have to pay taxes and all of that, and it's just not cost effective. We've raised our prices, and have always been a price leader in our area, but frankly, we really aren't sure how much higher that we are going to be able to go in the near term to keep up with not only minimum wage, but the other companies, the behemoths around us that just keep raising and going up. It is more than just marketing and branding, though, at a higher price, because at some point clients will just say, No, thank you and move on. You know, our competitors are already the neighbor kid down the street who doesn't charge very much, or even another dog walker who's just getting started and has really low prices. So what used to be considered healthy profit margins, you know, you think 20 to 40% are becoming aspirational as we look to shrinking margins across the business with no ability to really raise rates to keep them right. And
Collin 03:12
so that question becomes, how small does that margin need to shrink before we need to do something about it? What are we going to try and do in our business to shake it up about our marketing, yes, sure, but also structurally and operationally about our business. If we're feeling like we're capped on how high we can go on our prices, is there anything else we can do in our business to try and get some of that more margin back in our operations? And
Meghan 03:39
I know COVID didn't help any of this with inflation. Now at basically an all time high prices keep going up. There's only so much wiggle room that we can really have, especially when you have employees with all of the additional overhead. When we talk about normal averages for profit margins, there are really three areas, the first one being the lower end. So 10 to 20% profit margin is really common for businesses with higher overhead. So if you have an office space, or if your employees have benefits, or you have office managers or field managers, admin staff, really then there's the 20 to 40% range, which is pretty healthy. These are well run businesses with optimized scheduling, pricing and minimal wasted resources, the highest efficiency businesses are at 40 plus percent for a healthy profit margin. These are really seen in solo operators with no to little overhead, or businesses that charge really premium prices while maintaining lean expenses. So if you have employees like us, some of the major drivers in price increases are obviously labor costs. Employee based businesses often have 50 to 60% of revenue going straight to payroll, and that should be all inclusive, so make sure you're calculating that right. There's also operational efficiency, so scheduling, reducing the drive time, if you have 2030, minute drive times in between class. Clients that's really going to eat into your profits. 510 minutes. Really ideal. There. Maybe you found that you're saying yes to one client that's a little too far away, and then a few months later, another client that's a little too far away. And so you're actually expanding your service area. Or maybe you have office managers, and they're taking kind of a long time to route, plan and schedule, and you really need them to be more efficient. And then, of course, there's the overhead costs. And again, if you have an office space or insurance marketing software equipment, all of this can really eat into the profits if it's not managed well, insurance alone has gone up six to 10% or more year over year. And then software as well. Even though a lot of digital platforms are using AI, their software is still going up 15 to 20%
Collin 05:44
and some are even charging extra to get access to the AI this. These buckets of costs are really things that we as a business, we try our best to manage, but they do creep in over time. If you've never done this, I really encourage you to do something like this. You can go to your software, if you use it, or go into a Google sheet and enter all the addresses for your clients, if you have software, export the addresses as a CSV, then you can actually go into Google Maps, technically Google Earth, upload the CSV as a file and see all of the little pinpoints that come up on the map. This will give you a great representation to at least just show you exactly where are all of my clients. I guarantee you there's going to be five that are way further out than everything else than you realized at the time. And then you can look at those and say, How long am I actually serving these people? What actually income are they giving to me, and how much of a pain are they to me to get some scope and idea of what is actually going on here. And then, yes, the services, those overhead costs our software, softwares do go up, and depending on how many subscriptions you have. Really look at each time, there's a 345, $6, increase year over year. Sometimes within a couple months, you'll be shocked to see what you pay. We're paying for a lot of these things just two or five years ago even, but
Meghan 07:06
in most cases, there really isn't a whole lot we can do about it, because some of these are critical to our businesses. And Augusto, we had dealt with a couple years ago. Of them raising our price. And we really like them, and they do a lot for our business. We really rely on them. And so we did shop around a little bit, but at the end of the day, we thought, yeah, it's worth it for us, even with the price increase.
Collin 07:27
So really understanding just how valuable these things are to you, do you actually need this? Yes, the biggest expense that most of our businesses are going to have are those labor costs, especially if you have employees, right? So understand, am I using those people correctly? Are they optimized? Are they efficient? Are they doing what they need to do for my business? Are my pay scales in alignment? Or did I jump way far ahead because I was worried I wasn't going to get anybody for my job ad, and now I'm kind of sitting here wondering When on earth I'm going to make profit all of these things, just outlining everything and going, where are my costs going? And importantly, at what rate are they changing? Because if we see that, oh, these are actually changing year over year, quite extensively, 1015, 20% but my, my, my prices aren't or maybe I feel like I'm capped. We've got to be we've got to find ways to do something else in our business to get back that margin,
Meghan 08:25
and that's what we're going to talk about next. But before we do as a pet sitter, you know how much trust goes into caring for someone's for a family member, but who's got your back? For over 25 years, pet sitters associates have been helping pet care pros like you with affordable, flexible insurance coverage, whether you're walking dogs, pet sitting or just starting out, they make it easy to protect your business. Get a free quote today at petsit llc.com and as a listener, you get $10 off your membership when you use code confessional at checkout. That's pet sit llc.com because your peace of mind is part of great pet care. So what do we do about the shrinking profit margins we mentioned? Raising prices isn't always the best option, and it's harder to do than ever, obviously, but even a tiny increase can give you breathing room to work on other things. I know. We just did one January 1. If you haven't done one in a while, really run your numbers. Look at your budget. You probably do need to do one. Your rates must cover your labor, your overhead and your profit for labor, 50 to 60% of your revenue all in is generally the average. A lot of our businesses say that we aren't for everybody. We are a premium service. So set your prices accordingly. Set a premium price, position yourself as a high end service with clear value differentiation. And that can be hard sometimes when you go, well, it's just a dog walk. But there are things that your business does that nobody else does, things that you know value. You can bring things you can do in your business to enhance that customer experience. Maybe offering tiered pricing is something you want to do. So a standard walk is $25 but an enriched walk is $30 which includes mental stimulation. Maybe a canine massage, then you offer an adventure hike, which is even more of a premium service, for $75 so again, the standard walk, 25 an enriched 30 and then an adventure hike 75 and why
Collin 10:11
is this so important? It's because your labor costs don't scale one for one with each of these services, especially from the standard to the enrichment. If you keep it at 30 minutes, an extra $5 Yes, it gets the client a whole lot more as far as that mental stimulation and puzzles and all that stuff, but you are only locked in for 30 minutes, so that actually gives you a little bit of extra padding, and then the adventure hike, if you're paying hourly for your labor. This, again, doesn't scale, but it's way more profitable, because the margins are so much better on that service, as opposed to the standard walk, for every one or two adventure hikes that you get, this helps cover the margins that you don't have for the standard walk.
Meghan 10:51
Basically make sure that your premium services are being charged at a premium price. So if you want to calculate your ideal pricing, for example, if your 30 minute walk is $25 it really should cost $15 or less per walk to retain 40% of that profit. Because again, you're doing a 6040 split, 60% revenue, 40% profit. So $15 or less per walk to retain that 40%
Collin 11:15
profit again. And this is where this gets hard, because if you have increasing labor costs with hourly rates going up, or if you're trying to pay mileage, or if you're trying to do all these things, because we want to do well by our staff. That's where we've got to really understand and optimize everything else on our routes and everything else in our business to make sure we can do that with our actual revenue generating services
Meghan 11:37
well. And speaking of routes, you do want to reduce that travel time Absolutely. I mentioned 2030, minutes between services. That's not really ideal. You really want to get it down to five to 10 minutes. So maybe targeting specific neighborhoods of people that you you want to service maximize those walks per shift, really?
Collin 11:54
Yeah. So again, re look at that service area, and maybe even if you can have employees that only cover very specific areas to keep their drive time 10 minutes or less. We know a lot of businesses who will say, Okay, where do you live? I will only give you clients who are five minutes from your house, or whatever that actually is, because this not only makes it more convenient for the employee, it also helps you as the business, limit the amount of drive time that you're paying for because for every mile that you're driving, that's money that you're paying for that you're actually not generating revenue on. So we want to make sure that our revenue generating time blocks those actual walks, those actual sits, the poop, scooping, whatever you're doing, those are as close together as possible.
Meghan 12:33
Now this does become hard if you want all of your employees to potentially be able to do all of your visits. If you're a one for one model. This makes sense. Yeah.
Collin 12:41
So all the more reason to really make sure that you have a well optimized and a really good service area that is going to be the most efficient for you. If
Meghan 12:50
you don't think you could raise all of your rates, think about offering additional upsells for your services. This is especially important because pet parents are looking to have more personalization from their pet care services. So this could be enrichment visits, like we mentioned, mental stimulation puzzles going on, snifaris, adventure hikes, training, add ons, instead of raising your rates by two to $5 lean into the personalization aspect and offer maybe a $5 upgrade. So a frozen Kong or a lick matte treat, a puzzle toy, a water refill and fresh bowl. Setup a brush and ready. Just grab a brush. Session for five minutes and then go or a treat bag. Add on a photo upgrade. You can have different portraits or accessories for different holidays. Also a personalized report note. Pet parents love that it's from their dog's perspective. You can also do a digital keepsake or a holiday bandana or bow tie, a popsicle in the summer, or a seasonal themed report card, a fun way to say, hey, here's some fall adventures with your dog's name. All
Collin 13:54
of these are just really simple ideas that to your bottom line, shouldn't and really don't add a whole lot of extra money compared to the $5 that the upgrade actually is. And again, what you're leaning into here is the perspective and the desire of the modern pet parent to have things that are personalized and customized to them. They want to splurge on experiences for their pets. They want to feel like they are providing the best possible care for their pets. So these things allow them to pick and choose, create that, that little list of right? I don't just get a walk. I get the frozen Kong, I get a little Polaroid print, and I love the popsicle thing in the summertime because I know it's hot, and I want to make sure that they stay cool. These are little, they are fun. They are light. They allow you to be flexible, and you can customize these to your brand, your voice, wherever you live and wherever your community is, and what's important to them. Find those things and don't be afraid to talk about them to the clients. The only way they're going to know about them is if you tell them about them
Meghan 14:57
to increase your profit margins, you're also. Want to streamline your admin work, especially if you're paying an office manager for this, automate scheduling as much as possible, your invoicing, your client communication, instead of having employees randomly driving around to drop off flyers or do boots on the ground. Marketing for you plan, execute better route plan, just like you do for visits, same thing with your boots on the ground. Do you have an admin who is manually typing out emails, maybe talk to text is a better option for them or automate those tasks to get back some of that breathing room. Batch work is amazing. Instead of sitting down every week going, Okay, I need a blog this week. What do I do? Have chat GPT help you out with some content ideas, and then you can just sit down and write many of them, maybe an entire year's worth, in one sitting, so you never have to guess, okay, what am I going to write about this week? It's already done for you, because you sat down, you took the time to do it. Same thing with social media posts and emails, when you can use software to automate these things minimize manual tasks as much as possible, so you can reduce the admin payroll hours, and
Collin 16:02
even if you're so low here, reduce the amount of time that you're spending on administrative duties, so that you can be in the field, generating income and revenue when you're not also taking breaks and taking care of yourself as well. Because that's really important. We're not just trying to eke out doing visits, you know, for more hours of each day, but if you can have one extra visit on the day because you got emails taken care of through AI, it allows you to make that just little bit more income and revenue from you and Megan. You had mentioned about reducing the amount of driving around randomly to find places to put up flyers. I think one aspect that you can do here, yes, route plan to make sure that you know the five places that you're going to go and the most efficient route between them. Efficient route between them. But even more than that, the simplest steps that you can do for this call ahead, are they even open, right? Do they even have space to put a flyer? Or are you gonna be wasting your time showing up? And one step beyond this, start doing networking and these kind of connections through DMS on Instagram or on Facebook or on LinkedIn or wherever that you are doing this and follow up with that email instead of going in person each time. You can really cultivate a lot of these relationships without having to do it in person, which saves you time and money
Meghan 17:13
when you are thinking about marketing, focus on those client referrals. It's very low cost and typically high ROI, because those clients already know like and trust you, and they can refer their friends and family to you. One of the biggest things to help with margins is to focus on efficiency in everything, because it is everything. So think about how much you are spending on finding clients. What is your client acquisition price? How much are you spending on gear and equipment? Could you lower that? How much are you spending on software, and are you using it to its fullest? You probably can't lower the price of software because there's usually only a couple options to choose from. But again, are you using it to the fullest? Are you squeezing everything out that you can Yeah, instead
Collin 17:53
of paying for three or four subscriptions for different softwares, could you use all the services that only one or two provide it might not be as fully fleshed out and as fully polished as everything else, but you're getting way more bang for your buck by doing one or two things in your business instead of those four or five different things.
Meghan 18:11
But you do have to balance that out with not putting all of your eggs in one basket, because if one of the software goes belly up and they don't have a backup system, then you're kind of out of luck. So you do need to weigh your options there absolutely for more efficiency. Think about what your average drive time is. What if you decrease that by 5% how much money would you get back? What about 10% or 20% again? Think about the most efficient route and how you can get there. You can track that employee efficiency by ensuring that your employees complete multiple visits per shift to maximize that revenue per hour. It may take a while to get a lot of clients in a centered area, but you may consider that to be your end goal. It
Collin 18:50
really would be worth the effort if you could have a much more concentrated and densely packed client list in order to again, maximize these efficiencies. That dollar per hour of revenue when we're out doing actually visits, is something to really keep top of mind. If I'm only generating revenue and money when I'm actually walking a dog again, if I have a 30 minute dog walk, and I start at one o'clock and I go to 130 if I have to drive 20 minutes away, that means that I don't get to start making money again until 150 which means I only for that one hour, I only had 40 minutes of actual revenue generation in my business. And as you increase that per hour day after day, little by little, you really start to see it doesn't take much. Just a five minute increase going from 40 to 45 minutes of revenue generating can be the difference that a lot of us are looking for in the margins in our business. For
Meghan 19:46
larger companies, are all of your admins and managers really filling their time with the right things? Or how much can you automate or offload to AI to get them to do more visits? Now this is assuming that your office managers actually also do. Field visits, if they are strictly office managers, then you can look at adding other digital tasks, maybe running reports and doing more high level things in the business. Think about this, would you rather have a small business with a 40% profit margin or a larger business with 20% the answer is going to be different for everybody, because some of us don't want to grow and scale any more than we already are. But it is something worth considering and
Collin 20:22
about finding efficiencies in everything. It's not saying that you can't have a large business with a 3040, 50% profit margin, but in the labor services that we are actually in, it gets harder and harder. So what it does mean is it means that you have to build the systems correct, and you have to build them the right way from the beginning, or they start working towards that. So it may be worth it for a little while to scale back those growth ambitions that we have to hit some really good revenue, to hit some really good profit margins before we start building up and scaling beyond that. Yes, at the end of the day, one of the best things that you could one way to bust through these profit margins shrinkages is to just grow and maybe I don't grow my margin, but I just grow my volume. However, running a large, inefficient company will catch up with us eventually, if we're not careful and if we're not really, really intentional. So get the baseline, get the foundation, find the efficiencies where you can and then build from there. We
Meghan 21:23
would love to know how you are addressing this in your own business. You can email us at Pet Sitter confessional@gmail.com or look us up on Facebook and Instagram at Pet Sitter confessional, thank you so much for listening today. We appreciate you, and also pet sitters associates and our Patreon people. We will talk with you next time bye.
