Where to cut corners in opening a float tank center – DSP 76

Opening a float center is a huge expense. There are several major investments that can seem daunting being on the outside looking in. Where to you skimp? The float tanks themselves are definitely a huge part of that, but getting everything right for construction seems even more daunting possibly. It’s a natural inclination to save money and it can definitely seem like there has to be a corner to cut somewhere to bring that bottom line down a little bit more. You want to do it correctly though, it doesn’t really seem worth it if it’s going to end up costing you more money down the line to fix or replace whatever it is you have now.

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Transcription of this episode… (in case you prefer reading)

Graham: Today’s question is, “starting a perfect float center seems reeeeeally expensive. If you were starting up a new center, where would you cut corners to save a little money?” or, I assume, also implied “a lot of money.”

Ashkahn: “Where” would you cut corners, not even “if” you would cut corners.

Graham: Yeah, it’s kind of begging the answer there, huh?

Ashkahn: Yeah, I mean, cutting corners is real tough in the float center because you’re talking about building things in a way so that your building doesn’t get destroyed. And so cutting corners is going to lead to damage and stuff like that, so it’s not a very easy game to play.

Graham: Dangerous corners to cut. It’s like trying to cut a corner of a block off with your car when you’re driving. Like it’s going to involve some collateral damage as you drive through the lobby of something, you know?

Ashkahn: Yeah, and it can often lead to a lot more-

Graham: Is that a good metaphor? Did that make sense?

Ashkahn: Pretty much. Yeah, I think people get it. You know, cutting corners leads to really expensive repercussions. Like much more money than you would have spent to begin with. And you have to be closed, and you have employees that you are going to want to still get paid and not just be out of a job for two weeks while you’re closed for renovations. So there’s a lot of long-term consequences from cutting corners.

Graham: Yep. You also end up with more octagons as opposed to squares.

Ashkahn: Yeah. You’re cutting out the corners.

Graham: So let’s back up slightly, which is to say what the most expensive parts of starting up are to kind of say where you have the most option to cut corners, right? So there’s kind of like three big things that make up 80 to 90% of the cost in opening a float tank center. And those are going to be your actual build out construction. You know, putting in your walls, your soundproofing, your waterproofing, all the plumbing. Stuff like that. That’s one of the big three.

Ashkahn: Your float tanks themselves.

Graham: Yep. You know, and sometimes even equal to construction.

Ashkahn: Yep.

Graham: Depending of course on what kind of float tanks you can get. But those can get really expensive. Those are another huge one.

And number three is just cash in the bank in case things go wrong and to get you past that year and a half of runway where you’re kind of expecting to take a loss as a business. And so you know, float tanks. I mean, you can get less expensive models. And that’s one way that you can save money is maybe you have your eyes set on some kind of float tank, but the price tag is fifty thousand dollars per unit. And you realize, no, maybe I’m going to go with twenty thousand dollar units or something like that.

Ashkahn: Yeah.

Graham: Or look for used tanks.

Ashkahn: Yeah. Used float tanks I think is good, because float tanks, they’re pretty sturdy, you know? So buying them used is not- … I don’t think there’s really that much of a detriment to their quality after being used.

Graham: Yeah, especially if they were taken down and they were still operational and everything’s in good order, and when you buy- …

Ashkahn: If you’re buying relatively new. If you’re buying a tank from 30 years ago, that might be a little bit different, but- …

Graham: Yep. And if you get some kind of guarantee from the owner. You know, if they say, “hey, this was operational when I took it down. All the pump equipment works.” That should go in the contract when you’re getting that used tank just to make sure that you can hold them accountable or return it or get a discount if things don’t work when you go to set it up.

So, float tanks are definitely an area where you can save some money. Just again, by spending less money on the units themselves. Construction. That’s probably where we’ll spend most the time talking about cutting corners because that is, I think, what most people are curious about is the actual build out of float tank centers is pretty dramatic and much more extreme than- …

Ashkahn: Well, before we jump into construction, I think people can have a lot of expensive stuff in terms of interior design and things like that, too. And I think those are really easy places to cut.

Graham: Yeah. Yeah.

Ashkahn: You can easily spend fifty thousand dollars on furniture and stuff like that-

Graham: Totally.

Ashkahn: To make your lobby look cool. And you know, that’s almost like the easiest corner to cut in my mind because you can totally just buy that stuff later.

Graham: We still don’t have a sign.

Ashkahn: We still don’t have a sign.

Graham: . So that’s definitely a corner that we like- … Signage might be another-

Ashkahn: Yeah.

Graham: Dramatic cost that you can cut out apparently for up to seven, eight years, you know?

Ashkahn: So yeah. You can maybe pull back your aspirations a little bit on the kind of aesthetic and crazy thing you’re going for with your lobby. And after you get open and have some money coming in, you can put that money towards that. But that’s certainly not going to do any long-term damage to your building or, you know, be that difficult to replace after the fact.

Graham: I mean, yeah to start out. We found some just really comfortable used couches on Craigslist that were like a nice blue, and that served us for a really long time.

Ashkahn: I mean, that was our upgrade. When we first started, it was just cushions on a wooden platform.

Graham: Shh, shh, shh, shh, shh. Don’t tell them about the two-by-four chairs.

Ashkahn: So you can start a lot simpler than you may think you can.

Graham: And then the third big expense is money in the bank you have in case things go wrong, and you can’t really cut that down. I mean, you can start with less, and then that’s just- …

Ashkahn: It’s just a risk.

Graham: Less of a runway and terrifying.

Ashkahn: Yeah.

Graham: And then a big risk you lead to- …

Ashkahn: I mean, you can cut it down. That’s what you’re sacrificing. You’re sacrificing kind of being able to hit any speed bumps or- …

Graham: And you might also be sacrificing protection of your corporation, like of your corporate veil, that’s going into it. If you don’t have enough money in the bank when you’re starting up, then that’s called under-capitalization. There’s thing called the “corporate veil” that protects your personal assets from your business assets. And if your business goes under, you’d like for you personally to not lose your house and all of the money in your bank account and stuff like that. And one of the ways they can get access to your personal finances through your business is by being under-capitalized. Yeah.

Ashkahn: Probably like seriously under-capitalized, so I think there’s some room in there. And it just gets riskier and riskier as you move that mark over.

Graham: And it’s a good one to not plan on because you’re going to probably near the end of construction be tapping into some of those reserves anyway. So yeah. Don’t plan on cutting that one back, but it will happen.

So let’s talk a little bit about construction. Are there any big obvious ones outside of construction we should- … You know, you don’t need the company car probably when you first start out.

Ashkahn: Yeah. I mean, I guess marketing. Some people have a big marketing budget before they open, and I think that can be replaced with a lot of free marketing.

Graham: Yeah. Lots of giving away free floats.

Ashkahn: Yeah. You probably don’t even need to be taking billboards out or serious kind of expensive ad coverage in newspapers and things like that. I think there’s a lot of ways to market that don’t involve spending big chunks of money.

Graham: Yeah. I mean, even things like running a Groupon or something like that is another marketing that will cost you money because they’re taking it out, but it doesn’t cost you money upfront, which makes that very different than a billboard in that sense.

Ashkahn: Right.

Graham: So, construction.

Ashkahn: Yeah. So this is the one that gets tricky because there are just lingering effects of whatever you’re doing. And really, I’d say as you go along construction, the real expensive parts of construction are the soundproofing and the kind of water/saltproofing.

Graham: Yep. And the plumbing.

Ashkahn: Right. Which I guess I put in the water/salt camp. So as you start to approach those two different areas, I think the water and saltproofing one is a little bit- … I’d be more hesitant to be cutting corners there because that’s where stuff gets seriously messed up. And like the plumbing and floor drains is stuff that’s really hard to do after the fact and really expensive to do after the fact.

Graham: Right. If you double down on all the soundproofing and then you skimp on waterproofing, the salt’s going to destroy all your expensive soundproofing-

Ashkahn: Yeah.

Graham: -anyway. So you do need- … Always use protection. Always use protection.

Ashkahn: So yeah. Skimping on saltproofing and waterproofing could lead to, you know, the insides of your walls getting mold on them and serious damage that requires cutting out big chunks of sheetrock, you know. All sorts of headaches and stuff come from that.

Graham: Similarly with the plumbing side, not putting in enough floor drains. Not digging enough piping trenches to make sure that you can get proper drainage and stuff like that gets really dangerous for the longevity of your rooms and just for your daily operations and being able to actually turn over your rooms and keep staff not stressed out and things like that. So it’s also hard to skimp on the plumbing side of things. And so much of that is labor, too. You know, you’re paying for the plumber’s time and laying all these pipes and having the trenches. And yeah, again, installing the drains and the fixtures and stuff like that. So it’s a hard place to justify not spending a base amount of money.

Ashkahn: Yeah.

Graham: So what does that leave? Well I mean, I do think soundproofing being one of the most expensive parts is a place that you should look at for where you can possibly cut corners on soundproofing.

Ashkahn: Yeah. I mean, it’s nice because it’s kind of like there are certain parts of soundproofing that are very additive. Like you can just add them on after the fact. You don’t have to tear something out to replace it with something else. There’s a lot of upgrades that you can do over the course of time that’ll make things more and more soundproof without making you have wasted money in the first place. So it’s nice. It’s an easier game to play, I think, in terms of a little more strategy.

Graham: And a good kind of general approach, I think, is to just realize that the more interior something is in your walls for soundproofing, the more expensive and the harder it’s going to be to go back and retrofit that in the future. As opposed to things that are just on the outside of your walls that you’re trying to beef up or add more soundproofing onto, right?

So, for instance, lobby wall. If you start with just a single layer of nice soundproofing on your lobby wall and you want to see if that works, that’s a great place to not immediately skip to installing two or three layers of QuietRock or drywall or something like that because adding just an extra layer of Sheetrock with green glue in between is not the most expensive thing to do. You know, you lose money on some of the painting and finishing work on the outside of that wall, but that’s almost it, you know- …

And the more you get inside, and it’s like you start with single stud walls, and now all of a sudden you want to upgrade those double studs or upgrade them to single studs with kind of clip-in channel system where you’re creating an air gap that way. Now you’re talking about having to tear off all of your waterproofing, all of the preexisting soundproofing. Bring it down to the studs, and maybe even move those studs in order to install a second set. And that’s kind of starting from scratch. So you can see really quickly how the more interior you get towards the walls, it gets crazier and crazier for the amount of money to upgrade things.

Ashkahn: And there’s a lot of soundproofing that you can- … So the tough thing about soundproofing is it’s hard to know as you’re installing it what the right level is. So that’s the other thing, too, is you can start a little bit on the low side and then see like, oh, actually, you know, this part of it’s working fine, but there’s clearly sound getting in through here. And kind of upgrade the parts that need upgrading rather than going kind of full steam on everything. And then there’s really no way to know if you overdid it or not. So there’s some benefit to being able to add things on. And there are a lot of just like I was mentioning, additive processes, like adding another layer of wall or adding soundproofing to your door, which you can often do just through like a track in front of the door.

Graham: Yeah, doors are a good one. Starting with not the most hardcore thousand dollar doors.

Ashkahn: Right.

Graham: Maybe starting with a 200 or 300 dollar door.

Ashkahn: Yeah, the hinges, the frames. All that sort of stuff.

Graham: Yeah.

Ashkahn: You can spray insulation type material into areas that were empty before to ceilings and things like that. You can install secondary ceilings. There’s just kind of all sorts of stuff you can keep layering on with soundproofing as you see that it’s needed.

Graham: Yep. And I guess planning on doing that on the exterior of the float room. So on the hallways if you do have storage spaces in between your float rooms, which is a really nice buffer for soundproofing. Being able to buff up on the soundproofing on the inside of those storage rooms, because inside the float rooms, once you’re soundproofing is there, you kind of need to cover it with all your waterproofing to make sure it doesn’t get destroyed. And then adding extra soundproofing from the inside of a room does become expensive, because now you have to take down your waterproofing in order to beef up the soundproofing again.

So yeah, plan on lobby sides of things. Hallway side of things. Again, storage closet in between your rooms. Your work room side for soundproofing that. Those are all things that are relatively inexpensive to add on. So all better places to skimp than on the soundproofing on the inside of the float rooms.

And I mean, so another one that’s kind of interesting is HVAC, especially because you can get such a range of HVAC units.

Ashkahn: Yeah.

Graham: And it’s interesting because there’s not a great way to upgrade between the different styles of HVAC. So if you are deciding to go with something that’s lesser than you want to end up with eventually, chances are you’re going to have to pay a ridiculous amount of money in the future to upgrade  to the system that you wanted to start with. Way, way more than just actually starting with that system had you had the money.

So as an example, I mean, we started with just wall heaters in our rooms and ceiling vents that were venting the air and letting fresh air in and things like that for the air exchanges. And we didn’t even have a central HVAC until a couple years in to running Float On. And that worked okay for us. You know, it definitely got us to that point where we did have enough money to install the central furnace and A/C on the ceiling.

And so from there, you end up with this central HVAC. You know, usually a split furnace kind of air conditioning system. And the ideal is to have something called a mini split system, which actually instead of ductwork uses coolant lines and expands the coolant into the rooms. But that’s a totally different set up than just a regular central HVAC. So if you want to upgrade from the kind of system we have to a more ideal mini split, again, you’re talking about going in, tearing everything out of the ceilings, opening up the ceilings to run these coolant lines. And now again, that cost gets higher than had you just started with it.

So you know, that’s the difference between wall heaters and ceiling vents. You’re talking about a few thousand dollars. Maybe getting up to 10 with the central kind of HVAC systems. It’s like for four or five tank centers or something like that. You’re looking at in the 25, maybe 30 thousand dollar kind of range. And then for something like mini splits. All of a sudden, you’re looking at 40 thousand, 50 thousand dollars, right? So that’s kind of the range of differential you’re looking at there where you’re deciding which one to go with and which corner to cut.

Ashkahn: Yeah. At least with HVAC, it’s not like you’re going to be damaging your building with the cheaper setup.

Graham: Yeah, so- …

Ashkahn: As opposed to the water and saltproofing.

Graham: So although it’s going to cost you more money to upgrade in the future, I would almost rather double down on the soundproofing inside the rooms, waterproofing inside the rooms, and just know that at some point you’re probably going to have to close for a few weeks to a month or something-

Ashkahn: For crazy renovations.

Graham: To, yeah, do crazy renovation. Redo your entire heating/cooling system at some point.

Ashkahn: Oh, man. This sounds- … You’re making me nervous just thinking about it. I remember when we had to do that. It’s all coming back.

Graham: It’s miserable. It’s miserable. I guess know that every corner you cut will cost you way more money down the road than had you been able to get away with not cutting the corner.

Ashkahn: Yeah. And you have to be closed. You know, closing sucks all around. You’re not making money. Your customers don’t get to come in and float, and your employees don’t have regular jobs. Like that’s just a triple whammy of- …

Graham: I was just going to say triple whammy. Good word choice. Yeah.

Ashkahn: Of not good times. You know, triple- …

Graham: Hat trick whammy. Yeah.

Ashkahn: So it’s a little hard to plan on doing something like that just because it is such an unfortunate thing to have to do when you’re actually kind of up and running and you have regular customers coming in and stuff like that. We lose a lot of members every time we have to do a big project.

Graham: Yeah. Yeah. It’s significant.

Ashkahn: Most of them are like a month or something. It hurts. We get a huge drop in members, and it takes us months to get back up to our normal numbers.

Graham: Yeah, so there’s a lot of opportunity cost that goes into those closures. And a lot of times, I mean, you know, add to the 70 thousand, 80 thousand dollars you’re now spending on renovation all the floats you could have been running that you’re not running because that’s all an added cost, too. And you can see really quickly this thing that maybe would have cost 50 thousand dollars at the very beginning, now is costing 120 thousand dollars.

So another solution is, hey, maybe you have this set amount of money that you have, and that’s what you’re going to spend on your float center. And maybe if cutting corners is where you’re looking, you should consider going out and finding another investor or-

Ashkahn: Yeah.

Graham: Try to get a bigger loan or waiting a little longer and just seeing if you can’t get the extra money to actually start right. You know, and save yourself some heartache down the road. So there you go. Our advice is if you can, don’t cut corners.

Ashkahn: Yeah.

Graham: It will bite you- …

Ashkahn: It’s a tough business to cut corners in.

Graham: It’s a really tough business to cut corners in. If you have any other questions, go to floattanksolutions.com/podcast.

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