Different Reasons for Writing a Float Center Business Plan – DSP 204

Writing a business plan can often feel like you’re throwing hard work into the void. If you’re not getting a bank loan, who’s going to see it? What’s the point of it if all the numbers are going to be different?

Graham and Ashkahn break down their experiences of starting Float On without a business plan and how useful it was writing one later, as well as how they’ve used that business plan to help dozens of other centers get funding and open their doors.

FTS Product – The Float Center Business Plan

Art of the Float Consulting

The Business Model Canvas

The Lean Canvas

Listen to Just the Audio

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

Ashkahn: Hey everybody, hey. Things are good over here.

Graham: Yeah, everything’s fine. Everything’s fine.

Ashkahn: My name is Ashkahn.

Graham: I am Graham. And this question is kind of a long one actually.

Ashkahn: I’m going to sit then.

Graham: Chapter 1. “I’ve heard you talk before about jumping into business before worrying about a business plan. Assuming that it is not required for financing. Since you don’t really know who will come on and what it will “be”, until its actually open. That being said, what would your business plan look like if you wrote it now versus then?”

So, basically just like is it important to have a business plan. Or, assuming that you have money and you’re not using this business plan to go get a bank loan or something. How valuable is it to a center owner?

Ashkahn: And like I guess like how different would a business plan that we wrote now be compared to one we wrote before we opened? To see like if, if they would be close at all or not. Um, so maybe let’s give a little history here ’cause we did not write a business plan before we opened.

Graham: No, we had literal back of the envelope calculations.

Still have that envelope somewhere I think.

Ashkahn: And I mean we have a business plan that we like sell to people. So we obviously wrote a business plan. Um, so we have you know, we have lot of these like experienced both not doing business plans and doing business plans.

Graham: And its interesting in that our business plan I think is actually useful for centers who are getting started and for even existing centers to get a sense of your numbers. But, it’s because you can really easily play with variables and test out difference in areas.

Ashkahn: And its based on real information.

Graham: And I should say, I view the financial sheets in our business plan still useful in that context. It also comes with like a 30 page written packet for banks which I like, going through the process of writing out a formal 30 page proposal for your business if you’re not getting funding, I still think is fundamentally flawed and a really silly exercise to go through.

Ashkahn: So let’s like rewind for a second. Why do-

Graham: Sorry I got really…-

Ashkahn: Why do people-

Graham: You’re right, this is something that I say, yeah.

Ashkahn: Why do people write business plans? There’s a couple of reasons.

Graham: They have too much time on their hands, one.

Ashkahn: Yeah, yeah they’re not even going to open the business, they just want to write a business plan. So to me like the biggest one is that someone is asking you for a business, like a bank or an investor. Or you’re trying to get money to fuel opening your business up and that person wants to know that you’re serious about it. They want to know that you’ve done your homework. They want to see what you know, they want you to digest information about what the business is going to look like and give it to them so they can see if it’s going to be a good investment or not. And you know, they just want to make sure you’re, you’re willing to put some work into this too I think is part of it, right, like, just seeing if someone will actually just sit down and write a nice like well made business plan.

So, especially when you’re getting really conventional sources of funding like, bank loans and stuff like that, you know it’s very normal, it’s going to be hard to get a bank loan without a business plan.

Graham: Impossible, yeah.

Ashkahn: So, that’s a big reason that people are making these.

Graham: And even within those there’s a big difference. Like I was mentioning that 30 page written out business plan. Banks want that, investors don’t.

Ashkahn: Yeah.

Graham: Like banks still want to see that, investors don’t really care.

Ashkahn: And if you’re getting a bank loan, like an SBA backed bank loan, like the SBA just has like, here’s like how you should write a business plan. Like it’s all this like very like Lego piece sort of thing. Where you’re putting together exactly what’s expected of you and they want to see exactly what they’re expecting to see.

Graham: Yeah, business partners. Even non-investors just you’re trying to bring in another business partner you’re gonna be doing, and running the shop with, sometimes that’s nice to have. Just a low level business plan you know this can be something that is 3 to 5 pages of written content and like 3 to 5 pages of financials. Something kind of digestible, relatively small. But you need something to be able to show to someone just to make sure you’re on the same page with assumptions. But, but, that’s kind of it.

Ashkahn: Well so then there’s also people will, you know there’s an idea that just the act of putting the business plan together is a great way to do the proper research and training and homework you need to do to open your business successfully. That like its not so much the end product that really matter its just going through the steps to look at your city and your demographics and your finances and your marketing and just like being forced to kind of sit down and think through all that sort of stuff.

Graham: Like the classic quote “the plan is nothing, planning is everything”. You get so much through the act of planning that it warrants everything you had to go through.

Ashkahn: So I think that’s the kind of ground work for where we’re coming from here. For as we start to talk about business plans.

Graham: And there’s one other, you’ll sometimes get asked for really like even even lower levels than we were talking about with you know like 5 pages of written and kind of financial stuff for smaller aspects of your business.

For example, even talking to the health department, they want to see, might want to see some little at least model of how you’re going to be running and written out content. When you’re talking to a landlord, they might want to see financial projections, just kind of give it a once over and make sure that your predictions are good. So I would put that in like you know business plan junior. Or just, just writing out some projection is the other area you’ll see this come up.

And that one is really hard to avoid.

Ashkahn: Yeah, so let’s kind of go through those in that same order. Like if you’re trying to get money, you’re probably going to have to put a business plan together in one of those ways. And like, I feel like that’s the more obvious stuff. You know if you’re getting a bank loan you’re going to probably have to put that big serious business plan together. If you’re getting investment, you might have to put less ones together. So I think really the question asked here is what, if you’re not doing those things.

Graham: Exactly, yeah.

Ashkahn: What are like what’s the benefit or should you put a business plan together.

Graham: I was just standing here, I’m like “I wonder how deep he’s gonna go down this rabbit hole since the question specifically said I don’t care about that category”.

Ashkahn: Yeah, yeah. So we’re narrowing this to that. And, that’s an interesting one because I do feel like, it’s not the most common thing in the world for a business plan you try to come up with before you open your business to be that in sync with reality.

Graham: And this is the fundamental problem, right?

Ashkahn: After you open your business, right? Like it’s just hard to know. You don’t, you just don’t know exactly what’s involved in the business. You can make guesses. And it’s not that you shouldn’t think about this at all. You know what I mean? We didn’t write a business plan, but we like thought about what the numbers might be. And we thought about what we would do for our marketing – and how we launched.

Graham: And we talked to our existing centers.

Ashkahn: Yeah, so like we didn’t go through the process of really like writing this all up or like formalizing it or even making it like that, concrete, by like writing it out for ourselves. We kind of just went on an absorb information bender, I guess.

Graham: Yup. And, and we were totally wrong. Even with the limited information that we put together, and massive amounts of rounding and stuff like that-

Ashkahn: We first thought that like we would have to do I think three floats a day to stay viable. We’re like “anything more than three floats a day is just butter on top!”

Graham: Yeah, we, we misunderestimated a lot of stuff. Including everything that salt can destroy,

Ashkahn: Construction

Graham: All the cost of staffing. You’re not just gonna be running the shop yourself.

Ashkahn: Yeah.

Graham: It comes with payroll taxes. We just, we didn’t know anything.

Ashkahn: And if you do know. Even if you’ve run a business and you know payroll and common finances and stuff like that, like it’s really hard to know exactly how the uniqueness of your business is going to run. Like, like the construction stuff is really unique to float centers. Like, any amount of past business experiences is not going to necessarily, without you talking to other people and learning things, is gonna make you have a good prediction of you know the repairs and maintenance, or how much the salt can damage or what you should be planning for in terms of cleaning time and all that sort of stuff. Like, some of that stuff is just experience that you, that you build.

Graham: And this is a plug for you know if that is the goal. You’re not, you don’t need funding, you do want to write a business plan for yourself to make sure that you understand what you’re getting yourself into. You’re gonna need to work with someone. You know, it doesn’t have to be us. You don’t have to get our business plan. But you do need to consult with another float center and probably that means paying them for their time because getting into the weeds and actually figuring out what with your plans and your location, it’s realistically going to cost to open a center is not small thing.

And even then they are just going to be estimates too. Like, keep that in mind, every contractor you approach is going to have a different number than what the other center that you’re talking to or working with, or the other consultants have told you, so. Even after you get your best estimates in place, there’s still a huge amount of needing to do your own research and actually get quotes from people in your area. And so it’s very time consuming which I wanted to kind of lay out as one of bases for my argument against doing these in depth business plans for the most part. Is it is really time consuming and it’s probably not going to be accurate.

Ashkahn: And like you’re starting a business. Like your time is very, very valuable. You’re very strapped on time when you’re starting a business. So, even if it, if there you know there is like I’m sure some value to like going through all those steps, but. Is it going be as worthwhile as maybe spending that time doing something else. As you’re on the kind of crazy path toward opening up a storefront business.

Graham: So, so what does that mean for what you should be definitely doing. Like you decided to open a float center, you’re just going to go out there without doing any financial protection. And like, there has to be some preparations. So what’s the level of preparation that is valid or that we recommend, Ashkahn?

Ashkahn: Buy our business plan!

Graham: You totally should. It’s an amazing business plan and the numbers are filled from across the country. So it does a lot of the work for you. I love the shameless plug but that was not the direction I was, I was headed.

I mean first of all I think just getting, being able to get a sense of overall like profitability of a center and revenue potentiation and expense potential, just in the broadest possible terms, is good.

And fortunately our industry is like relatively open. I mean if you call two dozen float centers, probably five to ten of those are going to be willing to at least give you some ballpark numbers or share with you honestly how, how they are doing. So just calling around and doing a little basic research to make sure that this is even a business that’s viable in the kind of way that you want to run a business.

Ashkahn: Right.

Graham: Because the truth is float centers aren’t insanely profitable. You’re not running a commercial real estate business here, you know. The bottom line is you know float centers can definitely be profitable and can definitely provide for their owners and you can get to the point where you’re not working your shop and still making money, and. Its just you’re not going to be making you know, $500,000 a year personally in take home capital as a result of running this center or you know running a single center, so being sure that you have that reality in mind I would say is a really big one.

Ashkahn: Yeah and just understanding you know, just learning like a little bit about the numbers will help you clarify what you want to do as you’re opening. You know maybe you want like two more float tanks, or two less float tanks than what you were thinking because you can kind of see there’s different economies of scales there, you know. And, just float. Go float at other float centers. Like, that’s a great way of just absorbing information. See how they run. Watch the staff as they’re going to clean. See how long it takes between when you get out and the next person get into your float tank. Like there’s just so much information you can glean from being in the environment that I think can be helpful.

And again its based on something real. Like, you’re really seeing a real float center at work. Like its, its just hard. I think I like I can’t imagine anything that we put in our original plan was like, or that we would have put in our original business plan, was would have been that close to reality.

Graham: It was so far from reality. I mean this I pre-opening, like again when we were doing back of the envelope calculations. We’re one of those people where their landlord requested to see what their financials are going to look like and their predictions and stuff like that. So we did have to prepare pretty much a little like two pager of what to expect. And none of the numbers on there were vaguely accurate. They were all just fiction. I mean at the time I was like “these are actually probably gonna be pretty close to reality”. And I was so wrong. Start up costs were so vastly higher. Ongoing costs were way higher. Those cost scales you want to get out of the business and as the cost of living goes up in your area, the amount of salt damage again and repairs, and there’s just so much we didn’t budget for when we were doing this initially.

Ashkahn: Yup.

Graham: And so there’s this kind of sentiment a lot in the business world. And you see this too other than banks, pretty much everyone in the business world has also acknowledged that that old classic 30 page business plan is not worth business owners time doing. You know, and banks because they’re such this solid institution, you know they want to make sure that the people coming onboard are diligent. That they dot i’s and cross t’s.

Ashkahn: It’s just like a protocol. It’s such a built in protocol. It’s such a big system.

Graham: Yeah.

Ashkahn: That it’s just like, it’s hard to rely on one, whoever the bank person is making like gut decisions and stuff like that. Like they just, I think need to have a more formal process.

Graham: And ultimately a loan is just a different kind of application.

Ashkahn: Yeah.

Graham: Right like all they want to make sure is that over time this person can pay their loan payments back. As opposed to an investor where it’s like they want to know that this thing can get wheels and like carry them far, and make them a bunch of money on the upside, right. And the bank doesn’t really care about that. They want safety, and stability. And in that sense. A big business plan and someone taking the time to go jump through all of their hoops say “this person is the kind of person whose willing to take the time to jump through hoops and there’s a certain stability there” and that’s part of what they  pun intended bank on.

Ashkahn: Alright let me tell you something. I think the other thing, the other thing to be cautious of if you’re going into writing a huge business plan is that I think its very common to think of a bunch of pitfalls that will never actually happen to you. Spend a lot of coming up with solutions for problems that you’ll never actually run into. And there’s no way to figure out the problems you will actually hit.

That ends up being I think one of the biggest just like wastes of time. You sit down and you’re like, this is going to be an issue, this is probably going to be an issue, this is probably gonna happen. And you come up with all these solutions and figured out how you’re going to get around them and you open your business and like none of that happens and there’s this whole other group of things that are actually like the challenges that you have to deal with. And you know that, I think is especially, beyond finances and stuff like that, that is just one of the hardest things to somehow predict or come up with before the fact.

Graham: Yeah, yeah for sure. Um, I mean you don’t what you don’t know. And the things you think you know are often wrong.So its a challenging state.

How would our business plan now be different than our business plan when we first opened? Well again we didn’t really have one when we first opened.

Ashkahn: Yeah so it exists.

Graham: And also all the assumptions that we did make on the back of the envelope were totally wrong.

Ashkahn: I mean the difference now is just that. It’s based on real information. Like we have, we literally just like to write the business plan we did for the Float Tank Solutions one. We just like took our real finances and crunched them and took our real float numbers and like used them with our finances to figure out how much of stuff we’re using per float. Like it was just, it just had like reality to fuel it in a way that you don’t have beforehand.

Graham: Yeah. And we have the advantage too of being in this position where we help a lot of other people in the industry and do consulting and stuff. So we get to see construction bids come through and actually update our numbers kind of nationwide based on a variety of points. So for us specifically, we are actually in kind of a great position to have an accurate sense of what a business plan would look like and what it can provide.

If we were just a new center coming in to things, and wanting to write a business plan, again I would probably try to go and find someone to work with and get some consulting. There are several people out there now who do consulting. Dylan through The Art of the Float podcast is a great one to contact too. Of course again, we have our business plan. We do one on one consulting. There are a few other centers who have kind of started doing that same sort of service.

I mean the truth is you don’t need a big business plan. You don’t need complex profit and loss plus balance sheets, plus your cash flow statements all written out. But you do need to get a good sense of how this thing is going to behave. Or how its likely to interact with the real world and again whether even at its best going to be profitable enough for you. And you’re not going to do that without talking to someone whose been through it or hopefully a couple people and averaging those out.

You know if we were to do it differently now, and again we didn’t have the resources we have in terms of our own business plan and stuff. I would probably go out there and be looking for someone to help me. Or consider grabbing our business plan or something like that. It’s just you shouldn’t waste hundred of hours preparing this stuff and its not going to be accurate if you try to do it on your own. And that’s, that’s kind of the bottom line, I guess.

Oh I did have one other piece of advice. Which is, there’s one other side of the business plan that’s not financials. And that’s more just like being able to operationally thing through what you’re doing. Like how are you going to market stuff? How are going to get the word out? Like there are people who fund their entire center, built it, and are kind of just Fields of Dreaming it, right. Like they never had a marketing thing or they’re just like oh I’ll build my center and people just show up, you know.

So there’s kind of this trend in a lot of small business development to move towards pretty much what is like a single page business plan. So there’s something called, I believe it’s The Business Model Canvas. There’s definitely one called The Lean Canvas, which is kind of through the lean startup organization and movement. And basically what these are just single page outlines.

They usually have I think about what 8 to 11 little segments on there. And basically if you fill in these 8 to 11 little boxes, it will walk you through all of the core elements just necessary to have in business. From marketing, to getting financing at the beginning, how you’re going to staff it, what the supply chain is like. Different things like that. Who are your vendors? What’s your unfair advantage? You know, what are you coming into that another person starting a float center wouldn’t have. And those are just really useful. You can fill one out in an hour. Or you can take a day to fill it out. And that will give you a nice overview without wasting a ton of your time. So, that’s as opposed to that 30 page business plan. I recommend checking out one of those one page business model canvases.

Ashkahn: Yeah something that help give you a little structure too. Making sure you’re not totally neglecting some section of what you’re going to need to run your business.

Graham: And then just pull out that envelope. Take your pen, start crunching numbers on the back of it.

Ashkahn: Scribble. And that’s it, you should be good.

Graham: Cool well this definitely turned into a big pitch for our business plan. Which I guess is good for us. We should probably be advertising our products more on a podcast. But um, yeah, it also is just the truth. My opinion is still the same as when you asked this question which is I do think its foolish if you don’t need a business plan for funding to go out there and write a full 30 page business plan and really complex financial sheets.

Ashkahn: You have more productive things you can do with your time.

Graham: Yeah, yeah. Cool.

Ashkahn: Alright, if you have questions about any of our other products, you know you can go over to floattanksolutions.com/podcast, send them in and we’ll chat with you. Just like it will be a one sided chat. You won’t be here.

Graham: That’s how I like it anyway. I like my audience not to be able to immediately talk back.

Ashkahn: Its like a two sided one sided chat with the two of us.

Graham: Alright, bye everyone.

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