Something in the world of floating have you stumped?
Show Highlights
If you’re opening a new center and trying to anticipate your business, what’s a reasonable amount of paying customers to expect? What about total capacity including free floats?
Graham and Ashkahn dominate the mic to drop some knowledge on the float family regarding what to expect.
Show Resources
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Transcription of this episode… (in case you prefer reading)
Graham: Hi.
Ashkahn: Hey.
Graham: Hello, everyone.
Ashkahn: Welcome.
Graham: I’m Graham.
Ashkahn: I am Ashkahn. And it’s time to get funky.
Graham: It’s time to get dewy.
Ashkahn: Time to get daily. Get your daily funk on.
Graham: All right, “I have just started listening to your podcast, and love what you’re doing.”
Ashkahn: Nice.
Graham: Yes. Rocking it.
Ashkahn: Good. Good question.
Graham: More question, yeah great question.
Ashkahn: You probably suspect why this one got chosen.
Graham: See you guys tomorrow. “I have a question around capacity expectations.”
Ashkahn: Okay.
Graham: We are new, okay. Now, new. Just-
Ashkahn: Congratulations.
Graham: We are now. It’s supposed to be now. It says, “New.” Yeah, “we are now just applying for financing to set up a three pod center.”
Ashkahn: I take back my congratulations.
Graham: “With new fit out, and we’re trying to gauge what the capacity would be for the first six months to a year. We expect to give away quite a few free floats.”
Ashkahn: Nice.
Graham: Good, been listening, “to keep people interested in the concept of floating, and expect full paying clients to be about 30 to 40 percent capacity for the first six months. What’s normal for new float centers in the U.S.?”
Ashkahn: Okay. I guess-
Graham: First of all, it totally depends. Sorry, what were you going to say?
Ashkahn: I’m going to assume by full paying, they mean also discounts, like memberships and stuff.
Graham: Memberships and stuff.
Ashkahn: Not just like, literally full price.
Graham: I think they just meant like, customers.
Ashkahn: Not free.
Graham: Yeah, yeah, yeah.
Ashkahn: All right, go ahead.
Graham: Well, it totally depends. There’s not like, a simple answer to this question, you know. I mean, even just between whether it’s a one or two tank center in a small town versus having a five or six tank center at the heart of LA or New York or something like that. It’s just going to be a very different kind of capacity that you might be able to expect from an endeavor like that.
So, you know, given that it’s all very specific to what you’re doing, looking to data is always a nice thing to do when possible. It’s not like we have a ton of it for the float industry. But we do have an industry report that we put out through Float Tank Solutions every year. And for the last couple years, we’ve been … It might’ve even been three years. We’ve been asking people to also say what, a number of floats that they’re running, and kind of break that down per number of float tanks that they have at their center. So that’s definitely worth going to take a peek at. The 2018 State of the Float Industry Report. We’ll link to it in the show notes.
But the average range of floats per tank was 73 to a 112, per month. Per float tank that you have. So that doesn’t exactly show you capacity. In addition to, depending on where you are, and what’s normal for your area. It also obviously depends on the number of floats that you’re running in a day, which can be controlled by your hours and by your length of float that you’re running as well.
So even 112 floats can mean different things to a center who’s running 90 minutes floats, versus 60 minute floats, for example.
Ashkahn: Yeah, and you have hours of operation. You may find that if you’re open for longer, your percentage capacity goes down, but you’re running more floats per day than you would otherwise. And so, is that a bad thing? Probably not. You’re running more floats every day than you would otherwise, even though that, even though you’re less full percentage wise.
Graham: Yeah, and this one again, the question really differentiates between free floats and paid floats. Which these stats obviously don’t necessarily report on.
Ashkahn: But you have a good hunch there. And I feel like your intuition is not that off from reality. If you were doing a good job, especially at the beginning, you’re probably, according to how we like to do our marketing, you are giving away a lot of free floats. And you are really trying to fill up your float tanks as much as possible. And expecting 30-40% of those to actually be kind of quote unquote, real paying customers for the beginning. And to be hustling to do marketing to fill the rest of them, is realistic. It’s not totally out of sync with what you could expect.
And it probably means that you’re doing a pretty good job with those numbers. A float center that’s been around for a while. And I feel like is doing a really good job, and is financially stable in those sorts of things. What you would consider a good, successful float center is probably somewhere around 80 to 90 percent capacity.
Graham: I might even go a little … Again, capacity is so weird. It depends on your hours of operation, too and what you’re actually doing. I usually say 75 to 80. But yeah, somewhere in that range. 75 to 90 percent is the max that you could possibly booked at. Tanks go down, they take repairs. People do last minute cancellations. There is no way to realistically get to 100 percent.
Ashkahn: And it’s partially, it’s also because we have these ebbs and flows in our schedule based off of the weekdays and stuff like that. Right, so you want to have enough float tanks to be able to handle the weekends when things are really popular. 80 percent doesn’t mean that every day, 20 percent of your float tanks are empty. It probably means you’re pretty full on Friday, Saturday, Sunday. And maybe lighter on Tuesday, Wednesday morning sort of things. That’s where some of that balance comes out.
Graham: Yeah, for sure. And I mean, a lot of that buffer is also places where you can sneak people in with free floats. Again, not that we need to convince you question asker. But to me, that’s good. If you’re pushing 100 percent capacity anyway, you’re getting up really high. You should think about expanding your hours. Because it will mean that you can get more people in. It also means your members get less upset. You know, if you get above a certain capacity, that’s actually also really bad for some of your regulars who want to get in and schedule floats last minute and stuff like that.
Ashkahn: Yeah.
Graham: So I mean, that’s just, it’s a little framework for ideal range. To me, I would say the danger zone for overall capacity … Well let’s talk about paying capacity. That’s what they were curious about. I’d say the danger zone to me, is below about a third. You get down below 33.3 percent, that to me is the serious danger zone of actual paying customers. Excluding used staff, free floats, things like that.
Ashkahn: Yeah. It just gets hard at that point. One, you probably have a bigger space, you’re paying more rent. There’s more float tank maintenance, all that stuff because you have a bigger float center. But also, 33 percent capacity still might mean that on some days, you have a full schedule at certain time slots. And empty times otherwise. And then it just gets hard to balance out staffing. And you may need to have more people there to deal with those times where all your tanks are booked at 7:00pm or something. But then people are just kind of sitting around a bit earlier in the day. You’re kind of like, losing more in terms of expenses in a set up like that.
Graham: Yeah. And I’d pretty much say between 33 to yeah, 45 or 50 percent is kind of like the warning zone, but not the danger zone. And take all of these numbers with a huge, huge dose of Epsom salt, right. Yeah, just do it.
Ashkahn: Take a huge sip out of your float tank there when you’re thinking about this.
Graham: Yeah, there’ll be plenty of grains in there. And what you … Because these are, these are giant generalities. But there’s no way to answer this specifically without an exact use case. Somewhere between the one third to one half range, I would call again the warning sound. You’re probably not in immediate danger of shutting down. But if you don’t start pushing past that 45, 50 percent mark of paying customers, then things could turn bad.
Or if again, you hit some disasters, and it turns out you need to do a bunch of repairs on your rooms because salt has destroyed them. You might not have enough money in savings to be able to do those repairs. And then yeah, above that 50 percent mark of actual paying customers. And as close to full price obviously, as you can get. That starts to feel a little safer. Now what we’re talking about is the actual margins that you’re making on top. Like how profitable is your business after that.
Ashkahn: And I really, you should be shooting for 110 percent.
Graham: Both in terms of effort, and capacity.
Ashkahn: Gotta throw an extra float tank in the parking lot. Start poking that out, too.
Graham: I thought you were going to say throw an extra floater in someone else’s tank. Sorry, we’re just going to be sneaking in here today. 110 percent.
Ashkahn: But, yeah. You seem on top of it.
Graham: Also, I would say that it’s almost hard to say. From my perspective, I more measure our revenue than I do the actual percentage of people who were paying some money versus not paying money. Just because the discounts can bury so much, too. I mean, the $10 discount is very different than a 90 percent discount. Or bringing a float down to $10.
Ashkahn: Yeah, revenue average income per float is another good thing to look at.
Graham: Yeah, and I don’t even have a number for that for you, necessarily. But I would say, when you are opening up the actual capacity numbers that I’d aim for, including free floats, are as close to 100 percent as you can … 110 percent is what … Maybe not. Not if it involves the parking lot tank.
Ashkahn: Yeah, things get weird.
Graham: Or the random person.
Ashkahn: You should stick a little under that.
Graham: But you are, you’re aiming for 100 percent. Whatever you have to do, give away as many free floats as you can. Launch on Groupon. We have an episode where we talk about kind of launching marketing more. But, I mean that’s it. And that creates this momentum. Where if you get as many people as possible coming in, regardless of how much they’re paying, that’s how you build up to that over 50 percent paying customers. Even within a few months.
When Float On launched, we weren’t open as many … We weren’t open 24 hours a day. We had more limited hours. But we launched with around 80 percent capacity. We’ve pretty much kept around that number, you know. 70 to 80 percent, and just kind of increased our hours of operation to match those. And so we don’t have the exact stats from early on, on what percentage of those are paying, versus non-paying customers. Or anything like that. But it does give you an idea that it is definitely possible to start, booking up your tanks really solidly. And to know that maybe differentiating between paying and non-paying customers is a good mental exercise. But in reality, if you’re keeping a high capacity, the non-paying customers are going to turn into more paying customers coming in. Both from repeat visits, from word of mouth. Stuff like that.
So in some sense, I do think paying attention to just your overall raw capacity number is a better number to look at than who’s paying versus who’s not.
Ashkahn: Yeah.
Graham: And, if you have questions of your own, where do people go, Ashkahn?
Ashkahn: They go to Dailysolutions.com. Which actually, will re-direct you to FloatTankSolutions.com/Podcast. A little shorter to type in, kind of fun.
Graham: It doesn’t promote Float Tank Solutions as well. Like we’d decided when we first started this podcast, we were going to say float tank solutions, so that they knew that’s who we’re affiliated with, you know. Sneak a little marketing up in there.
Ashkahn: For any day until today.
Graham: What.
Ashkahn: I’ve been outsourcing this to a job in the Philippines.
Graham: We’re winding down.
Ashkahn: I’ll see you guys later.
Graham: We’ll miss you.
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