Something in the world of floating have you stumped?
Show Highlights
“When should I start making money?” is a deceptively simple and anxiety inducing question that every business owner has to face. Sometimes the answer is straightforward. There are lots of franchises that have near endless amounts of market research and profitability trends that point to a sensible timeline of when and how much you can expect versus a given investment.
Float centers aren’t like that, unfortunately. There’s simply not enough data out there to create predictability in a market. The good news is that given the relatively low overhead excluding opening costs, float centers have the potential to be profitable almost immediately. Graham and Ashkahn break down this question and provide some tips on the issue.
Show Resources
FTS Product – Float Center Business Plan
Listen to Just the Audio
Transcription of this episode… (in case you prefer reading)
Graham: Today’s question is, “when should my float center be profitable?”
Ashkahn: Hmm.
Graham: I mean, probably as soon as possible, right, like ideally before you open-
Ashkahn: Got to get food.
Graham: … you’re turning a healthy profit.
Ashkahn: If you’re making a choice between profitable now or later, yeah, I would usually go with now.
Graham: And “should”, isn’t it … I mean, I guess “should” is sort of the defining word there, right? Like obviously as any business owner, you’re just trying to make your business as profitable as possible as quickly as possible while not compromising your base morals.
Ashkahn: or sometimes, by compromising them.
Graham: I think depending of the company.
Ashkahn: But yeah, you know, there’s expectations from banks if you’re taking out a loan, or investors, they’re often expecting certain types of businesses to not be profitable for X amount of time.
Graham: Yeah, I guess that is true.
Ashkahn: And there seems to be like industry standards for other industries as well.
Graham: Yeah, just not this one.
Ashkahn: Just ’cause it’s small, you know, like there aren’t as many float centers as there are restaurants for us to pull like huge, huge aggregate data numbers on. So, let’s talk about being profitable.
Graham: So you were just focusing on different words in the sentence until it makes sense, that’s good.
Ashkahn: No, here’s really just the thing, I think, the point I want to make. Are we talking about being profitable like you’re making more money each month than you’re spending? Or are we talking about profitability including making up for the startup costs that you spent to open the business in the first place?
Graham: Right. In my mind, I guess we were talking about profitability of ongoing month-by-month making more money than you’re spending.
Ashkahn: Okay. Great.
Graham: The straight like P & L profits.
Ashkahn: So in that case, it seems at least from talking to other float centers, our experience, and stuff like that, it seems like float tanks are pretty decent compared to other industries in terms of how fast they can become profitable.
Graham: Yeah, and I’d say the operative word there is “can.” So let’s talk about that word for a second.
Ashkahn: It’s like a small tin that can hold things-
Graham: Get out of here.
Ashkahn: -sometimes food materials.
Graham: Shut the front door. So it’s because the cool thing about float tank centers is that they totally are able to achieve an early profitability. Like when we opened, we were booked pretty solid. Like our first few months, those months were profitable for us. In not a lot of other businesses you can do that, or with restaurants it takes a lot of settling in it seems like. You really don’t expect to be profitable with a restaurant for a few years often. But a lot of centers also are unable to fill their tanks and don’t get profitable right from the very beginning.
Ashkahn: So yeah, if things are going well, I think float tanks tend to be ahead of the curve compared to other businesses, which is nice. When we talk to float centers that have been around for a while and kind of had really good launches and stuff like that, they generally are profitable in their first month.
Graham: Did you say lunches?
Ashkahn: Launches, launches, yeah.
Graham: Launches, got you, okay. Yeah, I’m there. We’re on the same page.
Ashkahn: Right usually … yeah, “A good lunch is what gets you to a good launch,” is what I always say. So that’s really cool, that’s like the cool thing about the float industry, that’s probably what you’re shooting for. You’re not going into opening your business being like, “I’m probably not going to do a great job for the beginning.”
Graham: Yeah, yeah, exactly.
Ashkahn: So yeah, you definitely have the possibility of turning a profit pretty quickly, which again, compared to other industries is often not what people are even expecting a business to do.
Graham: I guess there’s another part of that, too, which is a lot of people are working in the business themselves.
Ashkahn: Right.
Graham: And for calculating profitability, whether or not you’re including your own wages or salary or dividends into that is, yeah, maybe questionable. Even whether you’re paying yourself what you would pay for an employee, if they were taking on all of the roles and responsibilities that you have, is an interesting one. Like to a certain extent, we didn’t really know how profitable Float On was as a company until we personally were out of there, you know, and we actually have regular staff and independent contractors that can fill in all of those little filler roles and just do hours that we were sort of taking onto ourselves, you know.
Ashkahn: Yeah, ’cause it really is. I mean, payroll is just such a huge part of your expenses. So, like being the person who’s running the shop and kind of having that cost be flexible or kind of hurting you personally and not hurting the business, in terms of you not taking that much money home. Those make it so that there’s a huge, huge reduction in your expenses on the books.
Graham: Yeah, so I guess just something to be cautious of. Like even if on the books you’re profitable, it’s worthwhile thinking of what you’d have to pay hour-wise to other people coming in if they were taking on all of the roles that you were doing, and whether you’re still profitable without yourself in the business. I guess the business by itself, not including all of your kind of unpaid owner hours that inevitably creep in there.
Ashkahn: Yeah, and things, you know, even if your schedule is full right at the beginning, you’re probably still going to be able to increase the amount of income you’re making as time goes on. ‘Cause often when people are launching and they’re doing a great job marketing and they’re getting their schedule full, they’re doing it through not selling a lot of full-price floats. They’re either, they’ve run some sort of big discount, maybe it’s Groupon, maybe it’s some other kind of big discount thing they’re doing to get their name out there. Maybe they’re giving away a ton of free floats, they’re floating all their friends. These are the things that help you have a good launch and help you get your float center full and help you do that marketing. That’s the stuff that starts to pay off some months down the line when those people decide to come back and pay full price and decide to actually come and float.
Graham: Yeah, for sure. There’s kind of this reinforcing cycle of keeping your tanks full that we’ve noticed. You know, like chances are if attendance starts dropping at our float center and we don’t do anything to correct it, that attendance kind of keeps going down or stagnating at a certain relatively low point. That’s just because you’re not generating as much word of mouth when you’re not having people come into your tank. So in addition to being able to hit profitability early on and actually fill up your tanks, if you do that, you’re in a really good position to just have that snowball forward and continue to the next month also fill up your tanks and also be profitable. So it is really worthwhile thinking about how you’re going to make a really big impact.
Like one of the things that I encourage float centers to think about nearing opening, is just what can you possibly do to make sure that you can, in that first month as much as possible, just have totally booked-out tanks? I mean in my mind, even if all of them were free floats, that’s still such a good investment in your marketing just to get bodies in those thanks so they can start discussions.
Ashkahn: So how soon should you be profitable?
Graham: As soon as you can.
Ashkahn: Yeah, hopefully pretty soon. Like you definitely have the ability with the float center to be profitable right away, day one. Day one you should spend more money than you spent that day, you know?
Graham: That pre-opening you know, I mean, ’cause you sell floats before you ever open up, too.
Ashkahn: You can, you can do, you have pre-sales and stuff like that.
Graham: And I also, just as a random insert tip, I like the idea of selling memberships at a discount prior to opening, too. I got that from The Float House guys kind of gave a good talk on that one year. But the idea of pre-selling memberships is just such a good in to having that sustainable revenue coming in kind of from the very beginning, rather than one-offs. So, random tip.
Ashkahn: Yeah, and good luck.
Graham: Yeah, good luck. And if you have your own questions and want to send them our way, definitely do. Go to floattanksolutions.com/podcast.
Recent Podcast Episodes
Benefits of a Free Float Giveaway – DSP 315
Float On has been known throughout the years for pulling off outlandish marketing stunts with mixed success. For example, we ran a giveaway on social media back in 2014 for a full year of free floats to our lucky winner.
Derek and Ashkahn provide a follow up on the success of that campaign and talk about the primary, secondary, and tertiary benefits that came from doing such a major giveaway.
The Importance of Social Media – DSP 314
Social media seems to be the only marketing platform that anyone talks about anymore. How to do facebook ads, when to post on Instagram, how to improve Google SEO… it’s a broad topic that seems to dominate the conversation in marketing.
Ashkahn and Derek explain not only why it seems this way, but the misconception of relying too heavily on social media in marketing strategies, as well as a defense of social media as a platform.
How to not be salesy selling memberships – DSP 313
Derek and Ashkahn give the low down on pitching memberships to customers. A lot of float center owners don’t want to come off as pushy sales people after people get out of their floats.
Ashkahn sympathizes with this a lot, since that’s exactly how he felt when he first started selling memberships for Float On. He and Derek suggest a perspective shift on the idea of memberships, as lots of customers end up being appreciative of the opportunity, and don’t feel like they’re being overly pitched to.
Why is Water Treatment Important? – DSP 312
If float tank water is safe, in part because of all the salt, then why is there such a huge emphasis in the industry for water treatment? After all, there haven’t been any reports of anyone getting sick because of floating.
Ashkahn and Graham tackle this question and challenge the idea on its face, because, well, just because something hasn’t been reported doesn’t mean it doesn’t happen, and given how little is known about water treatment in float tanks, it’s a good idea, as an industry, to minimize the risk of infections and illness as much as possible. Really, there’s a lot of reasons, from peace of mind, complying with health regulation standards, and even marketing, to maintain your float tank solution to as high a standard that you can.
Soundproofing Windows of Your Float Center – DSP 311
Graham and Ashkahn discuss soundproofing windows of a float center, but first they talk about which situations may even warrant soundproofing in the first place. It may be that soundproofing is better prioritized elsewhere.
If you do decide to soundproof your window, the guys give you some tips on how best to do it and what to look for when picking out which type of glaze you may want along with a few other options.
Latest Blog Posts
What? Another Product Announcement? The New and Improved About Float Tanks Guide!
We’ve learned a lot since then, so has the industry and the rest of the world. Floating is no longer considered some obscure practice. The industry has become very well established the world over and is continuing to grow. As such, the About Float Tanks Guide in particular desperately needed updating.
There has been new research, new standards in manufacturing, and as an industry, we have a much better understanding of all things float tank.
Download the latest version today!
Announcing: The 2017 Float Tank Industry Report
In 2014 we started gathering answers to a survey that would eventually become the very first State of the Float Industry Report. We've released one every year since, and this year we (once again) have the most contributions that we've ever had. In total, 193 existing...
Working with a Landlord
If you’re planning on opening up a float center, it’s likely that you’ll end up renting and, therefore, working closely with a landlord. Like any business relationship, it takes communication, discernment, and openness to make a renter-landlord relationship feel truly comfortable.
Everyone involved is taking a risk and the reality is that, when it comes to floating, it’s probably more risk than your average small business – craft shop, bar, hair salon, law office, what-have-you.
This piece also includes a free download – a compilation of support letters from float center landlords!
Employees vs. Independent Contractors. Which is better when offering additional services?
Part of what makes all of this so confusing is there isn’t a one-size-fits-all set of actions that differentiates a standard employee from an independent contractor. Your State regulators, the federal Department of Labor, and the IRS all have their own criteria for what constitutes an “independent contractor”. Here, we’ll just be using the IRS definitions as a sort of jumping off point to the issue. If the status of employees is ever challenged, the IRS determines the status on a case-by-case basis over several criteria by a panel of judges, very similar to American Idol.
Basically it comes down to who is in control of the work. How much control does the company have over the type of job being done vs. how much control does the person providing the service. This manifests in different ways, but to fit the definition of an independent contractor, a service provider really does have to be independent. Beyond just using this guide, you should always consult an HR lawyer if you feel like there’s any confusion or ambiguity.
Basically, the rules fall into three main categories…
