Critter Comforts

The boom in pet businesses has entrepreneurs vying for their spots as top dogs.

Editor's note: What kind of pet business should you start? Read "10 Pet Businesses to Start" to get some ideas.

Susan Benesh, president of Posh Poochy Inc., a Columbia, South Carolina, manufacturer of clothing, collars and accessories for dogs, thanks her beloved bichon frisé and pug for their inspiration. The idea of launching a pet company began when strangers stopped Benesh in the street to ask her where she bought the cute sweaters and collars her two pooches were wearing. Benesh realized that the items she enjoyed crafting for her own canines could make her some money.

Benesh, who formerly owned a small publishing company, began investigating the field by visiting independently owned, high-end pet boutiques in cosmopolitan markets such as Atlanta, Los Angeles and New York City. They instantly wanted to carry her items, and she soon had trouble keeping up with demand. She sent out free samples to other retailers around the nation and listened to their feedback. In addition, she conducted Google searches to obtain information and statistics on the pet industry. Benesh also compared her pricing and offered a differential that other high-end dog apparel makers didn't provide. For instance, instead of charging $1,200 for dog beds that few people will buy, Benesh's beds cost between $195 and $225.

With sales already surpassing $1 million this year, Posh Poochy's merchandise is sold at 400 pet shops in the United States and around the world, as well as online. Benesh and her three employees work out of an office and warehouse, totaling 3,000 square feet.

"You've got to have a specialty, be more affordable than what's out there and not try to compete with the big pet stores if you're starting out," says Benesh, 47, who launched Posh Poochy in 2003.

Hot Market
Benesh is part of an explosion in pet businesses that is inspiring many new entrepreneurs to start their own ventures offering a product or service for Rover, Fluffy or almost any kind of animal you can think of. Since many animal businesses can easily be launched at home with little capital, entrepreneurs are lining up by the dozen to sell their wares. Based on attendance at the American Pet Products Manufacturers Association's recent annual trade shows, an estimated 125 to 150 new pet business are created each year, and there are no visible signs of a slowdown anytime soon, says Andrew Darmohraj, vice president and deputy managing director of the Greenwich, Connecticut-based organization.

Just look at the numbers spurring this continuous growth. Pet spending has more than doubled in the past 11 years--from $17 billion in 1994 to a projected $35.9 billion by the end of this year, according to statistics from the APPMA. Fueling this trend are empty nesters lavishing attention and money on their pets, young adults who are having children later and currently put their time and energy into their animals, and a pet industry that has become more sophisticated at consumer marketing, points out James Chung, president of Reach Advisors LLC, a Belmont, Massachusetts, business strategy and research consultancy. The influence of mass media--including popular cable channels like Animal Planet--has also made the family pet more revered than ever, Darmohraj adds.

In fact, the pet business is now the seventh largest retail segment in the nation, with consumers spending more on their beloved creatures than they do on candy or toys, according to the APPMA. And a whopping 63 percent of all U.S. households--or 69 million homes--have a pet.

But don't think it's too late for you. There is still plenty of room for new ventures--as long as they offer something novel or really useful. "The pet industry, unlike many others, is almost recession-proof," Darmohraj says. "Consumers will always be willing to spend money on their animals no matter what, like they would on their kids."

Despite the existing demand, you need to carefully research a product or service to find out if there is enough of a need for it, or conversely, if your segment of the market is oversaturated. You also need to put aside the notion that just because you adore your dog or cat, owning an animal business will automatically be fun and easy.

"People think, 'Oh, I love dogs, so I'll start a dog-sitting business in my home.' It's not that easy when you're dealing with animals that aren't your own, and you shoulder a tremendous responsibility when you're taking care of someone else's pet," says Gene Fairbrother, Dallas-based lead business consultant for the National Association for the Self-Employed and president of MBA Consulting Inc. "You also have to check with your state licensing board to make sure you have the proper license and liability insurance."

For instance, about half the states have some kind of kennel ordinance and licensing, says Jim Krack, executive director of the American Boarding Kennels Association in Colorado Springs, Colorado. Dog day-care and boarding centers are rapidly expanding to include services like hydrotherapy for dogs, even offering video access for pet owners who are traveling and want to see their pets in action at such facilities. If you are considering starting a business with such services, Krack says, you definitely could have a leg, or paw, up on the competition.

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This article was originally published in the November 2005 print edition of Entrepreneur with the headline: Critter Comforts.

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