Value Added: Lessons from the founder of Dogtopia |

Spending a few hours with Amy Nichols is like attending business school.

The 37-year-old co-founder of Dogtopia, a doggie day-care chain, is a confident, data-devouring businesswoman who leaves sentimentality (except for dogs) on the floor when it comes to advancing her enterprise.

She and her husband, Mike, have built their North Bethesda-based business into a 23-store franchise chain generating $11 million in revenue and a mid-six-figure profit.

Dogtopia opened its first store in Tysons Corner on June 15, 2002.

The couple owns three Dogtopias (in Tysons, North Bethesda and Herndon), which carry about $500,000 in debt. The other 20 are franchises, in places such as Waco, Texas; Temecula, Calif.; Omaha; and Highlands Ranch, Colo. Nichols charges franchisees a $40,000 startup fee, plus 8 percent fees on gross revenue.

The franchises bring in 86 percent of the annual revenue. Only one franchise has folded, and that was mostly because the owners divorced and split up.

Amy and Mike earn a healthy six-figure income that is about equal to what they made when they both left their telecom jobs a decade ago. But they are on a path to big bucks because they own a growing and profitable business with scalability. Amy estimates the U.S. pet business is a $47 billion market.

“Just in the time I had the business, the U.S. pet market has doubled in size despite going through a recession,” Amy said. “The sky is the limit.”

I chatted with Nichols in her bright, well-organized headquarters near White Flint Mall recently. A wall map of the United States had an orange pin for every franchise and a blue pin for future locations. A row of neat white binders, containing financial data for each franchise, rested on a credenza behind her desk.

A nearby bookcase held copies of business books including Jim Collins's "Good to Great" and Seth Godin's "Tribes."

Here are some Nichols tidbits:

1. Research. Before she quit her $160,000-a-year Web hosting sales job at Cable & Wireless, Nichols did a deep dive into the pet day-care business.

“I did a ton of research online,” she said, including reading endless customer messages on various Web sites. She visited several dog day-care centers — her faithful Boston terrier, Griffin, in tow — exhibiting the curiosity of any concerned pet owner. She posed questions, inspected the premises and calculated what worked (big rooms) and what didn’t (chain-link fences).

When she took on franchising, she developed a 400-page manual for each franchisee.

2. "I'm scrappy," says Nichols. You said it. She taught herself how to use a computer spreadsheet, enabling her to build financial projections before she built the business.

"I plotted my sales and expenses out over one and two years ... spot on."

The entrepreneur rented a booth at the Super Pet Expo in Chantilly, Va., giving away dog treats she had baked and telling people about her forthcoming day-care business — even though she didn’t have a location yet.

3. Know your customer. Nichols wanted to go upscale and stress service, allowing her to charge more.

“I wanted to be the Nordstrom of doggie day care. They don’t make any bones about the fact that they have really nice stuff, and it’s expensive.”

How high-end? Try $33 a day, which drops to $27 a day with a monthly pass. That’s about $8,100 for 300 days.

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4. Know how to staff. Dogtopia encourages customers to develop a regular schedule for their dog day care. "That way, we can predict the number of dogs coming on any given day, and staff appropriately."

Which leads to ...

5. Repeat business. "We wanted to make it easy and convenient to encourage them to come more often. That's why I instituted the [day-care] passes and getting people on a regular schedule."

Which leads to ...

6. Float. "I love float," Nichols said. Float is upfront money you get from selling things like a 30-day pass. Businesses love float because it gives them cash to play with — to invest, pay bills, build new locations — while they wait to deliver your product. Nichols understands float, which is why she encourages her teams and franchisees to sell monthly passes.

7. "Density is key." Nichols glommed on to a Tysons Corner office building right off the Dulles Toll Road. "I knew that 50,000 people came to work in Tysons every day. If I could get a fraction of that, we would be good to go. I knew right from the beginning that I wanted to be near where people work and not near where people live so I can be there and provide this service. I could encourage the idea that taking the dog with you to work in your car would relieve your stress."

Result: Tysons Corner grosses more than $1 million a year and is the cash cow of the burgeoning Dogtopia empire.

8. Defining who you are. As Amy puts it, "we aren't in the doggie business. We are in the business of guilt relief. There is no emotion more powerful than guilt. This business is about people putting their feelings on their dog. And if their dog is happy, they are happy."

Count me as one of them.

“I felt if I’m boarding my dog and paying you $50 a day to board him, and I can see [my dog] is happy playing with Fluffy and Bobo, then I can go have my margarita and go back to enjoying my vacation. That’s why we have cameras in the dog rooms. So people can see their dog is going on vacation, too.”

9. Nothing personal. Nichols says the hardest part of the job is managing people. "It's not enough to just love dogs," she said. "If someone is not working out, the franchisees need to let them go. You can't be personally responsible for all these people."

Nichols said she practices “situational interviewing” with potential employees and franchisees. Instead of yes or no questions, she asks candidates to “tell me about a time when you were frustrated in your job and how you handled it.” Or “tell me about a time when you had to discipline an employee.”

10. Too much. And too soon. Nichols said she regrets expanding out of the Washington area so quickly. Dogtopia had only one store, in Tysons Corner, when she got ambitous and opened its first non-company franchise in Houston in 2006. Then came California and others.

“It has been a lot more expensive to support stores that are a five-hour flight away,” she said.

Nichols is also paying for empty space at the White Flint headquarters, where support staff was supposed to be overseeing national growth. The slow economy put a crimp in franchise growth, which they hoped would be 50 stores instead of 20.

With the economy in recovery, she now hopes to add 10 franchises and grow to $15million in revenue.

“I’m like a dog with a bone,” Nichols said. “I don’t give up easily.”

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Value Added: Lessons from the founder of Dogtopia

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