Sunday, June 22, 2003
Copyright © Las Vegas Review-Journal

NEW BUSINESSES: Gone to the dogs

Entrepreneurs hope to find niche as purveyors of puppy pampering

With a small-business startup loan, Tammy Mathews, above, and her husband, Philip Mathews, in January opened Puppy Enterprises, a dog salon and bakery, at 1780 N. Buffalo Drive. The couple moved to Las Vegas about eight years ago for the business opportunities. Photo by Jeff Scheid.

Tammy Mathews knew she was onto something with her puppy chicken soup and ziti and muttballs that she made in the kitchen of her Las Vegas home.

No saliva-slobbering dog could resist the taste. Directions were simple: Warm and serve with a kiss on the forehead.

She gave a jar of it to a friend of her father-in-law who was a marketing executive for a supermarket chain in California. He came back with a scary suggestion.

"You should take out a big fat loan and get it manufactured with professional quality and distribute it nationwide," said Philip Mathews, Tammy's husband and business partner in Puppy Enterprises at 1780 N. Buffalo Drive.

"We kicked that around and when we started looking at it, we thought that's too much of a risk. It was just too much of a gamble."

That was in early 2002 when the economy was even shakier than it is now.

The Mathews trademarked their product and deviated slightly from the manufacturing idea.

With a $50,000 small-business startup loan from Bank of Commerce, they opened Puppy Enterprises, a dog salon and bakery, in January near the upscale communities of Summerlin and Desert Shores, where residents are apt to treat their pets like royalty.

"You'd be surprised how many people get the Doggie Diva package," Tammy Mathews said.

For $32 to $50, depending on the size of the dog, the treatment includes a bubble bath, full body massage, cool blow-dry and brushout, petting and belly-rubbing session, face and paw trim, teeth brushing and manicure.

On the way out the door, the lucky dogs receive a doggie bag with a specialty cookie.

Mathews said she wanted to use the entire loan to manufacture the puppy chicken soup, which sells for $5.99 a jar, but it was "too much of a leap of faith."

She figured she could pay her bills and build up capital by opening the grooming and massage salon, "and I'll be darned if it hasn't," she said.

With four part-time employees, Puppy Enterprises did $7,500 in sales in the first month. Revenue for the first 4 1/2 months of the year totaled about $55,000, and the owner projects $125,000 to $150,000 for the year.

The Mathews moved to Las Vegas from Florida about eight years ago because they had heard about the business opportunities here, the job market, affordable housing and a low cost of living.

She was a manager for Omaha Steaks and he was a fine dining server at Bellagio. Both are 36 years old.

They're among hundreds of entrepreneurs who've tested the business climate in Las Vegas, cited in the past by several magazines as one of the nation's best cities for starting a new business.

"It is a business-friendly environment," said Ken Mundt, senior vice president and chief credit officer at Bank of Commerce. "It's easy to form an LLC (limited liability corporation) in the state and the cost of entry into business is not very high. I was glad to see that the gross receipts tax seems to have gone away, or taken another form, but whatever tax package we get, we're still better off than the states around us."

Lending to a first-time small-business owner involves substantial risk, Mundt said.

Bank of Commerce, founded four years ago, will process about $36 million in loans backed by the Small Business Administration and non-SBA loans this year, he said. The amount has grown each year.

What does it take to get approved for a small-business loan, anywhere from $15,000 to $500,000?

A good business plan is essential, Mundt said.

"Some of it is research, the other part is have they done the financials. We look at how much has the borrower prepared themselves to start a business, if they have high levels of personal debt, have they got enough money saved to start a business."

One of the things Mundt remembers about the Mathews is that they had seriously prepared themselves for starting a business. They had great credit and low debt.

"Businesses don't fail because they can't make their SBA (loan) payment, they fail because they can't make their personal mortgage," he said.

Another plus for the Mathews: They had researched their demographics and had selected a good location.

"We've seen others that we turned down in areas where the demographics didn't support a high-end pet grooming store," Mundt said.

Tammy Mathews said finding a location for her business was the hardest part.

She knew she needed to be near her customers, but commercial landlords in the affluent west valley weren't willing to lease space for a business they perceived would be dirty and smelly. She looked around Lake Mead Boulevard and Buffalo, in the Vons shopping center and across the street by Gold's Gym, only to get the cold shoulder.

"Nobody wanted anything to do with dogs," Tammy Mathews said. "I couldn't explain this, that it's not going to be a smelly dog shop."

She felt fortunate to find a real estate agent who understood her business plan and thought it was a good idea, leasing her 1,200 square feet for $3,000 a month at a new shopping center near Buffalo and Vegas Drive.

Mathews also said she'll be a lifetime customer of Bank of Commerce for having faith in her. She had been turned down by Citibank two days after applying for a loan with no questions asked, after having attended a seminar at that bank sponsored by the Service Corps of Retired Executives.

The nonprofit organization assists and advises prospective new business owners with seminars, counseling and financial programs.

Tammy Mathews learned she'd have to forfeit the comforts of corporate life such as a steady paycheck, vacation and health benefits to start her own business. She does everything from bookkeeping to maintenance.

She went to Los Angeles and San Diego to research the idea of a boutique dog salon and was "underwhelmed" at what she saw.

"I hadn't seen anything on this scale," she said. "They were hedging. Once the business plan was done, we went to Paris for a wedding and we got the Paris boutique feel. That did a lot for us."

A significant part of her business is on the retail side. Doggie treats such as carob-based cookies, doughnuts and rolls are prominently displayed in a bakerylike showcase.

It took trial and error and talking to her own dog's veterinarian to get the ingredients right, Mathews said.

"There's gotta be a hook. That's the thing people miss. Our dog treats don't look like dog treats and the dogs think it's people food. That's the key," she said.

After putting in a full business day, Mathews goes home and bakes until midnight. She also keeps the books and creates all of her own graphics on her home computer.

Neither Tammy nor Philip draw a paycheck.

"We don't take any pay. We're trying to make the numbers right," Philip Mathews said.