SECTION ONE – Strategy Identification
There are two sides to growing a day spa business. On one hand, you have an environment that provides a relaxing, serene atmosphere – perfect for the kind of clients you wish to attract. The other side, you have a grueling business – one you need to stay on top of if you wanted to grow.
The first thing you need to do is the personal qualification evaluation. I’m assuming you already did this before you began reading. How prepared are you to run a business? Do you know everything that’s involved? Are you prepared to take some time to learn the ins and outs of running a day spa business?
After you qualify yourself as someone who is ready, willing and committed to growing a day spa business, we need to evaluate some goals. You need to ask yourself what your end goal is and take a look at your business goals. You need to find out what motivates you. You need to realize that you can’t do this by yourself. That’s okay – that’s actually why I wrote this article. It is designed to teach you responsibility delegation so that you can meet your personal goals of financial freedom.
So what is your personal end goal? Is it to retire early? For most people, it is something all along lines of financial freedom. Financial freedom means more than being debt-free. It means having the time and energy to enjoy the fruits of your labor. It may take a while, but if you do it correctly it will be well within your grasp.
What are your business goals? Do you want to run a small shop? Or, are your goals a little more grandiose? Do you see yourself starting a chain? Or, do you have the goal of remaining local? Determining the goals of the business will go a long way in assisting you with making some of the most important business decisions that can make or break your business.
How do you plan on naming your spa? Names carry a degree of power. This is the name people will know you by. It needs to be easy to remember, relevant and unique. It needs to be appropriate. It will embody your entire business.
Take just a minute and let’s identify what motivates you to run a day spa business. Is it the money? Money motivation will only carry you so far. You need to have a passion for the business side, for the daily operations of the business, before money. The money will come will come, but that is not a large enough focus. If you don’t have a passion for running a day spa business, there are plenty of other ways to earn money. A wise man once said, “If you can figure out a way to get paid to do something you really love to do, you won’t have to work a day in your life.” Remember that. If you don’t enjoy what you’re doing, the money isn’t worth the work.
SECTION TWO – In Business for Yourself
One of the greatest freedoms in America is the ability and privilege to go into business for yourself. However, you must remember that equal rights mean equal responsibility. You’re not guaranteed to succeed. It will take hard work, smart work and often working long hours – both nights and weekends.
Before we go about building your day spa business, let’s take a close look at the need for a day spa business. You can often find the need by creating it. After all, that’s what running a business is about.
Let’s take a look at a good chunk of your target audience – the baby boomers. These are the people who are the parents of millennials. These are the people who were born before or around the 1960s. They are established, most of them own houses, and most of them have money to burn because their children have grown up and have lives of their own. These baby boomers spend an exorbitant amount of money on anything they can to make them feel young again. For baby boomers, the fountain of youth has no price.
Baby boomers spend most of their money on either healthcare or health and wellness products and services. Your business falls in the category of health and wellness. This is where your need is created. Your day spa business will satisfy the health care worries and interests of the baby boomers. This is your largest demographic, but is not your only one. Their children – the millennials – have experienced the pinch of inflation and know that the only way to beat it is to make more money. Those who have made more money, as well as those who have learned from their parents’ mistakes concerning how to take care of themselves, will also be your customers.
As you think about building your own business, take time for yourself. Take a break – don’t overwork yourself. This is a business, and you need to treat it as such. However, if you work the past the point of productivity, you will do more harm than good. There is paperwork, not to mention finances, purchases and people to manage. If your end goal is to build a retirement fund from the profits of this business, you will do well to remember your own well-being.
You also need to look at the bigger picture and try to focus on other consumer wants and needs – your goal will be to satisfy all customers. The better you take care of your customer, the better your customer will take care of you.
SECTION THREE – Supporting Your Business Part 1
When you are going into business for yourself, no matter the industry, you need to have a business plan. Business plans usually span between 30 and 40 pages and detail every aspect of your business. You may need investors, and investors will not invest their money in a business without a thorough plan.
There are two parts of your balance sheet. The first part is your revenue, also known as “money in” or cash flow. This is where you take all of the money you make from every source and put it all on one sheet. The resulting total, after you add all of the numbers up, is your gross income. This is something you need to calculate monthly. You must know exactly how much money your business is bringing in if you’re to succeed.
The other half of your balance sheet is known as “money out” or, in other words, your expenses. You will have plenty of expenditures. Everything you buy – every penny – needs to be recorded on this part of the sheet.
This balance sheet will indicate the health of your business. It will be the sheet investors will want to look at. All of your buying decisions will be based on the balance sheet. It is called a balance sheet due to the fact that when you combine the revenue with the expenses, you will see how well balanced your business is.
You start with the income and add it all up. Then, you take your expenses and add them all up. You take your total revenue, subtract your total expenses and that is your profit. That number will tell you how much money you made it in any given month. The health of your business is wholly dependent upon this sheet.
You will need to find out what it is going to take to break even. In the beginning, you will have more expenses. You will spend more money than you will bring in. That is the nature of any business. You need to figure out how much money you need to bring in, and for how long, in order to find where your break-even point is, and then break it down by month. At the end of the month, you need to compare your balance sheet to your break even model to figure out if you are on the track to becoming profitable. If you’re not, figure out why.
SECTION FOUR – Financing Your Spa
More than likely, you will realize that you need investors. You may be in business for yourself, you may be doing all the work, and it may even be your idea. However, your investors are the real business owners. You will own most of it, sure, but for investors, investing is their business. They will want a return on their investment, and it will come from your profits. A contract you devise between yourself and your investors will contain details about how much your investors own and possibly how long they will own it. It will also detail how much they’re investing and how much they expect to get back.
You need to protect yourself. You’re investing a lot more than money in this day spa business. You’re investing your time, your energy and your livelihood. One of the best investments you can make is to retain a lawyer well-versed in business law. It will come in handy when you least expect it.
One of the tasks of your business lawyer will be to protect your intellectual property, your ideas. He will protect your business plan, your logo, and your name – essentially everything that makes your business unique. If it’s not protected, you may find yourself in a world of hurt later on.
There is a myriad of equipment that you will need to purchase for the daily operation of your business. This is why you need investors. Unless you have a couple million dollars lying around – which most people don’t – then you will need investors to pay for it all. Furthermore, you will need to hire staff. Essentially, in the beginning, all of your expenses from labor to equipment and property will be paid for by your investors.
SECTION FIVE – Supporting Your Business Part 2
As you choose a location for your day spa business, you need to have an idea of a layout for your space. A day spa is considered a brick and mortar establishment. Consider several business layouts with strategic designs that will allow you room for expansion. The last thing you want to do is find out you can’t add any services because you didn’t leave any physical space for it.
You may want to hire an interior designer. A day spa is about relaxation. Your customers will walk to the door expecting to be pampered. You need to create an environment that lives up to that expectation. You need to consider the ambiance of every room. Lighting is an excellent way to create atmosphere. Consider the psychology of color. Your interior designer will know all about it. Examine the materials of interior design. It is more than just paint color. It is about the design of chairs, the color of countertops and even the pictures on the walls. One of the fun things you can do is design rooms with themes. You will find customers asking for a particular room with the preferred theme.
You need to consider the interest of health. For example, make sure all physical surfaces can be sanitized. You will have people coming in and out all day long. If you can’t manage to keep the place clean, no one will want to come back.
Let’s talk about rooms for a minute. You will need to have a series of rooms dedicated for certain uses. Every room will fall into one of five categories:
- Treatment rooms
- Dry rooms
- Wet rooms
- Foyers and community spaces
- Administrative offices
Not only do you need to make sure that you have rooms that under each of these five categories, but you need to leave room for expansion. If anything else, you may find it rather useful to have an extra room or two – even if you just use them for storage.
SECTION SIX – Equipment Purchase & Rentals
One your business’s most expensive and valuable assets will be its equipment. After all, you can’t do the trade if you don’t have the tools. Begin by identifying your needs. Make a list of what you have, and then make a list of what you need. All of your tools and equipment should be mentioned in your business plan. You need to consider every aspect of your business. For example, one of the common services day spas offer is the manicure. What would you need to do a manicure? The nail technician needs a chair, table, lamp, dedicated space and a chair for the client. This does not even begin to cover the consumable costs such as chemicals, nail enamel, and gloves.
One of the joys of having a business is the ability to set your own goals. You set your goals based on your needs. You need to decide if you will lease equipment or if you will buy equipment. Leasing is cheaper in the short term because there is little to no upfront cost. However, if you plan on renting your gear for the long-term, then you need to consider purchasing your equipment. The goal of any business is to make money, so decide what is smartest for you.
Consider your equipment options. Your equipment will be based on the services you offer your clients. You may need to consider basic skin care, advanced skin care, hydrotherapy, permanent makeup, airbrushing equipment, and accessories. You also need to consider consumable supplies such as beauty chemicals (lotions, polishes, etc.) and chemicals that will be used for sanitation purposes. Since you will be dealing directly with people, you need to keep sanitary regulations in mind. Otherwise, you may have an unpleasant visit from your local health department. In most instances, the health department will show up unannounced to do a surprise inspection. They can be pretty lenient as long as you show a willingness to follow regulations. They will educate you and grade you and you may fail inspection. However, they will give you a reasonable amount of time to correct all mistakes.
Consider the business aspect of equipment purchases. These are investments. You need to take care of them. Furthermore, every one of these purchases will end up on your balance sheet. You may need to sit down one evening and calculate the cost of each piece of equipment you plan on purchasing to find out what the return on your investment will be.
Your decision to rent or buy will be based on two things. First, it will be based on your personal needs identification and based on your client offerings. To discover what you should be offering your clients, consider your target audience. You need to find out what they want and what they need. Take this information and fulfill that need. That is how you’re going to stay in business. No one is going to spend money on you or your spa if you can’t satisfy the wants or needs of your clients.
SECTION SEVEN – Marketing Part 1
There are many things you can do to market your day spa business. Marketing is an entire side of your business that warrants a good chunk of your attention. How can people go to your salon or your day spa business if they don’t know who you are? There is no time to be shy or timid. You need to do everything you can to create a good image of your day spa in people’s minds if you want to have enough clients to keep you in business.
The fastest way to do this is through trade shows. You may find investors this way, you may find clients this way, and you may find a way to satisfy your own needs – becoming a client yourself for other businesses in the same industry. It is an excellent way to get your name out there and to check out your competition. Find out what your competition is doing. Observe them – you may find out what to do, and you may find out what not to do based on your competition. Trade shows are chock full of inspiration.
Word-of-mouth is harder as a marketing technique because you’re harnessing the power of other people. However, its difficulty is relative to it its success rate. People listen to each other. Word-of-mouth is one of the cheapest and most efficient marketing methods known to man. The difficult part of generating word-of-mouth marketing is not getting people to talk about you and spreading the word. On the contrary, it is earning a reputation worthy of the efforts of other people.
Utilize the power of the Internet. Social media, and the internet in general, is not only free but, if it’s used correctly, it may also be the only marketing method you need. Millennials have entire businesses based on social media and other online methods. Utilize Facebook, Twitter, and the power of blogs.
The fastest way to earn the respect of other people and get them to use word-of-mouth to expand your business is to create a first-hand experience. This will most likely cost you money as free trials are, quite literally, free. However, how can people expect to know what kind of services you offer if you don’t offer them? There is a fine line between a free trial and being taken advantage of. Discover your limits and protect yourself.
Your competition can tell you everything you need to know about how to market – especially if they’re successful. You need to handpick your products carefully. Your products consist of more than just selling a bottle of shampoo or lotion. Your products are your services. As a day spa business, your products and services will be based on the needs of your clients and there is no better way to discover those needs than to find that what they’re already paying your competition for the same services? The best way to serve your target audience and cater to their needs is through your competition. You may wish to go as far as experiencing your competition for yourself. They don’t need to know who you are, or what you do. Go there and get pampered yourself.
Sample your products. Give potential customers a free or discounted appointment. These discounts will motivate them to come in because they will think to themselves, “I’m not paying for it so what do I have to lose?” If you manage to impress them, they may come back as a paying client. After all, that’s the goal of your marketing efforts – to create paying clients. It is your customers who will pay for your entire business.
Consider the demographics and local availability of your products. If you live in a dry area, consider special lotions that are moisturizing to combat skin issues. That’s just one example of how you can craft reasons for customers to buy your products – through product selection. Furthermore, you can create a demand for your products by supplying a line of products that your competition does not. If clients want what you offer, they must get it through you. You will learn all about marketing words like the word “exclusive.” This is most certainly one of the most powerful marketing words.
Learn to trust your employees. Employee empowerment can be one of your best marketing methods. You can empower your employees by considering their opinions. Allow them to make individual decisions, within reason, and enable them to help you decide what physical products you should carry. Your employees will be much more effective at selling a bottle of shampoo or a bottle of lotion if they exhibit brand loyalty. Employee empowerments create an environment of morale, loyalty, and responsibility. Keeping employees happy is not easy, but it is possible through employee empowerment.
Your physical products deserve careful deliberation. This is where employee empowerment shines. If one of your employees shows a fierce loyalty to a certain brand of hair products, consider carrying those hair products. You may find that your employees become excellent salespeople when they sell something they personally believe in. That’s the power of brand name products. You may also consider private-label products or creating your own lotion or shampoo. These chemicals may be used in your salon specifically for clients, or they may be bottled up and sold for home use. Keep in mind that you are not WalMart. You do not need to offer everything under the sun. However, the only person who can decide how diverse your offering should be is you.
In all your marketing efforts, remember that there are government regulations and safety standards. You may not be able to offer specific products to the public as a result. Your consumable products – among many other things – are of concern to your local health department, who can and will shut you down in a heartbeat if you display a blatant disregard for local health regulations.
SECTION EIGHT – Staffing Requirements
Your staffing requirements may start out small, and they will be based on your needs. Furthermore, not all your staff will be made up of individual people. You may hire agencies or even use technology as a resource. Your staff is what you need to run your business at three distinct levels. Each one is considered a level of management even if a person in a particular position, such as a receptionist, doesn’t manage anyone.
Let’s begin with upper management. There’s you. You are the owner, the big kahuna, the head honcho. You have the final say on all the decisions related to your business. Your decisions will make or break the business. However, this level of responsibility offers the highest level of rewards. As the owner, you are creating an entire entity with which you may retire. Marketing consultants are another part of upper management. These may be advertising agencies to help you get your name out there. They may be internal consultants helping you with your day-to-day operations. Or, they may be trade show representatives. Anyone who contributes to getting your name out there or makes upper-end decisions can be considered a member of upper management. The last members of upper management are your financial tools. Anyone who helps you with bookkeeping, payroll or any other role of financial management is part of this upper management group.
Your middle management includes the day-to-day operations. Who opens your store, and who closes your store? Who makes the schedules for your technicians and your receptionist, and who handles the daily deposits? Your managers, that’s who. They will often get paid more than the technicians, receptionists or any other employee who does not have management responsibility. The people who manage the day-to-day operations of your business – your day spa – are members of middle management.
Lower management members are the members of your teams. Nail technicians, cosmetologists, and massage therapists are all considered members of lower management. These are the people who take care of your clients. Ensure that the members of your lower management have the credentials and the education to take care of your clients. Another member of your lower management team is your receptionist. Your receptionist books the appointments for technicians and answers the phone. Your receptionist is the primary salesperson for the products your clients will buy. Furthermore, your receptionist is the first person your clients talk to when they walk in the door. He or she needs to be knowledgeable, cheerful, and loyal. If you expect your receptionist to do a stellar job, then you need to consider the wants and needs of your receptionist without sacrificing the needs of the business.
SECTION NINE – Harnessing the Power of Technology
Evaluate your technological needs. This includes everything from appointment software to financial software and retail software. Employee management software, such as the software that gives you the ability to print checks, make the schedules for your employees and time management software, is essential. For example, your hourly employees will need the ability to clock in and clock out.
So, how do you go about getting the software? Shop around and request demos. Don’t put your money in anything without experiencing the software for yourself. There are many different options out there, and this is a business decision. As such, you need to make sure that your software fits your needs. You may find that you need custom-made software for your business and you may not. You may find that generic salon management software is just the answer you’re looking for.
Learn to use the Internet and cloud services. You need to set up a website. Outsource a webmaster if you need to, but you need an online presence. Your phone systems will most likely be connected to your Internet connection. Cisco offers a wide array of IP enabled phones, and these are essential for running a business in today’s cloud-based world.
Your business is your baby. The last thing you need is to find out your business is not being run the way you expect it to when you’re not there. The quickest way to keep tabs on your business is to set up CCTV services. The security cameras will help with loss prevention. They will deter customers from stealing products and employees from not working when they should be. However, if your technicians work on commission, this may not apply to your spa. Many technicians in the salon business get paid based on commission. Therefore, if there are no customers on a Sunday night, it’s not really costing you money to have them sit around because they are not getting paid.
SECTION TEN – Marketing Part 2
The second section of marketing covers a more personal side of marketing. It consists of discovering needs versus wants. For clients, your job will be to satisfy both. However, your personal needs need to be distinguishable from your personal wants. Furthermore, the needs of the business carry precedence over wants. This may not be a question you can answer right now, but you need to figure out what the needs of the business are in the marketing department.
As you market your day spa business, you need to discover the difference between features and benefits. A feature of any product tells you what the product does or has. A benefit shows you what it can do for your client – it is the reason your client buys the feature. Take this example: A new tire has deep treads. That is a feature; it does nothing for the person buying the tire. The deep treads grip the road in wet conditions, providing a degree of safety. That is a benefit. That fact alone gives people a reason to buy the tire. I don’t care how deep the treads are, I care what the treads can do for me. As a business owner, you must know the difference between features and benefits.
Cater to your clients. Find out what your clients want. Find out what your clients need. Conduct surveys, observe the competition, and go to trade shows. Find out what’s hot and what’s not. Take all of this information and integrate it into your business. I can think of one particular example when one of the newer trends was to pluck eyebrows using string. Knowing this was a trend that people paid good money for, I would consider offering that service at my salon.
Consider your product, your price, and the promotion of your products. As a day spa business, you will sell some products, but your business will primarily consist of services. Don’t let prices scare you. Price is a direct indication of quality in the eyes of your clients. Your clients will think nothing of paying for a $200 nail service if you create a perceived value that it’s worth every penny.
You need to take the economy into consideration. Economic considerations have more to do with location and demographics than they do the financial health of the overall local economy of your city. No matter how bad the economy may be, there will always be people who are more than willing to spend money on being pampered. If the unemployment rate in your city is 11%, you will do well to remember that 89% of people are still employed.
How do you promote yourself? Remember that reputation is something that is earned, not bought. This is why businesses are renamed with new owners and new management.
Consider publicity. Hire a writer to create press releases, articles, brochures, and business cards. You are always selling. It is all part of your job description as an owner. You have the power to cut deals with other business owners. Consider guerrilla marketing. Guerilla marketing consists of personally going out and considering unorthodox marketing methods such as walking into a non competing business and requesting referrals. You can exchange business cards and brochures, offering to promote their business if they promote yours.
Through all your marketing efforts, you need to set realistic objectives and expectations. Don’t overreach. Don’t make promises you cannot keep. Most of all, don’t beat yourself up. You are your own worst enemy, but you can also be your own best friend. Marketing is all about attitude.
SECTION ELEVEN – Outsourcing & Merchandising
You need to remember what your business is. It is a day spa, not a design agency. Outsourcing is essential to the success of your business. It leaves your schedule open to focus on the customers. You are not of the business of writing, so don’t spend a whole lot of time writing a brochure. Outsource it to a graphic designer and a copywriter. You do not hire graphic designers. You hire nail technicians and massage therapists. They’re for your business. Focus on your business and outsource the rest.
As you’re starting out, you may design your own business cards and your own brochures. Sooner or later, you will find that you may need to outsource. When you spend more time perfecting a brochure than you do managing your business, you need outsource.
Consider advertising agencies. Advertising agencies hire graphic designers, copywriters, webmasters, and everyone else you may need for your marketing efforts. Advertising agencies are the creative brainpower behind your image. That’s what you’re paying them for. The only thing you need to do is proofread the materials they create. You need to make sure that they deliver what they promise. Hold them to the same level of accountability that you hold yourself. Don’t settle for subpar work.
Merchandising is all about relationships. Relationships are not something that you can put on the shelf and forget about. Relationships are constantly cultivated. It something you pay attention to. It shows you care. If you honor people, people will honor you. The best way people will remember you is by how well you treat them. Treat them with respect. Take them out to lunch. Give them a reason to remember you.
Remember your vendor relationships. Your vendors can often cut you deals and save you money. You may end up becoming good friends with them after a while. A weak vendor relationship not only hurts your bottom line but affects just about every aspect of your business.
Your receptionist is a salesperson. Your receptionist will sell all of the products you offer. This includes the retail merchandise at the front of the store and the services of your technicians – especially if you take walk-ins. You may be in a location where people just walk in looking for a specialist. These people become the clients of your technicians – and the success of your technicians means your success as a business owner.
Your relationships with your clients and customers are of the utmost importance. There is a fine line between having a respectful customer and having someone take advantage of you. Learn that line – but don’t learn at the expense of your employee. Clients and customers come and go, but your employees do not. On the contrary, your employees take care of your business by taking care of your customers. Do what you can to keep your employees happy. It may mean that you pay more, and it may mean that you cater to their schedule.
SECTION TWELVE – Management Duties
The first thing you need to do is keep your goals clear. Write them down and be mindful of them. It may be helpful to have them posted somewhere in your office. Goals are as important as money. Your goals are what drive your business. Your goals are what motivate you. Your goals directly determine your success.
You need to create policies and standard operating procedures. You will not always be there every single time a small issue comes up. This is the purpose behind standard operating procedures and policies. What is your return policy? What is the policy when your employees or technicians request time off? What is the policy for how will you pay your employees? All of these questions and more can be answered with a well-written standard operating procedures manual.
When you hire employees, you need to interview them. Ask them questions and get to know them. Do more than just ask if they are available to do a job. Your success is dependent upon their success. Hiring the right mastermind is what determines the success of the business. A mastermind is what is created when all your employees come together. It is the harmonious relationship between you and all of your employees. It is this mastermind that will run your business.
Consider employee relations. Employees need to be kept happy if they are to be loyal. You are indirectly responsible for employee morale. If you can’t keep your employees happy, they will leave. This hurts you more than you may think because clients in this industry don’t follow businesses, they follow technicians. Just as your employees will bring clients to your business, they will also take them with them if they leave. Don’t let them go if you can help it. Take care of your employees. This goes back to the concept of honoring people. Honor your employees and they will honor you. Offer a fair compensation to your employees. This is also related to keeping employees happy. Your employees to need to support themselves. As an employer, it’s your responsibility to give them the means to support themselves.
Hire a CPA – a certified public accountant. Do not attempt to do business taxes on your own. At the same time, it is important to note that you should keep the receipts for everything. It is not good enough to just write down your expenses on an expense sheet. Your CPA will need to see your expense and balance sheet. However, you need a backup every single expense with a receipt. Your CPA has the responsibility of tracking every single penny that goes to your business. Their job may not be easy, but it is black and white. Either the money is there, or it is not.
As a business owner of a day spa business, you will have inventory. Your stock requires quality control. Your retail products will expire. The moment you sell expired products is the moment you will be hurting your reputation. Your reputation cannot be bought. Your reputation must be earned through diligence. You may need to throw away perfectly good inventory. However, it is far better to get rid of a few bottles of expired conditioner than it is to lose clients because you failed to rid your storefront of them.
Tread carefully when raising your prices. They do not always match inflation. Consider a formula based on how much you pay for a particular brand. For example, your grocery store most likely follows the national standard of making between three and four cents on every dollar that is spent there. If you consider raising your prices based on a percentage of what you pay, you may find products flying off the shelves. Consider a formula like base cost +1.5%. You may choose to charge more, and you may elect to charge less. This is your business and your decision.
How do you evaluate your success? It is based on many factors – not just money. Success is based on how happy your employees are. It is based on whether you as a business are making money. It is based on how happy your investors are. It is based on how happy and satisfied your clients are.
This article is about how to build and grow your business. Are you doing anything to measure how many clients you have? The true measure of success has nothing to do with money. The true measure of success has to do with the impact you have in your community. Does your salon do well in your community? Does your day spa business improve lives? Does your day spa business help people find their center? Does it help you find yours?
Check out Marine Agency today and give us a call for a free consultation to see how we can help insure your day spa business.