Converting to a Day Spa: Seven Important Pauses before Your Next Step
Everywhere, owners of hair, esthetics, and body therapy businesses are contemplating or engaged in expanding into the day spa market. Seduced by the media buzz over this hot new service phenomenon, many business owners se the day spa as a means of attracting new clients or keeping those they have. They read about day spa growth statistics, see dazzling new equipment at trade shows, and fear their own busy operation may be falling behind the times. With pen in hand they're ready to sign loan documents, lease agreements, and lots of checks in order to catch up with a crowd of savvy entrepreneurs who know where the real action is.
I'm a spa and salon business consultant involved in turning around companies that have made hurried investments into day spa facilities. My clients are often well intentioned salon owners who were overly focused on the more optimistic possibilities of spa conversion—things like larger sales, more glamorous surroundings, and a solution to irritating and misunderstood business problems from the past. Some are plastic surgeons and dermatologists looking for ways to attract new insurance-free patients to their practices. And many are investors entirely new to the personal service industry but banking on the day spa rage. If business is always a high-risk game, betting on a set of unproven assumptions only increases the risk of loss. If you're about to make a similar move into a day spa conversion or startup, take a few minutes to read these 7 reality-tested guidelines. They may save you substantial time, trouble, and money.
1. What is really motivating this move?
You'll need to be painfully honest if you want to avoid a rude awakening later. Are you bored with your current business? Do you think your plan will rain dollars on you? Are you afraid that your present salon will become obsolete soon? Are you looking for bigger challenges? You're preparing to spend a lot of money here, so be absolutely certain you know what you're doing—and why you're doing it. Better yet, get a second opinion about your assumptions.
2. If your current sales are not netting you enough personal income, how will a day spa change that?
Too many business owners fail to appreciate the relationship between sales and operating costs. They don't understand the real definition of profit—the money (hopefully) left over after all the bills have been paid. Instead they look for more cash across the counter to provide some extra income. But there is a dangerous tendency for day spas to create higher than average overhead in a service facility, and this is probably the main reason that I have such a busy consulting career. If you have a business plan, make sure that someone evaluates it other than your accountant or general business advisor. Find someone who knows about the real cost of running a day spa.
3. Do you have any real idea of what you're about to get yourself into?
If you're a career hair stylist, how much experience have you had managing estheticians, body therapists, and nail technician? Do you know what their particular professional expectations will be? Are you really qualified to manage their demands for specialized and expensive products and equipment? If you're an esthetician deciding to add hair stylists to your payroll, how do you plan to control their service schedules, timing, and production quality? And if you have no personal services background at all, how will you win the authority to effectively direct a professional services team? No business ice is slipperier or thinner than this. If you can't answer these questions with a lot of confidence, stop here and get some help!
4. Speaking of management, who exactly will be running the show?
In other words, what will your role in this venture be? Will continue serving a clientele while managing a complicated day spa at the same time (as if you have enough time to do so now)? If you plan to hire a manager, who will direct this person? What happens in the event that she or he abandons their post? Ever talked to someone who actually runs one of these operations to learn what their experience has been like? No? Now that's a conversation you really ought to have.
5. What's over the horizon for the day spa concept?
Interesting question. If you gauge it by trade articles and advertisements, you'll envision an endless panorama of growth and opportunity. Maybe so. But in the early 1980's there was a similar push toward converting specialty salons into full-service businesses—a less exotic precursor to the day spa idea. Many of those expanded salons trimmed back down to what they originally did best after struggling with disappointing financial results. Today's news can become tomorrow's cliché.
With two new large day spas under construction in our market area, my own company quietly removed the "day spa" title from its service brochure along with the traditional spa packages. Why? To maintain our market distinction and to focus on attracting the kind of customer who represents the best portion of our business: the single-service, retail hungry, repeat visitor. We've learned that we can make more money from fewer customers if we are servicing the right customers. Our competitors probably don't appreciate this and, in our opinion, may be headed in the wrong direction. The result of eliminating spa packages from our menu? A steady increase of service, retail, and gift certificate sales.
6. Is your current business all that it can be?
Expanding your current salon to a day spa doesn't just make it potentially larger; it changes it into something utterly new for you, your employees, and your customers. All will have to find new ways to relate to their familiar and favored company. Employees must adjust to new roles, coworkers, and scheduling needs. Clients may feel uncomfortable in new surroundings.
In many ways you're beginning a new business. But what was wrong with the old one? Did you really tap out your client or sales potential? Are there no new ideas or excitement left in what you already know so well? Rather than explore uncharted territory in a new market, why not work toward the top end of the one you're already in? This way you'll expose your company to lower risks and expenses while creating potentially vast new opportunities in overlooked areas of your business. Is your hair salon the premier destination in your city? Is your esthetics business getting the attention and prices for its one-of-a-kind treatment programs? Is it possible that you've temporarily lost the creative inspiration for your current profession that you had in earlier years? A fresh approach in a mastered field may be wiser than a foray in to something you know much less about.
7. Are you ready to work harder for less money than you do and have now?
Ready or not, you will. Startups and expansions involve unpredictable business consequences, except for these: higher costs, more management work, and sales that need time to grow. Building new facilities doesn't mean that there will automatically be extra clients waiting to fill the expanded space. It will require more money to support itself, however. This will demand attention, present new management problems, and ask a whole lot from its owner in terms of time and patience. Make sure that you have plenty to spare before committing.
I'm all for the expansion of the day spa industry. No version of a personal services business can benefit clients on more levels than this one can. They are wonderful kitchens for treatment innovation, and where environmental elements are heavily influential in a customer's overall experience and satisfaction. But I'm quick to caution against climbing into this sensitive and expensive vehicle without doing some careful advance planning. This is one piece of machinery whose instruction manual you'll want to read before assembling. Best of business to you!
About Preston, Inc.
Preston Private Label offers over 100 outstanding, results-oriented skin and body care products for both retail and professional use. We offer an excellent—-and free—-regional technical and career-building education program, affordable minimums, and fully custom labels, pre-applied. Choose from two packaging options and get the look that best suits your branding strategy. Generous margins that allow for markup from 150-700% mean you gain maximum benefit from retailing. From cleansers and toners to cosmeceutical serums, pro enzyme, glycolic and lactic peels to body contouring wraps, gift kits to aromatherapy oil blends and more, we have everything you need to create a highy effective, full range product line. Visit our website at www.prestoninc.net for more information!