7 Leverage Points for Revenue Generation and Cost Containment

  1. Spas need to be up-selling clients on additional treatments and products. It is the "would you like fries with your burger" principle.
  2. Consider alternative revenue centers such as fitness, lifestyle programming and food and beverage.
  3. Avoid "creeping expense phenomenon". Review each expense line item monthly to try to determine if an "out of line" expense is a one time increase or indicative of a larger issue.
  4. Pay close attention to "revenue adjustments" such employee discounts, merchandise returns, discounts and promotional allowances. This will prevent unhappy surprises.
  5. Excess inventory equals cash out of your pocket. Closely monitor your inventory turnover ratio, which measures the ability to manage inventory, cash and assets.  (Inventory Turnover=Cost of Goods Sold/Average Retail Inventory)
  6. Create a detailed retail plan that included your mission, theme, type of merchandise carried, merchandising plan and physical space planning and display fixtures.
  7. Set clearance strategies; if new merchandise does not sell in 6-12 weeks, do not sit on it and hope it sells, clear it out and move on.

By Deborah Evans, Principal, Deborah Evans & Associates, SpaSense Group, LLC

Deborah Evans is the founder and principal of Deborah Evans & Associates which has created and designed, developed, consulted, marketed and managed select destination, resort and day spas in the U.S., Mexico and Puerto Rico. With over twenty-six years of hands on experience and a proven track record, Evans is a dynamic visionary and recognized industry leader in planning, programming, marketing and public relations and successful management of hotel and spa operations.

Ms. Evans oversaw the development and repositioning of two leading destination spas, Lake Austin Spa Resort in Austin, Texas and Red Mountain Spa in St. George, Utah. Serving as General Manager of both of these "top ten" spas, Evans oversaw the re-tooling of "Bermuda Inn" to "Lake Austin" and "National Institute of Fitness" to "Red Mountain Spa". A partial list of consulting projects includes Grand Floridian Spa at Disney World in Orlando, Florida; Ritz Carlton, San Juan, Puerto Rico; Mission del Sol, Cuervanaca, Mexico; PGA National Resort and Spa, Palm Beach, Florida; The Greenhouse, Dallas, Texas; Jacques Dessage, Shadyside, Pennsylvania and The Retreat, New Braunfels, Texas.

 To contact Deborah, email [email protected]

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