In my 13 years as a spa business coach and industry speaker, one fact has become dramatically evident: a large percentage of spa owners are failing to achieve even modest financial success. We have rooms full of spa operators attentively listening to a business expert explain the many reasons small companies fail to perform as expected, most hands raised when asked if the information applies to their own experience.
Spa consultants may receive query after query from potential clients, only to see the vast majority of them shy away from committing to a plan for change. We now see a silent but growing list of day spas on the seller's block, and an upward swing in outright closures. And yet with all these reasons to take on professional business help why do so relatively few actually get any, or when they do, why have they waited so long to do so?
In interview after interview with past and present consulting clients, an interesting pattern of thoughts, beliefs and fears has emerged that sheds some light on why the suffering business owner will endure huge losses, or even bankruptcy, before or instead of seeking professional assistance. And it's purely human nature at work here. The intended purpose of this article is to help you, the potentially distressed spa entrepreneur, find help in overcoming some common impediments to improving your business's success potential. Here's the list of excuses my research revealed, as reported by those I interviewed:
Too new to know any better
The business is barely off the ground—how can one know if there's anything unusual happening here thus far? It's a reasonable perspective. Sure, after five months sales have not met our projections and costs are higher than expected, too. But, it's way too early to start thinking that we may be heading for trouble. Negative thinking isn't going to get us anywhere so we'll stay with the program and wait to see how things go. Besides, the holidays are right around the corner and we're sure to pick up some great gift certificate cash. As far as employee turnover is concerned, I read that it's always fairly significant during the first year you're open, so the four technicians that resigned recently are to be expected. Of course I'm a little nervous about the situation but isn't everyone when they first start out? We'll be fine.
It's not me or us; it's everything else
We've been growing steadily in the 16-months since we opened, and I'm glad about that, but we're still not making ends meet very well—not even close, actually. How can you expect to get ahead when every time you hire and train a new employee they either quit or move away and take their clients with them? I'm becoming pretty negative about training, in fact. Can you force someone to pay you back for their training if they quit before a certain amount of time has passed? I'm getting tired of being ripped off like that. I also think that new day spa that opened across town is having a bad effect on our appointments though I can't really prove it. Their services are a little cheaper than ours are—should we think about lowering our prices a little? The staff has really been pushing me to do more advertising but whenever I do the new customers don't seem to come back more than once. People say we're still being affected by the war, 9/11 and the recession but that was already happening before we opened. How do you find good help?
I'm in over my head but a good manager will fix that
Operating this spa is far more work and stress than I ever imagined! My family barely sees me and I'm running around like a headless chicken. I knew that there were things about business I wasn't good at but I've got to do something about that pretty soon. I need a strong manager to help me run the place, someone organized in a way that I'm not. Staff doesn't cooperate with me, probably because I'm too much of a softy and always give in when they want something, even though I know it's wrong. Besides, they have these licenses to perform services and I don't, so how do I know what they do or don't need when they demand things? My new problem is that I can't find this manager anywhere. A few people have applied but I don't think they're qualified for the job. Spoke with a spa business consultant after attending a trade show class but we're not ready for anything like that yet.
My manager is good in some ways but she doesn't seem to be on my side
I thought by hiring a manager I'd get better performance from my staff but it seems like she sides with them more than me. She doesn't want them to dislike her so she's not making them follow the rules here, even sticks up for the employees sometimes when I don't like what they're doing. I probably should try to find another manager but this one was hard enough to get and I can't afford to take on her work right now. Read about these spa management classes that look like something I need but there's no way that I can take the time off to go there, especially with the lousy week we just had. Mother's Day is coming; let's see how that goes...
Once more around the block
Well, I knew my manager was probably going to quit but I thought she'd have been more professional than to walk out with two days notice! So much for trusting people! Never again. So now I'm back to personally running things, which feels better and worse than before. It's a relief to have that sullen manager out of here but I'm no better prepared to handle this place alone than ever. Worse, some of the girls are pretty negative about the manager leaving and I'm afraid some of them may follow her to wherever she ends up next. I'm going to make it harder for them to get our client contact information than it's been. Right now I don't feel much loyalty from my team. Maybe what I need is to clean house and start over. I could call that consultant guy but I already know what he's going to tell me, so what good could it do?
We're always short on cash no matter how big our sales get
I can't make heads or tales of our financial picture. The bookkeeper sends me monthly reports (but always two months after the fact!) yet I'm not very good at understanding what they mean anyway. Our service sales keep going up even though our retail sales are still terrible, so how come I'm always racing to meet payroll, rent and my vendor invoices? Is someone stealing money from me? This really freaking me out now! Our product rep came in and did a sales class for the staff but it didn't make any real difference at all. They still just seem to hate selling no matter what. A retail expert told me that our sales could and should be at least $40,000 higher by this point in the year, August, than they are but he wants $4,000.00 to come in and correct the problem. That's a whole lot of money for a retail class! I can't afford something like that.
Hey, we're doing great now!
Wow! After 3 years I'm finally caught up with my bills and haven't had to worry about payroll as often as I used to. That's a BIG relief, too. But, now I'm wondering when I can make a little something for my self as well? This has been a long time to go without a personal income, though I do write my car and gas off from the business. How much is a manager or owner supposed to make, anyway? I'm afraid to start pulling money out of the business right now since we only recently got caught up financially. I feel like we're successful at this point, as it is. Finally did talk with that business consultant. Seems like a nice guy but I'm afraid to have him look at the spa and my management of it. I'll be too embarrassed for him to see our books or how we do things here. He'll probably show me just how stupid I am as a spa owner. Besides, I hate things like numbers and spread sheets that I know he'll want me to work with. If I can't handle that information why throw good money away on it? I'll just start to read that book I picked up last year, The 7 Traits Of Highly Effective People That May Or May Not be Just Like You! I think I can get around to that after we get past vacation season.
We need to make more money so I'm thinking of expanding
Weekend and evening appointments are getting pretty full, especially with all of those gift certificate sales. There's a larger space that's available right next door to us and I don't want it to get away. The landlord wants me to make a lease decision by next week or else he'll let another business take it. I think that between our remaining home equity line and a bank loan I can come up with the money for the remodel and new equipment. Besides, we need extra room to install that Dynoaquathermomassage unit I saw at the trade show. The vendor said it would make our spa truly unique in that no one else in New England has one yet. Now $25,000.00 isn't too much to spend for something like that if it sets you apart from the competition, right? The staff has seemed a little unmotivated lately so maybe this new treatment will charge them up again. I know that expansion is a big deal and that I should get a second opinion but everyone keeps telling me that we should get more space or even franchise. How could you go wrong with more sales? Plus, I'm hoping that more income will finally allow me to get a decent salary.
This isn't what I thought would happen...
The expansion went far over budget and took a lot longer than the contractor promised it would. Had to get a personal loan from my parents to cover the $40,000 shortfall. Now we've lost the holiday shopping season we were hoping to cash in on to bail us out. We also don't seem to booking all that many more appointments than we did before moving into the new spa. Some of the new people I hired are sitting around with nothing to do and our expenses have shot through the roof. Maybe it wasn't such a good idea to add on space when we did. I'm thinking that maybe I should take on a partner to handle some of the costs and management work. I thought I had more than enough to do before this new spa but now I'm way in over my head. That grand opening party cost us a fortune but hardly anyone showed up for it Saturday night. Practically had to threaten the staff to help out with it. They're unhappy with having to do complimentary treatments as a means of showcasing their services, saying that they hate doing "free" work. Why don't they understand that they're doing marketing instead of just giving their work away for nothing? I certainly would do it if I weren't busy like some of them aren't. Maybe I ought to just sell the spa. I wonder how much it's worth? I've got about $600,000.00 in it so far, not counting all of the unpaid work I've put into it. If I could just get my initial investment back I'd be pretty relieved. How easy is it to sell a spa?
Without exaggeration, this is an extremely accurate tour of the distressed entrepreneurial mind at work. It operates on a strange fuel of bravado, denial, fantasy, rationalization, blame, and action avoidance. Very often by the time a business consultant is brought in the owner is standing at the steeply angled stern of the ship, the remaining few feet left above water. It's the Titanic revisited; ignore the threats lying in wait, run full speed ahead in the belief you're your design is unsinkable, wait too long after hitting trouble to save the situation; you've got all of the ingredients for a perfect disaster and now the worst has come true. But, the fact is, it's almost all avoidable.
The meaning of this story is simple: if you think you need help, GET HELP! There are many sources of savvy and experienced spa business professionals that can keep you from following this common course to failure. It takes courage to admit that a plan isn't working, and even more to embrace the cure. But, all businesses eventually turn out to be something very different than how they were originally conceived. In the end it's successful survival that really matters!
By Douglas Preston, Preston Inc. www.prestoninc.net