I am a day spa owner. While that in itself is unremarkable let me add that I am the owner of a 20-year old profitable day spa in Saratoga, California USA. Saratoga is a small, attractive, wooded town located on the outer edge of the renowned human pressure cooker known as the Silicon Valley, home to some of the most expensive real estate in America. It’s a rather conservative community where spending is exceptionally high in goods that have a perceived “investment” or prestige value (boutique vineyards, Mercedes Benz S600, mega-karat wedding ring, etc.) but curiously low in “frivolous” commodities such as cosmetics, facials, and other indulgent non-necessities. Saratoga is a quaintly seductive place where, on the placid tree-lined streets of its downtown commercial village, small business dreams alight only to wither and die. Gourmet coffee houses, specialty dress shops, Asian antique retailers, and a countless others have set up shop, floundered, and quietly disappeared. Against all odds (and the prediction of many along our deserted street) our spa has survived and thrived. Preston Wynne Spa, all 3400 sq. ft. of it, has set sales and quality standards admired throughout North America. We’ve won every spa award available, more than once, and continue to capture the attention of the media. Best of all however is the miraculous fact that my long-time partner and myself are no longer personally welded to the day-to-day operations. We developed a strong team of highly competent managers who dedicate an extraordinary concern for service quality, customer satisfaction, and strict respect for the company’s revenue and budget demands. Our 60+ spa employees produce over $3.5 million in annual service and retail sales, and they do it from a menu restricted to face and body treatments—no hair or nail offerings whatsoever! And of that sales total an astounding $1.5 million comes from service-driven retail products, with no assistance from casual walk-in buyers. This is the true spa bliss most owners hope to create for themselves, but few ever do. So, how did we accomplish this?
If you’re considering entry into the exciting and potentially lucrative world of spa business ownership, or desire to improve the performance of one you currently operate, you need as much fact-based help as you can find. With the right recipe for leadership and a keen eye on the real sources of business profit you can make your spa run surprisingly well and be rewarded with a handsome investment return. So in the spirit of helping my spa colleagues to ascend the ladder of fulfillment and fortune I offer you my top 7 tips for uncommon spa business success!
1. Start with a well thought-out plan.
As a spa owner and business consultant I’ve witnessed firsthand the hazards of diving into a new spa venture with only floor plans and high hopes providing direction. It’s like planning road trip with little more than a car and your imagination to guide you. Some obvious questions should boldly stand out: Where do I want to go? How much time and money do I have? How willing am I do endure risk in the process? What will life look like, feel like, and be like once I have arrived at my goal? And how will I know if I’m successful or not, in other words, what is my personal definition of business success? Without this basic blueprint you’ll immediately run into some very avoidable trouble and disappointment. Take time to plan for everything!
2. Don’t chase the illusion of success.
Maybe you’ve based your business hopes on the “success” stories of other well-known or highly visible spas. You’ve heard all of the hype, read the stories and articles about the new hot spas cropping up, and know how hard it can be to get an appointment at some of them. You want this! But what you don’t see in all of the glamorous veneer can be extremely important to you: Is their business model going to be profitable? Are these spa owners heavily in debt? What’s working and not working for them? If they could plan their spas all over again what would they change? It’s difficult to get at this kind of information but it’s also the most critical information possible in planning a business. Don’t rely on accountants to create your financial projections—find an industry expert who’s seen a few authentic spa profit and loss statements. Investigate deeply and be patient with the process. This is real-world knowledge that you’ll need before you dive in on your own!
3. Know thy customer, know thyself.
Believe it or not, spa customers evaluate the quality of a spa more on how they feel in it more than on the individual services themselves. When asked to recount a spa experience the average customer while describe it in sensual or tactile terms rather than in technical details. Spa clients are far more qualified to judge a spa on a feeling level, positive or otherwise, which is the primary benefit of patronizing one. A spa that delivers a higher quality of customer service yet performing merely competent treatments will routinely receive higher praise than the spa whose focus is on exemplary services, leaving hospitality and graciousness to fend for itself. Ask a friend to recall a visit that they might have made to a spa, and listen carefully to the reply. Do you hear more experiential or technical details in the story? And how would you describe such a visit to someone else, someone you wanted to entice into trying a spa for themselves? I say it all of the time—the spa business is really the entertainment business! Invest heavily in customer service training that guarantees your spa will be the escape from reality that you promise it will be.
4. Bigger isn’t always better.
If you accept the wisdom is point #3 then you’ll have some solid guidance in deciding the size of your spa. The smaller it is the lower the initial startup cost will be, the fewer employees you’ll need, and the less management demand you will have. By now you’ll have considered, if you’ve done some of the above homework, just how suited you are for the task of management itself. Do you love directing and teaching people, or disciplining poor performers? Can you merely toss off key management responsibilities to others and expect high quality output? Don’t waste lots of money on impressive-looking but non-revenue earning amenities such as large steam rooms, capacious lounges, and yawning foyers. Customers want to feel safely enveloped in your spa, not lost in there. Besides, it’s what you do that counts more than what you are. My own spa, by luxury standards, lacks many of the features a resort or over-built day spa often have, but our success is based on what we do well. Little attention is paid to the absence of those awe-inspiring features that won’t serve as a substitute for intimacy and warmth.
5. Plan a service menu that generates profits, not just sales.
Try to be all things to all people and you’ll come out a big loser in this business! Just because there’s high demand for certain services doesn’t mean that you have to or should offer them. Most customers do not spend long hours in the spa even if you’ve designed the “one-stop shopping” concept for them. Plan your spa services around proven programmes that generate strong service and retail revenue in order to maximize your per-client sales potential. Avoid too much emphasis on spa packages that sell well but end up producing poor retail results while simultaneously gobbling up the most valuable hours on your service schedule. You want to avoid giving up high-demand hours to low-producing clients—your regular (and most valuable) customers will be forced to look elsewhere for their weekend and evening appointments! Don’t invest heavily (if at all…) into specialty service programmes and equipment that may not have a well-established consumer demand. Being the first with a new service for the sake of “uniqueness” is the riskiest form of self-flattery. Too many wet rooms, high-tech tubs, and Watsu pools may seem impressive yet stand dry and empty for long and costly business hours. And even if they do manage to fill up, was there a better use of your investment dollars? Go where the demand is strongest and then just do the work better that your competitors. My own spa has a rather narrow service menu but has staked its reputation on high-calibre customer service and hospitality. We also make money!
6. And on the subject of retail…
The real beauty of spa and salon retailing is in its power to directly influence it. Almost all of the skin, hair, and body products you will ever sell in the spa are more of a reflection of what you endorse rather than the marketing campaigns of manufacturers. I’m a huge believer in private branding of retail products as they allow brand exclusivity, pricing freedom, and serve to build another pillar of your business equity. In other words, you are free to price products under your own name as operating costs and profit expectations require rather than be bridled by a manufacturer’s suggest retail price (msrp). If you ask most spa owners to name their best selling products you will discover that the volume in sales was created by the preferences of those selling them, and not by the product’s reputation at large. I make almost all of my company profit from high-margin retailing, which is why our service menu heavily favors facial treatments—the service with the best retail relationship.
You must also commit to requiring a minimum retail sales performance from your service employees if you plan to make the most of this critical revenue source. Leave it to chance and you’ll be very disappointed with the result. Nagging your employees won’t correct sale problems, and even a slightly higher-than-average sales commission will do little to positively stimulate a sales-phobic team. A regular investment in skilled retail training and sales tools coupled to a set and frequently monitored employee sales performance will mean many thousands of dollars in retail revenue every year!
7. Hire employees who will solve problems, not create them.
No challenge in spa management is greater than in finding, motivating, and retaining stable and productive employees. You may feel as though your hiring history seems as futile as building sand castles at the waterline—seeing all your hard work routinely washed away. But regardless of the industry you work in employee turnover with its impact on customers, quality, and consistency is a predictable that we must live with and thrive in spite of. The trick is to find the best possible job candidates, train and inspire them to give their best while still with us, and to make sure that we have more of them waiting in the wings when the inevitable vacancy occurs. You want job candidates who are retail friendly, flexible, and who have a healthy sense of self. Generosity toward others is an especially desirable characteristic as it often indicates a willingness to place the needs of others before one’s own—of particular importance in a team oriented work environment.
The spa employee has a hierarchy of needs that you must understand and satisfy if you desire to retain them for long and benefit from their tenure. The top 5, in order of importance to employees, are:
1. Education: the strong need to be stimulated, improved, and valued through a continuous investment in knowledge.
2. Recognition and validation: the feeling that one is appreciated for their personal and technical contribution to the company’s success.
3. Growth and opportunity: the sense that one isn’t stagnating in a futureless job.
4. Security: the belief that they have chosen a safe, supportive, and healthy company to work for.
5. Personal income: “Well, I do need to make a living too…”
The less you foster values #1-4 the more value #5, money, rises to the top of the list. In other words without the sense of satisfaction one wants to feel from their primary values the more one’s secondary values increase in importance. This is especially dangerous to employers in the spa (clientele dependent) industry since we know that time will be required in order for even an outstanding therapist to develop a reliable following. The more this employee can feel satisfaction with their primary values the more patient and motivated they will be in waiting out the normal business building stages. Be generous with training and praise, and you’ll receive a handsome payback from your investment!
While hardly a “how-to” manual for business success, these tips among the most valuable that I learned in the effort to make my spa to achieve what is has. That business, other than some of the initial spirit and passion that spawned it, is nothing reflective of its original concept. I had to learn to love the doing of business more than the idea of owning one before I would be willing or able to face the realities of successful management. Look inside yourself and see if you can find a fascination for making something work well, and also for the determination to see the task through, whatever it takes. Business success is one-part planning, one-part willingness to revise, and one-part refusal to give up. In the first 10 years of my history as a spa operator I could think of a lot more reasons to burn the place down than I could to continue being so frustrated with its management. I’m relieved and thankful today that I stuck with it!