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In this new series of articles I’d like to share with you some fascinating insights into common business management challenges confronting many spa operators today. A striking similarity shared among my many clients has been the sense of frustration, isolation, and embarrassment produced from failing to solve a steady list of recurring business problems. Unforeseen mistakes made when planning a spa, while natural, can seem like quicksand—easy to get into but difficult to escape from. Spa business consultants, like myself, may be employed at any stage of a company’s life: during the initial planning phase—the ideal time—or further down the road where an investment in sound management strategies is unavoidable. Even spas with a long track record of growth and profit can benefit from a thorough analysis their sales, marketing, and management procedures. After all, the best time for a physical is when you’re feeling fine, not after an illness has set in. It’s better to avoid trouble than react to it.
My client work, often begun as a last-minute S.O.S. from seriously cash-strapped spas, begins with exposing any erroneous assumptions that steered the original business planning. In many cases “the plan” was simply the result of creating, that is, dreaming up and building a spa that was more easily defined after it’s completion than at any time prior. In northern California there’s a curiosity known as The Winchester Mystery House; a sprawling 19th-century mansion created by the eccentric Sarah Winchester, widow of the famed American gun maker. Spooked by a psychic into fearing the souls killed by her product, she embarked on an endless building spree, intending to give every victim a room to haunt in the afterlife. The result was a gigantic, rambling edifice that grew without any plan other than to keep a step ahead of her worst fears. I’ve seen spas built like this— conceived, outfitted, and expanded in the hope that one will accidentally achieve “success” or at least stay too preoccupied by details to see the snare lying in wait. Small business is always a risky occupation, especially when one fails to recognize early signs of trouble.
I’ll begin by highlighting many of the routine business crises that compel business owners to contact our office. We’ll examine the way in which problems develop eventually impact the health of a spa. In subsequent articles we’ll study some actual client cases (business name and location withheld) to learn what corrective action was recommended, what of that was utilized, and then evaluate the progress.
“Is it just me or is something wrong here?”
Grand-opening parties are like honeymoons—once it’s over you must live with the responsibility you’ve committed to. Making sales, managing people and money, responding to customer complaints and many other key tasks. This is where you discover what you’re good and not so good at, what you enjoy and dislike doing, and who your business friends and adversaries are. Your new career has arrived like a new baby and it’s already testing you, hour after hour. Immediately you’ve discovered just how much you don’t know about business management, nor anticipated needing to know. Every company and employee demand funnels down to you, The Boss, and suddenly you feel overwhelmed, underappreciated—scared! You wonder if others in you circumstances feel like you do. Maybe the long work hours, the fitful nights of money worries, the staff gossiping, and shortage of front desk help will settle down in a few weeks. You might even secretly think you’ve just made the biggest mistake of your life by starting that big, cash-burning spa. And if all that isn’t chilling enough, you’ve helplessly watched your business plunge into a dark tunnel of recession and war jitters that threaten to deny you a few stable months to get on your feet. It may be of little comfort but you have a lot of company out there in the lonely world of business.
In this first article we’ll look in on one of the toughest spa management problems that you yourself might recognize. My experience in finding solutions to difficult spa business problems comes from more than my years of work of a spa consultant; I also lived through them for 20 years as a spa owner, practicing aesthetician, and business partner. Most importantly, however, my business survived, profited and has remained at the top of its game.
Case #1: The overbuilt, under-staffed, underproductive, money-losing day spa.
We were contacted by Laura, the sole owner of a 1-year old 5000 square foot spa situated in a hotly growing suburb of a large southeastern city. Laura, a full-time hairdresser with 25 years of working experience and a large following, has hopes that her new, gorgeous spa will allow her to slow down a bit while providing a secure retirement. She’s tired but has the energy reserves (partially kindled by the exciting spa project) to carry her through the hard work of launching a new business. When “success” is supposed to arrive she cannot say with certainty, but the projections cast by a skilled accountant points to a small profit within the first 18 months of operation. The trouble is she’s already 12 months into those projections and, even though sales have been almost as strong as expected, there are few signs that her revenues thus far is leading to anything resembling black ink. Expenses have remained ahead of sales, and the gap seems to be growing. While Laura is far from predicting doom she’s savvy enough to know that the present trend absolutely must turn around, and soon. Holiday gift certificate sales managed to keep employees and vendors paid but now the spa is facing a rush of redemptions, so the cash tide has suddenly reversed. Laura believes that increasing sales will solve the problem but, now that the holiday buying frenzy is over, is unsure of how to stimulate those sales. She’s advertised a few service “specials” that offer discounts during the slower midday hours, and has asked her staff to donate some time to sample some complimentary treatments for promotional purposes. But her employees have been cool to this idea, feeling that they should be paid for any form of treatment work.
Laura desperately wants help her with her situation. Let’s take a sober look at it.
First step: Identifying the real problem
Clients often ask me to “fix” an isolated problem that they believe is the root cause of their spa’s disappointing financial performance. If sales are slow they’ll ask for a retail class. If clients are scarce then marketing help must be the answer. If employees are unhappy with management or company policies then they must’ve hired a bunch of complainers, right? Where are all of the “good” workers? My task, from the client’s perspective, is to treat the targeted malfunction and get the business on a healthy footing—which is exactly what I’m not going to do. If we fill the child’s cavity but leave them alone with the cookie jar we’ll be under the drill again in no time. That we have a problem to solve is obvious, one that indeed requires immediate and focused attention. But the source of Laura’s troubles are embedded within a flawed initial plan—its systems—and manifesting as sporadic, persistent mini-crises. Spa owners will groan at the prospect of paying a specialist’s fee for correcting faulty management methods yet will endure the long-term pain and price those same methods have produced. Here we witness first real hurdle of finding a solution for the company’s ills—the hiring of the doctor—where most owners will try to buy time instead of competent assistance. But for those wise or exasperated enough to get the help they need, their business will finally have an honest chance to succeed.  I say chance because even the most carefully planned business faces a low probability of survival. Ultimately, it’s all guesswork.
Diagnosis
Following a round of questions on the company’s overall condition—available cash, debt, management systems, etc.—we search out the core causes of its underperformance.
Q: Are your employees required to meet sales and client retention targets?
A: No.
Q: How did you arrive at your service prices?
A: By sampling the local salon averages and staying close to them.
Q: Do you have or use a business budget?
A: Not really.
Q: What exactly are your personal financial expectations for the business are?
A: I’m not sure—to make money, I guess.
Q: Who manages the business?
A: I do, with an assistant.
Q: Do you enjoy managing it?
A: No.
Q: Do you enjoy or are you skilled in managing employees?
A: No! I hate it.
Q: Do you have enough time to manage the business even if you knew how to?
A: No—I’m already overworked as it is!
Q: How did you plan to succeed then?
A: That’s what I need you to tell me….
This is a very common and challenging situation here. Laura invested in a spa with little more than a dream, high emotion, and a checkbook to guide her. She built a 12 room, 10 -hair station trap for herself and now she’s thoroughly entangled in the mess. She has no idea  know where to go with and is reluctant to take the wheel even if given a good map to follow. Her situation spinning out of control, and is trailing substantial dollars behind it. In other words: a typical independent small business and owner. And then there’s the fear. Fear of business concepts. Fear of business professionals. Fear of losing control. And fear of having to face the stomach-wrenching possibility that her salvation, or the means to it, is far beyond her reach. Then comes the fear of having to shell out even more money to for a solution that might not work for her. Almost anywhere you begin the problem can seem overwhelming or impossible.
Prognosis
A very bleak, if any, future is in the cards for this venture. Born out of blind ambition to a well-meaning but neglectful parent, the most likely outcome will be years of fruitless effort, a cheap sale to another fantasy-driven entrepreneur, or outright closure. Many of these businesses doggedly hang on for years as a determined owner piles on substantial unreturned hours and cash while hoping for a miracle. And this business owner needs a miracle, as her pale interest in business management may have all but eliminated any real option for improvement. There is hope here but it will require a dramatic shift in the way the Laura perceives and executes her role in the company The question is: will she? A business owner cannot be dragged to an occupation where skill and success is expected. You must go there willingly, fully prepared to engage in the essential work of business management, and taking on whatever it takes to perform it well. I’ve seen it happen but not as often as I, or any business consultant, would like to.
My prescription
Realists are not often the most popular guests at the cocktail party. You must set aside emotion for emotion’s sake in order to make sound decisions regarding life, love, and business. Those among us who’ve lived through serious challenges (in this case, business challenges) develop a knife’s-edge efficiency when it comes to handling the next big event, and in communicating with others about them. We instantly recognize the danger before us, and know the odds of delaying a well-prepared response. So, here it is:
1. Accept the plain fact that your “plan” isn’t working, isn’t going to work, and never will work, because you never had a feasible plan to begin with. You set out became lost, and have remained so because you had no clear idea where you were heading. Until you stop running ahead of yourself and deal with the reality of your circumstances (as painful and embarrassing as they may be) you’ll only sink deeper into trouble.
2. At the risk of sounding like a 12-step program, you still have another round of honest personal evaluations to make. You must ask yourself, in all sincerity, whether or not you’re genuinely willing to commit to the proper management of the business—your business. This will involve a major revision to your career and duties, and performing unpleasant or non-creative tasks such as cash management, employee training and supervision, sales promotions, and so forth. You don’t need to be an Alan Greenspan to do this but you can’t succeed by hiding behind a salon chair or in a treatment room either. It’s time to either face the music or fire the band.
3. Design a business plan worth working (and probably suffering) for. Wait! Don’t toss the  magazine! This should be a fun and creative activity. The financial wizardry can wait—and should wait—until you have a clear and motivating picture of the spa and career you really want, not just the one you’ve wandered into. Spend a little time on this, a weekend perhaps, and do nothing but envision a company in action, doing what you want it to do, and work for you appealing enough to warrant wrangling with a business. You may need some assistance here, but your vision must include the indispensable tasks all business managers do. Any enjoyable achievement demands some measure of annoyance or difficulty in order to taste its pleasures—like cooking and eating an artichoke! Your list should contain the following questions:
• How much money do I want to make running my business,
and by when?
• How long do I want to work?
• What do I want this company to provide in terms of retirement
or personal time?
• What’s the long-term goal? (selling the company, passing it to children,
a national chain, etc.)
• How would I define business and career success in personal terms?
• What am I good at and what will I need to get better at?
• What are my driving ambitions for building this business?
• What are my personal and business values?
• How willing am I to change what I’m doing now to achieve my success?
• When will I begin?
4. Get some professional business help. Let’s face it—you need this help. Look for a mentor who can separate business fact from fiction, someone who’ll help you craft a realistic and achievable plan, someone who’s been successful before you. Make sure that your chemistry (communication) clicks but don’t chose a person who will allow you to slide back into self-delusion. The last thing you need is a repeat of the past. And if you think a consultant’s fees are expensive then just continue operating the way you have been and add up the cost of that.
Take spa management classes, begin reading some of the “idiot-friendly” management books in print everywhere, and work on replacing fear with excitement. Remember: anything can be scary when it’s unfamiliar to you. Fast-forward the picture in your mind by a few months. See, it’s not so bad now, is it?
But whatever you do don’t tolerate a situation you know isn’t good for you. The one thing you can count on in procrastination is that what’s bad now will almost certainly get worse!
Next in this series: How On Earth Do I Motivate My Employees? |
