What Spa Operators Need to Know NOW!
by Douglas Preston

The euphoria of spa building and easy money seems to be over now. Everywhere day spas are reporting a drop in sales of at least 20% or more, and the future doesn’t look promising, at least in the short haul. Business owners that were already struggling to reach profitability, and those trying to keep the profit they had, are facing the toughest challenge since the whole day spa phenomenon began in the US. Suddenly, those that either ignored or delayed implementing the advice of business experts are listening to them with both ears and eyes wide open; however, for many it will be too late to effect meaningful change. For years I have warned spa operators to prepare for a number of eventual and potentially catastrophic shifts in the market that could drag them down with a stunning swiftness, and that wave seems to be upon us now. Chief among those warnings were:

• One day the market will become saturated with day spas and sales will begin to decline.
• Recessions come like clockwork so you should have plenty of cash reserves on hand to weather a protracted drop in business.
• Too much reliance on gift certificate sales will lure you into a false sense of security while your employees fail to build a reliable repeat clientele. You’ll discover that when those certificates are no longer the hot gift item of the season.
• Management focus on luxuries and amenities instead of a prudent operating budget will lead to financial disaster sooner or later.
• Chasing sales without paying attention to profit margins is a self-engineered plan for failure.
• Overbuilding a spa is far, far riskier than needing to expand a compact one later.

Now the chickens have come home to roost, and they’re roosting right on the shoulders of a lot of beleaguered spa owners. Assuming that it’s not to late to make business-saving changes in your spa, there are a number of key things you can do (and, yes, should have done before now) that will buy you some time, save you money and maybe even help you turn a profit for a once. Nothing like a little pressure to help you get a few important things done!

My spa salvation checklist:
1.	Stop worrying and try to channel that energy into a positive outlook on your business future. We’re not talking about self-delusion here, just a matter of saving your focus and time for things that can make a beneficial difference in your company. Sure you’ve lost customers and sales, and you have bills to pay, but fret and stress only impede clear thinking and decisive action. Whatever you do, don’t have afterhours cocktails with the other distressed small businesspersons on your block! You’ll only end up deeper in the pit of gloom.
2.	If you still have a pulse then you’re still alive. Believe that there’s hope for your business and that you’re just as deserving and capable as anyone to make your company succeed. No “yeah, but” defeatism—you have a lot of work to do ahead of you.
3.	Stop wasting money. If you can identify an unnecessary expense, eliminate it. If you’ve made purchase commitments that can wait or you really don’t need, cancel them. If you promised employee raises then postpone them. Planning an expansion? Abandon it for now. Here are some other ways that you can save money without turning off the power or water:
	Review your retail and professional product inventory. Eliminate low-use, slow-selling and redundant stock. Selling 8 cleansers and 6 toners? Cut back by 1 each. Focus your services and retail sales around products and materials you have an abundance of or sell frequently. More choice doesn’t automatically mean more sales. Sometimes you simply spread a certain amount of sales over a large and expensive array of product options, forcing you to maintain a heavy and steady investment in inventory without the benefit of getting sales you might not without all that. Eliminate a job position that can be absorbed comfortably and skillfully by others on your team—and that team includes you, too! No one likes to take on responsibilities that were finally delegated to someone else, but that may be just what you have to do. During employee strikes major corporate executives have found themselves answering telephones, making copies, placing customer service calls and even cleaning the office as sympathetic unionized janitors refuse to cross picket lines. That, as they say, is business. Look at your profit margins. Does your retail line only permit you 100% markup at best? It may be time to look at other options that don’t restrict what you can earn such as private label companies. This will also affect your per-treatment service cost. You must stop giving your money away for no useful reason! Are you printing an expensive spa brochure? Did you know that most customers say that an elaborate spa brochure has virtually no impact on their patronage decision (although a cheap-looking one does)? A nice triple or four-fold brochure/menu printed on glossy stock may work as well as the multi-page booklet on rag paper with ribbon binding, and will certainly not cost as much to produce. After all, you want to be able to afford to leave those things everywhere!
4.	Finally and decisively turn your attention toward getting those retail sales you’ve been allowing employees to neglect or ignore entirely. Require performance, train on the method and insist on results! Remember, this is your business and future at stake here. You simply cannot afford to allow the means for survival to be treated as an option in a struggling business!
5.	Hire a skilled accountant or accounting service and get a working business budget in your hands. Not having a business budget to guide your spending is like writing checks but not having a register to record them in. You’re financially blind and that’s going to wreck your chances of ever succeeding. If you don’t know what you need to earn to cover what you’ll have to spend you’ll never make the two ends meet. There are plenty of resources available for this, even online services. The main thing is to get this done, now!
6.	Remember the term “rightsizing” from the last recession? That referred to bloated companies that brought their operations into alignment with the economic realities of the time. Offices relocated to smaller spaces, employees were trimmed back to match actual productivity needs and luxurious perks such as chair massage therapists, workout centers and free soft drinks were eliminated. None returned to the old order even after the economy recovered. They learned to live within their means and not get caught overextended like before. Maybe it’s time for you to consider the need for all you have where you are now—what is actually valuable to customers and what’s not. Don’t know the answer to that? Ask them.
7.	Never forget what your primary purpose is to your customer: a place of retreat and solace, somewhere they can go to temporarily abandon the cares of the world just outside your spa doors. Whatever you do be sure to emphasize that aspect of the overall atmosphere and experience in your business, and never, ever make the mistake of letting the outside world in.

Good luck to you and keep working at success. The die-hards are the ones that survive the inevitable storms we all must face.