Business plans are a must for aspiring and current spa owners alike.
Creating a business plan may not sound particularly sexy, but it will bring you back to reality when it comes to understanding the intricacies of running a successful spa. For aspiring owners, business plans highlight challenges or unexpected expenses that can impede progress. At the same time, current owners can refer to these roadmaps on a regular basis to ensure accountability and stay on target. “Opening your own business is fraught with challenges, so you must be prepared,” says Bruce Schoenberg, owner of Oasis Day Spas, with locations in New York City and Westchester, New York. “When consulting with hopeful entrepreneurs, I’m ‘The Why Guy’—constantly looking for holes in their plans because, after all, the devil is in the details.” Whether you need to fine-tune what you’ve already laid out or start from scratch, these strategies can help.
1. Do your research.
The key sections of a business plan will typically include a company overview; market analysis; strengths, weaknesses, opportunities and threats (SWOT) analysis; and financial workups. To inform these, Dana Sidberry, licensed cosmetologist and CEO of Motivation Marketing Firm in Charlotte, North Carolina, notes that you can find books about developing and utilizing a business plan, and online resources like bplans.com provide useful insights and guidance. When Schoenberg wrote his first business plan, he visited multiple spas and trade shows, and spent months reading up on how to negotiate leases, borrow capital, retail effectively and create winning services. He even hired a professional moderator to help run three focus groups: Two asked potential clients what they wanted in a spa experience, what services and amenities they desired (and didn’t), and their ideal environment and location; the third group was conducted with service providers, massage therapists and estheticians to determine what made an employer desirable, helping Schoenberg assemble (and retain) the right team.
2. Map out your goals.
An actionable business plan provides practical focus and direction for day-to-day operations and decision making, so it’s important to create an overview of exactly what products and services you’re providing and to whom, as well as figure out how you’ll accomplish it all. Boston-based consultant Fiona Adler suggests including the following sections on a single page: a vision statement, detailing your offerings, with a brief, clear description of your target market; a one-year goal, mapping out expected revenue/profits that are challenging but realistic; tactics, which are specific strategies (marketing/sales, organizational, supplier or developmental, e.g., adding new services) for each quarter to reach your goals; and action items, breaking down strategies into accessible, achievable objectives listed by month.
3. Crunch the numbers.
A detailed financial analysis is crucial, and your business plan may even include an investment pitch, or a pitch deck, if you plan to enlist partners to help fund the spa. Tina Alberino, management consultant for This Ugly Beauty Business in Tampa, Florida, recommends doing calculations based on a variety of scenarios, as overhead affects your pricing and employee compensation. Don’t forget to consider marketing expenses; forecasts in real numbers (such as profit and loss); and the cost of products, continuing education and operations. Schoenberg also advocates analyzing the capital needed for construction (or purchasing an existing business), equipment, supplies, security deposits, and legal and consulting fees. “Know as close to exactly what your overhead will be, your break-even points and where your profitability lies,” he continues. “Be honest with yourself; have the discipline to understand your numbers, pivot where necessary, and hire strong consultants and an accountant.” Finally, he advises having at least an additional year of financing to stay afloat while the spa grows.
4. Identify obstacles.
A feasibility study will help determine whether your idea is viable and predict potential pitfalls, so when conducting your market and SWOT analyses, don’t try to prove yourself right.You must challenge your own assumptions, identify weaknesses and listen to what the data tells you, says Alberino. “If the data shows that there’s no need or consumer demand for your concept, find out what there is a need for,” she says. Schoenberg agrees: “Your customers need a reason to choose your business over another. Look at your competitors and see what they’re doing right—and how can you
do it better.”
5. Modify as needed.
Treat your business plan as a living document. Follow it as closely as possible, but expect to make periodic updates as well. “Review it every day, make sure your team knows it inside and out, and keep it somewhere visible to remind you of the necessary actions,” Adler advises, adding that a closer read should be done once per quarter, with any major changes mapped out 12 months in advance. Then, month by month, cross off items to ensure you’re effectively implementing your strategies and achieving all you’ve set out to accomplish.
This story first appeared in the September issue of DAYSPA Magazine. To receive the magazine, click here to subscribe.