Part 1: So You’d Like to Open a Day Spa . . .
Personal wellness and rejuvenation is certainly occupying a prominent position in trends and news right now. While the industry was affected by the recession, business growth is currently back on track. It is estimated that the U.S. now has approximately 26,500 spas, of all shapes and sizes, and globally the industry is continuing to grow at an annual rate of approximately 8% (according to Global Wellness Economy Monitor, SRI International, 2014). Plus, the word “spa” has evolved to include many different wellness therapies. Spas now offer energy healing, nutrition classes, tea bars, and a host of other holistic health practices, in addition to the old staples of facials, massage and body care, with new ideas being created every day. Consumers have never had so many options to improve their health and wellbeing, and spas can play a prominent role on many levels, attracting new people to the industry.
People that have toiled in corporate jobs for years are interested in work that feels more rewarding and more impactful, and maybe you are one of them! Or perhaps you have worked in the spa industry for years, as a technician or therapist, and have decided now is the time to see if you can do it better, or differently. You might be right, but you don’t want to spend a ton of money just to discover that you’re wrong. While proliferation of spas is wonderful for priming the pump with customers, there so many other options at their fingertips that consumers will still need a compelling reason to give your business a try.
With so many variables around the word “spa,” just opening one is not a guarantee of instant success. New and different concepts may attract prospective clients to give your business a try, but a strong business is built on lasting client relationships. Consumers want spa services that are relaxing, fulfilling, convenient, and present a fair value proposition for them; how can you create a spa business that meets those needs, and may even include a new twist or two? Spend time with either a branding coach or other trusted advisors to consider the realities of how your spa business will come to life.
Collect news articles and images that appeal to you. Visit spas, wellness centers, and retail businesses and study what they are doing, and how they are doing it. Once you’ve collected your ideas, next gather your business partners and/or stakeholders and invest a day in a facilitated Strategic Visioning session. This valuable exercise will coalesce all of the concepts and values that will become the heart and soul of your business. The document created will form your guiding principles as you move forward, resulting in a business model that will really set you apart from your competition.
Yes, You Need a Business Plan
Even if you have enough money to build your own spa without borrowing, it’s important that you create a formal business plan. This document takes the concepts and ideas you’ve created in your visioning process and brings them to life on paper. The business plan should articulate your basic value proposition, as well as the services you’ll offer, the prices you’ll charge, your differentiators, your target demographic, and a study of your competitive set. You will refer to this plan numerous times over the lengthy birthing period, and it serves as your road map to guide your business going forward. If you do need to borrow money, you won’t get anywhere without well thought-out documentation supporting your concept, and a three- or five-year performance plan with detailed financial projections. Click here to learn more about how to build a Spa Business Plan.
But Can It Fly?
Now that the raison d’etre and business plan for the spa are created, you’ll need to carefully consider its feasibility as an ongoing concern. Just because there “isn’t anything like it” in the market doesn’t guarantee success for you; perhaps others have tried and failed with your concept already. You have identified your target customer in the business plan; now is the time to consider whether there are enough of them, who will visit the business with enough frequency, to drive your success. You’ll need to have a firm idea of how much money you have to spend, and the discipline to adhere to your budget. Basic build-out and startup costs will be, at minimum, $200 per square foot of spa, and you’ll also need six to eight months of operating capital. Therefore, you will need approximately $800k to open a 3,000 square foot facility. Will you own a building, or rent? How long will it take you to get a return on your investment, and would you be better off just parking your money in the market somewhere? If you’ve considered these questions and still have the burning desire to proceed, then you know you’re on the right track.
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