ITB 2024 Special Reporting
Is Your Spa A Prototype For Success?
By Leslie Lyon
Friday, 30th May 2008
You spent months, years perhaps, in preparation for your spa opening - You found what you believe to be the perfect location with perfect potential for making your client's hearts sing and the business cash register ring.

You sourced the most impressive pieces of spa equipment; chose a brilliant mix of product lines to form your service menu and retail offerings; and paid deliberate attention to every detail in the decor of the space.

And you were pleased with yourself because you had protocols for most of your services; your staff were adequately screened and fairly well trained; and you were pretty sure you knew your client demographic; and if your projections were accurate, you would more than likely be able to make your monthly payment obligations.

So, looking back it, everything seemed pretty well taken care of. You knew you couldn't expect perfection; it will be a work in progress, so you opened your doors to the future...

At first you had a pretty good stream of curious clients coming in on a fairly regular basis, and a couple of staff members even brought a few of their clients with them. Your weekends are busy, and that's encouraging, but Monday through Thursday scares you a little bit because you are running at what you guess to be about 50% utilization. Little did you know that if you did the math, it would actually be around 30%. Your guests respond positively to your new facility and say they are very impressed with the surroundings. They don't re-book before they leave, but they do say they will be back.

Your staff is keen and excited about being on board and they have great intentions of building their clientele and the business together with you. After their somewhat abbreviated pre-opening training program, they still say they are feeling confident and able to professionally administer the treatments and sell the products. They have stated that the nights and weekend hours don't bother them at all; they understand that this is the "nature of the beast".

They appear to enjoy the independence they have at your place of business...you have so few rules that you insist be followed. Generally you are not the type to watch over them like a hawk, you're mostly in your office on the computer or the phone, and they like that. They can go behind closed doors and add their personalized "flare" to each treatment protocol as they desire. They figure they should probably be following the protocols more closely, but even if you did find out, you probably wouldn't mind because you haven't shown concern so far.

You are somewhat optimistic when you look at your software financial reports. Some of them are a bit confusing to you because you were not able to attend the full training program before opening, but you're fairly certain that the numbers you're seeing represent reasonable increases. It's a bit difficult to make ends meet, because your staff payroll is a stretch even at the best of times right now, and your capital expenditures are demanding attention too. But you have put together some really great promotions on your event calendar and with some special occasions coming up soon, sales should soar and bills can be paid then.

You know how important it is to have your staff knowledgeable of each promotion, so you pull them aside for 20 minutes before each promotion is launched and you explain what you expect of them. You also ask them to really push gift certificate sales please, and they agree. Right now, you could really use the cash flow that gift certificates bring. You don't know that gift certificates should be treated as deferred income and not revenue until they are redeemed. Had you known this, you probably would not be spending all of the proceeds immediately after the sale, but rather, setting up a monthly draw on certificate sales.

Occasionally you catch wind of certain staff members cutting down the business and you are starting to hear a few more complaints from them than you had expected about how the place is run, but this can be typical with staff you think. But it is a bit frustrating because after all, they have this beautiful spa to come to work in every day, a fairly flexible work arrangement because you don't bug them at all, and what exactly is there to complain about anyways? They must be aware that you have invested every last dime you had and that you work 80 hours a week just to stay in business. And they can go home when they're not busy; they have lots of free time available to them, so what's the problem?

Customers are still coming in pretty steady on the weekends, in fact you turn many away on Saturdays, and it can be quite chaotic trying to manage the demands thrown at you each weekend. The reception area gets a bit back logged and all those clients on spa packages make it a bit difficult to program in the single service requests while avoiding those small blocks of lost time. But that's when they wanted to book their spa packages, and who are you to say "No" to a service request?

And when your staff can't stay within their allotted appointment times, it can really set things off. Mainly they get their services completed within a few minutes of the deadline, it's just that there's no time to sell retail or clean up the room when they run a bit late like that (let alone escort their client out), so retail kind of suffers and the rooms could sometimes be in better shape for the next client. Occasionally a client mentions that she didn't receive a full hour of treatment, and you explain it's really only 50 minutes, and she doesn't even believe it was that long. You wonder if it's because the therapist behind those closed doors isn't making her feel the value of the experience.

You have a few issues with the layout of the floor plan and traffic flow as well. You are one washroom short and your pick up and drop off area is standing room only on Saturdays - and there's no room for guests to enjoy their refreshment time in peace. But the thing that confuses traffic flow the most, is that the staff have nowhere to go, so they hang out at the front desk - you had no space left over for a staff room, and they don't fit inside the closet that is your office. And you continually have to turn away your lucrative 1-hour, $95 massages because you don't have enough treatment rooms. It's a good thing that all 8 of the 45 minute, $35 manicure services are booked though. And you now realize that comments made about the fact that you can hear every word coming from the treatment rooms, was an unfortunate sound-proofing oversight and something you'll now have to live with. The click of hard soled shoes in the hallway is an awful distraction; but installing a "soft shoe" policy hasn't occurred to you yet.

You know you should probably have some sort of Job Description and Evaluation process in place, but you never had time to do that. You can now see how the lack of these documents is causing staff accountability issues, and you believe that this is something you should take a look at very soon. Especially when staff are demanding pay increases when you know they don't deserve it. But what are the guidelines?

It always comes down to their opinion against yours and they usually seem to feel they are being slighted. And they don't consider their tips as being a part of their income, when you think they probably should. But you're not even sure how much they get behind those closed doors and you have no real system in place to control and disburse tips anyways. If you knew they were a taxable income, you would probably handle things differently. You've also noticed that accepting tips on credit cards is expensive, but attempting to recoup that fee from your staff will probably be poorly accepted. If you actually calculated the hit you take on an annual basis, perhaps you would see the urgency in correcting this situation.

And another thing, when you hired your staff, they were all gun-hoe on selling retail and were keen on seeing their blanket 10% retail commission become a nice supplement to their generous wages. You even high-fived each of them and sent them on their way with a "now let's get at it"! It was a deal; they said they would sell! When there's that kind of enthusiasm, who would have guessed they were going to need ongoing training and motivation as well?

Those busy weekends really are your saving grace though, because the early weekdays continue to be a major challenge. And what's worse, your staff seem to be sick a lot lately, and particularly on those busy weekends and nights too. So those financial projections that you took a pretty good shot at with your good friend are way off because you didn't allow for all of that lost revenue due to illness. Being that you thought you would be making so much more than you actually are, has caused you to take a second look at your operating expenses. You realize that there are areas you might be able to cut back on, like marketing for example. So you drop most of your advertising and promotional efforts so that you can re-coup a bit on the bottom line.

You've thought about asking your staff to become involved in drumming up some business, but you really don't think that it's their responsibility now, and they would certainly agree with you. This is your business, and it's your responsibility to see that it flourishes so that they can make a living. No, it just wouldn't seem right to ask them to make a few cold calls; contact client's who haven't been in for awhile, or heaven forbid, ask for a referral now and then. Maybe the best thing to do then, would be to discount services and products to entice clients to come in and buy. The extra dollars should allow you to pay your staff and operating expenses and have a bit more on the side, shouldn't it? You're not clear just yet, that revenue is not profit.

You're starting to hear around town that some of the other spas are paying their staff much less than you are and they seem to be doing better. You've also caught wind of a sickening little piece of information. You have gained a reputation of inconsistency and occasional unprofessionalism. Your staff is moving onto greener pastures and they're even taking a few of your clients with them. You had heard that it was a good idea to get a "Non-Compete" contract signed by your staff, and "Confidentiality Agreements" as well, but again, where do you get those?

Your nights are becoming sleepless. You have quite a few financial obligations, and you just are not sure exactly how you're going to meet them. You're only 18 months into the business and already wondering if you've made the right choice. It occurs to you that bigger might be better, and you begin to consider expansion or even a second location. At the very least, if you don't expand, more staff on site would make the business busier, wouldn't it?

The above hypothetical (if not slightly exaggerated) story, demonstrates the following mistakes have been made:

  • Lack of target market research; business trends and competitive analysis;
  • No budget and no real understanding of the businesses finances; not enough cash reserves; no back-up plan;
  • Neglect in building a business model and corresponding floor plan based on what your market research and budget have told you;
  • Faulty staff selection process and fatal lack of formal pre-opening and ongoing training; development; and support;
  • Lack of in-place standard operating policies and procedures;
  • No formal efforts in understanding staff satisfaction levels;
  • No surveying of the guest experience;
  • No real ongoing business monitoring; slow response on the part of the owner; no need to change what you don't acknowledge;
Inadequate and even unavailable management support systems or reliable professionals to help fix the problem.
So someone suggests it's time to bring in the professionals - you need a "Spa Turnaround". An individual or a team comes in, spends a couple of days asking a lot of questions, reviewing systems and observing behaviours. A needs analysis is performed and a formal proposal is provided based on this assessment. This proposal is costly and long term, and you now have to make more funds available for this corrective action. If only you had done what you knew you should have done, in the beginning. But you know it is necessary now. If you don't do it, you will be out of business within the year.

Hiring the experience of a professional consultant may be your only chance at staying afloat. They may suggest many things in an attempt to turn around your business, such as:

  • New full-scale market research and plan re-development;
  • Full financial re-analysis and costs clean-up, including a budget; monthly cash flow; profit and loss; and balance sheet. Unfortunately this will probably also include a compensation re-do, which may cause staff loss;
  • Business re-positioning related to new market studies and financial re-analysis. Possible demolition and/or renovations to improve traffic flow and programming opportunities;
  • De-staffing and re-staffing with new recruitment strategies and ongoing staff growth and developmental plans;
  • Develop full Standard Operating Procedures and Staff Handbook;
  • Re-train staff; open channels of communication; creation of new methods for staff handling and satisfaction;
  • Re-evaluation of full guest service offerings and procedures;
  • Develop monitoring; guidance and milestones for key tasks;
  • Develop a reliable, professional system of supporters you can call on in time of need.
Although this scenario outlined above really fits the small to mid-sized business model, there are also million dollar plus models experiencing the same kinds of problems, only on a much bigger and broader scale. In these larger facilities, you may also be experiencing: lack of inter-departmental staff knowledge, support and cross promotion; confusion in answering to too many department heads with differing opinions; demanding guests with exceptionally high standards; extreme fluctuations in seasonality; your remote location causing low availability of staff talent; problems with suppliers; super high operating costs due to extravagant surroundings; inventory overstocking and lack of inventory management systems; quality control issues; and with all of these combined, you are unable to provide proper upkeep and ongoing business improvements.

Much of the time, these kinds of problems can be fixed. But they need to be caught in time and will require your full-on dedication to the turnaround. And it will certainly be a journey of self discovery for you and a time of trial for your staff.

But whether you are just starting out and after reading this short story, wish to avoid some of these pitfalls; OR you are an experienced professional in a position that sounds similar, remember there is hope and in many cases you can do at least some of this work yourself. But going into your spa venture with your eyes wide open is paramount. Take a Spa Management course and research the industry deeply. Running a spa is not a cake walk; in fact it's shockingly complex. Good luck, and allow yourself to enjoy the process. It will change your life...so why not be sure you are making a change for the better?

Have questions? Contact Leslie personally at 1-519-585-0626, or llyon@spas2b.com.

Spas2b is a full-service Spa Development, Consulting and Training company based in Waterloo, Ontario, Canada. Spas2b draws on the extensive experience of its President, Leslie Lyon. Leslie has evolved with the Health and Beauty Industry for more than 30 years and has participated in many aspects of the Spa trade. An Aesthetician and Electrologist for 25 years, today Leslie enjoys her profession as an International Consultant, Educator, Key Note Speaker, Published Columnist and Freelance Writer.

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