The beauty industry is quite lucrative, and seems to be growing every year. In 2014, the International Spa Association (ISPA) announced that the spa industry surpassed revenues of $14 billion, revenue was not the only area of growth, but spa visits, revenue per client, and an increase in new spa locations also grew.
The spa industry continues to grow at a steady pace. With over 350,000 people in the US employed at spas, the industry has proved its staying power. With an average guest spending $87 per visit, there is a positive look ahead to improvement for other key indicators such as number of visitors and increased revenue.
However, surviving in the spa business will require more than just good industry numbers. To succeed in opening and operating a spa, you will need careful planning and execution of these key points:
Spas typically offer a wide array of services such as manicures, pedicures, facials, massages, and more. In order to determine which services your spa should offer, it is important to understand your competition and their pricing structure. By studying the market, you will have a better understand of what is missing in your niche. For example, there may not be businesses in your area who offer massage services. Because of this, you have the ability to charge a little more for massage services than you would if you had more competition.
Training and Licensing
Depending on the services you offer and state you are located in, you will be required to acquire specific licensing. To find out more information about licensing requirements, contact your state’s cosmetology board. Speaking to the board, will allow you to find out which schools offer training in your area. You will then be able to determine whether you wish to hire technicians or go through the training yourself. This decision and many others will depend on the size of the spa you plan to open.
Once you decide on a name for your spa, you will want to establish a Limited Liability Corporation (LLC) and register it with your state. LLCs have many benefits, both from a tax and legal standpoint that you will want to discuss with your accountant or lawyer. You will need a federal tax ID, a sales tax permit, and a Certificate of Occupancy. Your business will also require a limited liability insurance policy, covering you from theft, damage, fire, and a worker’s compensation policy to protect you from employee injury claims. While some of your staff may be contractors and carry their own insurance, it is always wise to have your own insurance just in case.
The location of your spa is probably the most important aspect of starting your business. The more visibility you have, the more foot traffic your spa will have and the more you will save on advertising costs. Ideally, you want to target a location within a high traffic area, which is easy to get in and out of, and is visible from the road. Make sure that you choose a location that has enough space for your equipment, such as manicure and pedicure stations, shelving, and massage tables. When you narrow down your selection to a few locations that interest you, contact a broker who can explain the terms of your lease to you, as well as your attorney.
Hiring a qualified team of professionals is a must for your spa. You should aim to hire technicians skilled specifically in each service you plan to offer. Your staff should regularly attend industry shows and seminars to stay up to date on new trends, services, and products. You also want your employees to fit your spa’s culture and vision.
To start a spa, you may be looking at $100,000 or more in startup costs. This will cover equipment, a lease, wages, employee training, supplies, licenses, furniture, insurance, and more. Developing a business plan for your spa business is a must. By writing out a detailed plan, you are more likely to get the funding you need to get started. Most new businesses are not likely to get approved for a direct loan with the bank, so it is best to look into a Small Business Administration (SBA) loan or a personal loan. If you are lucky enough, you may be able to attract the attention of an investor. Search online for a sample spa business plan that will break down expenses and obstacles you may come across.
Making It in the Spa Business
Do you have what it takes to make it in the spa business? In order to be successful, you will have to offer competitive services, have enough startup capital, obtain the proper licensing and permits, and choose the best location and staff. Being successful requires proper knowledge of the industry, dedication, and being able to properly implement your strategies!