July 7, 2022
The massage industry is an $18 billion industry and financial rewards can be very appealing. It’s also a very diverse line of work and can be tailored to fit your specific expertise and passions.
However, it’s not always easy to start a successful business, regardless of the industry; especially if you don’t have a solid plan, so we’ve put together some words of advice cantered around the benefits, drawbacks, processes involved, and what it takes to open a spa business and immediately start drawing in clients.
We’ll even throw in a few spa business ideas to give you some inspiration. So, let’s get started!
Why Open a Spa?
The first and most obvious reason for opening your own company of any kind is that you will no longer have your own boss! This of course comes with its own benefits and drawbacks, but if you’ve owned your own company before, or you prefer to do things your own way, you’ll be aware of the satisfaction that comes with calling all the shots and working on your own schedule.
The second motivator (or maybe the most important) is the profitability of the venture. Owning a spa, when done right, can bring in significant financial perks, as well as discounts on all the products you’ll be using.
A spa isn’t just a place to offer services; it can function as a retail outlet too. Many spas receive anywhere between 5% and 30% of their income from sales, and spas report profit margins from 35% to 75%, depending on the cost of the country they’re operating in.
The average spa owner’s salary is around $80,000, with many owners earning $100,000 or more.
Wellness is a basic human necessity, especially in times of stress. Opening a spa allows you to directly address the issues of a large demographic of people, and improve people’s moods. By its very nature, a spa is a relaxing environment, and the service you’ll be providing is a rewarding one.
For all the professionalism required in running a spa, it’s not a particularly complex industry to get a handle on. With some basic business skills and experience working in the industry, almost anyone can turn hard work into these financial and emotional returns.
There are many more reasons to open a spa, but it might be worth considering the drawbacks before you make your decision.
Reasons Not to Open a Spa
Each of the positives has its corresponding downside, and while running your own business means you’re in charge, it also means the buck stops with you. There’s no clocking out at 5 pm if things aren’t going so well, and you’re ultimately responsible for all of the legalities and general functionality of the company.
This can be a thankless and sometimes overwhelming task, and it requires more than just knowing about business. Managing people is a necessary part of owning a spa, and without strong leadership, your project may fail. You’re also likely to be financially responsible for paying back anything you’ve borrowed to get off the ground.
Whether you make money or not, your staff needs to be paid, and this typically takes up between 30% and 60% of all spa revenue. If there isn’t much left over, that will have to come out of your share or cut into your insurance claims bonus.
Not all customers are easy to deal with. You’ll be responsible for being professional and responsible, regardless of how friendly your clientele is.
Further, you’re going to have to understand the business principles necessary for running your own company and have the time and mental energy to adopt them. This includes financial papers, insurance, accounts, payroll, and various marketing and sales strategies.
If all of this sounds well within your capabilities, you might be just about ready to get started. The first thing you’re going to want to do is to figure out exactly what kind of spa you’re going to be.
Spa Business Ideas
There are several ways to run your spa, and each will determine the kind of customer you can expect to get. Running a high-end joint in a cheap and remote part of town might save on rent but probably won’t be noticed by your wealthier customers without a lot of prompting.
Conversely, looking for the busiest spot on the high street will cost you a lot, so you’ll struggle to make ends meet if you’re only trying to reach the lower-income market. Figuring out your niche is the first step to starting your project, and this means identifying who you’re going to be.
Here are some spa business ideas you might use for inspiration:
- Organic Spa – This will appeal to many who prefer organic products, and offers the chance to reach a market that other spas in the area may be neglecting. In addition to organic certifications, plant-based products are also popular in a spa such as this.
- Steam and Sauna – This can be a great ‘starter spa’, as it doesn’t take as much groundwork and financial input to get it started. From here, you can think about expanding to other rooms, but it will involve planning ahead when it comes to working space.
- Antenatal – Pregnant women have specific massage needs that can be hard to find in a regular spa. If you’re enthusiastic and your location has little competition, this could be a way to reach an untapped market and develop a specialist skill. The perks of this type of spa are in the ability to offer generalized massage on the same premises, with the same resources.
- Senior – Another way to specialize in your spa is to address senior massage. Again, this is a way to diversify your target market to be inclusive of specific needs while maintaining the ability to reach more common pain points where possible.
- Physiotherapy – If you’re qualified, and you have a passion for this kind of therapy, a physiotherapy spa is a very popular choice, and can be quite a high-paying avenue. Attaching this to a gym is a great way of taking yourself to your customers, and opens up opportunities for advertising and business networking both.
There are hundreds of ways in which your spa could stand out, and each comes with its own perks and challenges. Consider your competition and see what’s missing from the local area to help you pick something that nobody else is doing.
How to Start a Spa Business
To begin any enterprise means knowing your market. You can’t go blindly into the industry and expect to be able to reach people; you need to know exactly what you’re offering, how it appeals to the ideal customer, and everything about how to pay for and market this.
For all of these, you’ll need a business plan. This itself will take some groundwork to compile, so might not be possible immediately, but in general, it can be broken up into the following categories:
- Executive Summary – This is the first part of the business plan, but will likely be created last. It’s a general summary of what’s in the rest of the document and will be a lot easier to construct once the document has been completed.
- Company Description – This is where you’ll describe your purpose. Your spa will be set up to reach a specific market to solve a specific pain point, and the description section of your business plan should include your mission statement to cover this. Start it with an elevator pitch and demonstrate your passion for what you’re doing.
- Products and Services – This section will list and describe everything you’ll be offering and how much they’ll cost. Here you’ll need to demonstrate an understanding and awareness of what your competition is doing. Itemize any additional requirements your products or services need to be delivered.
- Market Data – Here you will be laying out who your customers are. This means having done good market research and a solid understanding of how you are dealing with their issues.
Have your market data complete and detailed; you should know where your ideal customer goes for lunch, what kind of car they drive and what their average salary is, among other things. This is one of the most important parts of the business plan, especially when it comes to requesting funding.
- Business Strategy – This is the section for explaining how you’re going to reach your customers. You should demonstrate an understanding of sales and marketing, budgets, customer loyalty programs, and the customer journey as a whole, and then describe how you will use this knowledge to make conversions.
- Team – Your management team needs to be qualified and equipped. List your team and go into detail about their qualifications and what they’re bringing to the table. Don’t overdo this – it needs to be accurate and to the point, but not hyperbolic. Focus on the human side of the team and how they will be working together to reach your company goals.
- Financial Projections – Finally, and perhaps most importantly, your financial documents need to be in order. Financial reports and projections are the first things an investor will look at, and if they’re shoddy, you’ll be immediately ignored as a prospect for generating funds for your company.
Here, it’s a good idea to use professional templates like the ones we have at Projection Hub. We have a few templates that can work depending on what type of spa you are opening up. Our salon template is typically a good fit for spas focused on massage offerings. Our medical office template is great for Med spas. And our Events, Spa, Hotel, and Restaurant template is great if you plan to offer other mixed use business in the same facility. It covers five years ahead and comes with free support, as well as a guide on how to use it.
Not everything in the business plan will be possible to fill in straight away. If the company hasn’t been fully formed, it’s time to start looking at how to do that.
Running a spa is going to cost money. Major factors that drive the bottom line in any service style company are going to be size, concept, price, and location. Any of these can dictate how much money you’re going to need to get started, so make sure this is all planned out before you apply for investment.
Then, decide on what level of investment you are looking for and what sort of equity share you might be giving away.
From all the research you’ve done, you should know exactly what equipment you’ll need, where to find it, and how much it’s going to cost.
Tied to this is revenue-generating space. If you have treatment rooms, each needs to be equipped to be an efficient and lucrative area in your building.
Insurance and Licensing
Working with people and in a physical building brings with it a plethora of additional insurance and health and safety criteria to think about. You’ll need to make sure you’re appropriately licensed, and all your spaces are up to safety specs.
You’re going to need to research and understand the difference between general liability, business owner, professional liability, and worker compensation policies for insurance, to make sure you’re protected from customer damage, the customers are protected from any harm, and any products you might be selling are also covered.
Licensing is going to depend on where and how you’re operating, but will probably require some level of certification for anyone interacting directly with your customers. Then government permits and state licenses will vary from place to place.
Your staff is going to be your point of contact between the customers and your company, so hire well! As mentioned, this will be one of your biggest costs in running a spa, so you might as well get the right ones.
Once you’ve done your preparation, you’re going to have to go out and find your clients.
How to Find Your First Clients
If you’ve done your groundwork when it comes to market research, you should have an easier time with this. Finding clients can involve a diverse set of strategies, but they all involve knowing where to look. Here are some of the best ways to get your first client:
- Advertise – Do this in places where your customers will be. Many times, a company will waste huge amounts of ad resources and time by throwing out adverts at the wrong time or place. Target your approach to hotels, pools, or anywhere you’ve established your prospects will visit.
Ads can be in the form of business cards or flyers if you want to go cheap, or ad space on various sites. It can also involve radio and TV, if your market research has deemed that appropriate.
- Have a social media presence – get involved in the online community and share your expertise. This is part of networking in general and will pave the way to building your reputation in the industry. When your voice is familiar and you are established as trustworthy, this will go a long way to channeling your prospects towards your spa.
You should also have an easily–accessible photo album connected to your social media accounts and service menus for people to check out when they link to your pages through your online presence.
- Have a website – This should also tie into your social and physical media. You need a place for people to land when they look you up; preferably with a sales pitch and access to all the information they’ll be looking for. It should be easy to book an appointment and have all your direct contacts, as well as photos of your spa and the services it provides. If you’re selling products, an online shop is a good addition, too.
- Offer discounts – Once you’ve done research into the competition, it’s easy to set your prices and get your first customers in. It’s a good idea to offer discounted services at first, as a promotion to get people in the door.
The long-term strategy for clients should be to get referral customers because this saves you a significant amount on promotional materials. Therefore, offering at break-even, or even at a loss, is a great way to provide happy customers and have them spread the word of your outstanding service, which should provide a return in the long run.
- Collaborate – If you’re thinking of selling products, or you have a special brand you like to work with, consider reaching out to the manufacturers, who may be happy to help you promote your venue in exchange for your custom. This can lead to bigger and better deals in the future, as you grow, and can be a mutually beneficial way of increasing your customer base.
If you’ve set everything up well, and your first clients are coming in, they’re going to start growing in numbers quickly. A good and cost-effective experience is a reason for people to return, and if you take care of your loyal customers well, they will soon be championing your services to others.
So, now you know the ins and out of how to start a spa business, you should be well on your way to getting started.
All you need to remember is to be well equipped with a direction, set up your business plan, find your niche and make sure your team is reliable and qualified. Find an appropriate location and plan the space well. Then, get insured and make sure you’re certified, and get to work attracting clients with smart networking and targeted ads.
The key to running a spa yourself is preparation. If you do it well, it won’t be long until you’re benefitting from the wellness of a spa and being paid for it.