OPERATIONS
Written by Lisa M Starr, senior consultant, Wynne Business
BALANCING ACT
What numbers should operators be aiming for and what’s the key to managing the bottom line as well as creating a happy and productive workforce?
T 92
he spa sector is emerging from the recent economic pressures to be a stronger, more focused indus- try. It is becoming clear that in order to grow our businesses, we
need to continue to lead clients in the direc- tion of holistic wellness and lifestyle choices to accompany their massages and facials. Spas that can do this eff ectively will thrive in the next few years, but it will require spa leader- ship to remain focused on the bottom line,
while being open to future trends and devel- opments. T e ability to do both of these things well requires someone with both leſt -brain analytical skills and right-brain intuition, a quality that top business leaders possess. How does your brain measure up?
LEFT-BRAIN FOCUS POINTS Any business that measures success in prof- its needs to be focused on numbers and this is especially true in an industry where mar- gins can be slim or even non-existent. Many spa directors and owners who have entered the business as technicians don’t enjoy the ‘num- bers’ part of their jobs. But besides the obvious results apparent in the bottom line, the num- bers have their own story to tell about what is going on with a busi- ness, if you know how to read them. T ere are few
Every day that a product sits in a box, and not on a shelf, is another day that money is tied up
spa business handbook 2011
industries where the majority of the business is conducted behind closed doors, out of the oversight of management, as is the case in a spa environment. While you may have a gut feeling that things are going well, the numbers become an even more important management tool, providing facts to back up your intuition on levels of client and employee satisfaction, success of marketing initiatives and numerous measurable performance indicators. T ere are widely diff erent scenarios in vari-
ous regions of the world, but for the majority of spas, the most expensive operating expense is the labour cost. From management sala- ries and hourly support staff to the service providers and the accompanying taxes and benefi ts, labour costs can be as high as 65 per cent of a spa’s total revenue. If your overhead expense is only 15 per cent, this is a viable scenario, but if your overhead is closer to 40 per cent, then you have a problem. T is is a complex issue, but as a general rule of thumb, if the service provider compensation plan can be designed to fi t into the range of 20 to 30 per cent of service revenue, then you should be able to off er a nice benefi t pack- age (5 per cent), pay competitive salaries to your support staff and management (total- ling around 10 to 12 per cent of revenue) and still be able to show a profi t aſt er taxes. While service providers have traditionally received
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