Posts Tagged spa industry
Posted on August 5, 2009 with No Comments
Increasing revenue and traffic for spas and MedSpas can be done several ways. One, open new locations, increase marketing efforts, or adding new services or products.
For many spas, opening new stores or locations may be part of a long-range growth plan, yet may not be suitable while operating in a down economy when spa treatments are viewed as either a luxury or discretionary.
Marketing efforts can be categorized as advertising or direct sales. Advertising can come in many forms. Direct mail, email campaigns, joint marketin efforts with related products or services, TV or radio. Many spas I have seen are flying banners outside their locations (local laws permitting), putting up billboards, and putting advertisements or discount inserts in papers, local news, press releases, or handing out discount or “specials” to customers and guests coming through the spa.
Increasing marketing efforts or expanding services is your best ROI when the economy has slowed. Massage Therapy, Botox or anti-wrinkle procedures, facials, and vein therapy can be supplemented with several ideas.
Another opportunity is making available additional services or products inside the store.
Selling in-expensive consumable products can help boost sales, improve traffic, and get consumers coming back. Spider vein creams can be excellent ancillary products following sclerotherapy or laser therapy. For pregnant women or those who have had children, a preventive or repairing stretch mark cream can help aid recovery and prevent scarring. And while injections can help smooth wrinkles and puff lips, anti wrinkle creams and serums help neck wrinkles, crow’s feet, and puffiness or dark circles under the eyes.
These products are designed to supplement and enhance procedures and improve weekly or monthly revenue. Choosing products that are expensive with luxurious packaging and “rock star” name brands may work against you. While they may certainly enhance the image of your spa (and to many that is important), high-priced skin care products have been shown to be great initial purchases, but lack the consumable “punch” needed for return purchases.
Posted on July 6, 2009 with No Comments
The American Academy of Anti-Aging Medicine has announced its fall Congress and Exposition in San Jose, CA on September 9-12, 2009.
It is a 4 day event and they have over 75 speakers slated for presentations together with workshops on In-Office procedures. Several focus areas include hormone replacement therapy, aesthetic venous treatments (spider vein treatments), detox and weight management, stem cell research updates, as well as fundamental and advanced topics on managing your “Anti-Aging” practice – medical, spa or medspa – a critical topic in today’s challenging economic environment.
They are currently accepting enrollment into the conference (http://www.worldhealth.net/) and it is not too late for reserving the best spots as exhibitors. If you are a manufacturer of anti-aging skin care products, equipment, cosmetic or plastic surgery aids, advertising, or other anti-aging systems, you want to make sure you are in attendance. Spa and med spa owners and managers as well as clinicians will be on-hand.
Here are some very interesting facts to know if you are in the industry or considering it:
Fast Facts on The Anti-Aging Marketplace
- The consumer public has voted with their wallets overwhelmingly in favor of the anti-aging healthcare model. The anti-aging marketplace is one that is demographics-driven: people around the world are getting older. As a result the anti-aging marketplace is projected to reach $41.94 billion by 2006, expanding at an average annual rate (AAGR) of 8% [Business Communications Company, 2002].
- The anti-aging market is expected to grow to $41.94 billion in 2006, reflecting an average annual rate (AAGR) of 9% [“Drugs and Cosmetics for Aging Boomers,” Business Communications Company, Inc., 2002]
- The market with the highest projected AAGR is hormone replacement therapy, at 16.5% [“Drugs and Cosmetics for Aging Boomers,” Business Communications Company, Inc., 2002]
- Global nutraceuticals market grew from $38.2 billion in 1999, to reach $46.7 billion in 2002; by 2007, global nutraceutical sales are projected to reach $74.7 billion [reported by NutraIngredients.com, “Nutraceuticals sales to hit $75 billion”] In he nutraceuticals market stands at $17.1 billion [“NBJ Releases New Report on Maturing US Supplement Industry,” Nutrition Business Journal, September 2002.]
- Sixty percent (60%) of Americans age 65+ are pursuing anti-aging interventions — including hormone replacement therapies and dietary supplementation [MSNBC Jan. 28, 2002.]
- Dietary supplement sales in 2000 were $17 billion. [Nutrition Business Journal, Nov. 2001.]
- Thirty-three percent (33%) of adults take supplements on the specific advice of their doctor. [Harris Interactive survey, 2001.]
Posted on May 1, 2009 with No Comments
In the first part of this series on increasing spa profit, we talked about the three components of finance that are under our direct control – revenue, gross margin and expenses.
In the game of business, these are the three variables we can generally manipulate easily. External factors, weather, competition, new product introductions and regulatory issues have to be dealt with as they come. The big three (sales, costs, and profit margin) are generally under our control. Making each move in the right direction is our goal. Let’s take a look at expenses.
In 1991, my wife and I were 3 years into our first company. We had 7 offices spread across the southeast. The older offices were very profitable, the newer one, not so much. But, we were paying the bills and making the mortgage – ~$5 million of revenue and 32 employees. While we weren’t getting rich, we were comfortable – until Sadam Hussein invaded Kuwait. That sparked (or aggravated) an 18 month recession where we came close to losing the business.
Our response was professional (at least it felt that way). Having spent 5 years at IBM and coming out of b-school, we quickly put in place a “Cost Containment Plan”. While the title was a bit grander than the size of the company, I believe we did do a very good job identifying how to save money, reduce unwanted expenses, and discontinue costs. We employed ideas from staff, bankers, suppliers and the University of South Carolina’s Business School. Here’s what we did – hopefully a few ideas you might find useful.
- Have a meeting- As goofy as this may seem on the surface, getting everyone together to announce what the purpose is is critical. I have found when everyone has a clear understanding of the landscape of where we want to go or what we want to do, you get much better input. We had series of meetings. The first was to get as many cost savings ideas on the board as we could. I am a BIG fan of the giant-sized Post-It notes – you can write on them, them stick them on the wall – literally wall papering the conference room. These keep everyone focused and helps stay on task. In any initial meeting my rules have always been to get ideas on the board – no need to prioritize or critique – just keep the ideas flowing. It helps if you facilitate and “grease the tracks” to keep folks from snipe-ing each others ideas. Just keep it moving!
- Lists, lists, lists – Again, a bit goofy, but taking all those ideas, prioritizing and categorizing allows you to now distribute, review and consider your options. We would provide a meeting summary and ask everyone to review – while scheduling a follow-up meeting. We would ask everyone to give careful thought to any and all ideas with the PRIORITY being “What Ideas Can We Put In Place NOW ” that will save us money.
- Follow-up – Lists are good, but very similar to plans. Without someone to guard against their demise, lists can often find themselves stuck in a drawer or in a folder on a computer. I have felt someone needs to be the “list manager”…meaning they had responsibility to make sure everyone did what they were supposed to and followed-up with enough lead time to keep folks from coming to meetings empty-handed or headed! The biggest component to Follow-Up is having the “After Party”, or the meeting after someone has consolidated the ideas. Here’s where you can:
- Assign responsibility
- Allocate resources
- Determine and notify of monitoring
- ID follow-up
- Implementation – While all this sounds and looks good, without implementation you won’t get results. Therein lies the benefit of the lists. Lists should be posted and each individual should have their own. Again, this all looks good and for those who don’t see the value, will think it’s “over-thinking” the issue. Well, I can tell you after seeing numerous companies – very small and very big – this works…may be a pain for those “shoot first” folks, but nevertheless, its the best process for getting the most done.
Alright, all this sounds good, but how do I cut costs and expenses?? I didn’t mean to ramble on about process, but the process will reveal ideas you would not have considered…therefore, it’s worth it. But, ideas…that’s right, ideas.
Ideas for Cost Savings
There will be a sub-part to this post where I am listing all the ideas from some of our cost-savings plans, but here are a few to get you started. Remember, expenses are just one of three things you should bee looking at.
- Staff expenses – In the 91-92′ recession, my wife and I cut our salary 4 times, then discontinued bonuses for managers, then cut managers salaries 15%. BTW – we asked the managers if they would rather take an across the board cut or lose a person on there staff…all voted for salary reduction. We discontinued temporary workers (completely), implemented a hiring freeze (no duh?), and banned OT for anyone who was hourly.
- Health – When our health program came up for renewal, we lowered the plan. I had always believed n the “Platinum” plan with all the bells and whistles – no more. Cut deductibles, copay’s, whatever you need. We also went from 100% employer paid premium to 90%.
- Telephone, office supplies, office cleaning, subscriptions, associations, et al. – anything and everything that showed-up on the income statement as an expense was exposed to scrutiny, change and evaluation. We cut-out LOTs of small miscellaneous costs. Again, making someone responsible for IDing these expenses, providing alternatives, and implementing change is critical.
- Advertising- Most advertising does not work. Yep, I’ll say it again….it doesn’t. I want to flush out some ideas that do in a latter post, but you should critically scrutinize ALL advertising.
- Travel, conferences, etc – For us (at that time) we spent a fair amount for a company our size traveling and periodically were attending shows, conferences, etc. We stopped all conferences and spent a lot of time driving rather than flying. Being a pilot I know there is great rationale for flying, but we just decided to drive…spending a lot of time on the phone in between cities.
I’ll list a few more ideas next time, but I have found that companies – even small ones – benefit greatly by sitting down and having a “jam session” to come up with creative ideas to cut costs. If you follow-up and make sure ideas are implemented, you can move the cost-containment program off your plate pretty quick. Though all of this sounds like a lot of work, 4-5 days of planning and discussing followed by a week of implementation will knock-out 80% of the projects. So, it’s worth a couple of weeks of time to decrease expenses by 15-30%? Yep, I think so!
Posted on April 15, 2009 with No Comments
Business is a game. A serious game with real money with real careers, futures and success on the line. But, a game none-the-less.
In this game we have variables we can control and some we can’t. There is little we can do to control weather, suppliers, material costs, and competitors. There are, however, variables in this game we do control and can influence. Those are…
- Gross Margin
While it’s often difficult to focus on these fundamental components as an owner/operator of executive of a mid-sized operation, entrepreneurship sooner or later comes down to these three key components.
For various companies I have been involved in, I have had to stop myself and our team to reminder ourselves to “block and tackle”. Improving a company’s profitability – especially a spa in a down economy – requires putting each of these components under a microscope and identify what you can do to win the game.
I guess if this were a play game, decisions might come easier, but discussion and planning should be fairly helpful.
For instance, sit down and consider all the things you can do to increase revenue. Consider advertising, flyers, partnering programs (with a salon for instance), or developing relationships with civic programs, churches, or schools.
From a gross margin perspective, push higher margin services, introduce new programs (expanding your service or product lines), add ancillary services (skin care products), find less expensive suppliers.
Expenses can be tackled from several angles. Shop for the best deal on office supplies, watch utility bills, opt for lower cost advertising – or free advertising by contributing to local newspaper or magazines; watch staff expenses.
Over the next couple of weeks I am going to break down some details of managing Revenue, Gross Margin and Expenses that might give you a few more ideas – specific to Spa, Salon or MedSpa operations . The bottom-line (literally) is to wake-up every morning and think “what can I do to affect these numbers?” Individually, get sales, margin and costs going in the right direction.
If all works out well, each will move simultaneously, and it will have a great impact on profitability!
Posted on April 14, 2009 with No Comments
If you’re in the spa or MedSpa business, you need to consider attending the New York Show – April 26-28, 2009. IECSC (International Esthetics, Cosmetics & Spa Conference) has four shows scheduled this year. They are regionally located to cut down on travel costs – NY, Las Vegas, Illinois and Florida. Each conference has education tracks set aside for specific interest – Medical Aesthetics, Spa Business and numerous workshops and educational programs.
There are expected to be over 200 exhibitors and lots of info for dealing with the weakened economy, expanding services and improving sq/ft ROI. Costs range from $70 for a single workshop to $500 for a 3-day pass to all programs. Go to http://www.iecsc.com/ny/ for more information. General admission to the floor is free. There is a very nifty interactive PDF with schedules, details, and registration information.
Tags: Conferences & Shows, cosmetics, education, esthetics, IECSC, medspas, Skin Care, skin care shows, spa industry, spas, workshops
Category: Conferences & Shows