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Staying Profitable as Your Spa Evolves

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By: Patrick Vande Weg
Posted: September 28, 2012, from the October 2012 issue of Skin Inc. magazine.

As your skin care facility’s business cycle develops and moves from phase to phase, following a business plan, taking control of your time, setting up sound business practices and hiring the right people are the keys to success.

Owning or managing a skin care business during any growth phase is very challenging and can be very stressful—especially a low-margin business. Many owners and managers find themselves working long hours, performing low-income tasks, and making only modest incomes or having only a small impact on revenues. Why does this happen? This article outlines three steps to help you understand the characteristics, problem areas and crisis points associated with each growth phase of a business cycle, and the key areas that must be addressed to strengthen a business and move forward.

Step I: Identify and understand the growth phases of a business cycle

From two-room skin care practices to 10 or 20 room day or resort spas, understanding the growth phases of a business cycle and where your spa business currently is in that cycle is key to identifying the characteristics, problem areas and crisis areas that must be addressed to operate your business efficiently, let it mature to the next growth phase and implement successful spa thinking. The growth phases of a business cycle are as follows.

Phase I: Start-up/Entrepreneurial Phase Characteristics

Problem Areas

Phase II: Growth/Expansion Phase Characteristics

Problem Areas

Phase III: Mature/Professional Management Phase

Characteristics

Problem Areas

Phase IV: Decline or revitalize

A business headed toward the end of its maturity cycle has two choices: decline or revitalize. To best evaluate the position of a skin care facility, the overall client and community perception of the business must be examined. Is the perception “Spa X used to be ...” or is it ”Spa X always has something new, unique and …”.

Revitalize Characteristics

Decline Characteristics

Step II: Survival-growth-profitability strategies (see Chart)

Step III: Evaluate and stick to winning principles