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Surviving the Economic Crisis

By: Cathy Christensen
Posted: January 7, 2009, from the January 2009 issue of Skin Inc. magazine.

The beginning of a new year should be a time to wipe the slate clean and start anew. However, the 2009 U.S. economy can’t help but be saddled with the baggage of a weathered and worn 2008, a year that brought a new president, a recession, and a new focus on the impacts and woes of small businesses nationwide.

The vast majority of the 14,615 spas1 that make up the spa industry in the United States are owned by entrepreneurs, making it a vibrant segment of the U.S. small business community. Although this entrepreneurship is what makes the profession so unique and personal, it is also what is causing the industry to fall victim to the turmoil caused by the recent economic downturn and credit crunch.

According to the U.S. Small Business Administration’s Office of Advocacy, a small business is an independent business that employs fewer than 500 employees, and small businesses represent 99.7% of all employer firms in the country.2 (See Facts About Small Business.) Because of this enormous reach, small businesses may also be the ones hurt most during the recession. In fact, approximately 25,000 of the 157,000 jobs cut in October 2008 were from small businesses.3

There are two places a spa can be right now: on steady ground or in trouble. If your spa is in trouble, it is important to ask for help from experts in the industry to look at your numbers and find out why your business is being upset, says Lenny LaCour, partner, LH Connects in Glenview, Illinois, and spa industry expert. “It’s hard to do it yourself because you are so attached to your business. You need to set up a business plan, start from where you are and work yourself out of it,” he says. If you are on steady ground, stay the course and improve how you manage your spa by looking at things such as waste, marketing, client retention and customer service.

The spa industry

Although it is a widespread belief that things will get worse before they get better—especially for day spas—some spa owners, such as Monica Morrell-Dean, owner of Spa Morrell in Chattanooga, Tennessee, have yet to experience any hardship because of the current economic climate. “We are seeing a steady stream of clients this year, even more so in the third and fourth quarters, which is meeting or beating last year’s numbers,” she says. The five-year-old, 1,850-square-foot Spa Morrell employs 10 team members. “Our industry is recession-proof sometimes—women will always buy lipstick,” says Morrell, although she admits things might scale back a bit more than they currently have. “Those clients that come four or five times a year might come two or three times instead, and buy more retail products.”