At Strategies, our mission is to help owners of employee-based salons and spas create successful and sustainable businesses. To be successful and sustainable, a luxury spa must not only be profitable, but also have enough cash reserves. Generally, a spa should have a profit margin of 10-15%, depending on operating expenses, payroll rate, and overhead costs. However, many day spas operate with compensation rates of 50% or more, leading to minimal or no profit margins.
If you are an independent spa business owner, it is important to assess your financial health. Many day spa owners also rent out part of their space to independent contractors with their own equipment. No formal education is required for day spa owners and they do not need to attend cosmetology schools. As with other salon owners, day spa owners must retain customers and acquire new ones in order to maintain their salaries.
Recent surveys show that three-quarters of respondents are eager to try out these services right now, and that interest will only increase as services become more widely known. Salon owners who attract famous customers are more likely to be at the higher end of the estimated range. Additionally, some day spa owners now offer mobile services to their customers, which reduces monthly overhead costs for renting the space. While reducing expenses may be an option for homeowners to increase their income, paying expenses such as vacation pay, health insurance, and paid education can help differentiate their spas from the competition.
What a day spa owner brings home as payment can be affected by the expenses required to manage their spa. Research has shown that most owners understand and have correctly predicted the operating expenses of a company; however, they tend to overestimate the company's ability to generate revenue - in other words, they are overly optimistic about utilization projections. Many new business owners - whether from a spa, restaurant or other business - have been able to realize their vision and receive great feedback from customers but simply did not have enough money to keep the doors open until there were enough daily customers. It is essential for day spa owners to have a network of professionals who can recommend services that their own spa does not offer - and vice versa.
The Bureau of Labor Statistics does not list the exact salary of day spa owners; however, it does provide an indication of what they could earn in a typical year - especially since some often work as technicians. It is not uncommon for service providers to say “I don't care about numbers; I just want to do my job” when owners and managers try to share financial and critical numbers with staff. After hiring your team, technical staff (or service providers) will need to be trained on product knowledge and treatment protocols - some of which may be provided by your product partners - but you will need to give it your own spin. Owners of high-end salons who attract celebrity customers are more likely to be at the top of the estimated range.
Ultimately, what a day spa owner brings home as payment can be adversely affected by the expenses required to manage their spa. It is essential for day spa owners to have a network of professionals who can recommend services that their own spa does not offer - and vice versa.