How to Write a Day Spa Business Plan

The Day Spa industry is a growing trend for several reasons.  First, our business plan writer has found that in this day and age, women not only want to keep up their personal appearances through eyelash extensions, pedicures, and hairstyling, but they also want to do it in a convenient manner. 

From this, when day spas offer numerous services, then customers are more inclined to visit these types of establishments as compared to “al la cart” establishments. 

A second reason for the popularity of day spas is their profit margins.  Styling a person’s hair, painting nails, and even semipermanent makeup is relatively inexpensive to complete from the perspective of the cost of goods.  In other words, performing these types of services takes skill but not very much in raw material like nail paint or the actual eyelash extensions.  This leads to significant profit margins in the industry, which will continually attract competitors into the marketplace. 

A final reason for the popularity of day spas is that men are also increasingly visiting these types of establishments.  This is led to an additional revenue source for day spa competitors.  Because of these reasons and more, the need for a day spa business plan cannot be more profound.  So, when writing up your day spa business plan, make sure to take into consideration some of these tips and tricks for your future business plan.

Executive Summary for a Day Spa Business Plan.

In the executive summary section of the Day Spa business plan, make sure to first discuss what type of business your organization will be.  For most day spas, our business plan writer has found that the business structure is often a limited liability corporation.  By selecting a limited liability corporation, business owners are able to protect the personal assets from possible lawsuits from an employee for performance or customer accidents.  However, some organizations do select a limited liability partnership.  This happens when two professionals decide to set up shop together.  For example, in eyelash extension professional may partner with a massage therapist to start up a day spa.  In these types of situations, we find that limited liability partnerships are often selected over other types of business ownership.

Also, in the executive summary section, make sure to discuss how your business will look and feel for customers.  Customer experience is absolutely critical, in our opinion, for a day spa success.  Unfortunately, though, customer experience is difficult to control and even harder to ensure that his uniform.  Day spa business owners may take some steps to improve the likelihood of uniformity throughout their day spa business.  For example, our business plan writer has found that someday spa entrepreneurs will create a standard operating procedure manual that outlines acceptable practices for different professions.  By doing this, not only does the owner have a legal document for which the fall upon in case of termination.  But, they are also able to start down the road of uniformity through broad parameter expectations.

Company Information for a Day Spa Business Plan.

The company information section of a Day Spa business plan should start by explaining the problem that the company will solve for the client, then address the “Who, what, where, when, why, and Hows.”  A common problem that day spa owners mitigate for customers is convenience.  Customers, when seeking hairstyling, nail care, or massages, tend to prefer services done at one location.  In doing this, not only can they care for their beauty and personal needs, but they're also able to do it in an efficient manner.  When day spa owners understand their clients' problems intimately, they can then better design their interior and exterior of their business to align with their customers' needs.  Once this is complete, make sure to summarize this information in a professionally prepared company summary section of your day spa business plan.

Product Description for a Day Spa Business Plan.

Day Spa businesses generate revenues from various services offered.  Some day spas will offer services like manicures, pedicures, tanning opportunities, and massages.  Other day spas may provide services like hair styling, waxing, and eyelash extensions, no matter what your product or service, make sure to have a detailed section in your business plan discussing all services offered.  However, our business plan writer recommends that day spa owners do not put in prices for services.  Unfortunately, day spa services prices change continuously.  Because of this fact, every time your price change, you would then have to update your day spa business plan.  Avoid this hassle and only put services with no prices.

Competitive Advantages for a Day Spa Business Plan.

The Day Spa industry has been growing substantially over the last several years thanks to technological innovation as well as improved services offered.  Technological innovation has come in the form of hair extensions, eye extensions, and permanent makeup.  As for improved services, hairdressers, massage therapists, and other skilled professions continually research their industry to find tips and tricks to better practice their trade.  With so many different potential competitive advantages, some day spa entrepreneurs often get lost in this section.  To better help in writing a day spa competitive advantage section, the entrepreneur should focus on only two or three different competitive advantages.  These competitive advantages should be what your company does best or what your company does differently from other competitors.  By focusing on a narrow selection, day spa entrepreneurs are able to hone in on optimizing these activities to enhance their competitive advantage position.

Location Description for a Day Spa Business Plan

The location for a new Day Spa facility is critical for the success of the business.  For the interior of the business, day spas are often about 1500 to 3000 ft.².  Inside the spas, owners tend to segment the area into different compartments.  For example, someday spa owners will have a hairstyling area, a massage therapy area, and then an eyelash extension section.  By segmenting the interior of the building such as this, professionals of similar trades are able to work closely together.  Also, this helps with stocking the equipment needed to provide day spa services.

As for the general location of the Day Spa facility, our business plan writer has found that these types of businesses do well in locations like strip malls or actual malls.  These types of locations to best because, first, these locations have plenty of parking spaces for customers.  There’s nothing worse than someone not been able to find a parking spot for their personal care needs.  Another reason is that day Spa facilities often perform best with significant foot traffic.  An example of this would be when a day spa opens up services near a grocery store.  As men and women continually visit this grocery store on a daily or weekly basis, they will inevitably see the day spa advertising sign out front.  This practice not only builds brand recognition but also increases the likelihood of patronage.

Target Market for a Day Spa Business Plan.

A common Day Spa target market is women between the ages of 25 and 45.  This demographic tends to spend the most money and personal care items.  However, day spa owners may select different demographics like regional or income base.  A regional target market for a day spa would be customers within a specific mile radius, such as a 4-mile radius, from the facility.  If the day spa is high and, then, a target market may be men and women with incomes exceeding $100,000.  This would then target folks with high discretionary spending.

Industry research for a Day Spa Business Plan

Based on quick research from our business plan writer, the main industry in which Day Spa competitors compete in the health and wellness bond industry.  The health and wellness spa industry generated approximately $20 billion in the last 12 months.  There are approximately 23,000 businesses competing in the health and wellness bond industry.  This includes day spa competitors as well.  In the last five years, this industry has grown by approximately 2% annually.  In the next five years, day spa industry experts project a similar growth rate.  Best estimates place the number of employees at about 400,000.

Owner and Management Section of a Day Spa Business Plan

Owning and managing a Day Spa business is quite different from other organizations.  This is because owners tend to be employees as well.  From this day, spa entrepreneurs may include themselves as employees instead of gaining the title CEO.  From this perspective, business owners are able to work in their business for the most part and still have enough time to work on their business.  As a day spa business grows, though, the business owner tends to gravitate away from day-to-day operations and focus more on CEO activities.

Funding Request for a Day Spa Business Plan

Starting in the Day Spa business is actually quite expensive.  Business owners need to lease space in strip malls.  Build-outs alone often cost approximately 75,000 to $150,000.  Also, day spa owners must purchase furniture and equipment for their soon to be services provided.  This again may run an additional $20-$40,000.  To help with this section of the business plan, day spa owners should create budgets for each one of their segments of the business.  For example, a budget should be made for buildout, equipment needs, decor, etc.  By breaking into categories, business owners can then have a better understanding of their budgets when the different category needs to be addressed.

Financials for a Day Spa Business Plan.

Financial projections and financial models for a Day Spa business plan should first start with identifying which services will be offered on a daily basis.  Popular services may include pedicures, manicures, hair styling, coloring, massages, and eyelash extensions.  Next, identify the sales price, at least on average, for each category.  Then, determine how much it costs and material to perform each action.  Once this is complete, then determine how many of the services you will provide on a daily basis, again, on average.  With this complete, start with the sales price and subtract the cost of goods.  Then, multiply this number by the daily sales expected.  This will give you your gross margin daily.  Once this is complete, multiply it by 30 and then subtract your fixed monthly costs.  This will give you a good estimate as to what your monthly profits will be.

Author: Paul Borosky, Doctoral Candidate, MBA., Author

Owner of: Tutor With PaulQuality Business Plan, and Quality Business Consultant,

Date: 2/24/2020