Spa Money: 5 Places to Find More Profit in Your Spa Business

Are you ready to learn more about spa money and, more specifically, 5 places to find more profit in your spa business in 2022 and beyond?

Because most spa owners don’t have a background in accounting or have a business degree (which is why spa coaching is often so valuable!), it can be easy to miss areas in your spa biz where you can increase your profit margin.

However, that doesn’t mean you can’t learn where to look! Here’s how to work smarter, not harder when it comes to finding more profit in your spa biz:

The Importance of Profit

Out of excitement for what you do as a practitioner in the spa industry, spa owners can often “throw together” their processes, niches, and teams… and often leave their profit margins behind to leave dust while you focus on the more “fun” aspects of your biz.

I like to look at your spa business as a bucket of money that gets filled by booking clients and completing retail sales. However, your spa can quickly turn into a “leaky bucket”, where there are holes in your business that are losing you money without you even realizing. 

Trust me: back when I was a spa owner it happened to me, and it can happen to you too!

If you never seem to have enough money left over at the end of the month to either make ends’ meet or reach your monthly revenue goals, these are the five areas that would most likely be in need of having a hole patched:

#1: Doing a Cost-Per Treatment Breakdown

Did you know? The vast majority of my spa coaching clients have never done a cost-per-treatment exercise for the services in their business.

(And, for those who thought they had, they often only included the cost of the products instead of factoring in their full overhead, admin payroll, payroll deductions, and the cost of products!)

Including all of your relevant expenses in your cost-per-treatment breakdown is an absolute non-negotiable. Pro tip: create a spreadsheet so that all of your pricing breakdowns can be easily added-up (or referenced later down the line!)

#2: Reevaluating Your Compensation

Out of the five places to find more money in your spa business, compensation can be the most insidious. 

This is especially true in the current job market, where it is notoriously difficult to secure talented estheticians.

Why? Because a significant amount of spa owners can’t actually afford what they pay.

Let me put it to you like this: over the past five years, more and more spas have shifted from straight commission to straight hourly with small commissions. This is because many spa owners have clocked that, if you work off of a straight commission, your staff’s wages will go up as your service treatment costs do!

That means that, if employees are expecting 50% commission, you could be finding that you’re out of pocket at the end of each month… and still working in the treatment room instead of having the money to outsource more work!

#3: Increasing Your Pricing

Now that you’ve analyzed both your cost-per-treatment structure and your compensation structure, you may realize that you need to increase your prices in order to cover your bases.

If that’s the case, don’t hesitate! Your spa’s financial situation will never get better until your prices do.

Especially if you’ve risen through the ranks as a service provider, you may dig your heels in at the thought of raising your prices… especially if you just raised them during the COVID-19 pandemic. If that’s the case, remember that you run a business, not a charity: while we here in the spa industry tend to be the warm-and-fuzzy types, sufficient pricing is necessary for you to run your business in the way it deserves to be run.

#4: Getting a Handle on Your Cash Flow

If you aren’t paying attention to both your monthly and yearly cash flow, there are likely places that you are overspending on.

Big money-drains can include:

• Your tech stack (like common marketing tools or automation that you pay for)
• Subscriptions
• Under-selling retail items
• Over-spending products, treatment tools or equipment

#5: Analyzing Your Team’s Performance

Last but certainly not least is analyzing your team’s performance.

While the other five places to find more money in your spa business may be straightforward, analyzing your team’s performance should be done consistently in order to have the most up-to-date information.

Questions to ask yourself regarding your team’s performance include:

• “Are practitioners hitting their performance goals?”
• “Do I have a system in place to track performance and keep the team accountable?”
• “How much retail vs. services are being sold?”
• “What is the average client retention per team member?”

These metrics can even be used in your compensation system in case you would like to offer scaled pay to reward high performers. (Which we have a template for in our Spa Manager Systems, Profit Maximizer and Recruiting VIP Days.) 

Struggling to Carve Out More Profit In Your Business But Don’t Want to Do It On Your Own?

Book your Spa Profit Maximizer VIP Day today: I’ll help you assess where the holes in your spa biz are and give you actionable steps to close each one so that you’re keeping profit, rather than letting it continue to drip out of your leaky bucket!