Despite seeming like an already saturated market, there’s no better time to start a business according to Forbes, which argues that the pitfalls of 2020 will only lead to the rise of 2021.
I’ve put together this complete guide on how to start a business, particularly a spa-related business, in order for you to find this process as zen as your finished spa should be.
I’m just kidding – unfortunately, there is always going to be a certain amount of stress that comes with starting your own business, but I hope that the information I’ve provided throughout this article will at least assist you in knowing how to get started on your business.
Why Start a Business?
Despite the daunting nature of starting a business, there are plenty of reasons why people decide to take the leap of faith and dive straight in. This includes the following factors:
You Can Follow Your Own Passions
One thing that appeals to entrepreneurs is that starting a business provides a chance to follow your own passions rather than being forced to spend your career working towards someone else’s dream. Working for someone else is much more limited in this sense.
When you start your own business from the ground up, however, you can build something that better aligns with your values and can even be passed down to your family in the future.
You’ll Be Your Own Boss
On a more practical level, being your own boss can be hugely beneficial depending on your lifestyle and any commitments outside of work as you’ll have complete creative freedom.
This can also help boost your motivation levels as when you wake up each day, you’ll want to work towards your own success. Without you there to work hard and drive the progression of your business forward, it could become stagnant, and as your own boss, this is all on you.
More Flexibility in Your Lifestyle and Schedule
Working around a 9 to 5 work schedule isn’t for everyone, with many studies showing the success of a four-day workweek which has recently been trialed in countries like Sweden.
Although the early days of setting up a new business usually involve long hours, eventually, being your own boss will give you the freedom and flexibility to work around whatever schedule suits you best until you have managed to figure out a good work/life balance.
Steps to Starting a Business
We can’t lie and say that starting a business isn’t going to require a lot of work, and it won’t always be easy, but by following these steps, you’ll know you’re headed in the right direction.
Create a Business Plan
The best way to firmly establish what your business, brand, and company values are all about is to sit down at the very beginning of this whole process and figure out what you are looking to achieve with your business by coming up with a clear business plan.
There’s no right or wrong way to create a business plan, but you will typically have the choice between creating a traditional business plan and a lean startup plan.
We’d recommend starting with the latter just to give you some direction, but it’s often a good idea to wait to create a fully detailed, in-depth business plan until you’re a little further on.
Choose a Company Name
Although this is definitely one of the more fun and creative aspects of starting a new spa business, it can be quite a challenge to come up with the perfect name straight away, but you should choose a name for your business that reflects your brand and company values.
Mind maps and other methods for brainstorming can be a useful way to get your ideas flowing, but here are a few creative spa name suggestions if you need some inspiration.
Try to keep the name short and unique, easy to read, and think about the long-term goals for your business so you won’t have to change later down the line. Forbes also recommends using search tools like Moz or SEMRush to determine how popular the name is for SEO.
Research the Validity of Your Business Plan/Ideas
According to the Entrepreneur Handbook, “once you have a few thoroughly researched business ideas it’s time to test quickly and validate if the premise of your proposed business works in the real world” to make sure your venture has the potential for success.
You can do this by conducting thorough market research.
Define and Analyze Your Target Market
Target market analysis will assess how your product or services compare to others on the market and can determine where your business will fit in with your existing competitors.
This will allow you to establish effective marketing strategies and you will be able to identify ways in which you can gain more traction with your target market and potential customers.
When defining and analyzing your target market, ask yourself the following questions:
- Which are the most and least valuable markets?
- What is your “ideal” customer and what are they like?
- Are there any current gaps in the market?
- How viable is your business model/products/services?
- Is there any way you can improve your business strategy?
Understand/Get to Know Your Potential Customers
Another reason why market research is so important is that it allows you to understand or to get an idea of what type of customers you’ll encounter. This gives you a better chance of connecting with your target market which can help turn them into repeat, loyal customers.
When starting a new business, there are three types of customers you will likely encounter:
- The ‘savvy’ buyer: Less concerned with quality, more focused on affordability. Make sure you research what your competitors are charging to learn whether or not you can justify targeting this type of customer, or whether you will be outpriced.
- The industry influencer: Usually considered an expert or at least highly knowledgeable about the market. Mostly concerned with quality and can be a great option for marketing your business by harnessing their authority within the industry.
- The end-user: Someone who will use your product or services frequently. Research the things that excite or frustrate them and use this information to give your business an edge over the competition by trying to fill a potential gap in the market.
Think About Funding Opportunities
Without the proper funding, you will struggle to set up your business. You should think about funding opportunities early on in the process as this will determine the outcome of future decisions like what equipment you can afford or how much you have to spend on marketing.
There are a few different funding options for startup businesses, including but not limited to:
- Business loan
Many traditional lenders offer business loans for small or new businesses and there are a few alternative lenders you could consider if your loan application is rejected by the bank.
This will allow you to grow and scale your business, although as it is a loan it will need to be paid back by a previously agreed upon repayment date or as soon as the business starts to return a profit. In some cases, it may be a better option to look at getting a grant, first.
Investors are people or other companies that provide a large sum of money in return for a shareholder’s percentage or a stake in the business. Risk tolerance varies between investors as does the amount of capital available, styles, and repayment time-frames.
Don’t confuse an investor for a trader, either, as the former will typically be involved for years after the initial investment whilst traders are usually looking for more of a short-term gain.
Grants can be a great way to initially finance your business as these do not need to be paid back in most cases – and who doesn’t love free money?! However, there are often stricter rules and regulations regarding what businesses can be accepted for a grant application.
Look at the funding programs available to you and see if you match the requirements.
There are several other funding options available to new business start-ups, including crowdfunding, lending money from friends or family, and opening a business bank account with an agreed-upon overdraft, so you’ll need to research which option is the best for you.
Set Up the Legal Structure For Your Business
When you’re setting up your business, there are different structures you can choose from.
This is when one person owns and runs the business and is the simplest business structure you can have. As a sole proprietor, you will receive any/all of the profits that you make, but you will also be solely responsible for any debt or damages incurred through the business.
If there are two or more people involved in setting up a business, the easiest structure will either be a Limited Partnership (LP) or a Limited Liability Partnership (LLP). The difference is in how much of a personal risk will be involved and the level of control over the company.
Limited Liability Company (LLC)
A limited company separates the business from its owners meaning they will only be liable for business debts up to the amount they initially invested, therefore there is less risk to you.
This incorporates the best of both worlds of both corporation and partnership business structures, according to the SBA, as your personal assets will be safe should the business run into financial difficulties, but profits go to your personal account to avoid corporate taxes.
Another good structure for a business with more than one person involved in setting it up is a corporation. There are different types of corporations you can use for your business structure, with each of them ensuring that the owners are not personally liable or at risk.
The main difference between them is how tax works, so you’ll need to research which type of corporate structure will be best suited to your business.
Whichever structure you choose, you’ll need to register your business early on in the process. Think about how you are going to protect the intellectual property of your business and whether you will need to trademark your name or the products and services you offer.
Make Sure You Are Familiar With Procedures to Do With Accounting and Tax Obligations
Organizing your business’s finances is a far cry from when you were trying to pick out a suitable name, and there’s a lot you will need to wrap your head around to avoid mistakes.
You can learn accounting on your own or, if you have enough money for it in the budget, you can hire an accountant to make sure you are keeping on top of your tax obligations.
Create an Identity For Your Business
Having a strong brand identity is essential for any business as it will help you get your message across to your customers and can inspire customer loyalty and repeat custom.
When you are creating your brand identity, you will need to pay attention to:
- Website design
- Color palette
Ultimately, your goal should be to create a brand identity that sets your business apart.
Set Up a Marketing and Sales Plan
Deciding how you’re going to sell your products and services is almost as important as choosing what it is your business is going to sell. Without one, you’ll struggle with the other.
There are multiple different routes for marketing a business – whether you’re a service-based business like a spa, or a shop selling physical goods – including: selling online, renting or opening a retail store, trade shows, exhibitions, pop-up shops, and selling to retailers, wholesalers, and distributors, and there are pros and cons for all of them.
To determine which is the best marketing and sales plan for your business, consider your products and services, your budget, and your customers’ preferences if they have any.
Insure Your Business
One step you definitely don’t want to forget or gloss over is taking out the proper insurance for your business, as otherwise, you will not be covered if the business runs into trouble.
This is incredibly important from both a legal and a disaster perspective, as without insurance, the sole costs will fall to you and may need to be paid from your personal finances.
Finding the right business insurance is tricky when there are so many different options available on the market, so do your research and make sure you have read the fine print for each type of insurance you’re considering to avoid being hit with surprise fees or penalties.
Consider Whether You May Need to Recruit Other People
Due to the effort that goes into setting up a business, it is tempting to look at hiring other people or additional members of staff to help you with the day-to-day operations. This will allow you to take a step back and focus on the bigger picture for your business’s future.
It’s important that you don’t hire too soon as this can tie up a lot of your capital which could otherwise be spent on branding, marketing, and other business expenses.
If you really can’t do without the help, consider hiring a part-time employee or a subcontractor which means you are not committed to paying a full salary for too long.
Test the Performance of Your Business and Adapt Accordingly
An essential element of being a business owner is being able to identify gaps or weaknesses in the business as this allows you to work on them and adapt accordingly.
Not only is it important to closely monitor the performance of your business, but you may realize you need to adapt your business model in order to compete with other businesses.
This is why creating a business plan is so important, as having a clear plan can help you adjust to new ways of working and you can use them to track the progress of your business.
Mistakes to Avoid When Starting a Business
Starting a business is complicated and it can be easy to make mistakes, especially if this is your first venture. To help you avoid some of the most common mistakes when starting a business, we’ve listed them in this section so you’ll know what to keep an eye out for.
Not Making a Business Plan
You wouldn’t set off to explore uncharted territory without a plan of action or at least a roadmap to help keep you on track for the duration of your journey. This is exactly the same as starting a business without a predetermined business plan or a lean startup plan.
Not making a business plan leaves you and your business at a higher risk of failure. If you’re worried about the business direction changing – don’t! You can always update your business plan and it might even be nice to look back in a few years and see where it all began.
Poor Handling of the Finances
Financial stability isn’t something that you will necessarily achieve in the early stages of setting up your spa business, but poor handling of the finances will easily ensure its failure.
One of the most important pieces of advice for new entrepreneurs is to avoid partnering with the wrong investors, as they are more than just your financial backers.
To keep track of your business expenses and to keep an eye on the finances overall, it’s best to keep a record of all transactions made using company funds. Create a budget within your business plan for marketing and sales, and try to stick to it as closely as possible.
When it comes to services and product pricing, you need to get it just right.
Charging too much will put customers off, but don’t undervalue your product or services either! It can be tempting to offer freebies and promotional offers when you start a business to help generate more interest but know when you’re starting to take this too far.
Not Making Use of the Digital World
Recent advancements in technology have opened up digital transformation opportunities for businesses, with many arguing that this is essential for the future growth of a business.
The advantages of utilizing the digital world in your business plan include:
- On-demand services or bookings for better customer service
- Improves efficiency and productivity among employees
- Allows you to collect data and performance statistics
- Increases overall profits
- Greater resource management
- Keeps pace with your competition
If that isn’t enough to convince you, see the other benefits of digital transformation here.
Not Being Organized
As a business owner, you’ll likely be juggling multiple different balls at all times. It’s therefore essential that you organize yourself to the best of your ability so you can keep on top of everything that needs taking care of so your business can thrive.
There are several proven organizational strategies that work well for new or small businesses, including creating a system for your office space, keeping track of customer support, and planning campaigns in advance. If in doubt, you can’t go wrong with a list!
Not Researching or Understanding Your Target Audience
If you’re not 100 percent sure about who your target audience is and what makes them tick, you will struggle to effectively market your products or service. This means you could miss out on a huge pool of potential customers purely as a result of a lack of research.
It’s important to understand that not everyone is your customer and that’s okay, but you’ll need to understand different demographics in order to find who your target audience is.
Launching Too Soon
When you identify a gap in the market or a niche in which you think your business model would excel, it can be difficult to hold back as the temptation is to rush in and fill the gap before any other businesses get a chance to swoop in.
However, launching a business before it’s ready is one way to ensure disaster. Launching before you have created a business plan or purchased the necessary equipment, for example, will make you look bad and will make it harder to build trust with your customers.
Expanding Too Quickly
Again, don’t try to run before you can walk.
As much as you’ll want to reach your goals and consolidate the success of your business, expanding too quickly is actually a common cause for business failure.
If you invest in expanding before your customer base is big enough to warrant it, for instance, you may not be able to recoup these costs with sales which can leave your business in debt.
Not Focusing Enough on Marketing
Proper marketing is crucial to your business’s success, whether it be through organic types of marketing such as word of mouth and shares on social media or paid marketing like ads.
Without the right level of focus on marketing, you may miss out on reaching your target audience or they might get the wrong impression of your business.
The Basics of Starting Your Own Spa Business
This next section will take a look at some of the basic principles of starting your own spa business, from the equipment you will need to the services you will be offering to customers.
Choose the Right Location For Your Spa Business
You wouldn’t buy a house if it wasn’t in a suitable location that suits your needs, so why would you ever compromise when it comes to your business? Location is extremely important and the neighborhood you choose to set up shop in can have a real influence on your success.
Ask yourself the following questions when you’re searching for the perfect property in the right location for your spa business:
- How much foot traffic does your intended business location get?
- Is there available parking? How much?
- Will there be any direct competition with another similar business in the local area?
- How successful are your competitors?
- Are there any zoning laws or restrictions?
Decide on What Spa Services You Will Be Offering
In order to be officially classified as a spa business by the International Spa Association (ISPA), you will need to offer at least two out of these three services:
- Skincare services (including makeup and cosmetics)
- Body treatments (including salon services such as hair removal)
- Massage services
If you already know how to provide these services, then great – if not, you will need to think about hiring an employee or educating yourself so you can perform them yourself. Make sure to research the requirements in your area including any state or local licenses needed.
Decide on the Equipment You Will Need
Before you start picturing your new setup and designing the layout of your spa, think about what kind of budget and building size you have to work with, as this will inform your choices.
The majority of day spas will provide locker space to store your belongings while you receive your treatments, shower facilities, and some, if not all, of the following items:
- Massage tables/chairs
- Linens (and preferably washers and dryers for laundry)
- Hot towel warmers
- Eye and face masks
- Toiletries and shower supplies (like soap, shampoo, and conditioner, for example)
- Massage oils, incense, essential oils, and scented candles
- Front of house office equipment (desk, chairs, and card reader machines)
- Reception area furniture
- Wax warmers
This is not a complete nor a prescriptive list but it should be enough for you to get started on your shopping list. Just remember to charge it to the business account as expenses…
Put Some Thought Into What Your Exact Target Audience Is
The success of your business relies on your customers and your ability to connect with your target audience in order to receive their custom in the first place, so you need to put some thought into what your exact target audience is in order to market your business correctly.
Decide On What Products You Will Sell
In addition to the spa services your business offers, it can be a good idea to sell spa products on the side in a gift shop or at the end of a treatment. These can include:
- Hair products
- Nail products
- Other spa products
Try to only sell high-quality products that will help boost the reputation of your brand.
You Will Need to Hire and Train Staff
This is especially true if you are only trained in one specific area of your spa business, as you’ll need someone to perform various other treatments so you can expand your menu.
Hiring the wrong people can be costly for your business in terms of money, time, and productivity, as well as potentially lowering morale and dampening your own enthusiasm, so try to hire candidates that have the most experience and similar values to your brand.
Choose a Management Software
Starting and running a business is a hugely stressful and time-consuming process, which is why choosing the right management software for your business to use is so important.
Investing in some quality management software should help you with:
- Staff work schedules
- Clients’ appointments
- Reports and analysis
- And more!
Even the most basic software packages include templates and samples, so do your research and choose the software that is most suited to your style of business.
Be Sure to Offer Amazing Customer Service
People go to the spa to relax and to have a good time, so your customer service should focus on providing exactly that. By treating your customers with respect, they’ll
You Will Need Lighting/Music for the Spa
Something that is often overlooked but is integral to the “spa experience” is ambient music and lighting. This is what creates the serene, calming atmosphere that most spas exude.
Take the time to get this right and you’ll set the tone for your customers’ experience as well as for your business.
Although there are plenty of reasons that would justify any concerns, starting a business doesn’t have to be as scary as it seems. Spas are supposed to be relaxing, are they not?
As long as you seek out the proper advice and information (which you clearly are doing if you’ve wound up on this page), you should be able to start your business. Now it’s up to you!