We are going to take a deep dive into what it costs to open a spa in a very general sense so that you can use this information to derive your own business plan.
The wellness industry is continuously growing, however, there has been a boom in popularity for wellness businesses.
With this boom, a renewed sense of interest in opening and starting new businesses such as day spas.
Many people who are looking for a career change in something that they can invest in and grow into are turning to this industry, and with that comes many different questions about what it costs to actually build and run a business such as this.
Realizing your dream is often easier said than done and the majority of the problems revolve around expenses.
There are several aspects that pertain to what it costs to run a business such as this, and overall it really depends on what your vision is.
We have looked at these costs in three different sections – soft, hard, and operating costs.
Soft Costs To Open A Spa
When we say soft costs, we mean the expenses that come with making sure your business stays running smoothly and brings in revenue.
They are just as, if not more, important than the hard costs of starting a business.
We will look at some examples of soft costs to open a spa business.
In order to open your spa and ensure that it runs smoothly without complaint, you will need to hire trained and experienced professionals to carry out your treatments.
These professionals will help you create a fully functioning business that pertains to your vision.
During the onset, you will start to work with an architect, who will help you dictate how your space will be laid out.
They will also help you see how your revenue can be maximized and how the flow can be made as ergonomically as possible.
They will also ensure that you’re adhering to all of the licensing and building regulations.
You may also want to hire an interior designer to help you understand what your options are when it comes to flooring, furnishing, lighting, wall covering and colors, and other fixtures.
A lawyer will also be helpful to help to review your legal contracts, agreements, and structure.
As well as this, an accountant is important to have so that they can maintain your charts of accounts and other financial planning information.
Marketing agencies with graphic designers are another great professional addition. They will make sure you have an eye-catching logo and that your marketing pieces are cohesive and help to bring in a decent clientele.
You will also want to try and set up a decent website, as it is important to start an online presence when starting a new business.
Regardless of whether you are renovating a space that already exists or if you’re starting entirely from scratch, you will need to obtain the correct business licenses and building permits.
In an ideal world, you will have a spa business consultant who can begin to create the infrastructure of your HR department.
They will also help to plan for operations and staff compensation.
Depending on the size and intensity of your new project, these fees will vary wildly.
We recommend budgeting deftly for the professional services that you will require as they can make or break your new business.
There are lots of systems that you’ll require for your spa, and a lot of these are cloud-based. This means that they are probably running a subscription-based service.
For example, there is a spa software that you will require so that you can keep track of your client, inventory, and transactional databases.
Other separate accounting software will also be necessary. This too comes as a software package that requires a subscription.
Other software may include a security system, payroll services, and subscriptions for opening and maintaining your bank accounts.
There are plenty of other little costs that may slip your mind when it comes to opening up your spa.
These include marketing – this is heavily reliant on the marketing strategy you adopt – and collateral support, for example having printed brochures and menus for your spa.
Your clients are guaranteed to ask for these little things, so it’s important to factor them in when budgeting.
Other little costs include linens, blankets, robes, towels, retail bags, and staff uniforms.
A detrimental part of starting any successful business is finding the right staff.
It doesn’t matter if the staff you hire have experience or not, they will still need to be trained in the methods in which you wish your business to operate.
Once your team is hired, you will need to train your technical staff on their treatment protocols as well as their product knowledge.
You may find that your product partners are willing to do the initial training for free when you purchase their product, after which future training would be invoiced.
Other support staff will also require training, especially when it comes to using spa software, security systems, and telephones.
All of your staff will need to partake in a team building training day as well as service and sales exercises.
Make sure to factor this into your budget as it is a crucial part of starting and maintaining a successful business.
This term is used to refer to all of the expenses that come with the facilities.
Examples of these costs include renovation, construction, getting furniture, fixtures, and equipment (FFE), taking inventory for retail and professional use, office and administrative supplies, and signage.
All of these hard costs are entirely depending on varying factors. For example, are you renting the space or are you doing a build-out?
Or are you taking over a spa business that already exists, and you want to make as few adjustments as possible?
Other possible factors include where your business is located. Is it in a suburban, rural, or urban area? Also, will you be working with non-union or union laborers?
If you’re looking to take a facility over from a spa that already exists, then this is probably the cheapest option when it comes to starting your own spa.
However, if your plans are overly sophisticated, then it may work out just as expensive as starting from scratch.
In the long run, building a new space is more beneficial, despite the large costs. A general rule is that your construction will probably cost you around $90-$130 per square foot.
For example, if you plan to open in a 2,500-square-foot area, then this will probably cost you $225,000-$325,000. This is in a broad sense.
All equipment and furniture needs will be different depending on what your wellness center or spa vision is.
For facial machines, treatment tables, treatment trolleys, lounge furnishings, office equipment, and technician chairs, you’re probably looking at around $30 per square foot.
If your vision includes the use of medical-grade equipment, then this will definitely be more costly.
Typically, you would have your own dryer and washer unit at the spa so that your linens and towels can be washed on location.
Other support equipment includes a dishwasher and refrigerator.
You also want to consider various industry investments.
These will cover a large portion of the services that you will offer as well as the brands that you’re planning on carrying.
An average spa that is less than 3,000 square feet may have around six treatment rooms. These won’t need more than a single brand for skincare.
You could even make use of smaller and more niche brands as well as retail products that offer lifestyle or travel sizes.
There are also options available for the deployment of merchandise as well as cabin stocking.
You will probably find that you will need around $5,000-$10,000 to cover the products needed to stock all the treatment rooms, and dispensary, as well as having three months’ worth of stock for retail purposes.
Operating The Spa
The last thing to consider is the operating capital. This will need to be carefully budgeted for.
Once your spa is built, designed, equipped, and open, you will have to make sure you have enough money to cover the day-to-day operations of the spa.
This will need to cover the time period from when your doors are open for the first time ever all the way up until your cash flow and income is steady to cover your bills and other revenue.
Typically, this can take around six to twelve months from the opening day.
If your monthly expenses, such as salaries, marketing, rent, support, subscriptions, and banking, are around $18,000, then you will need to make sure you have $100,000-$200,000 in reserve to keep your business running smoothly and to make sure you’re not making a loss.
A lot of new businesses fail due to the fact that they do not have enough money secured, to ensure their doors could stay open long enough to maintain a steady cash flow.
To quickly answer how much it will cost to open a spa, you will need to take a look at your square footage and multiply this by $200.
For example, a 2,500-square-foot spa will total $500,000.
This is an estimated amount but should be enough to cover all of your soft and hard expenses. However, this amount doesn’t cover your operating capital.
Make sure to bear in mind that if you want your facility to be high-end then you may have to increase the square foot costs by 75% to almost 100%.
A high-end facility may include a spa that you’re planning to open alongside a hotel or other business, any facilities with high-quality finishes or wet amenities, or a spa that has specialized treatments or equipment.
The US Small Business Administration states that around 78.6% of newly started businesses will only survive one year.
This is almost halved when talking about businesses that survive over 5 years.
Research shows that most new business owners fail due to their overestimation of the revenue that their business can produce.
Despite having correctly estimated the expenses it costs to run the business, revenue and operating capital is a constant downfall.
Spas are always growing in popularity, however, getting a startup and starting a new business is a huge challenge.
If you’re desperate to succeed in this industry then you will need to make sure you have a very detailed plan in order to make your dream a reality.