Spa Business Plan Template & Example

Written by Dave Lavinsky
spa business plan template
Table of Contents
Table of Contents

Spa Business Plan

If you’re starting a spa or expanding your current spa business, a detailed business plan is essential for success.

The following spa business plan template outlines the key elements to include in a comprehensive plan. This template can be used to create a business plan for any type of spa, including but not limited to: day spas, resort spas, medical spas, wellness spas, and luxury spas.

You can download our Spa Business Plan Template (including a full, customizable financial model) to your computer here.

 

Spa Business Plan Example

I. Executive Summary

Business Overview

[Company Name], located at [insert location here] is a brand-new, upscale day spa focusing on providing high-quality, full-service beauty care to the surrounding community. Our product and service lines fit nicely with the prevailing tastes and preferences of the local area – middle class suburbanites want quality beauty care, but don’t want to pay luxury prices for it.

Products and Services

[Company Name]will provide beauty services for all ages and both genders. Services will include massage, facials, and hair removal (waxing and threading). All manner of special treatments will be available—including specialty massages and facial treatments.

In addition to providing these services, [Company name] will also be a retailer of exclusive beauty care products. Customers will find products at [Company name] that they won’t find in grocery stores.

Customer Focus

[Company Name] will primarily serve the residents within a 5-mile radius of our location. The demographics of these customers are as follows:

  • 27,827 residents
  • Average income of $74,700
  • 58.9% married
  • 49.6% in Management/Professional occupations
  • Median age: 38 years

In addition to this prime adult demographic for an upscale day spa, there are two large high schools and four middle schools in the area. Students, particularly girls, from these schools will be sure to patronize [Company Name] for special occasions.

Management Team

[Company Name]is led by [Founder’s Name] who has been in the beauty care business for 20 years. While [Founder] has never run a day spa himself, she has been a masseuse since age 15 and spent most of her adult life working as a masseuse at spas and salons. As such [Founder] has an in-depth knowledge of the day spa business including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.).

Success Factors

[Company Name] is uniquely qualified to succeed due to the following reasons:

  • The Company will fill a specific market niche in the growing community we are entering. In addition, we have surveyed the local population and received extremely positive feedback saying that they explicitly want to frequent our business when launched.
  • Our location is in a high-volume area with easy access from multiple residential and commercial district zones.
  • The management team has a track record of success in the salon and spa business.
  • The upscale day spa business is a proven business and has succeeded in communities throughout the United States.
  • Local competitors leave a large gap in the day spa market—there are low-cost providers ($30-50 for a facial), and an ultra-luxury beauty salon ($120+), but nothing in between.

Financial Highlights

[Company Name] is currently seeking $260,000 to launch. Specifically, these funds will be used as follows:

  • Store design/build: $140,000
  • Working capital: $120,000 to pay for Marketing, salaries, and lease costs until [Company Name] reaches break-even

Topline projections over the next five years are as follows:

Financial SummaryYear 1Year 2Year 3Year 4Year 5
Revenue$400,000$466,067 $524,563 $590,400 $664,500
Total Expenses$345,594 $385,172 $419,434 $475,894 $507,480
EBITDA$54,406$80,895 $105,129 $114,506 $157,020
Depreciation$20,840 $20,840 $20,840 $20,840 $20,840
EBIT$33,566$60,055 $84,289 $93,666 $136,180
Interest$16,822 $14,719 $12,617 $10,514 $8,411
Pre-Tax Income$16,744$45,336 $71,673 $83,153 $127,769
Income Tax Expense$0$0$17,104 $29,103 $44,719
Net Income$16,744$45,336 $54,569 $54,049 $83,050
Net Profit Margin-10%10%9%12%

 

II. Company Overview

Who is [Company Name]?

[Company Name], located at [insert location here] is a new, upscale day spa focusing on providing professional beauty treatments and services in an enjoyable environment. It will showcase a well-designed interior as well as a full-featured waiting area equipped with television screens and at-request refreshments. [The Company] also sells a variety of premium beauty products which will be on display in the waiting room.

[Company Name] was founded by [Founder’s Name]. While [Founder’s Name] has been in the massage business for some time, it was in [month, year] that she decided to launch [Company Name]. Specifically, during this time, [Founder] took a trip to Fort Lauderdale, FL. During his trip, [Founder’s Name] frequented a day spa that enjoyed tremendous success. After discussing the business at length with the owner of the spa, [Founder’s Name] clearly understood that a similar business would enjoy significant success in her hometown.

Specifically, the customer demographics and competitive situations in the Fort Lauderdale location and in his hometown were so similar that he knew the business would work. After surveying the local population, [Founder’s name] went ahead and founded [company name].

[Company Name]’s History

Upon returning from Fort Lauderdale, surveying the local customer base, and finding a potential retail location, [Founder’s Name] incorporated [Company Name] as an S-Corporation on [date of incorporation].

The business is currently being run out of [Founder’s Name] home office, but once the lease on [Company Name]’s retail location is finalized, all operations will be run from there.

Since incorporation, the Company has achieved the following milestones:

  • Found office space and signed Letter of Intent to lease it
  • Developed the company’s name, logo and website located at [website]
  • Hired an interior designer for the decor and furniture layout
  • Determined equipment and fixture requirements
  • Begun recruiting key employees with previous beauty experience

[Company Name]’s Products & Services

Below are [Company Name]’s initial service offerings and in-store products sold.

Specialists will be asked to perform the following services for both men and women:

  1. Facial treatments
  2. Massages (full-body, neck and shoulder, foot, etc.)
  3. Waxing
  4. Threading

Each appointment, if desired, will include an initial beauty assessment and suggestion phase where the specialist will discuss the customer’s beauty. There will then be a cleansing skin wash with our in-store products, followed by the desired services for the face or skin.

[Company Name] will feature premium beauty products in-store from these well-established brands. It will continue to update its offering in order to provide the newest beauty products to its customers.

Some of its featured brands will include:

  • Aveda
  • Great skin
  • Repêchage
  • Spa Concepts

Furthermore, the waiting area will have television screens and popular publications to make the wait for service more pleasurable. Toys and board games will also be on hand for waiting children, as well as at-request refreshments which we will provide for free during the waiting period.

Store Design

[Company Name] will develop a 2,500 square foot store whose key elements will include the following:

  • Cosmetologist Booths
  • Reception Desk
  • Self-service coffee area
  • Sinks
  • A waiting area with TV screens
  • Restrooms

The retail location has 10 dedicated parking spots which should suffice even in peak hours.

[Company Name] plans to be open 7 days a week, from 10AM to 6PM. As demand dictates, we may extend or reduce our hours.

 

III. Industry Analysis

[Company Name] competes against small, individually owned salons, spas, massage parlors, and against major regional or national chains. There are over 450,000 registered beauty or spa salons in the United States.

The spa and salon industry is a fragmented one, as the 50 largest companies only hold 15% of the market. The market is estimated to grow to more than $35 billion in three years. This bodes well for [Company Name]; since there are no truly dominant competitors, barriers to entry are not as high as many other industries, and a start-up can expect to have success in this growing market. There is plenty of room in the industry particularly for well-placed local day spas that cater to specific geographic and demographic customer niches. Smaller spas can easily develop loyal clienteles that enable them to compete and succeed against industry giants; in this industry, size does not necessarily mean an advantage, which bodes well for [Company Name].

Market Trends

The market in which [Company Name] will compete is experiencing a number of different trends.

  • Steady growth. This market is expected to grow consistently at around 2% annually.
  • Success drivers. Customer satisfaction is what ultimately makes one spa triumph while another fails. The experience a spa’s client has determines whether or not they return and whether or not they refer others to the same spa.
  • Economies of scale. Larger spas are finding opportunities to succeed, by making effective use of support personnel. Receptionists, washers, and assistants at larger establishments can take care of many of the menial tasks that skilled masseuses and cosmetologists have to handle in small day spas. This permits a skilled masseuse or cosmetologist to spend a higher proportion of their time actually performing skilled services.
  • Premium independent day spas. Independent day spas also compete in the premium segment of the market. These firms develop loyal customer bases and select their location on the basis of population demographics.
  • Specialty spa salons. Presently, a niche is being carved out for spas that cater to very specific customer segments, such as those that desire gemstone treatments and dermatologist brands.
  • Intense customer loyalty. Many spas develop repeat customers who become a regular client base and represent a significant portion of their revenues. Spas whose employees are able to develop strong relationships with customers can expect to see more long-term success.
  • Changing gender patterns. Traditionally, women bring in the lion’s share of revenues for spas, using beauty services more often and spending more at each appointment. In recent years, however, the male consumer’s attitude has begun to shift. Men now make up approximately 25% of spa clientele.
  • Gender preferences. Women are the most lucrative customers for spas, visiting more often and purchasing more special treatments.

 

IV. Customer Analysis

Demographic Profile of Target Market

[Company Name] will serve the residents of [company location] and the immediately surrounding areas as well as those who work in [company location].

The area we serve is populated mostly by the middle class; as a result, they have the means to pay for higher quality service, and are looking for a hair and beauty services somewhere between the deep discounters and the top-end luxury brands.

The precise demographics of the town in which our retail location resides is as follows:

WilmetteWinnetka
Total Population26,09710,725
Square Miles6.893.96
Population Density3,789.202,710.80
Population Male48.04%48.84%
Population Female51.96%51.16%
Target Population by Age Group
Age 18-243.68%3.52%
Age 25-345.22%4.50%
Age 35-4413.80%13.91%
Age 45-5418.09%18.22%
Target Population by Income
Income $50,000 to $74,99911.16%6.00%
Income $75,000 to $99,99910.91%4.41%
Income $100,000 to $124,9999.07%6.40%
Income $125,000 to $149,9999.95%8.02%
Income $150,000 to $199,99912.20%11.11%
Income $200,000 and Over32.48%54.99%

Customer Segmentation

The Company will primarily target the following three customer segments:

  1. Soccer/stay-at-home moms: The town has a large population of stay-at-home moms who are active in the school and community. These moms seek beauty services on a regular basis. Winning the loyalty of a mother often includes winning the business of her children and husband as well. These women are well-connected to each other and as such are a prime source of referral business. [Company name] expects to regularly acquire new customers from referrals.
  1. Professionals: [Company name] is located along a well-traveled commute route. By offering convenient location and exceptional service to the customer, [Company name] will draw in working men and women who need to look professional for work.
  1. Students: There are multiple high schools and middle schools located in the surrounding area. These students still live on their parents’ income and can therefore afford to pay for higher-quality services than discounters provide. In particular, [Company name] can expect to generate significant seasonal business based on the beauty needs of the local youth culture.

 

V. Competitive Analysis

Direct & Indirect Competitors

The following retailers are located within a 5-mile radius of [Company Name], thus providing either direct or indirect competition for customers:

Joe’s Beauty Salon

Joe’s Beauty Salon is the town’s most popular beauty salon and has been in business for 32 years. Joe’s offers a wide array of services that you would expect from a beauty salon.

Joe’s offers facial treatments, manicures and pedicures, and haircuts and styling. Over 60% of Joe’s revenue comes from services targeted at women outside of hair services. In addition, Joe’s does not offer its customers premium salon products.

For example, they only offer 2 types of skin cleaners and 4 types of moisturizing cream. This puts Joe’s in direct competition with the local pharmacy and grocery stores that also carry these mainstream products. [Company Name], on the other hand, offers numerous options for exclusive products that are not yet available in [Town’s Name].

Lux Facial

Lux Facial has been in business for 5 years and offers an extremely high-end facial treatments, with introductory prices of $120 per facial.

However, Lux Facial will primarily be targeting a different customer segment from [Company Name], focusing on the households with an income in the top 10% of the city.

Furthermore, [Company Name] offers many of the services and products that Lux Facial offers, but at a fraction of the price, such as:

  • Facial cleaning
  • Facial masks
  • Intensive skin care spot treatments
  • Premium beauty care products from industry leaders

Freddie’s Fast Day Spa

Freddie’s Fast Day Spa is located four stores down the road from [Company Name]. Freddy’s has been in business for the past three years and enjoys great success, primarily due to its prime location.

Freddy’s business offers inexpensive facial treatments and neck massages and focuses on volume over quality. It also has a large customer base, with a large percentage being teens between 13 and 18 years of age.

[Company Name] has several advantages over Freddy’s Fast Day Spa including:

  • An entertainment focused waiting room, with TV’s and board games to make the wait for service more pleasurable for children waiting for their mothers.
  • A focus on service quality rather than speed alone to ensure repeat visits. [Company Name] will spend on average 20 more minutes with its clients than Freddy’s.

While we expect that Freddy’s Fast Day Spa will continue to thrive based on its location and customer relationships, we expect that more and more customers will frequent [Company Name] based on the high-quality service it provides.

Competitive Pricing

Joe'sLUXFreddy's
Pedicures$30-$40$40-$50$60-$70
Facials$60-$70$70-$80$80-$90
Manicures$20-$25$30-$35$40-$45
Massage$65-$75$80-$90$85-$90

Competitive Advantage

[Company Name] enjoys several advantages over its competitors. These advantages include:

  • Location: [Company Name]’s location is near the center of town, giving us access to commuters going to and leaving the train station, local office workers, and passersby shopping in the city. We also offer adequate parking making it easy for customers to patronize us.
  • Great service at an affordable price: The beauty care services offered by [Company Name] are similar quality to its most premium positioned competitor, Lux Facial. [Company Name] will offer these services at a much more affordable price.
  • Management: Our management team has years of business and marketing experience that allows us to market to and serve customers in a much more sophisticated manner than our competitors.
  • Relationships: Having lived in the community for 25 years, [Founder’s Name] knows all the local leaders, newspapers and other influences. As such, it will be relatively easy for [Company Name] to build brand awareness and an initial customer base.

 

VI. Marketing Plan

You can download our Business Plan Template (including a full, customizable financial model) to your computer here.

[Company name] seeks to position itself as a respectable, upper-middle-market competitor in the spa market. Customers can expect to receive professional beauty care from skilled cosmetologists and masseuses for a price somewhere between discount chains and luxury establishments.

The [Company Name] Brand

The [Company Name] brand will focus on the Company’s unique value proposition:

  • Convenient location
  • Familiar, regular specialists
  • Significant personal attention
  • Moderate price point
  • Comfortable, customer-focused environment

Promotions Strategy

[Company Name] expects its target market to be individuals working and/or living within a 5-mile radius of its location. [The Company’s] promotions strategy to reach these individuals includes:

Local Publications

[Company name] will announce its opening several weeks in advance through publicity pieces in multiple local newspapers and publications. Regular advertisements will run to maintain exposure to relevant markets. Community newspapers, school publications, youth sports programs, and similar channels will be a major promotion effort.

Major Publications

We will make careful use of advertising in selected larger publications. [Publication or newspaper name] has a circulation of xyz, and we can expect to reach a wider geographic region of customers on a limited basis. Advertisements with major publications will be used selectively, based on cost-effectiveness. These ads will include discount coupons so that response to the ads can be tracked.

Community Events/Organizations

[Company name] will promote itself by distributing marketing materials and participating in local community events, such as school fairs, local festivals, homeowner associations, or sporting events. Since mothers are often heavily involved in such things, we will not only reach the lucrative audience of adult women but also potentially their families by extension.

Commute Advertising

We will drive attention toward [Company name] by hiring workers to hold signs alongside [route or highway]. Advertising on heavily traveled commute routes are an opportunity to alert large numbers of working individuals with disposable income of our opening.

Customer Loyalty Programs

[Company name] will create a winning customer loyalty program to keep its best clients coming back again and again. When not actively providing services to customers in the store, our professionals and other employees will make periodic, regular phone calls to customers. These phone calls will (a) ensure that customers are satisfied with their treatments, and (b) remind customers after a certain period of time has passed that they might want a new facial or massage. Long-term customers will have the opportunity to participate in the loyalty program, and referrals will be rewarded as well.

Direct Mail

[Company Name] will blanket neighborhoods surrounding its locations with direct mail pieces. These pieces will provide general information on [Company Name], offer discounts and/or provide other inducements for people to visit the spa.

Ongoing Customer Communications

[Company Name] will maintain a website and publish a monthly email newsletter to tell customers about new events, products and more.

Pre-Opening Events

Before opening the store, [Company Name] will organize pre-opening events designed for prospective customers, local merchants and press contacts. These events will create buzz and awareness for [Company Name] in the area.

Pricing Strategy

[Company Name]’s pricing will be moderate, so customers feel they receive great value when patronizing the spa. The anticipated price point for a standard facial treatment is $80, in exchange for which a customer can expect to receive personalized attention during and after their visit. The customer can expect to receive quality beauty care, for a more affordable price than what they pay at an ultra-premium salon or spa.

 

VII. Operations Plan

Functional Roles

[Company name] will carry out its day-to-day operations primarily on an appointment basis. Walk-in clients will be served by the earliest available specialist, but priority will be given to clients who called ahead. In the meantime, waiting customers can divert themselves in the lounge, which features television and current popular magazines.

In order to execute on [Company Name]’s business model, the Company needs to perform several functions. The majority of employees will assist in upselling customers in addition to the primary functions as cosmetologists and masseuses. [Company name] anticipates using the services of X employees, divided into the following roles.

Service Functions

  • Facial treatments
  • Massage
  • Hair removal

Administrative Functions

  • General & administrative functions including legal, marketing, bookkeeping, etc.
  • Sourcing and storing products
  • Hiring and training staff
  • Appointment making
  • Customer service/cash register functions

Miscellaneous

  • Maintenance personnel

Milestones

The following are a series of steps that lead to our vision of long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:

DateMilestone
[Date 1]Finalize lease agreement
[Date 2]Design and build out [Company Name]
[Date 3]Hire and train initial staff
[Date 4]Kickoff of promotional campaign
[Date 5]Launch [Company Name]
[Date 6]Reach break-even

 

VIII. Management Team

Management Team Members

[Company Name]is led by [Founder’s Name] who has been in the beauty salon and spa business for 20 years.

While [Founder] has never run a day spa herself, she has extensive experience providing massages and working in major spas for the past 20 years. He began his career in [19xx] when she received a certification from [Massage School] and began work at [major chain], where she worked for X years.

[Founder] graduated from the University of ABC where she majored in Communications.

[Other person’s name] will serve as the customer service manager. [He/she] has extensive experience the hospitality industry.

[Founder] will serve as the store manager. In order to launch our spa, we need to hire the following personnel:

  • Cosmetologists (3 to start)
  • Masseuses (2 to start)
  • Assistants (1 to start)
  • Receptionist (2 to start)

As dictated by demand and operational maturity, [Founder] will consider hiring the following personnel:

  • Receptionists [Number]
  • Assistant Store Manager

 

IX. Financial Plan

Revenue and Cost Drivers

[Company Name]’s revenues will come primarily from the services rendered and secondarily from the sale of beauty care products.

As with most services, labor expenses are the key cost drivers for spas. Specialists are paid through a combination of salaries and commission, rewarding them for performance and making specialists an active part in business retention and development.

The major cost drivers for the company’s operation will consist of:

  • Commission paid to specialists on a per-service basis
  • Salaries
  • Lease

Moreover, ongoing marketing expenditures and cost of good sold expenses are also notable cost drivers for [Company Name].

Capital Requirements and Use of Funds

[Company Name] is seeking total funding of $265,000 of debt capital to launch its store. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses and working capital.

Specifically, these funds will be used as follows:

  • Store design/build: $135,000
  • Working capital: $130,000 to pay for marketing, salaries, and lease costs until [Company Name] is cash-flow positive

Key Assumptions & Forecasts

The following table reflects the key revenue and cost assumptions made in the financial model.

Number of customers per dayPer location
Year 126
Year 229
Year 332
Year 436
Year 541
Pedicure$35
Facial$60
Massage$80
Product Sales$20
Annual Rent$90,000

5 Year Annual Income Statement

Year 1Year 2Year 3Year 4Year 5
Revenues
Product/Service A$151,200 $333,396 $367,569 $405,245 $446,783
Product/Service B$100,800 $222,264 $245,046 $270,163 $297,855
Total Revenues$252,000 $555,660 $612,615 $675,408 $744,638
Expenses & Costs
Cost of goods sold$57,960 $122,245 $122,523 $128,328 $134,035
Lease$60,000 $61,500 $63,038 $64,613 $66,229
Marketing$20,000 $25,000 $25,000 $25,000 $25,000
Salaries$133,890 $204,030 $224,943 $236,190 $248,000
Other Expenses$3,500 $4,000 $4,500 $5,000 $5,500
Total Expenses & Costs$271,850 $412,775 $435,504 $454,131 $473,263
EBITDA($19,850)$142,885 $177,112 $221,277 $271,374
Depreciation$36,960 $36,960 $36,960 $36,960 $36,960
EBIT($56,810)$105,925 $140,152 $184,317 $234,414
Interest$23,621 $20,668 $17,716 $14,763 $11,810
PRE-TAX INCOME($80,431)$85,257 $122,436 $169,554 $222,604
Net Operating Loss($80,431)($80,431)$0$0$0
Income Tax Expense$0$1,689 $42,853 $59,344 $77,911
NET INCOME($80,431)$83,568 $79,583 $110,210 $144,693
Net Profit Margin (%)-15.00%13.00%16.30%19.40%

5 Year Annual Balance Sheet

Year 1Year 2Year 3Year 4Year 5
ASSETS
Cash$16,710 $90,188 $158,957 $258,570 $392,389
Accounts receivable$0$0$0$0$0
Inventory$21,000 $23,153 $25,526 $28,142 $31,027
Total Current Assets$37,710 $113,340 $184,482 $286,712 $423,416
Fixed assets$246,450 $246,450 $246,450 $246,450 $246,450
Depreciation$36,960 $73,920 $110,880 $147,840 $184,800
Net fixed assets$209,490 $172,530 $135,570 $98,610 $61,650
TOTAL ASSETS$247,200 $285,870 $320,052 $385,322 $485,066
LIABILITIES & EQUITY
Debt$317,971 $272,546 $227,122 $181,698 $136,273
Accounts payable$9,660 $10,187 $10,210 $10,694 $11,170
Total Liabilities$327,631 $282,733 $237,332 $192,391 $147,443
Share Capital$0$0$0$0$0
Retained earnings($80,431)$3,137 $82,720 $192,930 $337,623
Total Equity($80,431)$3,137 $82,720 $192,930 $337,623
TOTAL LIABILITIES & EQUITY$247,200 $285,870 $320,052 $385,322 $485,066

5 Year Annual Cash Flow Statement

Year 1Year 2Year 3Year 4Year 5
CASH FLOW FROM OPERATIONS
Net Income (Loss)($80,431)$83,568 $79,583 $110,210 $144,693
Change in working capital($11,340)($1,625)($2,350)($2,133)($2,409)
Depreciation$36,960 $36,960 $36,960 $36,960 $36,960
Net Cash Flow from Operations($54,811)$118,902 $114,193 $145,037 $179,244
CASH FLOW FROM INVESTMENTS
Investment($246,450)$0$0$0$0
Net Cash Flow from Investments($246,450)$0$0$0$0
CASH FLOW FROM FINANCING
Cash from equity$0$0$0$0$0
Cash from debt$317,971 ($45,424)($45,424)($45,424)($45,424)
Net Cash Flow from Financing$317,971 ($45,424)($45,424)($45,424)($45,424)
SUMMARY
Net Cash Flow$16,710 $73,478 $68,769 $99,613 $133,819
Cash at Beginning of Period$0$16,710 $90,188 $158,957 $258,570
Cash at End of Period$16,710 $90,188 $158,957 $258,570 $392,389
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