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So What's Really Going On Out There?

So how are we supposed to interpret what is going on? In the past month, I've spoken with someone wanting to build a 44 acre wellness center, a multi-unit spa-lon operator who has sold one of her two operations and is now operating one profitably. I've also spoken with a new and growing hospital owned wellness center and two very successful multi-operation spas; one with ambitious growth plans, the other with a "hold for now" business plan. 

Then at a recent conference, I heard that Botox and nail polish may have been the cosmetics that did not miss a beat as far as sales were concerned during the recent recession, similar to red lipstick and nylon stockings in the 1929 Depression. I'm hearing that it is difficult to get spa service appointments at high end spas and that people are purchasing $100 dollar eye creams. So, am I seeing that the spas that cater to an exclusive clientele are not suffering but growing? Are we experiencing a growth in demand for high end services and prices? Are those who have the money spending it quietly so that those who are experiencing economic challenges can't see it?

Contradicting this appears to be the number of cosmetic surgeons and medical spas in urban markets who are promoting their services for Verona Laser and Medical Weight Loss programs on the coupon sites. Some higher end day spas are couponing, driving their prices down. Day Spa and Medical Spa operators who experienced a slight elation after the economy appeared to uptick may now have to compete more with price. Economic news in 2010 looked promising and we felt as though we were moving forward and were getting back on track. Many of the big development projects, previously on hold, broke ground. In 2011 things may have changed. So I ask. What is really going on out there?

A few real life stories: Someone built a 45,000 square foot fitness-wellness-lifestyle-nutrition Taj Mahal facility in the Southeast. It's closed now, and has been reincarnated as a YMCA. A closed spa in a Northeastern suburb (previously independently owned) was re-opened as a unit of a branded national spa. In another situation, a chain of salons closed down and some of their locations were acquired and re-opened by a local company. Bottom line? The experienced, savvy operators are picking their shots. They know that many phenomenal locations have been beautifully built out and, if they are prepared and it is part of their growth strategy, they can expand their company at a fraction of what it would have cost to build out a new facility. The big guys are doing okay and growing. That Taj Majal spa that has been vacant for a while may be a branded spa before you know it.

Recovering but not recovered. It appears as though the dark days of 2008-2009 are over. Spas are not closing at an alarming rate and those of us who have survived have experienced some growth and have become the new homes of the spa refugees left spa-less when their favorite palace of nirvana closed. We've re-focused on profitability. Many of my clients have experienced a profitable 2011 with sales flat or slightly down compared with 2010. Some are experiencing a sales increase over 2010. They've done this because they kept their eyes on the core. Certain numbers need to line up: Direct Costs, Direct Labor, Overhead Costs, Net Profit and Debt Service. The number that drives all of these percentages is Breakeven Sales. This is the number of services you need to do each and every day in order not to lose money. Do you know what your Breakeven Sales number is? It's not difficult to learn and I'd be happy to discuss it with you.

If you haven't planned your profitability for 2012, you probably won't be profitable. I will venture to say that if you find yourself profitable at the end of 2012 without a plan, consider yourself lucky. It usually doesn't happen that way. As I teach in every one of my presentations, you are completely capable of understanding your finances. This includes mapping out your profitability and goals on a roadmap that you can use as a check and balance each and every month of 2012.

If you are a multi-unit operator, I am assembling a business roundtable. Larger businesses have different needs and issues. Many have asked about me how others are doing. Well, let's find out and meet via a quarterly roundtable. We are seeking a group of operators to take part in a quarterly idea exchange. Network, learn, and discuss business issues with colleagues that will not be competitive with your business. There is strength in numbers and operators need to stick together. All participants will be from different geographic areas around the US. The information could be of great use to your business as well as the industry overall. If you'd like to participate please contact me.

If you would like some guidance preparing your Profit Plan for 2012, please give us a call. Now is the time, what are you waiting for? As always, the first call is free.

Our best wishes to you for a happy holiday season and a successful and profitable 2012. 

Call 888.727.5489 or e-mail us atMonte@WellnessCapital.com.

Upcoming Events: I'll be speaking at the following upcoming tradeshows:

March 4 and 5, 2012

The International Congress of Esthetics and Spa, Miami Beach

Miami Beach, Florida

March 11 and 12, 2012

Spa and Salon Expo

Las Vegas, Nevada 

May 6 and 7, 2012

The International Congress of Esthetics and Spa, Dallas

Dallas, Texas

June 9-11, 2012

International Esthetics Cosmetic and Spa Conference

Las Vegas, Nevada

September 9 and 10, 2012

The International Congress of Esthetics and Spa, Long Beach

Long Beach, California

October 28 and 29, 2012

The International Congress of Esthetics and Spa, Philadelphia

Philadelphia, Pennsylvania