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What Is the Pulse of Our Business Today?

What is the current pulse of our businesses? A while ago, I said that we are in stabilize and sustain mode. Then we had a great 2021. Between PPP and the pandemic feeling somewhat under control, we felt like we were poised to ride the rocket ship to new levels of success. And then came Omicron, the great resignation, and now Omicron the sequel, and the sequel to the sequel. To say we are living in anything but a completely fluid business environment, would be a lie. We have seen more changes that drastically affected our businesses in the past two years than we ever have. So, how are we coping?


We are growing (sort of), but we have issues. Medical Spa clientele have the money and are flocking to our wellness businesses. Medical Spas are doing great with the exception that the device manufacturers have raised their prices and oversold certain devices in many markets making the competition fierce. Product vendors have their own supply chain issues and have raised prices as well. This forces us as operators to make the difficult decision of whether to raise our prices or not. How do I control my professional product costs? This is a challenge right now. It is now more important than ever to understand what the cost of services for your top 20% most popular services should be. Run some “What-if?” scenarios to measure the impact of a potential 10% increase in consumables/backbar. Calculate your breakeven so you know how many services you need to do in order not lose money. When you have the current and “What-if”? gross margins, you have the tools to determine if raising prices makes sense and does not hurt you competitively.

Physicians continue to enter the field, and there are several companies around the country that are acquiring and building MedSpas in hyper-growth mode. Although physicians are entering the field, they really are not great business people and do not really understand hospitality the way that Day Spa operators do. Day Spas are busy and booked, but are operating well below capacity because of staff shortages.


Staffing is our biggest issue. We could do more business if we had more people. My business is not immune to this as well. We go through screening, interviewing, and background checking. Compensation is negotiated, employment agreements are signed, training begins. Things are looking up! We start assigning work and getting them to work independently and SURPRISE! We receive notice as this spectacular new employee is moving on and taking another position. Sound familiar? I feel your pain.


We are getting qualified applicants for Medical Spa Practitioners and Day Spa Estheticians. Front Desk and Massage Therapists are a different story. It appears industry wide, we are losing people in key management positions as well. Call it change of life, home-schooling uncertainty, a need to be closer to family, grass-is-always-greener, or life-is-too-short mentality. Staffing is difficult. Employees are deciding, undeciding, and are in the driver’s seat. Managing them is more difficult than it has been, and we feel like we are walking on eggshells.


PAs and RNs are being paid a handsome salary or hourly rate and are receiving bonuses based on percentages of the revenues they generate. These bonuses are structured in such a way that they cannot be considered fee splitting. Signing bonuses are becoming more prevalent. If you are going to pay these, make sure to pro-rate them every quarter so that you ensure that that employee sticks around. Hourly rates are going up. We are finding that in Medical Spas, our direct labor is increasing in cost from 15% to 20% in many markets. In Day Spas, our direct labor is increasing to about 40%. Hopefully, this will settle back down as our economy settles down.


Client retention and re-booking is essential. Whose clients are they really? Shouldn’t we be able to protect our business when therapists or providers leave? With what sometimes feel like a revolving door due to staff accepting other employment, spas must clearly define at the onset that the clientele and guests are and will remain an asset of the business. If the employee leaves, they must know that there will be consequences if they pirate (steal) away our spa’s clientele to their next employer.


Are there any massage therapists out there? Well, the schools that are left are doing well. Some of the big ones did not survive post-Covid. Oh, by the way, massage schools are currently encouraging their graduates to open their own businesses rather than work for someone else. Many spas are starting their own licensed schools to train and develop their future staff. Several spas are utilizing recruiters and agencies to fill out their schedules.


Questions come up as to whether with the limited capacity, spas should continue selling packages and gift certificates. Yes, and yes. This current situation will pass. I wish I could tell you when, but it will pass. Keep managing your business the same in these challenging times as you would in less challenging times.


Review and raise what you pay your staff as you see it is warranted. Do this pro-actively, before they come to you and say that the spa down the street is offering them a position with higher pay.


I know that many of you feel that you are working harder and making less money. To a certain extent, this is true. Nonetheless, do not make rash or spontaneous decisions. The plans you make now and in the near future, may cost you more in the short run; but they will help stabilize your wellness business and give you the foundation to move forward and be sustainable. Stay ahead of the game.


We can get through this, and just need to weather our current economy. Hang in there! As always, we are here to help, and the first call is always free.