Start a day spa by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your day spa. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a day spa?
The cost of opening a day spa business depends on the type of day spa you want to open. A business license is required for opening any business, and some types of day spas require additional licenses and/or certifications. A number of day spa owners now provide mobile services to their clients, which means less monthly overhead for space rent. Many day spa owners also rent part of their space to independent contractors with their own equipment. In addition to space rent and the purchase of equipment and initial product inventory, creating the necessary ambiance for this type of business requires an additional $500 to $3000 for layout, design, and decoration. The Small Business Association offers many resources, including information on types of loans.
Read our day spa purchasing guide to learn about the materials and equipment you'll need to start a day spa, how much to budget, and where to make purchases.
What are the ongoing expenses for a day spa?
- The cost of liability insurance (approximately $250 annually)
- Maintenance of equipment
- Space rent in commercial areas averages approximately $1.00 per square foot, but in larger metropolitan areas it can be as high as $2.50 or more. While a small in-home day spa can be operated with 300-500 feet, most day spas require 1000-2000 square feet or more. Parking space is also an important consideration.
- Beauty supplies such as oils, lotions, facial masks, etc.
Who is the target market?
Preferred customers are those who are enthusiastic about relaxation and holistic health practices and have sufficient funds to invest in health and wellness products and services. These customers will view your spa as both a necessary resource for rejuvenation and a special treat to occupy a day of leisure.
How does a day spa make money?
A day spa business makes money by charging customers for a variety of personal care products, treatments, and services. Products are purchased wholesale in quantity and resold at retail value. Services are priced at an hourly rate above that charged by the provider. Day spa businesses also make money by renting space to independent contractors that provide additional services.
How much can you charge customers?
Massage services are commonly priced in half hour increments with an hourly cost of between $65 and $85 dollars per hour. 55% of the service price commonly goes to the service provider. The cost of a pedicure can range from between $20 to $65. The cost of a facial can range from $50 to over $250, depending on the type of ingredients used and the length of time required. Most day spas offer a continuously changing variety of service packages that provide their customers with the opportunity to spend an entire day being pampered. For example, a $150 package may include a facial, a manicure, and a half-hour of therapeutic massage. Overall pricing fluctuates according to changes in the national and local economies, so it’s a good idea to research competitor’s prices regularly.
How much profit can a day spa make?
The average annual earnings of day spa owners is between $35,000 and $120,000. Small day spas can earn up to $100,000, while large spas offering more expensive equipment and services, such as hydrotherapy, saunas and mud baths, can earn much more.
How can you make your business more profitable?
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A good business plan can help increase your profit margin. Selling retail products that help define and reinforce your spa’s image can also generate significant income. Nutritional supplements and other health and beauty-related products should be arranged attractively in the reception area. Products such as water bottles with your spa’s name, logo, or slogan can provide inexpensive advertising as well as generate additional revenue. Networking with other service providers within the self-care industry, such as acupuncturists or reflexologists, will enable you to offer your customers a wider variety of services. Expanding your customer base can help attract a greater number of customers with differing needs.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your day spa is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a day spa. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
If your facility features spa pools, you will likely need to be licensed by your state’s Department of Environmental Quality. For instance, Michigan’s DEQ extensively regulates recreational pools.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply. For more information:
- Check with your town, city or county clerk’s office for information about local permits and licenses
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
Release of Liability
You may also want to require clients to sign a waiver in order to avoid liability and potential lawsuits. Here is an example of a sample release form.
Recommended: Rocket Lawyer makes it easy to create a professional release of liability form for your spa business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
Depending on the kind of treatments offered and the location of your business, you may be required to obtain a cosmetology license or similar certification.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a day spa
A website with a home page and pages for services, staff profiles, special offers, and contact information is a must. Most people choose and schedule day spa services online, many from their smart phones. Membership in professional associations is a great way to network with others in the industry while building a solid reputation within the wider community. Offering gift cards to local charities is another good way to highlight your spa’s positive contributions to both individuals and the community.
How to keep customers coming back
In this business, creating an environment that is clean, safe, comfortable and relaxing is an important first step in attracting customers. Maintaining that environment requires good planning and a good cleaning crew. Offering special limited time promotions through Livingsocial or Groupon is also a good strategy. Research shows that marketing staff through employee biographies, personal connections and online recommendations results in stronger customer loyalty.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Day Spa In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This business is ideal for those who enjoy relating with people on a personal level to provide services that reduce stress, enhance beauty, and improve health.
What happens during a typical day at a day spa?
- Hiring and training staff
- Networking with professionally licensed service providers
- Researching new products and ordering supplies
- Developing and expanding a menu of services
- Advertising and creating sales promotions
What are some skills and experiences that will help you build a successful day spa?
- Interpersonal communication skills are essential for understanding and meeting customers’ needs
- Professional certification or license for cosmetology or massage
- A thorough understanding of all treatments offered
- The ability to educate staff and customers about new treatments and products
- Artistic design and decoration skills to create an attractive and inviting environment
What is the growth potential for a day spa?
Franchise opportunities exist for both large and small day spas. Additionally, it is possible to expand within a single location by offering additional services, hiring an outside professional such as a massage therapist, or undergoing construction to add private massage rooms, a sauna, or a pool.
Should you consider joining a franchise?
Joining a day spa franchise can be a good option for entrepreneurs who prefer to use a proven model rather than start from scratch. While joining one can mean slightly higher initial costs and less control, a quality franchise offers great benefits such as initial and ongoing support, marketing assistance, and brand recognition.
Opening a day spa franchise typically requires $120,000-$800,000. Larger day spa franchises typically cost more, while more niche favorites often have lower startup costs.
Interested in joining a day spa franchise? Check out our favorites.
TRUiC's YouTube Channel
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
How and when to build a team
It’s important to build a team of associates from the beginning of your business venture. The success of a day spa depends on both the quality and the quantity of services it offers. Having a network of professionals to refer your customers to for services your own spa doesn’t provide, and vice versa, is essential. To succeed, this type of business requires a delicate balance between competition and cooperation.
Read our day spa hiring guide to learn about the different roles a day spa typically fills, how much to budget for employee salaries, and how to build your team exactly how you want it.