If you want to start a spa business or expand your current spa, you need a business plan.
The following spa business plan template gives you the key elements to include in a winning spa business plan. It can be used to create a day spa business plan, or business plans for health and wellness spas, beauty spas and/or hotel spas.
[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:
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.).
[Company Name] is uniquely qualified to succeed due to the following reasons:
[Company Name] is currently seeking $260,000 to launch. Specifically, these funds will be used as follows:
Topline projections over the next five years are as follows:
| Financial Summary | Year 1 | Year 2 | Year 3 | Year 4 | Year 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 |
| PreTax 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% |
[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].
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:
Below are [Company Name]’sinitial service offerings and in-store products sold.
Specialists will be asked to perform the following services for both men and women:
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:
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.
[Company Name] will develop a 2,500 square foot store whose key elements will include the following:
Below please find a rough sketch of the floor plan:
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.
[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].
The market in which [Company Name] will compete is experiencing a number of different trends.
[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:
| Wilmette | Winnetka | |
|---|---|---|
| Total Population | 26,097 | 10,725 |
| Square Miles | 6.89 | 3.96 |
| Population Density | 3,789.20 | 2,710.80 |
| Population Male | 48.04% | 48.84% |
| Population Female | 51.96% | 51.16% |
| Target Population by Age Group | ||
| Age 18-24 | 3.68% | 3.52% |
| Age 25-34 | 5.22% | 4.50% |
| Age 35-44 | 13.80% | 13.91% |
| Age 45-54 | 18.09% | 18.22% |
| Target Population by Income | ||
| Income $50,000 to $74,999 | 11.16% | 6.00% |
| Income $75,000 to $99,999 | 10.91% | 4.41% |
| Income $100,000 to $124,999 | 9.07% | 6.40% |
| Income $125,000 to $149,999 | 9.95% | 8.02% |
| Income $150,000 to $199,999 | 12.20% | 11.11% |
| Income $200,000 and Over | 32.48% | 54.99% |
The Company will primarily target the following three customer segments:
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. Lux Facial 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:
Freddie’s Fast Day Spa
Freddie’s Fast Day Spais 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 beingteens between 13 and 18 years of age.
[Company Name] has several advantages over Freddy’s Fast Day Spa including:
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.
| Joe's | LUX | Freddy'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 |
[Company Name] enjoys several advantages over its competitors. These advantages include:
[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 will focus on the Company’s unique value proposition:
[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.
[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.
[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 up selling 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.
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:
| Date | Milestone |
|---|---|
| [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 |
[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:
As dictated by demand and operational maturity, [Founder] will consider hiring the following personnel:
[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:
Moreover, ongoing marketing expenditures and cost of good sold expenses are also notable cost drivers for [Company Name].
[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:
The following table reflects the key revenue and cost assumptions made in the financial model.
| Number of customers per day | Per location |
|---|---|
| Year 1 | 26 |
| Year 2 | 29 |
| Year 3 | 32 |
| Year 4 | 36 |
| Year 5 | 41 |
| Pedicure | $35 |
| Facial | $60 |
| Massage | $80 |
| Product Sales | $20 |
| Annual Rent | $90,000 |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 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 |
| PRETAX 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 1 | Year 2 | Year 3 | Year 4 | Year 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 1 | Year 2 | Year 3 | Year 4 | Year 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 |
