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Live Spa Staff Training

Spa Startups: They’re ba-aack!

The recession may have battered the spa industry and shut down many facilities, but we’re finally seeing a resurgence in startups–many of whom aren’t even using the “S” word (that would be “spa”) to describe themselves. “Wellness” is a watchword for many of these next-generation businesses, but other trends inspiring spa entrepreneurs include co-working and organic lifestyles.

Few would-be spa owners understand just how much capital they’ll need to invest to get their new spa up and running–and to nurture it through its first 18 months, the critical make-or-break period. The pressure from competition is usually underestimated in new spa business plans, and these businesses can crash quickly if spa entrepreneurs are over-optimistic and under-funded.

At the high end of the market, spa guests are seeking a new approach to luxury that’s based on authentic experiences rather than over-the-top opulence. That doesn’t always translate into a strong demand for esoteric services, though. The services that guests say that they are interested in and the ones that they actually purchase (especially on a regular basis) can be very different. Creating an appealing but unique menu is a must. It’s expensive to educate the marketplace.

Whether they’re in an urban setting or a remote one, one of the biggest impediments to new spas’ growth is finding enough talented therapists. A solid in-house training program is critical to success in every market. Not only does it improve therapist quality, it aids in employee retention: spa workers value education very highly. Lower employee turnover pays off big in customer satisfaction and pure bottom-line profit.

While there are still spas for sale–a great way to fast track a startup and reduce project cost–many of them are not listed with business brokers and identifying them can take a special approach. Sometimes a would-be spa developer is too deeply in love with their particular vision to recognize a fabulous opportunity in a distressed business. Differentiating a “distressed” business  from a “toxic” one is critical.

To help this wave of entrepreneurs avoid the pitfalls of developing a spa or wellness business, a new one-day Spa Startup Workshop is being offered on Saturday, October 3, immediately prior to the Wynne Business Spa Director’s Management Intensive (October 4-6) in Philadelphia’s Historic District.

For more information about the seminars, visit our management seminars page or call 610.368.6660.

Tuition details, including earlybird and multiple registrant discounts.

 

 

 

Discovering The Heartbeat Of Your Small Business

Discovering the heartbeat of your small business

Most companies today recognize the need to articulate their core values. Core values provide the compass that guides the business. While business strategies should constantly be evolving, core values, like true North, don’t change. In stormy times of stress and change (hello!) Core Values provide a secure anchor. They can remind us of who we are when we are considering compromising our principles. They can help us focus on what’s truly important. They can help us make decisions and set priorities. They can be used as a touchstone when coaching an employee and a measuring stick when hiring a new team member.

But where do Core Values come from? Jim Collins is one of the world’s experts on the importance of core values in organizations, having researched them extensively for his books “Good to Great” and “Built to Last.” He writes “… you cannot “set” organizational values, you can only discover them. Nor can you “install” new core values into people. Core values are not something people “buy in” to. People must be predisposed to holding them. Executives often ask me, “How do we get people to share our core values?” You don’t. Instead, the task is to find people who are already predisposed to sharing your core values. You must attract and then retain these people and let those who aren’t predisposed to sharing your core values go elsewhere. I’ve never encountered an organization, even a global organization composed of people from widely diverse cultures, that could not identify a set of shared values. The key is to start with the individual and proceed to the organization…”

Who should create your core values? Management teams or owners usually initiate the process of clarifying and identifying values, but as Collins points out, this can’t be a top-down activity. If Core Values are simply handed out to the team, they are often ignored or even ridiculed as more silly management-speak, or worse. (As the cynical Dilbert proclaims, “values are a type of emotional illusion common to children, idiots and non-engineers.”) Identifying Core Values is a process of discovery, and for that process to be relevant and resonant in the lives of your team members, it needs to involve as many of them as possible.  Agreeing upon your most cherished Core Values is a ritual that, when properly facilitated, can bring all an organization’s members closer together. Articulating core values is not simply an exercise in word-smithing. Word-smithing is important, but it actually comes last.

How do you identify core values? We like to compare the process of identifying and articulating an organization’s values to diamond mining:

  1. We collect a lot of ore, filled with rough diamonds
  2. Together, we sift through the ore and carefully select the best gems
  3. We polish and cut the best gems
  4. We proudly set and “wear” our gems

How many Core Values are enough? Good management is a lot like parenting, according to business “growth guru” Verne Harnish of Gazelles (gazelles.com).  He says, “have a handful of rules and repeat yourself a lot.” That “handful of rules” are your Core Values. Three to five concepts is more than enough for people to remember.

 What if I don’t like the Values my team comes up with? It’s extremely rare to have the Core Values process deliver Values that are different from yours. Why? The people in your company ultimately reflect and agree with your true Core Values—that’s why they’re there. One important reason to work with a facilitator in this exercise is to ensure healthy balance in the Values. For example, when you talk about Core Values with your team, especially teams from hospitality and helping professions, expect the conversation to get fairly animated. Teams that deliver intensive customer service are highly interdependent. Positive interpersonal relationships are crucial to their happiness. Their values tend to focus on interpersonal relationships with one another.

The facilitator ensures that all stakeholders are strongly supported by at least one of the Core Values: employees, customers, and ownership all have slightly different needs and agendas. The “kumbaya” values of your team may not acknowledge the necessity of making money, for example. An easy way to describe this is to think about the “three relationships” each team member experiences in the organization:

  1. Relationships with co-workers
  2. Relationships with customers
  3. Relationship with the business

Rather than establish these limitations at the beginning, we try to encourage a very unstructured discovery of personal values as they relate to work. Too many rules early in the process can restrict the free flow of conversation and ideas. Instead ask

  • What’s important to you at work?
  • Why do you work here?
  • What’s usually happening when you’re having fun at work?
  • What do you like most about your coworkers?
  • What do you like most/least about the organization?
  • What behavior do you think expresses a true professional?

If you’d like help articulating and capturing your company’s core values, we’d be happy to help. Contact us at consultants@wynnebusiness.com, subject: Core Values! And we’ll figure out if it’s something you can do yourself or if you might need to have your process facilitated by an expert. Either way, prepare to see your team in a whole new light. And prepare to keep that light burning bright for a long time!

Mastering Complaint Resolution And Service Recovery

WEBINAR: Mastering Complaint Resolution and Service Recovery

Registration has closed.  Below are the topics which were discussed. 
This training is Part 4 of the Spa Concierge Finishing School
and can be accessed on our Learning Academy page.

Join us  for this employee training session, co-presented by Lisa Starr and Peggy Wynne Borgman. We include time for your questions at the end of the presentation.

  • Are you confident in your employees’ ability to resolve guest complaints?
  • Do they know how to handle the inevitable issues that arise in a busy spa operation?
  • Are you certain that guests leave your spa satisfied?
  • When was the last time they received training in complaint resolution?

A great reputation has always been the best way to market a spa. But the internet has made superior customer service a crucial survival skill.

Web search is one of your top marketing modalities, and negative reviews can cost you thousands of dollars in lost revenue.

Our employee training webinar, “Moments of Truth: Mastering Complaint Resolution and Service Recovery” can give you a chance to economically and quickly get your team up to speed.

Don’t let another month pass without inoculating your front line team against mediocre customer service, and common errors.

“The road to success is paved with mistakes well handled,” said the founder of Neiman Marcus. This webinar is designed to enable your front desk team to manage the inevitable mistakes and mishaps of a busy spa operation, while strengthening customer relationships and improving customer service. The adrenaline-charged moment when an upset customer complains is a make-or-break event for your business. Make sure your team doesn’t hide their heads in the sand–ensure that they will ride to the rescue of your reputation!
Dowload for unlimited use within your business.

Agenda:
• Why your team must treat complaints as an opportunity
• 96% of your guests won’t complain; how to treat the 4% who do
• Using complaint resolution to improve relationships
• How online review sites have magnified the power of unhappy guests, and what to do about it
• Managing the “fight or flight” response when confronted by an upset customer
• The five steps to masterful complaint resolution
• Cultivating awareness: the ounce of preventation
• How to ask questions that get real answers from your guests
• Making it easy to complain
• How and when to apologize
• Helping the guest realize you’re “on their side”
• Avoiding the common mistakes of complaint resolution, including explaining, blame and scapegoating
• How to effectively manage a “venting” guest
• Techniques to improve your listening skills
• How to tell the difference between an upset and an abusive customer–and what to do about it
• Restoring a guest’s faith
• Making amends without giving away the store
• What most clients really want from “amends”
• The hidden danger in giving refunds too quickly
• What to do when your offer of amends is rejected by an upset guest
• How to prevent problems from recurring

Please check the Events and Learning Academy pages for our offered trainings.
Spa Directors Management Intensive

Spa Director’s Management Intensive 2011

 

If you own, manage, or plan to open or acquire a spa, this program is a must!

Presented by Lisa M. Starr and Peggy Wynne Borgman of Wynne Business Spa Consulting

 

If you’re already involved in spa operations, you’ll find solutions for your toughest management challenges. If you’re planning a facility, you’ll leave this program with a clear-cut strategy for business success. If you’re considering a career change or advancement into spa management, the Spa Director’s Management Program will put you miles ahead of the competition. This fast-paced, information-packed program is full of original, innovative but practical concepts that are actually at work in top spas. We work hard to make sure the days you spend with us are extremely rewarding. You’ll also take home our exclusive text, an incredible reference you’ll use again and again. This includes tools you’ll be able to put to use the day you return to work. You’ll have a chance to meet other spa industry professionals, a diverse group of people, from all over the world. Participants typically represent a variety of industries and greatly enrich the program with their input. You’ll create a support network that will prove invaluable as your business or career grows. The small size of the class ensures individual attention and maximum interaction.

Financial Management

  • Managing by the numbers: understanding financial statements
  • How productive is your spa? An accurate way to measure
  • Compensation Design: the key to profitability
  • Owner compensation: what’s fair?
  • Plugging the profit “leaks” in your spa operation
  • Discounting: is it right for your facility?
  • Staying out of trouble: proper accounting practices for spas
  • The raging gift market: taming the tiger

Marketing Mastery

  • “One-to-one” marketing: cheaper, better, faster
  • Customer retention: your best marketing tool
  • Calculating your actual cost of customer acquisition
  • A formula to instantly boost your sales by 33%
  • The power of PR: developing your media kit
  • Positioning your spa to survive intense competition
  • Essential components of great spa brochures

Successful Programs

  • Developing a compelling service program
  • Long-term programs: the new spa package
  • Programming for profit: which services to emphasize
  • Two key trends that must guide your program design
  • Staging spa experiences: the perils of packages
  • Workflow: managing its impact on quality and morale
  • Scheduling for maximum productivity.and quality

Leadership

  • Recruitment: effective strategies for hiring the best employees
  • Why the customer comes “second” in a successful spa
  • Why you’re doing everything yourself.and how to stop it!
  • Managing communications issues in your spa team
  • Why you can’t motivate your staff and what to do about it.
  • How to produce great staff meetings
  • Managing conflict between technical and support teams
  • Getting your support team to “think on their feet”

Quality Management

  • What customers value most: it may surprise you
  • How to manage quality in the “closed door” spa environment
  • The three essential ingredients of world class service
  • Training = quality: building your in-house program
  • How to instill a “quality” mindset in your entire team
  • Customer relations: resolving complaints
  • Comps, refunds and redo’s: how to use them wisely

Retail Success

  • Harnessing the awesome power of retail sales
  • Teaching spa therapists to sell
  • Tools and Techniques that support retail sales
  • Do you need a Home Care Consultant?
  • Creating a profitable retail mix
  • Retail Trends
  • The Spa Store: Visual Merchandising and Display
  • Mail order and online stores: Are you ready?

Seminar venue: The charming Inn at Saratoga, along the banks of Saratoga Creek in the historic village of Saratoga. Nestled in the foothills of the Santa Cruz mountains, the Inn at Saratoga is a peaceful Silicon Valley hideaway. Just 20 minutes from San Jose International Airport (SJC) and 50 minutes from San Francisco International Airport (SFO).

If you would like this course offered LIVE in your location, please reach out to us at seminars@wynnebusiness.com

to discuss or access our online Spa Directors Management Intensive here.

Seven Steps To Abundant Sales And Stellar Customer Service

Mastering Complaint Resolution and Service Recovery

 

  • Are you confident in your employees’ ability to resolve guest complaints?
  • Do they know how to handle the inevitable issues that arise in a busy spa operation?
  • Are you certain that guests leave your spa satisfied?
  • When was the last time they received training in complaint resolution?

A great reputation has always been the best way to market a spa. But the internet has made superior customer service a crucial survival skill.

Web search is one of your top marketing modalities, and negative reviews can cost you thousands of dollars in lost revenue.

Our employee training, “Moments of Truth: Mastering Complaint Resolution and Service Recovery” can give you a chance to economically and quickly get your team up to speed.

Don’t let another month pass without inoculating your front-line team against mediocre customer service, and common errors.

“The road to success is paved with mistakes well handled,” said the founder of Neiman Marcus. This training is designed to enable your front desk team to manage the inevitable mistakes and mishaps of a busy spa operation, while strengthening customer relationships and improving customer service. The adrenaline-charged moment when an upset customer complains is a make-or-break event for your business. Make sure your team doesn’t hide their heads in the sand–ensure that they will ride to the rescue of your reputation!

Agenda:
• Why your team must treat complaints as an opportunity
• 96% of your guests won’t complain; how to treat the 4% who do
• Using complaint resolution to improve relationships
• How online review sites have magnified the power of unhappy guests, and what to do about it
• Managing the “fight or flight” response when confronted by an upset customer
• The five steps to masterful complaint resolution
• Cultivating awareness: the ounce of prevention
• How to ask questions that get real answers from your guests
• Making it easy to complain
• How and when to apologize
• Helping the guest realize you’re “on their side”
• Avoiding the common mistakes of complaint resolution, including explaining, blame and scapegoating
• How to effectively manage a “venting” guest
• Techniques to improve your listening skills
• How to tell the difference between an upset and an abusive customer–and what to do about it
• Restoring a guest’s faith
• Making amends without giving away the store
• What most clients really want from “amends”
• The hidden danger in giving refunds too quickly
• What to do when your offer of amends is rejected by an upset guest
• How to prevent problems from recurring

Visit our Learning Academy and click on “Spa Concierge Finishing School“. The 4th unit in this online class will help you tackle these challenges.

Spa For Sale

Is that spa for sale really worth its price?

It’s a sign of the times. There are lots of distressed spas on the market right now. Many of these spas look like real bargains, selling for pennies on the dollar of their replacement cost. How is a potential buyer to know what the business is really worth?

Valuing a business is both a science and an art. The science includes the valuation formulas that are typically used. One valuation formula is “multiple of earnings.” Earnings include net profit, but it’s typically adjusted upward with “add backs,” things the business owner has written off that are primarily for their personal benefit, such as their salary, a car or business-with-pleasure travel expenses.

The art? That’s the value of the business relative to the buyer’s opportunities. Strategic value is just one of these considerations. For example, if you already own a spa and you’re considering the purchase of a second spa in a nearby town to expand your brand, and you can leverage an existing back office, that business may have more value to you than to the buyer who’s starting from scratch.

Is the seller using a business broker? If so, the “book,” or sales documents for the spa, should be filled with important data that will help you assess its real worth. There’s also a lot of fluff in there, but the numbers are the most important.

The financial statements should tell you much of what you need to know–that is, if they’re in good shape. A spa that’s for sale is probably losing money, so expect to see that reflected in the profit and loss statements. If things look too rosy, ask to see a P & L that has not been recast for the sales package, so you can understand what the add-backs are quickly. (The business broker should have this information at his or her fingertips anyhow.) We want to know what the spa has really been doing in the last year. Previous years were probably better–but that’s not terribly relevant these days.

Once the add backs have been calculated, you might see a small profit. Here’s the sad news for that seller, and for you as the future owner: spas generally sell for 2-3 times earnings (profits.) My brother-in-law, who’s in biotech, on the other hand, can sell his company for 18 times earnings. Spas and salons (and most personal services businesses) are at the low end of the scale when it comes to valuation.

That’s right; a salon with a net operating profit of $50,000 may sell for $100,000, but a biotech company with the same earnings could fetch $900,000.

It’s not just our low profit margins that dampens value, but the flighty nature of our workforce. Plenty of spas and salons that are sold lose a substantial number of their service providers. Spa and salon employees spook easily, often not waiting around to see if a new owner will actually improve things. As we know all too well, even the loss of one good employee with a strong following can mean a substantial drop in revenue, as clients follow them elsewhere.

Of course, it’s not just profit, but the balance sheet, that will determine the valuation of the business. The business is worth less if its assets are outweighed by its liabilities. One potential source of liability is unredeemed gift certificate/gift cards. You must be confident that the documentation of this liability is complete–and it often isn’t.

If you are simply purchasing the assets of the spa (an Asset Purchase), such as its lease and its equipment, and don’t plan to use the business name, you don’t have to assume its liabilities, including gift liability. Even so, it may be a good marketing idea to redeem gift liability in part or in full, on a voluntary basis and for a limited term. The value of the goodwill generated will probably exceed the hard cost of redemption.

You may be looking at a spa whose earnings with addbacks are $50,000 and using a multiple of 2x to give it a value of $100,000. But their gift certificate liability is $200,000. Here’s where “art” comes in, again–how do you determine the real liability there, since we know not all gifts will be redeemed? This is where a spa management consultant can help–looking at historic trends, aging of the gifts, etc., to produce a realistic number. Maybe that number is closer to $80,000, and you’ll only end up spending $40,000 in payroll and backbar supplies to service that $200,000 liability.  If you want to use the spa’s trade name, you’ll pay for this. But an asset purchase, where you wipe the brand slate clean, can eliminate the liability. Will changing names and rebranding the business cost you more than $40,000, in hard costs and lost business?

As well, you need to know the laws about gift certificate expiration in your state. Some spas pay tax on their gift revenues as they come in (the most prudent and IRS-favored approach); others wait and pay taxes as those gift certificates are redeemed (setting a spa up for an ever-growing tax liability.) If you want to sell your business and you’re in the latter camp, a buyer will have to consider this.

In California, the value of unredeemed gift cards can be converted from a liability to income after three years of dormancy. By law, the gift cards don’t expire, and you still have to honor them, but at least you can get it off your balance sheet.

We’re even aware of spas being “sold” for the price of assuming gift liability and a lease–no money is being exchanged in some of these deals. Landlords who are desperate to avoid vacancies in their shopping center real estate (which depresses rents and makes any other space less desirable) are sometimes willing to provide free rent–we’ve seen periods up to one year.

The decision to retain the spa’s existing name and branding is one to approach carefully. Look at online review sites to get a sense of how well the spa is managing its customer relations. It’s usually not possible to interview employees, but sometimes key management employees are privy to an owner’s decision to sell.

Reputations are on vivid display online, though you do have to take ratings with a grain of salt, since most review sites skew to the negative. Yelp, most notably, will “age out” positive reviews posted by people who write no other Yelp reviews, after just 90 days. Google aggregates reviews from different sites, providing a cross section. Some spas ignore online review sites, like Yelp–to their peril. If you think the spa’s name is “radioactive,” then don’t hesitate to rebrand. If the spa is established, with a reputation that’s slightly tarnished, an aggressive “under new ownership” marketing campaign, followed up with real improvements, may work the needed magic. Keep all of this in mind when thinking about how much you’re willing to spend on a spa.

This is merely an introduction to some important fundamentals of valuing a spa for sale, but it’s far from comprehensive. It’s essential to get help from a reputable business broker experienced in the sale of small businesses, and doubly so if the sellers are not using a broker themselves.

Owners are often emotional about selling, and probably under a lot of stress. It’s helpful to have a cool, collected third party between you and them. The first notion a seller needs to discard if they’re serious is the idea that they should be able to “get their money out of” a failing spa. It’s not going to happen–but you don’t want to be the one who gives them the reality check.

Next time: financing the purchase of a spa

Outside Is In

Outside is In

I was doing a hardhat tour of a new spa in the wine country yesterday, one we did the space plan for at the soon-to-reopen Hotel Yountville. (Yes, the teeny Napa Valley town whose restaurants are famed for possessing more Michelin Stars than most major cities.) I remember being a bit challenged by the dimensions of the floor plate as I was working on the design a year ago. But as I walked through it yesterday, I was delighted by what I saw.

Interior architect Lisa Holt of DLS Hotels, our client, did an impressive job of creating a light-filled, airy and charming interior as she took my design from two to three dimensions. Lisa has been an enthusiastic spa visitor and has actually owned and operated a small luxury hotel and spa with her husband and DLS partner David Shapiro.

Fortunately, one direction we could go was up. Lofty ceilings and spectacular, tall treatment room doors create a slightly Alice-in-Wonderland feeling.

In the wine country, the last place I want to be is a cave (unless it’s filled with champagne.) Lisa brought the outside in with extensive use of tall windows, repeating the elegant rhythms of the doors, and we designed small private garden sitting areas off each treatment room. Bringing the outside in takes a small footprint and helps it to live large. The wet areas of the spa give onto a lounging pool, extending the spa experience effortlessly outside.

Being able to get outside while at the spa is a real luxury, and even a little bit of outdoor space can enhance the guest experience dramatically. I know that I’m willing to spend more time at a spa when I can be outside sometime during my visit. Resorts usually get this right and plan for it from the outset, though I’m often surprised at how catacomb-y spa designs can be and cut off from the outside.

Outdoor space is not always an option, especially for day spas in retail settings. But sometimes an opportunity is right under our nose, in the form of ugly-duckling outdoor space that has become invisible to us through its very familiarity. It’s hard to look objectively at your own space, especially if you’ve been in it a long time, so sometimes it’s worth consulting with a designer to see what they “see.” One of my favorite publications for inspiration for small outdoor spaces is Sunset. They have a long tradition of outdoor makeovers that are simple, clever and inexpensive.

A few years ago we turned some found space on a second floor balcony at Preston Wynne Spa and turned it into a cabana-curtained loggia replete with cushy furnishings, outdoor rugs, and a private pedicure area for al fresco treatments. Five feet wide and thirty feet long, it was not useful for much of anything and surfaced with a very unattractive waterproofing seal. We added decking panels that sat atop the surface to create a more attractive foundation, and a fountain to muffle outside noise, as well as lush planter boxes (these also helped create more privacy.) With some soft goods (which are easy to refresh each year) it has become one of the most popular features of our spa.

Bonnie Waters at Changes Spa and Salon in Walnut Creek, California, found an unloved easement between a parking lot and the side of her building, a plain little patch of tanbark and forlorn shrubs. She convinced the building owner to allow her to use the space, which had no other purpose, and developed it as a charming outdoor terrace for her spa’s newly expanded retail and party room, screening it from the parking lot with landscaping. Because she couldn’t make permanent changes to the easement, she used decomposed granite with pavers set into the soil, rather than mortar.

Probably the best example of enhancing the guest experience with “found” outdoor space is at Osmosis Spa Sanctuary in Freestone, California. After years of operation as a landmark day spa specializing in Japanese enzyme baths, Michael Stusser, the visionary owner of Osmosis, carved a spectacular and authentic Japanese garden from a patch of creekside brush. This work of art is now the highlight of any visit to the spa and has created a remarkable identity for Osmosis.

I’m looking forward to experiencing the new spa at Hotel Yountville, inside and out, after our opening during Harvest season. Spas at their best reconnect us to nature and a more natural way of being. Outdoor space is often more than a sum of the parts; it’s always a great value-add.