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Spa Marketing Made Easy | Spa Business Growth
SMME #495 Why Your Spa Makes Money but You Don't
00:16:36
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This September makes a year since Kyle and I bought the farm.
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Now, I had this whole picture in
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my head when we signed on that place. It was going to be just like those perfect images that you see on Instagram. The picture perfect garden that grows enough food to feed your entire family. And of course, have our perfectly behaved chickens happily free ranging in the beautiful pasture with wildflowers kind of sprinkled throughout. Those chickens, not having to care in the world about any of the predators that might snatch them up. Now, I, of course, would suddenly have all the time in the world to make farm to table meals, my own bone broth, and even grow my own loofahs. And in this vision, I also was perfectly dressed, hair and makeup done, and on a good day, I even had the time to arrange fresh cut flowers from my garden all throughout my spotlessly clean house. Okay, sounds crazy in general because that's just not real life. But also because now that I'm one year in and I've learned the complexities of gardening, of how important the soil is, of what plants do well next to each other, how many bugs and bunnies and woodchucks want to eat every single thing that you've planted, and how expensive, expensive it is, Especially the first year that you're trying to figure everything out and just get that infrastructure in place. It is exactly like your first year in business. We have so many nurses and estheticians who've built these incredibly successful careers, and then they decided to go on their own. They had this romantic vision that they were going to have the time, freedom, and financial freedom that they desired. They were going to have this team that just worked so cohesively that their patients would flock to them. The minute that their doors opened and they go out and they start, they take action. And just like my first year on the farm, they realized it's really freaking hard. Now we are in our 12th year here at Attoesthetics. So while I remember that the first year was hard, it was also a really long time ago. Sort of like remembering the newborn stage when you have a 12 year old. You went through it, you know the intensity of it, but it's not the same as the exhaustion that so many of us feel in our bones during those years. Now, having this first year on the farm was such a great reminder for me and the lessons that we learn in business about how to move through that season. And that's exactly what I'm incorporating into the day to day at the farm now. My biggest lesson, systems equals freedom and Today we're going to be talking about a few systems and beliefs around profit. Hello, my dears. Daniella here, and welcome back to Spa Marketing Made Easy. If you feel like you could use a little more clarity around your profit, I want you to listen in. A full book looks like abundance from the outside. Booked out, busy, growing. But busy has never once ever told me whether something is actually working underneath. The inputs are still running. The consumables, the hours, the retail sitting unsold on the shelves. They don't just stop because the calendar looks good. Revenue is vanity. Profit is sanity. Now, I can't take credit for that. I did not come up with that line. But I have lived through enough seasons in this business to know exactly how true it is, and I'm currently living it with the farm. Now, our theme this month on the podcast is Profit Mastery, right alongside the August issue of Growth Factor magazine. And it is not about growing faster or booking more. It's about finally seeing what's true in the business that you already have, which services are actually making you money, what your real numbers say once you stop guessing what it would take for you to pay yourself first instead of just settling for whatever is left over. Okay, let me tell you where this really landed for me, because it wasn't a class, it wasn't a coach, it wasn't. It was a book. And I know that that book is what got me through. Covid Mike Michalowicz wrote Profit first, and the idea in it is totally simple. Every time money comes into the business, you split it into buckets before you touch it. Payroll, operations, taxes, profit. You pay yourself first out of that profit bucket on purpose before the rest of the month has a chance to spend it for you. For years, I could tell you what my business made. I could not tell you what I actually kept. I knew the amount that my bank account hovered at, you know, each month, but it was really hard for me to pay myself consistently with confidence because I just didn't have the clarity that I needed around my numbers. So revenue was the thing that I watched in the beginning, the thing that told me whether a month was good or bad, the thing that I was reporting to myself like a scoreboard. What I couldn't have told you for longer than I would like to admit was where the money actually went once it landed in the account. Payroll took a piece, taxes took a piece, that sometimes I wasn't prepared for whatever was left at the end. That's what I called profit. Except it usually wasn't profit. It was just what happened to survive everything else. I didn't fully trust the buckets until I could see them. And that's where a piece of software called ynab came in. You need a budget. Y, N, A B it let me watch those buckets fill in real time instead of guessing at them from memory. So I stopped getting surprised at tax season. I started knowing I was near a limit before I ever crossed it, instead of finding out three weeks later when the account was already thin. Now, the scary thing is that you can be fully booked, genuinely good at what you do, loved by your patients, and still quietly broke. It's not uncommon at all for us to have a spa owner doing seven figures or multi seven figures in revenue and is still struggling to know she'll be able to pay herself this month. It's not uncommon because these nurses and these estheticians, who again, are incredibly clinically competent, are putting all of their focus and attention to the care of the patient without looking at the numbers of what that actually costs. Now, I am in no way suggesting that patient care should not be a primary focus. I'm simply saying that for you as an entrepreneur, your focus has expanded and you have a duty to the business to keep it healthy and alive. Businesses need profit to function. Okay, so let's get specific because I want to leave you with some real numbers. There are three numbers that every spa CEO needs to see, and the first one may sting a little, but let's just walk through it.
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Okay?
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So most spa owners choose to market based on what they enjoy performing, not what the math actually says to push. So most of us build a menu. We lead we with what we love doing, and we assume that the profit follows the popularity. Now, one of our growth factor implementation students spent three years building her business around a service she loved. In the program, we do 16 one on one calls. In call two, we get really granular on the profitability of each service you offer. In call three, we build a financial dashboard for you. And one of the tabs in that dashboard, it actually calculates the amount of revenue your team needs to make in order for you to drop a day in the room without feeling the financial impact. And in call four, which is the call that I was on with this implementation student that I'm telling you about, we created this detailed plan to identify the critical number of a particular service that we need in order to hit that first milestone. So I opened up the spa capacity calculator, and she had no idea what she was about to see. Her practice had Been anchored for years around a facial line that ran 90 minutes long. It had a real consumable and payroll costs were quietly eating into the margin every single time. It was the thing that she led with in every piece of marketing that she put out. So the spa capacity calculator is this theoretical tool that we created that takes into consideration the number of treatment rooms you have, the hours of operation, payroll, consumable cost, et cetera. And it shows you that if you were only to focus on this service for the entire year, what the difference in profit would be. So we ran this cryofacial and then we ran the 90 minute facial. The 90 minute facial at full theoretical capacity topped out around $447,000 in profit potential. The 30 minute facial she had quietly stopped talking about that capped out at 1.2 million. She sat with that for a second and she said what most of us would say. I didn't realize it was such a huge difference. And I love the cryofacial too. And a minute later, the part that mattered more, she said, there is all my money going down the drain. Now that is the moment. That is the exact moment that I live for in a coaching call. Because it's not a failure. It's just information that she never had in front of her before. And now she has the tools to, to make that change. The longer facial isn't a bad service. It's still under menu. It's still right for the client who needs it. But for years she led with, marketed and trained her team around the service that took twice the time and makes less than half the money. And she never had the number side by side to see it. So we rebuilt her critical number around the 30 minute facial. Instead we just shift into that one. Shift goes into the huddle time goes into shelf talkers going goes into the client conversations. That's what is going to help her generate the profit in her business that she needs to live the life that she wants. Now I want you to run this on your own menu. This week, pick your two most book services, price, time, consumables, payroll. Same math on both. Whatever wins on paper is what deserves your marketing budget and your team's energy, not just the things you like doing most. Okay, so that's number one. Number two is where the money actually goes once you know which services actually make it. So once you know which services actually make money, the next question is whether any of that profit actually reaches you. Payroll, operations and taxes, they're always going to find a way to spend themselves Profit only survives if you decide ahead of time that a piece of every dollar belongs to you before anything else touches it. That is the whole mechanism behind profit first, not a bigger revenue number, a smaller number protected on purpose every single time money comes in. This is such an eye opening exercise because so many spot owners have thousands of dollars just sitting on their shelves because they never understood how much cost of goods affected their profit margin. And cash flow numbers are the language of your business and it is so vital for you as an entrepreneur, as a spa CEO, to get comfortable with them. Okay, and number three, the buckets only work if you can actually see them. Whatever tool you use, you know, ynab for me, your bookkeeper's dashboard, a plain spreadsheet. The goal is the same one that I got from watching my own buckets fill in real time. Knowing where you stand before you're already over, instead of finding out after what you charge, what it costs, what you keep. That's the whole of it. Not a bigger number on the books, a clearer picture of what is actually true. Okay, here's the belief that I wanna shift today because I think that this is sitting underneath a whole lot of other things in this episod. There is an association with corporate greed and profits that I think spills down into small business. And I think it subconsciously makes women feel bad or greedy or not focused on the impact that they want to make in their community. If they are focused on profits, that keeping more of what you make means that you care less about your clients or your team. That is untrue. Wanting profit does not make you the bad guy. The belief that wanting profit makes you the bad guy produces some of the most talented, hardest working women in this industry, running businesses that make just enough to survive because keeping more of it feels like greed instead of stewardship. Now here's what I've watched happen over and over again in this community. When a woman in SPA has money, she reinvests it into her team, into her community, into her family, in ways that ripple out further than her four walls ever could on their own. When she has both money and time, freedom, she gets to walk her kid to school, she gets to walk them to the bus stop on a Tuesday afternoon and still run a business that supports a team of employees who depend on her. She gets to live a both and lifestyle instead of choosing between the two. Your profit isn't just a number on a spreadsheet. It is what funds the version of you who has the bandwidth to be the CEO, the visionary, the leader instead of the person doing every single treatment in the building. And your team is watching what you do with money, not just what you say about it. You can write a mission statement about taking care of your people, but if you're scarce and short with your staff every single time a bill comes to you, that is the culture that you are building. No matter what a handbook says, profit protected on purpose is what lets you lead instead of just survive. Now remember, your schedule can be full, busy and admirable from the outside and it can still still be quietly costing you more than it's giving you back until you sit down and actually look. The business that survives isn't the one that looks the fullest from the outside. It is the one whose owner finally sat down and looked now, before I let you go, I'm going to shift gears here for a minute. I want to let you in on a little something that has been brewing behind the scenes. There is a change coming for this show later this year. I'm not ready to talk about it yet, but I want you to be the first to hear it from me before it's anywhere else. It is me stepping out of my comfort zone in the best way possible. So stay tuned for more details coming soon. Okay my dears, here is your assignment. I want you to pick your two most booked services, run the real math, the price, the time, the consumables, the payrolls before this week is out and send me a DM on Instagram or let us know via email. Tell me what you find. Action creates clarity. Don't just listen to this and nod along.
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Run the numbers.
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We are all rebuilding something right now. Whether it's a garden, a calendar, or the whole shape of how we pay ourselves. I am so, so excited for you to take this and do something with it and I'll catch you in the next episode.
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Quick reminder before you leave, if your spa growth still depends on you doing more, it's time for a shift. Watch the System Shift, a free training designed to help spa owners break past that 25 to $35,000 month plan plateau without adding more treatment hours. You'll learn the CEO level systems that help you scale while protecting your time, your values and your Peace. Go to grow.autoesthetics.com podcast and watch the systems shift. That's grow.autoesthetics.com Podcast.