Pulse October 2023 | Page 45

members ; how to take care of your staff and recruit and retain talented team members ; and how to manage inventory and cost controls .
First Budget For existing spas , budgeting for the coming spa year includes a review of the KPIs that drive the business . Often , using the most recent year ’ s budget as a baseline and adding three to four percent growth is realistic and acceptable .
New spas have no such history , so a first budget needs to be created from scratch . Many variables are involved in creating your budget , including developing your service menu and pricing , which should be informed by market research that identifies the positioning of other spas in the same category as yours .
Start your budget creation by calculating realistic room and therapist utilization rates , based on the number of treatments your spa will offer . Instituting yield pricing during weekdays and weekends is advisable and should be accounted for in your budget , along with deciding what your spa ’ s hours of operation will be . To start , you may want to condense your open hours to one daily shift for more consistent talent availability as well as to maintain better control of your payroll ; extending hours is always possible once the business is better established and running profitably .
A pre-opening budget should include a well-detailed breakdown of expenses . Being organized with what you need will avoid unexpected post-opening expenses that could affect the cash flow of your operating budget . Smart planners add up to an additional five percent in the preopening budget as part of a contingency plan .
Some of the OS & E ( operating supplies and equipment ) expenses you should take into consideration in your pre-opening budget : l FF & Es : Working with architects and interior designers , you will decide on the best furniture ,
“ Knowing what to expect — by researching spa budget tools and operations before opening day — will help prepare you for the annual process of budgeting and the day-to-day actions necessary to avoid any unhappy financial surprises .”