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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on February 23, 2022
Investment range
$5,550 - $24,100
Revenue potential
$70,000 - $470,000 p.a.
Time to build
1 – 3 months
Profit potential
$55,000 - $90,000 p.a.
Industry trend
Growing
Commitment
Flexible
Pay attention to these important factors as you establish your spa business:
You May Also Wonder:
How profitable can a spa business be?
Spas, even mobile spas, can be very profitable. The average spa service is $75, so if you just do a few a day, you’re making good money.
What is the most profitable spa service?
The profitability of spa services can vary depending on factors such as location, target market, and pricing structure. However, services like massage therapy, facials, and body treatments tend to be popular and potentially profitable options in the spa industry.
What are the three most popular spa treatments?
The three most popular spa treatments are often considered to be massage therapy, facials, and manicures/pedicures. These services cater to relaxation, skincare, and overall well-being, and are commonly sought after by spa-goers.
How can I differentiate my spa business from competitors in the market?
To differentiate your spa business from competitors, you can focus on several strategies. This includes offering unique and specialized services that are not widely available in the market, such as signature treatments or customized experiences. Providing exceptional customer service, ensuring a tranquil and inviting ambiance, using high-quality products, offering personalized consultations and recommendations, and staying up-to-date with the latest trends and techniques in the industry can also help set your spa apart.
How can I ensure a relaxing and comfortable atmosphere for clients in my spa?
To ensure a relaxing and comfortable atmosphere for clients in your spa, you can take various steps. This includes creating soothing and aesthetically pleasing interiors with calming colors, soft lighting, and comfortable furniture. Playing relaxing music, using aromatherapy to enhance the ambiance, maintaining cleanliness and hygiene throughout the spa, providing cozy robes and slippers, and ensuring privacy during treatments are also essential.
Starting a spa has pros and cons to consider before deciding if it’s right for you.
Trends in the spa industry include:
Challenges in the spa industry include:
Starting a mobile spa service costs about $5,500, which includes building a website, massage and facial tables and other equipment, and a down payment on a vehicle to transport equipment. Starting a spa in a physical location will cost about $25,000 or more.
You should be licensed in the services that you want to offer, such as massage therapy and aesthetician services. Search Google Maps to find training schools near you. Keep in mind that licensing requirements vary by state.
You’ll need a handful of items to successfully launch your spa business, including:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150 - $200 | $175 |
| Business licenses and permits | $100 - $300 | $200 |
| Insurance | $100-$300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Space rental | $0 - $5,000 | $2,500 |
| Space preparation | $0 - $5,000 | $2,500 |
| Massage/facial tables and other equipment | $2,000 - $10,000 | $6,000 |
| Vehicle to transport tables and equipment - down payment | $2,000 - $0 | $1,000 |
| Total | $5,550 - $24,100 | $14,825 |
The average price of a spa visit is $75, and appointments generally last one hour. If you’re working as a mobile solopreneur, your costs will be limited to fuel and supplies like massage oil, so your profit margin should be about 80%.
In your first year or two, you could work from home and have three spa appointments per day, six days a week, bringing in about $70,000 in annual revenue. This would mean more than $55,000 in profit, assuming that 80% margin.
As your brand gains recognition, sales could climb to 20 appointments a day. At this stage, you’d rent a commercial space and hire staff, reducing your margin to around 20%. With annual revenue of nearly $470,000, you’d make a tidy profit of more than $90,000.
There are a few barriers to entry for a spa business. Your biggest challenges will be:
Now that you know what’s involved in starting a spa business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research spas in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a mobile facial business.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as massages.
This could jumpstart your word-of-mouth marketing and attract clients right away.
If you’re working by yourself, your services will depend on your licensing. Services might include:
The average spa service costs about $75 but prices vary based on the type of service. If you work by yourself as a mobile spa service, your costs will be limited to fuel and supplies. You should aim for a profit margin of 80% for a mobile spa, and 20% for a physical location.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will depend on whether you decide to offer services to men or women. Most spas are for women of all ages, so you should spread out your marketing to include sites like TikTok, Instagram, and Facebook.
Here’s what to consider when selecting the ideal location for your spa business:
Find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to spas.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your spa business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best option, other than friends and family, for funding a spa business. You might also try crowdfunding if you have an innovative concept.
Starting a spa business requires obtaining a number of licenses and permits from local, state, and federal governments.
You need to be licensed in the services you offer. Requirements vary by state. Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your spa business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as Salon Biz, wellyx, or vagaro, to manage your appointments, invoices, payroll, marketing, and payments.
Creating a website for your spa business is vital for attracting and retaining clients in today’s digital landscape. You can choose a DIY approach with user-friendly website builders, which offer customizable templates suitable for spas. Alternatively, hiring a professional web developer can provide a more unique and tailored online presence.
A well-designed website should be easy to navigate, visually appealing, and mobile-responsive, with clear information about your services, pricing, and easy booking options. Incorporating high-quality images and strategic Call to Actions (CTAs) like ‘Book Now’ or ‘Contact Us’ is crucial for user engagement.
Here are effective marketing strategies for someone starting a spa business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your spa meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your spa business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a spa, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in spas for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in spas. You’ll probably generate new customers or find companies with which you could establish a partnership.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a spa business include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Spa services are a treat that many people enjoy, and they’re also big business, making up a $17 billion industry. If you’re an aesthetician or massage therapist, you know how much pleasure and wellness benefits your skills can provide, so why not open your own spa and get a share of that huge market? You can start small but think big, and someday have a whole chain of spas.
You now have a good foundation of business savvy, so it’s time to start massaging your way to entrepreneurial success!
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