MONTE ZWANG’S BLOG FOR THE DSA

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Feeling better or just getting used to it? Time to draw a picture. The picture is entitled “What My Business Will Look Like One Year from Today”.

In this picture I want you to describe your guest. Who are they? How often do they come into your business? How old are they? Where do they live? Are you seeing them more, less or the same as last year? Why?

In this picture, I want you to indentify your competition. Who are they? Why are you comparable or competitive with them? What makes your business special, unique or different compared to them? How are they doing financially this year compared to last year? Why?

Now, look at your business. How many guests are your seeing each and every week? What services are they coming in for? Are you seeing the same guests your saw last year or are they different? Do they bring or recommend their friends? What about your pricing – higher or lower than last year?

Look at your direct costs. Labor specifically. What is it as a percentage of service and product sales? Including payroll taxes, is it less than 42%? What about product costs? Are professional product costs in line, or is your staff using what they think they need rather that what you have taught them to use? Is retail product cost marked up correctly and is it controlled or walking out the door?

Overhead has to be paid every month. Has rent been re-negotiated? What about your advertising and promotions plan? Hopefully it is appropriate for the scale of your business and effective. Don’t get me started on advertising.

So, this picture is now taking shape. You know your guest, your sales, your costs and profitability. We now have a road map, a vision and targets. I call this picture a budget.

Monte Zwang

Wellness Capital Management, Inc.

monte@wellnesscapital.com

www.wellnesscapital.com

MONTE ZWANG’S BLOG FOR THE DSA

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So, have you re-negotiated your lease yet?  Look around the center, mall or building in which your spa is located. Are there vacant spaces?  If so, contact a local real estate agent and find out how much they are asking for comparable spaces and what deals they are offering.  You may be shocked to learn that space is being offered at rates lower than you are currently paying. The market rent that existed when you signed your lease is not the market rate today.

Prepare a presentation for your landlord that argues your case for reduced rent. The bottom line is that you want to be here when this market turns around.  In the meantime, you need help.  Lowering your breakeven means lowering your overhead. Lowering your overhead means re-negotiating your single largest expense which is more than likely your rent.  Offer a minimum of $3.50 per square foot less than you are currently paying for the upcoming 24 months.  Cost of living increases?  Delete them; they are inappropriate in this market. This savings can either be forgiven or added on to the end of the lease in the form of additional months. You may consider offering a percentage of gross sales (service and product only) not to exceed 12% if it helps your cash flow and makes the deal work.  Get creative. While you are doing this, make the same presentation to your banker.  Nothing is off limits when it comes time to operate at a lower cost when it comes to overhead.

In this market, don’t be surprised if you are approached by a real estate broker offering a great deal on a guest-ready fully equipped business that may have recently closed.   This may be a sign of the times as well, but if you are prepared, may create a growth opportunity.

Monte Zwang

Wellness Capital Management, Inc.

monte@wellnesscapital.com

www.wellnesscapital.com

Monte Zwang’s Blog for DSA

zwang_monte1So, how is it going?  It’s the first week of March 2009, and today’s headlines included a positive day for the stock market.  Isn’t it interesting how we keep our awareness and consciousness open to that?  In the past we were oblivious.  The economy and the things which affected it were out there, and not something that affected us. Well, how do you feel now?

Are you finding extra knots and tension in your clients? Are you seeing them as often?  How has this “financial event” changed your business? There is no doubt the news and events of today’s economy are affecting your business in some way. It’s hard not to internalize, but it has been our responsibility as spa owners to let our businesses be sanctuaries for our clients; a place where they can escape from the hustle and stresses of the outside world. It has been our ability to “keep the world out” that has fostered our growth. This promises to be one of our greatest challenges today.

Financially speaking, now is a time for taking the offensive.  Knowing that economic events are affecting our clientele means that we need to be pro-active in dealing with our own financial future. Now is the time to re-negotiate everything – our lease, bank notes, credit cards, compensation plans, vendor minimums – everything. This year is a year we walk the high wire without a safety net. Every step must be placed carefully in front of the other slowly, cautiously and confidently.

Monte Zwang

Wellness Capital Management, Inc.

monte@wellnesscapital.com

www.wellnesscapital.com

What Makes a Real Entrepreneur?

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Recently I ran across a blog entry by The Educated Entrepreneur called “Are You a Failure?” It really caught my attention, so I wanted to share it with you. Here is a sample from the article.

Many of us live day by day without taking any risks, without looking for better circumstances, or without thinking for more than a few seconds on how we can find solutions for bettering our lives. Once our thinking gets to the seemingly uncomfortable zone of choice, we experience our own loud inner voice saying “Wait it might be hard!” or “It’s going to be difficult”, or “What will others think?” or “Will I be laughed at?”, or “Will I fail” or even worse “That’s not my job”, and consequently we decide to remain in our safe harbor of comfort, safety, complacency, and satisfaction. How many of us are guilty of this?

Click here to read the rest of the article.

Truly, spa owners are faced daily with difficult choices and challenges, often asking themselves the same questions the blog author mentions every time a new opportunity or challenge comes along. Some decide that they are ready to take action and make new choices despite their hesitations. But others decide to maintain the status quo and even their extreme dissatisfaction with the way things are (perhaps pricing or compensation plans that aren’t working, a product line that isn’t moving or even a staff member that is wreaking havoc on your business)just to avoid the pain of change.

Why? Because they’re afraid the new challenges that come with change could be even more difficult than what they are already facing. They might resist moving ahead – even if they are miserable with the way things are now – to avoid taking on the scary unknown. As we say here in the South, sometimes the devil you know is better than the devil you don’t. I can totally relate.

Then today I read the following quote by Henry Kravis …”A real entrepreneur is somebody who has no safety net underneath them.” And although I don’t completely agree with that statement, I think I understand it and can relate it to the other article somewhat.

To me what Kravis is saying is that to be in business for yourself is to be totally dependent on yourself and your own inner resources to keep things in your business moving forward. Yes it is true that you need a variety of tools, people, opportunities and clients to make any venture successful, but  I think what he is saying is that you have to be able to see and recognize all of those things in your midst and know how to utilize each and every one of them.

I also think he means that a “real entrepreneur” is someone who goes out on a limb taking real risks being fully aware that if he or she slips, the fall could be pretty painful. As a result that person is very incented to be resourceful, inventive and persistent in reaching goals they have set for themselves and the business. And they are willing to risk the possibilities of failure, disappointment or hard work (and accept the possibly glory) that may come from those daring changes.

To me the question here is what happens to the real entrepreneur if there is a fall? With no safety net, what does the business owner do if they do indeed plummet to the earth? Must they instead possess qualities like persistence, resiliency, flexibility, or perhaps just an ability to pick up the pieces and move on when they do crash? I think so.

In times like the ones we are facing right now, it is clear that almost every business owner out there including spa owners – as well as the people they employ – must think about these issues and determine their feelings about their own possible success and failures, about how they will deal with a fall or a set-back in their business and life. Many must make decisions and changes in their businesses that are scary and potentially difficult as well and be ready to handle everything that comes as a result.

I have spent a lot of time exploring these same ideas in the recent weeks, wondering what the future will hold and how my two companies will get through it all. I’ve examined my various roles, responsibilities, obligations and priorities to determine what courses of action I will take if events turn one way or another. It won’t all be pretty, I’m pretty sure

But I have come to the realization that no matter what happens with the economy, my employees or my businesses; I will come out just fine. I know I can always depend on myself and my own inner strength, gifts, talents and resources. And while I am a part of what is going on in my life and career but I am not in control of or responsible for everything that is going on. Most importantly, although I have a role in the insanity I’ve had to face in recent months, I am not insaneJ No matter what challenges you are facing in your life or business, the same is true for you

If I can leave you with one word of wisdom it is simply that we are all products of our successes and failures – as well as the lessons we’ve learned along the way. But we are not our successes or failures. To me being a real entrepreneur means embracing that fact and allowing it to give one the freedom and desire to keep moving forward, taking chances and trying to fly.

Felicia Brown, LMBT

felicia@spalutions.com