Every spa owner wishes for their business to grow and expand. If their first outlet is a success, opening a branch at a new location is the logical option for expansion.
However, growth comes with risk. Not every location is the right fit for a spa or salon. Oftentimes, spa professionals assume that success in one location is proof of achieving objectives in another branch.
Unfortunately, a second outlet is more challenging than the first one. The employees, marketing efforts, management process, and everything will be doubled.
Apart from it, it requires entirely different market research. Since the spa will be serving a whole new set of customers, adjusting the strategies as per the demographics is imperative. So, from planning to implementation, everything will be different. It shows a considerable amount of risk in a second location.
Wondering what these risks are? Have a look at the below points:
- Inability to Meet Consumer Standard
We can notice a growing trend of yoga, steam bathing, mediation, and aromatherapies in some countries. However, not every location is ideal for these services. People from certain locations are not fully aware of the health benefits of spa services. Therefore, understanding the consumer is imperative.
For instance, if you are moving to the Philippines for a new spa location, you need to see the demand for spa and salon services in that region. But, knowing the demand is not enough. See how the consumers consider these services. Do they expect a luxurious treatment at an affordable rate, or are they ready to pay a hefty amount?
Furthermore, where are you planning to open a spa in the Philippines? Is it easily accessible for the target market, or will people find it hard to reach? Apart from it, what is the average income of people in that location? Do people consider going to a spa as necessary or treat it as a luxury?
If you are investing heavily in the aesthetics, infrastructure, employees, and overall business operations, you expect a good return. Consequently, you set a good price for your service. However, if consumers of that location are not ready to pay a high price for a spa treatment, your salon will get a tag of being overpriced.
- Lack of Qualified and Committed Staff
Being a salon owner, you need to hire massage experts, yoga mentors, reiki professionals, etc. Since you are opening a new location, you will prefer hiring staff from the nearby areas. If qualified and trained professionals are not available, your salon reputation will spoil in no time.
No matter how impressive the aesthetics of your salon are, if the service is not up to the mark, it will be of no use. Furthermore, you need to hire a branch manager and create a hierarchy for assuring quality service. People learn and perform training in the spa niche to become a professional. Thus, not everyone can be the right fit for your salon.
If you are moving to a new location, you will always have the risk of the availability of qualified staff. Some salons also hire people before moving. But, you also need commitment, dedication, and passion towards the service.
- Lack of Planning and Integration of Technology
Undoubtedly, working in multiple locations is a tedious task. Especially the first few months, when you are gaining experience of operating from two locations, you will find it challenging. Though a new revenue generation stream looks great but the efforts involved in it require planning and effort. Most importantly, there is a huge risk in it.
What if you are unable to keep up with the standard of service? Since you have to look after two branches at a time, you might not end up with the desired results. Or, you may start focusing on one branch, which will ultimately spoil the reputation of the other.
Many international spa chains successfully keep their service level by integrating technology. You can also mitigate this risk by using the best software. Use cameras to monitor and sync it with your smartphone. Now even on the go, you can notice what is going on in your salon. Likewise, you can use customer service management software (CRM). Through this software, you can even accept online payments, track orders, view consumer records, and have a look at ROI.
- Failure to Compete with the Rivals
Business competition is everywhere. However, if you are entering an area where renowned spas and salons are already present, you need to think out of the box. These areas must have a high consumer demand, and that became a reason for the existence of other spas.
Since prospects have already developed a relationship with present spas, there is a risk of entering into this area. People might not feel convinced about trying out your service, even if you offer deals and discounts. Moreover, repeated discounts also create a negative impact in the eyes of consumers.
The former spas already know about the likes and dislikes of consumers. Even though you are providing a commendable service, there will always be a risk of not getting 100% of the market share. Since other good spas are already present, they will get the share too.
This risk is always present in every business. Even if there is no competitor at the time of your opening, competitors can dive in anytime. Thus, you should always keep researching the latest spa trends. This knowledge will help you adopt the best strategies, and you can successfully beat the rivals.
Final Thoughts
Business risk is unavoidable. But, if you are successful in running a spa from one location, there is no guarantee of success from a second location. Every location serves as an entirely new business with a new target market, strategies, and plan.
There will always be a risk of meeting high consumer standards and not getting the desired staff. Likewise, the risk of managerial and operational issues is always present. You also need to face new rivals and adopt all the latest methods to gain a competitive edge.
So, always consider these risks if you are planning for a second location of your spa.
Good Luck!
