EP 498: The 5 Mistakes Keeping Your Spa Stuck at $35K a Month

Right now, my team and I are on the phone with about 40 spa owners a week. One-on-one calls. We’re looking at their P&Ls. We’re hearing what is actually keeping them up at night. Walking through the real numbers instead of the ones that just look good on Instagram. Now, doing that many calls each week, it teaches you so much. You actually stop seeing individual problems, and you start seeing patterns-the same five things showing up over and over again at the exact same revenue level. So, right around that 35 to 50k per month mark, where a spa looks successful from the outside, but the owner is exhausted on the inside. Welcome to Spa Marketing Made Easy. I’m Daniela, and on today’s episode, I’m going to walk you through those five things that my team and I are seeing over and over again, and I’m going to go through the list as I’m going through this. You might be able to identify with one. You might be able to identify with all of them, and if you do, great! You just found an area of opportunity in your business, a mess that can be cleaned up. Don’t let that get you discouraged. And for one of them, my guess is that every single person who listens to this episode is going to check that off as an area that they can improve upon. Whether you’re trying to get to 50,000 per month or 500,000 per month. Okay, so let’s dive into mistake number one. Most spawners at this level, they don’t actually know how to pay their team, and I don’t mean underpaying. I mean the opposite. I see owners overpaying so consistently, structured in a way that does not scale with revenue, and it’s actually threatening the survival of the business, so let’s talk about how we even got here in the first place, because I think this really helps it to click. Now, back in the ’70s, the IRS drew a clear line in the sand for our industry. So, if a business controlled the schedule, supplied the room and the products, collected the client’s money, and then handed a percentage to a person who was doing the service. That person was an employee. Full stop. The only version of just paying commission that actually held up was true booth rental. So someone renting a chair, paying a flat rent, keeping her own clients, her own money, running her own little business inside of your walls. And for a long time that was fine because most of the industry actually looked like booth rental. So independent stylists, independent estheticians, everyone running their own thing under one roof. And then the day spa happened.

We started building brands. We set the menu. We set the protocols. We ran the front desk. We handled the marketing. We told people what hours to be available and what training to show up for. Now, the second that you control that much of the experience, you have built an employment relationship, whether or not that’s what you call it on paper. The IRS had a name for that gap by 1987. There are 20 factors deep, but you don’t need all 20 factors. You just need one question: Who is actually running this person’s day? And if the answer is you, she’s not a contractor. She is your employee. So most of us inherited a pay structure built for a business model that we don’t actually run anymore. We are still paying like it’s booth rental, except now we’re paying payroll taxes and workman’s comp and buying all the supplies and investing in the marketing-the whole thing. So, on a commission-only structure, especially one that’s paying like 40% commission, that provider is getting all of the benefits of entrepreneurship without any of the risk, and here’s where it really starts to spiral. If you need to raise prices to cover operational expenses, you’re just giving your team a raise, but it’s not performance based. That is an unfun problem to resolve, and we have helped many spa owners through it. So I can tell you that it is so much better on the other side, and something that I want to make crystal clear: I am not trying to underpay estheticians. I’m an esthetician, and I’m all for paying your providers a fair and livable wage. I just want their performance tied to it.

I want to see that the better they perform for the business, the more money that they make, and the math just doesn’t work when the providers are making more money than the CEO, and that’s what we see time and time again when practices are paying straight commission. Now I know some of you are thinking, but Daniela, I can’t pay them hourly when I don’t have appointments on the books. I get that. I know that so. So many spas start out on commission only because it’s the only way that you can make it. But in my mind, they’re solving for the wrong problem. Now I believe that it is your job as the CEO to get your providers busy. It is your provider’s job to retain them. So if there’s not enough appointments on the books, then that’s a marketing issue that needs to be solved.

So tie it back to problem number one: not paying your team correctly. Spas that scale have a standardized pay structure that pays based off of performance and contributions to the practice. Okay, let’s move on to mistake number two. They don’t know how to hire or onboard correctly. Now, most spa owners, many spa owners, hire the way you treat a burn: fast, urgent, whatever stops the bleeding right now. Someone quits on Tuesday, and by Friday, you’ve hired the first warm body who could start on Monday. That is not hiring. That is triage, and what triage produces is turnover. You hire for a band aid. The band aid doesn’t hold, and six months later, you’re back where you started. Except now you’ve also spent the time and money training someone who’s gone. So let’s put an actual number on this because I think it really will change how you think about this band aid higher for hourly and service level roles? The typical cost of replacing someone runs 40 to 70% of that person’s annual salary once you account for anything, everything, not just the job posting. Right, so the interview, the background check, the training hours, where someone experienced on your team is standing right next to that new hire instead of doing her own job. So let’s say that you’ve got a provider making 45,000 a year. That band aid hire, the one you brought on fast because someone quit on a Tuesday, could cost you somewhere between 18 to $31,000 to replace once she doesn’t work out and you’re back at square one, that’s serious money. And just because you’re not tracking it doesn’t mean that it is not costing you. Now the good news is this can be fixed. Okay, a real job posting, a real job description, a defined training period with a rate yourself one to 10 checklist before anyone touches a client on their own. A standardized onboarding process. One of the AI employees that we build inside of Growth Factor implementation is an onboarding support, so it saves our spa owners a week of time and who knows how much money from decreasing that turnover process, it costs you more time up front, but it costs you far far less over a year. Mistake number three is that they stay in the treatment room because they’ve convinced themselves that there’s no way that they can find good people.

Okay, so here’s what I’ve noticed: It’s almost never actually about the talent pool. It’s trust. It’s control. It’s the fact that nobody ever properly trained the person that they hired. So of course, that person isn’t performing at the level that the owner would. You cannot build a business around the life you want to live if you are the bottleneck every single service has to pass through. The training system is the trust system. If you have not built one, that is the actual problem, not your team. And look, I’m not against the treatment room. I’m against building an owner-dependent business. If being in the treatment room brings you joy, that’s amazing. And I want your company to be able to hit its financial goals without the revenue that’s coming from you. Now, I totally get wanting to keep your skill set up. That is not what I’m talking about here. I’m talking about those who stay stuck in the room because no one can do it as good as them. It’s a trap, and it’s one that I don’t want you to get stuck in.

All right, mistake number four. So many of you are brilliant in the treatment room, and you’ve never been taught the basic technical skills that would literally save you hours every single Week, okay. Truly brilliant clinicians, incredible hands, incredible outcomes, and you don’t know how to organize a Google Drive folder, okay. These individuals that I come across every day-they’ve never used a project management system like Monday.com to track what’s actually happening in their business. Now, I totally get that clinical training does not include an afternoon on tech, but it’s time to stop treating basic tech literacy as an option when you’re an entrepreneur. Now I can’t even imagine the things that my kids are going to be doing when I’m a grandma. It will probably be so. Far beyond my comprehension, but what I can tell you is that I will never stop learning. Okay, I’m not asking you to know how to code. I’m not asking you how to build apps or anything crazy like that. I’m asking you to know how or attempt to learn how to navigate the most basic digital tools to keep your business organized, so that you can save time and money, and look zero judgment on our end. I have all the patience in the world for someone who is genuinely trying to learn something. If I see that there is effort being put in, I will explain the same thing 700 times for someone to feel confident, and I will do that gladly. Okay, mistake number five. This is the one that I was alluding to in the beginning. That almost none of you will have is that using AI anywhere close to what it’s actually capable of doing in your business. Okay, not as a gimmick, as a real competitive advantage, the spas that are pulling ahead right now-they’re the ones that are using AI to handle marketing, the follow-up, the content, the parts of the business that used to eat their entire week-and the ones falling behind are the ones who tried ChatGPT once, got a generic answer, and decided it wasn’t for them. AI is moving fast, like insanely fast, like so fast that three weeks ago feels like the olden days. This is the thing, though, that can save you 1000s of dollars in so many different aspects of your business. Standardizing your onboarding process to lower turnover, handling your marketing so that you can let go of contractors that don’t actually know your business, supporting your team with retail recommendations for your patients, helping you to actually know what your financials are telling you, so that you can identify duplicate, incorrect, or off charges-all things that I’ve dealt with with clients over the past week. One client who’s doing a build out, she used Claude to uncover a $40,000 billing error with her contractor, where he had duplicate charges. Now the communication was spread across numerous emails and files that would have taken hours upon hours to sort through, if it would have ever got caught at all. 40,000, $40,000, friends. Now another client, she dove into her financial workspace. She uncovered duplicate charges along with charges for services that she was no longer using. I had another gal who found a $200,000 cost of goods section on her P and L in one month that she had no idea about, and you know, in finding that she was able to generate a list of questions for her CPA. Now, whether that categorization was right or wrong, I don’t know. I’m not a CPA. It could be very well part of a strategy that they were focusing on for her benefit, but still, the benefit, you know, knowing that is going to facilitate a deeper relationship, a deeper understanding, and more confidence for that business owner. And look, you know, Claude and and these AI employees and why and how we’re moving so fast. This is why we’ve been doing so much work behind the scenes here at Addo this year. Eight humans on our team right now, getting ready to hire again. By the time that this is out, we’ll probably have added more humans to our team. We’re at 30 AI employees working alongside of us. That’s going to probably be up to 40 by the time that you are listening to this episode.

We’re on track to cross 100 AI employees before the end of the year, and that’s part of why this show is starting to feel a little too small for where this conversation is heading. Something is shifting here at Spa Marketing Made Easy, and I am going to let you in on that shift very, very soon. Thank you for your patience. I’m so excited to tell you about what we’ve been working on behind the scenes. Now, for today, for today, I want you to pick just one thing that we’ve talked about. Okay, I want you to give it a week. I want you to look at it honestly. I want you to write down what you noticed. Send me a DM on Instagram and tell me which one it was. Action creates clarity. Okay, don’t just listen. Go and do something with this. Make a change in your business that is going to help support you in building a business around a life you want to live. All right, my dears, I will catch you on the next episode.