How Much Money You Need To Start A Spa Business

How Much Money You Need To Start A Spa Business

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Starting a spa business may be your ultimate dream or your retirement plan, but make sure you have money set aside to do so! If you’re looking to start a spa business, while the need is there, the cost can make or break your profit. 

In many cases, opening your spa costs about $200 per square foot. That means your 2,000 square foot spa can cost about $400,000 to begin. This cost does drastically reduce once the business is opened; annual operating expenses usually do not exceed $100,000. 

Whether you’re looking to purchase an existing building or start for scratch, it could depend on how much money you can spend. Read on to find out what items should be in your budget and what you can do to reduce those costs. 

  1. A building, whether you need to rent, construct or renovate: between $20,000 and $50,000 to rent and upwards of $250,000 if you construct
How Much Money You Need To Start A Spa Business

When it comes to owning or renting your building, it could make or break your budget. A 2,000 square feet building costs somewhere between $20,000 and $50,000 to rent annually, while purchasing an existing building can cost $50,000 to upwards of $250,000 if you wish to build. 

It’s also important to understand your location. If you’re in a place that doesn’t already have a spa service, make sure you’re situated in an area where you can easily market to the locals. If you’re in an oversaturated market, it could also present more challenges—like competing with other spa services. 

  1. Insurance, licensure, and business permits: $1,500 for business and insurance, other licenses vary

As with any business, you are required to have insurance and certain business permits to work within your community. Business licenses will make your business legitimate in the eyes of the government and allow them to collect taxes on your income. Insurance can help you stay afloat if issues arise down the road. This usually costs about $1,500 for both. 

With your business being a spa service, you will be required to have certain permits outside of the typical ones. Outside of the certificates, building occupancy, and tax ID licenses you must get, you also will have to get certain licenses based on what services you provide. You may need a cosmetology license, a spa management certificate or degree, esthetician licensure, electrologist licensure, massage therapy licensure, or others before you start. These costs vary depending on what you want to provide, the level of education you need for that licensure, and the actual cost of the license. If you want to have a medical spa? You’ll need to be a licensed physician or owned by a licensed physician. 

  1. Furniture, equipment, and any other fixtures: about $50,000

Depending on the size of your spa, you’re going to need furniture, and that could run you about $50,000 for your 2,000 square feet building. What is it you’re going to need to fill that space? You’re looking at basic treatment tables, technician chairs, trolleys, lounge furniture, office equipment, support equipment such as washers and dryers, facial machines, etc. depending on what you provide. The more specialized your equipment, the more expensive it will be. If you lean into more of the medical grade services, you will definitely be paying more. 

  1. Inventory: about $5,000 to $10,000 to start

While inventory will be a recurring cost, you’re going to need about a three-month supply to start. An average smaller spa usually only uses a few items—think one brand with a few other smaller brands to tout and sell. You can reduce costs here by choosing a less expensive brand, but make sure it is still of the quality you want to provide for your clients. 

  1. Signage and marketing: $250 for a website, all costs depend on budget

When it comes to letting your clients know who and what you are, it all comes down to marketing. While it can get expensive, depending on what you’re doing, there’s one thing you must do in our Internet age—have a website. You can create your own website by yourself for about $250. On top of that, make sure that you start posting online—use a free social media website to start bolstering your followers. The more you can do for free, the better. 

  1. A point-of-sale and scheduling system: $500 and above

Regardless of whether you’re selling products within your spa or if you’re just taking payments and scheduling appointments, you will need some sort of point-of-sale system. These can be integrated into your website as well, and scheduling can be made much easier by allowing for online integration—like letting your clients know when their next appointment is by having it appear on their phones. This sort of system usually costs about $500 initially with a monthly fee to use 

  1. Staffing: variable

This is a major budget item for your spa, but it is also something that you cannot determine without the other budget items. Your staffing should include you and any other employees you may need, depending on the size of your spa. Consider starting smaller and working your way up. You can also expand your business as you go—start with the bare minimum, but if you find your clients wanting more and more, you can hire on specialists that will be able to provide those new services to your clients. 

How to Get the Capital to Start Your Spa Business

If you’re wondering how to get those funds, don’t worry—there are ways to do so without breaking the bank. 

How Much Money You Need To Start A Spa Business
  • Use the Small Business Administration. Not only do they have resources for new and small businesses, they also provide information on potential grants and loans. You have several options—like 504 loans, 7(a) loans, and microloans, which provide less than $50,000 for the opening of a small business. Note that there are loan counseling options, along with education and competitive terms, some of which you may not see in other loan options. Find out more about the funding opportunities at SBA.gov.
  • Apply for grants. Whether you’re a minority, a senior citizen, a woman, or anything in between, there are grant options for you. While you can search through the Small Business Administration, you can also benefit from local grants. Talk to the local chamber of commerce or your development agency in the region to find out what options you might have. 
  • Bank loans or loans from friends and family. While the most common, it certainly always isn’t the best option for you—so this should be lower on your priority list, as bank loans can typically have higher interest rates. When it comes to taking money from your family or friends, make sure you still write up a contract as you would with a bank loan. That means that no one can refute the agreement you make as you pay them back. 
  • Sell your personal assets. This is one of the last ways you should consider making money, as it personally impacts you. Try to avoid selling jewelry or your car and look for other options first. 
  • Cut down your budget. Are there items in your budget that you might not need? Can you cut down, with the plan of expanding in the future? What marketing choices can you make, and what can you do for free? How can you keep initial building costs down without cutting corners? These are all things you can ask yourself in order to save money. 

It doesn’t matter if this is your dream or your new reality—it may take a lot of money to start your spa business, but with right planning and the right attitude, you can make your dream come true. The spa market continues to grow—12.1 percent per year—which means that you have the opportunity to make a profit—and make a difference. Creating a safe place for people to visit and take time for themselves exceeds the profit expectations. 

Frequently Asked Questions

How Much Insurance Do You Need For Your Accounting and Payroll Business?

What challenges do spa managers face when they start a business?

Besides the challenges of a new business, spa managers will face inadequate training of their employees, customer disloyalty, overworked staff, unstable demand, and hesitation on product use. All of these can be avoided or mitigated through proper training and business planning. 

How much money do day spa owners make annually?

In many small businesses, a day spa owner can make about $80,000 or more annually. The average annual revenue of a day spa can exceed $800,000 depending on services, location, and employee education. 

What services do spas provide?

In many spas, specifically day spas, they provide different services such as massages, facials, electrolysis, manicures, pedicures, body exfoliation, wraps, aromatherapy, and more. Some even provide makeup application or hair services, depending on whether it is attached to a salon or not. Spas can even provide saunas, whirlpools and jet baths, steam rooms, mud baths, and more. Exercise equipment can sometimes be offered as well. 

To learn more on how to plan your own spa business click here!

Please note that the contents of this blog are for informational and entertainment purposes only and should not be construed as legal advice. Any action taken based on the information provided in this blog is solely at your own risk. Additionally, all images used in this blog are generated under the CC0 license of Creative Commons, which means they are free to use for any purpose without attribution.