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When evaluating the health of a spa business , compensation and expenses are without question the first figures that should be examined . And though there may be a variety of ways to approach those numbers , the basic rule I apply to judging a spa ’ s compensation is simple : A spa staff cannot be paid more than 35 % of the business ’ s revenue and be truly profitable .
If your spa is currently reviewing ( or planning to review ) its compensation model , consider the following set of questions as a starting point : 1 . How profitable are you overall ? Are you bringing five , eight , 12 or 20 percent to the bottom line ? ( Side note : if your profit is more than 20 percent , please allow me to award you a gold star ! And drop me a line so I can host you on our podcast !)
2 . What percentage of revenue is dedicated to compensation ?
3 . What are your current compensation levels ? Are those levels competitive in your market ?
Is your staff satisfied , and does it motivate them ?
Once you evaluate where your business is regarding its commission structure and profitability , you are armed with the data to make changes .
Changing a compensation model is unquestionably difficult , but it is not impossible . There are a couple specific rules I recommend following when considering a such change : First , communicate openly with your team ;
When evaluating the health of a spa business , compensation and expenses are without question the first figures that should be examined . And though there may be a variety of ways to approach those numbers , the basic rule I apply to judging a spa ’ s compensation is simple : A spa staff cannot be paid more than 35 % of the business ’ s revenue and be truly profitable .
38 PULSE ■ JUNE 2021