Non-Compete Agreements - They Can Work

One of the biggest concerns I hear from many salon & spa owners, is the fear of key employees walking away with customers. I’ve talked with employees at many companies, and it’s clear: These people believe any client they work on is “their customer,” they are free to take “their customers” away from their employer, and they don’t believe non-compete agreements are enforceable.

I just cringe for these business owners, who have such individuals in their employ. Sure, they are busy, but make no mistake about it — they are working for themselves and there is zero loyalty — these employees will leave you in an instant if they think the grass is greener elsewhere.

Aside from being completely wrong on all accounts, these employees have little knowledge or respect for the difficulty and sheer effort it takes to open, run and successfully manage a profitable salon or spa business. It’s the business owner that invests in marketing and signs the advertising contracts. It’s that same owner who doesn’t sleep at night, trying to figure out how to keep the lights on, the clients coming through the door and the paychecks issued. Client loyalty is key to the success — and long-term viability — of any business.

How can you prevent employees from stealing your clients if they decide to leave? The answer is, a well-crafted non-compete and non-solicitation agreement. The laws vary from state-to-state, jurisdiction-to-jurisdiction. There are ways to write bad (i.e. unenforceable) agreements, and there are ways to write great (i.e. enforceable) agreements. The best way to obtain a great agreement, is to hire a local attorney familiar with such matters — the money you spend writing such an agreement will pay for itself in dividends.

Do you even have agreements in place with your employees? If not, you have no excuse! Start now! Don’t give courts reasons to invalidate your agreement. Make it fair and reasonable. This means take ownership of what is yours — the client — and don’t unduly restrict your employees from being gainfully employed elsewhere. Avoid:

• Geographic restrictions - even limited ones can pose problems
• Blanket restrictions - everyone has a right to work, so don’t prohibit someone from earning a livelihood
• Unlimited restrictions - always reasonably time-bound the restriction (i.e. 1 year)
• Non-solicitation only - everyone tries to get around this, by creating the circumstances where “I didn’t solicit them, they called me!”
  Punitive damages - courts seldom award punitive damages, especially for employee contracts; so they just help to instill the belief that your non-solicitation agreement is egregious, unfair and unbalanced

Every good non-compete agreement should, at a minimum:

• Define Confidentiality and require employees to honor the confidential information of your business
• Define “Client” and “Client List,” and make it clear they are owned by company and are to remain Confidential and Trade Secret
• Indicate that employees (including “whether as an individual for its own account, or for or with any other person, firm, corporation, partnership, joint venture, association, or other entity whatsoever, which is or intends to be engaged in the same line of business as YOUR COMPANY, or in such other business competitive with YOUR COMPANY,”) may not solicit, interfere with, or entice away any clients (or employees) of your company, for a reasonable period of time (i.e. 1 year)
• Indicate that employees (with language above) after their employment ends at your company, may not service, or perform services for, any Client, for a reasonable period of time (i.e. 1 year)
• Require employees to acknowledge that the restrictions will not create an undue hardship, not prevent them from competing in an independent business, and agree they are subject to a restraining order and/or injunction if they violate the agreement
• Require “reasonable enforcement costs and expenses” to be paid by employee, if they violate the agreement
• Contain the standard clauses of severability, survival, waiver of breach and assignment

Note that if you are presented with employees who are bringing their own clients, and you want to acknowledge the clients they bring, my advice is to create an “attachment” that has the actual names of the clients you want to exclude from the agreement. The employee should specifically indicate who such individuals are.

If you have an employee who doesn’t want to sign such an agreement, then you have some interesting information: They intend to steal clients from you the minute the relationship doesn’t work for them. Do you really want such employees in your organization?

Recession? Relax: Five Ways to Build Your Spa Business

Spas are a $9.4 billion business in the United States, employing more than 234,000 workers, according to the International Spa Association. But traffic has been flat or declining in recent years, even as the number of spas has tripled since 1999.

And, now that consumers are feeling anxious about paying for basic needs like gas, shelter and food, some spas are having to respond with a strategy to push business in the door. Here are five ways to attract and keep business, that is working for many of the top Spas:

1. Reach Out to Corporations
   Companies are looking for the perfect outing to entertain their best clients or reward their best employees," says Pamela Margolis, co-owner and president of the Hotel Ivy Spa Club in downtown Minneapolis. "You don't have to be good at spa-ing -- there's nothing to practice. It's more flexible than organizing a round of golf ... and it doesn't take six hours out of your day."
   
2. Discounts
   A recent web site headline from Green Valley Spa in St. George, Utah. read, "RECE$$ION DEPRESSION?" Alan Coombs, owner said, "We kind of looked at this recession we're in and said, look, for the next few months, or until this recession can somehow be evaded, let's cut our core program price in half." "Even in recessions or difficult times, spas are busy because people need what we have to offer."
   
   Another example is, the Oasis Day Spa in New York City who has been running a Two for Tuesday special for the past two years. Customers who book two 60-minute treatments on a Tuesday, usually a slow day, get the second one for half price. This year, the spa also is doing a Wednesday promotion with some massages and facials priced at 1998 levels.
   
3. Internet
   "I think the Internet has been kind of a win-win for both spas and consumers," says Susie Ellis, president of SpaFinder, a Web site that publishes spa reviews and deals.
   Following the example of airlines and hotels, which long have relied on technology to adjust their prices based on changing supply and demand, more spas are using this strategy to beef up bookings during slow times. For the most part, these deals involve midweek and off-season discounts, last-minute specials and packages that are cheaper than booking several services a la carte.
   
4. Focus on Service
   Many spa owners should focus on their existing customers and clients for a boost in revenue. With this in mind, TJWeaver, owner of Douglas J Salon, suggests focusing on service. "It is one of the best ways to add value without costing money," he says.
   
5. Employees
   When the going gets tough, the employees you have will be your productivity all-stars. Make boosting productivity within reason, of course a focal point. For those that rise to the top, be sure to reward them accordingly. "You don't want to lose your most productive people at this time. Consider offering vacations or time off, which can be cheap incentives.
   
   

Massage Envy in your neck of the woods?

My company, SpaBoom, boasts over 2,000 spas and salons using our technology to sell Instant Gift Certificates on the Internet. What's cool about our business, is that our clients are making more money. There's no contract. The value proposition is compelling.

With this many clients, we've captured about 10% of the market. This is an impressive number, given we started offering this capability just 2 and a half years ago. However, my company has reached a chasm of sorts, and finding it harder to convince the remaining spas to jump on board and start selling their own Instant Gift Certificates on their websites, using SpaBoom technology.

So, what does this have to do with Massage Envy? Everything. I'm finding that the spas that haven't yet signed on to SpaBoom are generally too busy focused on the day-to-day of their own businesses. They are busy, overworked and sometimes have trouble keeping the bills paid. They are bombarded by vendors, and don't know who to trust.

We as human beings, generally refrain from change, especially when we can keep busy and keep the lights on. The problem is, the market is changing. Massage Envy is here to stay. Simply keeping the business going requires more than opening the doors and
providing services. It requires reacting to the marketplace, doing things smarter, maintaining market differentiators, and removing barriers to doing business with you.

If you have a Massage Envy in your neck of the woods, you must not ignore it. You must react. Not necessary by dropping prices, but by being more aggressive. Are you a day spa or medical spa, or are you a luxurious, romantic spa getaway? Reinforce your differentiators. Advertise. Create incentives for your existing clients to come back, as well as refer business to you.

Consider hiring a consultant to help you. Marketing is key. Cash flow is king. Here's a simple test for you: Are you selling SpaBoom Instant Gift Certificates? If not, you're not bringing in all the cash you can, and you're not making it as easy as possible for your clients to do business with you.

Larry Donahue is a registered patent attorney, a member of the Illinois and New Mexico bars, and specializes in Internet law, contracts and business law. His interest for the past eight years has been running, managing and selling Internet technology businesses.

Marketing Your Salon or Spa for 2008

Do you have your Salon or Spa's marketing calendar in place for 2008? If not, it's not too late, but you must act now!

You have more than a hundred ways to market your business, so it's important to know just when you'll be doing that marketing. Having your marketing calendar prepared for the year has several important reasons:

• So you can plan ahead and be ready to fire
• So you don't overlook opportunities
• So you can get your product suppliers to participate
• So your team knows what will be happening and when
• So that you can schedule enough staff for peak times
• So you can kick off holiday promotions
• So you can take advantage of special events
• So you can participate in your product manufacturer's promotions
• So you can qualify for additional co-op and promotional funds

Think of your marketing calendar as a road map to assist you in setting and realizing goals and keeping you on course. You’ll also need to set a budget, so the more planning you do now, the better.

Your marketing Strategy should accomplish the following:

• Acquiring more customers
• Persuading each customer to buy more products
• Persuading each customer to buy more expensive products or up selling each customer
• Persuading each customer to buy more profitable products

To accomplish this, here are some ideas to get you started:

• Call your vendors or associates and ask them to participate with you in co-op advertising.
• Take some time to send your existing customers' referrals and buying incentives.
• Have you thought about introducing yourself to the media? Free publicity has the potential to boost your business. By doing this you position yourself as an expert in your field.
• Invite people into your place of business by piggybacking onto an event. Is there a concert coming to town, are you willing to sell those tickets? It could mean free radio publicity. If that is not your cup of tea, how about a walkathon that is taking place in your area, why not be a public outreach and distribute their material?

It takes time to develop a marketing plan, but it’s important because it's a great opportunity to focus on the future, generate new ideas, and inspire your team and grow your company. Even a simple plan is better than none, but when you invest more effort upfront, you’ll have a better roadmap toward your goals.

Avoid The Pitfalls When Planning & Financing Your Medical Spa

Medical Spas - the latest trend in beauty services indicates markets preference for non-surgical treatments. With over 2,000 Americans turning 50 every day, studies show their buying power will exceed $2 trillion in 2007.
In fact, Americans spent just under $9.4 billion on cosmetic medical procedures in 2003. In 2004, American consumers spent $44.6 billion on anti-aging products and services, and the total anti-aging market is projected to reach $72 billion by 2009 (Business Communications Co., Inc., February 2005).

Unfortunately, there are problems with the Medical Spa Model. Many are, Day Spas, terribly structured franchise chains, and hair salons, calling themselves Medical Spas . So, while it sounds alluring to jump on this trillion dollar anti-aging boom, it would be wise to take note when heading down unknown territory.

If you’re planning on starting or expanding a medical spa, here are a few tips to consider:

Hire an Experienced Consultant - I am often astonished by the day spa consultants that have assumed the title of “medical spa guru”. Most of these new experts drop lots of names but few phone numbers. Anyone offering consulting services should be happy to give a list of references and more importantly, a list of competitors.

You Must be a Physician - If you are not a physician, you can not “own” this business. You may own the building, you may pay the staff, you may have a franchise with a “medical director”, and you may think you’re in charge. It doesn’t matter. All medical law is designed, written and interpreted to keep a physician independent in medical decision making. That means that if you are a non-physician in this field, the physician providing medical oversight has the power to “pull the plug” at any time. There’s also this to consider. What constitutes adequate medical oversight is decided by state medical boards. The board members making the rules are physicians themselves, some of which may be loosing money to “medical spas”. It’s never a good idea to enter a business where the competition can change the rules at any time, but that’s exactly where the current crop of franchises are. If you don’t have a physician on-site and seeing every patient before their treated, you’re in danger of having the rug pulled out from under you.

This is a Tough Business - The market is going to decide who wins and loses. If you don’t have absolutely compelling answers to this question, “Why would a patient choose to come to me over my competition?”, wait until you do. (If your answer is price, start over.) A copy-cat strategy is a no-win business plan. The next five years will see dramatic and disruptive changes in this marketplace. Large, well financed medical businesses with smart physicians and high quality care are going to open up next door to you. If you’re not well established with deep roots, you’ll be gone.

Choose the Right Equipment - The Right equipment is one of the things that will let you move ahead a step, or strap you down. Some if this equipment is like a "house on wheels." Before you decide on which equipment to buy you’re going to need to crunch the numbers. How many shots will the IPL heads last for until they need to be rebuilt? How much support is included? What kind of training is provided? Does the device work better than its competitors? Before you sign your next few house payments away, make sure of your technology decisions.
• Leasing is the best way to go if you want to pay for your equipment as you use it while preserving your capital. Many of the equipment companies have delayed payment plans as long as six months.
• Buying used equipment is often the best way to save money if cash flow is not an issue.

Keep Your Capital Out Lay Down - Cash flow is a problem many start-up medical spas face. Revenues and growth projections are commonly exaggerated in the excitement of a new business. Before you invest in leather treatment tables, make sure you can pay your bills. Financing is easy. Financing smart is hard: Speak the words “Medical Spa” as a physician and you’re everyone’s best friend. Banks, lenders, technology companies will all have big smiles on their faces and their hands out, ready to lend or finance anything you need.

Staffing is a Challenge - Training your technicians can be a tremendous drain on your time and resources. If you believe that our schools provide adequate training to make students labor-ready you are living in a dream world. Yes, some job seekers make the effort to learn on their own the skills needed for a new job, but most get that training on the job. That's where an in-house training program comes in. Not only does instruction arm your employees with needed professional or technical skills, but it also shows that you are invested in them and interested in bringing them with you into the company's future. This helps keep workers motivated and involved.

Profit or Loss - If you don't track the numbers, you'll never know. Understanding the financial aspects of running a business can be a challenge. You must focus on two major areas for growth and profitability: one, establishing a true form of measurement to project, track and monitor the growth (or lack thereof) in your business; and two, gaining a complete understanding of how to protect the cash you already have coming in.

Take these tips and begin using this knowledge to your advantage. Success doesn't happen by acci­dent; it's a result of careful plan­ning. When you put the correct chain of events into motion, you'll find that purposeful action always yields successful results.

Make it Convenient for Your Clients to Buy Gift Certificates

So, the busy Holiday rush is upon us. If you are like many salon and spa owners this is a great time a year to make extra $$$$ with your Gift Certificate Sales. However, it can also feel a bit over whelming - clients clambering at your door to not only to get their hair/nails done, or to maybe get a massage to relax, but now you have to handle the extra traffic of those demanding Gift Certificate buyers (it's a love, hate relationship)

Here's a Solution: Sell Your Gift Certificates on Your Website — Instantly with SpaBoom!
Your clients just choose one of your gift certificates, preview it, and then email or print it immediately. Works with your existing website, or as part of a SpaBoom Dynamic Website.

Here's the Advantage:
You'll increase out-of-town and last minute sales.
Lower your need to hire more staff to support the extra sales = more $$$ for you!
Save staff time — no filling out certificates and/or mailing by hand.

Some Facts:
Clients are looking for a fast and convenient way to buy Gift Certificates from you. Now, they can do it in the comfort of their own home
80% of Gift Certificates are bought 48 hours before the holidays - don't loose out on a sale because you are not open.

This is one of my favorite ways for salons and spas to increase their revenues. It's super easy to set up and you'll be selling your GC's on your web-site the next day!! Check it out!!! and use this code (thesecret) to save on the set up fee.