8 minute read
Better Business
Better Business Mentoring Spadida
By Chaim Homnick MA MBA
Spadida is a new business that opened this month on Central Avenue. It is a kids’ and teen salon that features birthday parties, mini mani/pedis, haircuts, ear piercing and more. The owner, Chavi Stern, has invested a significant sum in bringing this luxury experience to the Avenue, but she is facing some early growing pains. Last week, I sat down with the owner to provide some mentoring help to try and strategize the best path forward for her nascent business venture. Below is a condensed version of that conversation.
Chaim Homnick: So, let’s start by you telling me the vision behind Spadida.
Chavi Stern: The vision behind Spadida was to create a space for moms/ aunts/grandparents to build memories with their children. Especially since Covid, it’s really been hitting home more and more about what is important in life, and I wanted to give moms the opportunity to bond with their kids in a Disneyland-like space, almost a mini vacation in the middle of a hectic day.
My background is in working with children at all developmental stages, and so often what a child needs is some sensory input in order to feel centered and safe. We tried incorporating that idea into every part of the salon…from Orbeez and scented cream by the mini manis to swings and hammock chairs and costumes to dress up on a stage.
How did you project your sales? Are you meeting those projections?
Well, that’s the hard part, right? My numbers were all made up since this is a whole new concept and I didn’t really have a model to follow. I thought the idea was amazing and I invested way over $100,000 and 6 months of my life to bring this to reality. But only once you open up do you see what the actual expenses and income are, plus hidden expenses that I didn’t anticipate.
The experience is incredible. The customers love it. But the business isn’t where it needs to be yet. Our monthly expenses are more than we are bringing in in sales so far. That’s the issue many entrepreneurs face. Turning a good idea into a good business. What are your biggest challenges right now?
I put my heart and soul into designing the store (with a fabulous team! Thanks, team!) and the concept and perfecting everything; there’s no corner of space that wasn’t thought through.
But construction costs always end up more than expected, and the sales have been slower than I’d hoped. I worry about making payroll and building the business up to be profitable.
So let’s analyze that. When it comes to a cash flow crunch, there are two methods to solving that issue. One is simply selling more and chasing cash flow aggressively; the other is taking on debt, whether via loans or an investor. Right now, you don’t want to take on any additional debt, but perhaps we can strategize ways to build up cash flow faster than the business would generate cash flow organically.
The way to do that is probably through something like loyalty cards. If you have a popular service, like the mini manis, then maybe sell a card that entitles the user to 5 visits at a discounted rate. The consumer gets a discount for their loyalty, and you get cash flow now as you scale the business. Likewise, a discount of 10% or 20% on people buying gift cards will also generate long-term business and future customers while getting the business a cash infusion now.
I like both of those ideas. Honestly, it’s a bit overwhelming trying to incorporate new ideas while trying to manage the day-to-day of a new business, but I’ll definitely give it a shot.
Speaking of incorporating new ideas, my other challenge is simply educating the consumer about our service and why it is different, and more expensive, than going to a regular salon.
Part of why I opened Spadida was because I used to take my daughter with me for a manicure before yom tov. But when you go to a regular salon on the Avenue, it really isn’t for kids. The women who aren’t there with kids don’t want other people’s kids there, the staff’s goal is to slap some nail polish on kids and get them out of there, and it’s really not as special for a kid as the experience could be or should be. In Spadida, the goal is a magical experience for the girls. Whether they are coming as part of a birthday party or with their mother or on their own, we want the experience and not just the end result.
So, the price point factor is definitely a challenge many businesses face. It is hard to pinpoint the sweet spot where customer satisfaction and suitable margins intersect. If your feedback is overwhelmingly that the price
is too high, then you likely need to consider that and adjust. But in terms of educating the consumer, you just need to get them in the door and the experience will speak for itself. The “value add proposition” will become clear to the customer. Consider offering a card with a free mani or other service to girls in the community so people get a chance to enjoy the Spadida experience.
That’s a great idea, I love that! We’ll get right on free mani vouchers! As far as pricing, we did see some price point pushback, and I am working on bringing down prices where we can still meet our expenses. For example, our party package is amazing, and we booked four parties in our first two weeks. But we also had a lot of people clamoring for a more basic party plan that would be at a lower price. So we introduced a more basic spa party package option.
That leads into the next problem, though. Sundays we are busy, but a lot of the rest of the week is slower. We will have a busy day and then a very slow day.
That’s a challenge because an equivalent non-Jewish salon would have a true Friday/Saturday/Sunday weekend to maximize party income and weekend traffic. You just have Sundays as your main day. Then, on the weekdays, most kids are in school. You need to identify ways to generate revenue in what otherwise might be dead times.
First, within your existing business model, how can you reroute some of that Sunday traffic to weekdays? Maybe a party package discount if they have their party on a weekday after school instead? What else can you do to create new, alternate revenue streams?
That’s a good point. I’m seeing that. And every party we’ve made so far has been on a Sunday, so it definitely would be worthwhile for us to lower the price for a weekday party. So far, we started doing women’s wigs for same day service during the week and giving high-quality low-cost women’s haircuts in our teen section. That’s been a perfect way to keep my cosmetologists busy during school hours before girls start coming in. I’m also trying to provide inexpensive lunch time hair blowouts for high school girls.
What else can I do? pivot to also offering a girls’ Motzei Shabbos program or after-school programs. Maybe you need to offer a Friday afternoon Erev Shabbos Special on some of your services. You need to consider every angle that will help generate non-Sunday income.
Long-term, you can always consider offering certain popup sales in your store or subleasing a part of it to a related business, but those are just options to consider if a good fit comes along.
I think an important point in general, as your business plan has now gone from theoretical to real, is to analyze your sales and your margins. If you maximized your weekend sales and party bookings, would the money generated be sufficient to make this a viable business long-term? Because then you can keep tweaking and playing around with your weekday offerings and find the right balance for this business to flourish long-term. But you need to really crunch those numbers. How many parties per week do you need for the business to be viable? How many individual appointments? Really dive into the financial backend and work on perfecting the business model.
That’s a lot to take in at one time! But I’ll definitely review this conversation and implement piece by piece as I can. Thank you so much for your time and great informative ideas. I’m going to hit the drawing board and try to apply some of them ASAP!
Conclusion
Spadida is a great concept on paper. But every new business needs to find the right pathway to profitability and sustainability. Since we met last week, Mrs. Stern has already begun implementing and experimenting with several of the suggestions we considered. Hopefully our discussion and the expert’s tips help her identify the best methods for maximizing her business.
Chaim Homnick is a serial entrepreneur who owns several businesses. He also mentors small business owners. If you own a business and would like to be featured, or if you have a question you want to see answered in a future column, or for general feedback, email chomnick@gmail.com.
What is your advice for a new store starting out on Central Avenue?
Yael Schulman, Owner of Goodnight Moon
“As a local business, you need to focus on local trends. Always listen to and address the needs of the local community. Always be honest with your customers. And, make sure you surround yourself with reliable employees. ” Yael Vogel, Owner of Yaeli Vogel Fine Art
“For a store to be successful on Central Ave, you need to have “tunnel vision” and think only about what can make your store better and not compare yourself to other stores or try to sell what other stores are selling . Yes, there can be overlap, but a store should feel like its own world and own community. When you provide that feeling, that’s where you have success. ”
