By Special to Capital Business
Monday, September 27, 2010; 27
THE ENTREPRENEUR Tori Paide didn't know where she would end up when she left her high-stress office job in Washington. She saw how acupuncture treatments were benefiting her health and decided to make a change to pursue a career in the wellness industry. After earning her master of acupuncture degree, Paide's choices were to work at a spa or wellness center where she would have to give half of her profit to the owner, or to go it alone as acupuncturist, worrying not just about serving clients, but also about marketing, booking her own appointments, bookkeeping, insurance and all the other things that go along with running a business.
She decided to try the latter and leased a space in Takoma Park. New to the practice, she had a small client list, a space bigger than she could fill alone, and clients who were interested in additional wellness services that she couldn't offer. What she did have were friends and contacts who were trained in massage therapy, rehabilitation, nutrition and other wellness practices. So Paide opened her space to some of them and agreed to split the rent. And then it dawned on her -- she had hatched a new business model. By allowing several practitioners to work under one roof, the group could afford valuable support services and offer clients a full range of services.
Paide calls her business The Still Point, a holistic spa and wellness center in Takoma Park. It provides wellness services such as massage, acupuncture, herbal medicine and nutritional counseling as well as natural beauty services and a natural and organic skin-care boutique. She is also environmentally conscious, running 100 percent on wind power and offering only organic and naturally produced products for facials, nontoxic nail polish, paraben-free massage cream and innovative eco-makeup lines.
"Since we opened in July 2007 we have seen positive growth every single month, despite the economic climate. Our main business model is based on 'renting' space by the hour to our practitioners as opposed to setting a 'split' that is standard practice in most spas. We believe this has attracted us the best practitioners who are also entrepreneurial enough to fill out and maintain their own practices. We encourage Still Point practitioners to build their own practices and emphasize retaining clients while staying faithful to our model that enables success for everyone.
"My question: Where do we go from here? Our physical space is only so big, and I'd like to expand. What's the best way to go about this? How do we choose between opening a new store or franchising?"
Asher Epstein, managing director, Dingman Center for Entrepreneurship at the University of Maryland's Robert H. Smith School of Business
"You need to ask the question 'What's the end goal for expansion?' Think about what you're trying to accomplish by growing this business model. Growth just for the sake of growth doesn't always work."
"I am really committed to helping industry practitioners earn a very good living in a collegial work environment -- to replicate what we currently have with The Still Point."
"Having that greater motivation -- beyond just growing your revenue -- to improve the lives of service providers in this industry will help keep you focused in making the right decisions as you scale the business.
"In terms of how to scale the business, opening another location is one option; franchising is another. With the franchise model, you have the benefit of someone else putting up the capital to open another location, but there's the trade-off of losing some of the control. You can provide an operating book, but you also run the risk of someone replicating your business model.
"The franchise model works well if you think about a company like Panera Bread or Starbucks -- when you have large-scale relationships with coffee growers and other suppliers that an individual store owner wouldn't have access to without the franchise benefits. Those franchisees are paying for the infrastructure that takes a lot of time and resources to build.
"Without a lot of infrastructure, you could work with partners in a quasi-franchise -- essentially a partnership where you retain a controlling interest and make sure the quality of the experience and service is there for customers and practitioners. If you want to think about rapid growth, you will need to develop a step-by-step playbook that documents every single aspect of how you operate and how you deliver that service that sustains your business.
"I do think you've got the right model. In any business, if you put the right incentives in place to drive the practices you want. People do what's in their best interest. You've set up a model where it's in your practitioners' best interest to ensure their clients come back month after month, and the lifetime value of a customer getting massages or acupuncture on a monthly basis is pretty high."
"In addition to opening an annex in Takoma Park to include coaching, psychotherapy and other counseling services, I'm already looking at working with a partner to open a new location in the D.C./Baltimore area. We've done the market research and things look good -- and we've come up with a list of practitioners who would be interested in joining us. We're planning to move forward."