Case Study

Serenity Spa

Presented to Dr. Bruce Firestone

Due: Wednesday, April 7, 2004
Entrepreneurial Culture 42.491
Celine LeDuc 267892 and Julie Ann Ancheta 239289

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Introduction

Jill Ancheta and Celine Leduc are two girls that have dreamed of opening a Spa together

throughout their University years. Now that they are about to graduate, they have

decided to carry out this business venture together, and they have named their business

Serenity Spa. Serenity Spa is currently a home based business, and the girls are

contemplating whether or not they should stay home based for a while, or if they should

expand to a commercial location, and if so, what would be the best location.

History

Jill and Celine were grade school friends, and have been inseparable until the unfortunate

day Celine’s family decided to move to the other end of the city. The girls tried as hard

as they could to keep in touch, but throughout the years, began parting their own separate

ways. As fate has it, Jill and Celine were reunited ten years later at Carleton University.

After many years of being apart, they found out that they still had many things and

interests in common. Jill and Celine both had a passion for business and dreamed of

becoming an entrepreneur. Although Celine and Jill attended different high schools, they

both chose to enter the business field. They similarly have always been interested in the

health and beauty industry. Throughout university they were in many of the same classes

and on countless occasions spoke about one day opening a business together. They

believed that opening a Spa together would be a smart idea since they had similar work

ethics and unique individual skills that they could bring to the company.

As an athlete in high school, Jill has always been fascinated with fitness and the

human body. When she or any of her teammates were injured, Jill was always interested

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in learning about the injury and the healing process. Jill was also a good leader in high

school, she was a captain of the Track and Field team, she was involved in leadership

camp, and outside of school she was a dance instructor. With high school and all her

extra curricular activities, Jill was also able to juggle part-time jobs. When it came time

to graduate from high school, Jill was torn between her two passions, massage therapy

and business. She finally made the decision to pursue her business degree at Carleton

University. With the passion for massage therapy in the back of her mind, a course called

Small Business Management made her realize that she could have the best of both worlds

by becoming an entrepreneur and opening a Spa.

Since Celine was in high school and thinking about her future career choices, she

always considered venturing into owning my own business. Entrepreneurship was never a

new concept to Celine since it had always existed in her family. Her grandmother owned

her own translating company and my mother quit her typical office job to operate her

own word processing business back in the early nineties. After being exposed to the

duties of an entrepreneur for many years, she decided to embark on small business

courses in high school to increase her knowledge of the business industry. One course

that was very influential was a course called: OAC Entrepreneurship. In this course

helped students develop a business plan. After hard work and lots of effort, Celine’s

business plan made it to the City Finals that year. Celine’s love for entrepreneurship did

not end after high school, but she took it to a higher level. Celine’s ultimate goal

throughout her life was to open a hair salon or Spa. After observing and reading about

hair for some time, Celine started to cut a few of my friends’ hair and provided some

other hair services to them for free and for experience. Now, six years later, and through

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word of mouth, Celine has over 30 paying customers who come for a range of hair

services. She realizes that this natural talent and ambition that Celine possesses could turn

into a profitable business venture.

Celine and Jill decided that it would be a smart business move to combine both

their skills and talents into one business. They realized that there are many hair salons

and spas that exist but as entrepreneurs, they believed that she could offer a unique

experience that the rest do not offer. They decided to call their business The Serenity Spa.

The Serenity Spa would offer many hair and massage services to clients either in the

customers own setting or in the basement of Celine’s home. Thus far, the business has

been running quite well as second part time job for both students. Jill has been practicing

and researching different types of massage therapy. In fall 2004, she has enrolled in a

massage therapy certification course. During the evenings and weekends, Celine has been

busy increasing her clientele and providing hair care services. Some statistics on services

provided:

Location of Service Avg.

$
Customer’s Home 40%
Celine’s Home 60%

Service Provided
Cut & Style 25% $35
Style 20% $25
Cut, Highlight and Style 40% $150
Highlight or Colour and Style 15% $80-120

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 Customer Demographics %
Customer Residence
West End 80
(Nepean/Kanata/Stittsville)
Central 10
(Downtown Ottawa)
East End 2
(Gloucester/Orleans)
South End 8
(South Gloucester)

Gender of Clients %

Female 80

Male 20

Since most customers (over 55%) are using the highlight/colour and cut services, Celine

feels that the cost for driving to 40% of her clientele’s homes or offices are worth while.

The average cost for relocating to a customers house if they chose for home service is

also quite low since majority of the customers (80%) live in the west end of Ottawa

where Jill and Celine both now live.

Market Analysis

Who are the customers?

Our target customers are men and women between the ages of 20 and 50 years old that

want to enjoy the ultimate spa experience. These men and women will be busy

professionals who value convenience as much as they do quality.

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What do our customers expect?

Our customers expect professional service and quality products. Serenity Spa offers it’s

customers with a wide variety of products and services such as hairstyling, massage

therapy and aesthetics.

What makes customers choose us?

Our Spa focuses on home comfort with professional quality treatment. We will offer

many of the services customers would find in a commercial spa right in our cozy home

setting. To obtain a higher level of calm and comforting surrounding, we will also offer

numerous services right to the comfort of the customer’s home or office.

Competition

There are many spa and hair salons that exist within the Ottawa area. One main

competitor exists in the west end of Ottawa. They offer a wide range of products and

services, and they are known for their quality of service. There weakness is their high

prices for their hair and aesthetics services.

Our second major competitor is located in the heart of downtown Ottawa. We

feel that this spa is a major competitor due to its location. Its location allows for many

business men and women to make convenient appointments at their spa during open

hours within their workday. Although they possess many strengths in this industry (such

as quality service and location) they also charge higher end prices compared to other

local spas.

The third major competitor for the Serenity Spa is some of the surrounding local

hair salons and barber shops. These salons offer convenient locations for local customers

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and charge reasonable prices. Their weaknesses include; lack of variety of services, a

rushed atmosphere, and moderate quality of service. We feel these salons and barber

shops are competitors since our competitive advantage is convenience, and many of these

salons are easily accessible around the corner from their home or office.

The Problem:

Now that Celine and Jill are graduating from university they both are considering what

they should do with The Serenity Spa. Jill will soon be certified and will be able to start

creating a clientele for the company that will hopefully help raise more customers for

Celine’s end of the business. Celine as well, is finding that numbers of customers are

quickly increasing since word of mouth is being spread around. The problem they are

now facing, like many start up companies, is growth. Should The Serenity Spa expand

and relocate to a commercial location, or should it stay home based?

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Instructors Manual

Serenity Spa

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Instruction Manual for The Serenity Spa

After reviewing The Serenity Spa case and evaluating the circumstances and factor, we

believe that they have the choice to proceed with the following alternatives.

Alternative #1

The first alternative is for The Serentiy Spa to relocate to a commercial site. Right now

Celine and Jill are working out of Celine’s basement, and they feel that they have enough

volume to relocate to a commercial spa location.

Alternative #2

The second option is for Jill and Celine to stay home based. Although their clientele is

increasing, nearly 40% of them are home visits. Therefore, a new commercial spa, in the

present and in the near future, is not necessary for Serenity Spa.

Alternative #3

The third option for the Serenity Spa is to remain home based but in order to keep up

with the increasing customers, hire additional hair stylists, masseuses, aestheticians.

They will not relocate but work on expanding their volume through more home visits.

Recommendation

We believe that Jill and Celine should chose alternative two. They are now finished

university and have more time to devote to their business. Relocating at this time is not

necessary since almost half of their customers are home visits. Perhaps, they could hire

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additional part time staff to work during the busy days of the week. Keeping the spa

home base is also preferred since Jill will be attending a certification course next year and

will not be able to practice until later in the year. The competitive advantage that

Serenity Spa has over many of the surrounding spas and salons is their home visit service.

Therefore, they are not jeopardizing losing business by not relocating. At the moment

they should be concerned with increasing clientele, developing the company website and

sales of hair and beauty products. Eventually, we feel that the business should relocate,

but not in the near future. Growth should move slowly and after a few years of running

Serenity Spa as a fulltime business, Celine and Jill can see if it is the right time to expand

and relocate to a commercial site.

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