ZZ DAY SPA INC

How I Bootstrapped My Way To A $3M/Year Day Spa Business In New York City

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Gary Oberoi

Founder, ZZ DAY SPA INC

$250K

revenue/mo

Founders

Employees

ZZ DAY SPA INC

zzdayspa.com

from new york

started January 2018

$250,000

revenue/mo

Founders

Employees

Discover what tools recommends to grow your business!

Discover what books Gary recommends to grow your business!

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Profit First: Transform Your Business from a Cash-Eating ... Mike Michalowicz

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Atomic Habits: An Easy & Proven Way to Build Good Habits ... James Clear

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Hello! Who are you and what business did you start?

Hello guys, my name is Gary Oberoi and I founded ZZ Day Spa 3.5 years ago. The goal was to make it the most customer-centric day spa in the world.

I moved to America from India many years ago and I feel very grateful and blessed to have had more than my fair share of good fortune. America has been incredibly kind to me and I don't know of any other country that offers you such an incredible opportunity to be an entrepreneur and the potential to succeed. I started ZZ Day Spa in Manhattan, New York in November of 2018 and we currently have two locations the third one is opening on July 1, 2022. In three years we went from $30000 in monthly revenues to $240000 in monthly revenues.

Our founding principle was to create the most customer-centric spa ever. To do whatever it took within reason to make sure our guests had an “unforgettable experience.” I learned this from watching YouTube videos of Jeff Bezos, Elon Musk, and Warren Buffet all preaching the merits of a customer-centric company.

Today, not only is ZZ Day Spa the most highly rated spa in New York with over 1000 Five Star reviews but we were awarded the #1-day spa in New York City, 2021 by the International Beauty and Spa Awards and named the Top 3 Spas in New York for 2022.

We have been blessed with an incredibly caring and hardworking team of therapists and staff. This brings me to the notion of making sure you hire the “right” people because once you build a team of caring and responsible people, they self-direct themselves with little supervision.

I wish I could say things were easy. In March 2020 like the rest of the world, we were shut down due to the COVID-19 pandemic. Debts piled up rapidly and we had zero revenues for four months. When we did reopen, things were slow going. However, our whole staff agreed to take a 30% pay cut, our landlord gave us a rent break and slowly but surely we worked ourselves out of that terrible situation. At our last Christmas party, I could not hold back tears when I got up to thank my team for their contribution. I looked around the room and a swell of gratitude built up in my heart.

Our goal was to create a place for customers to not only come and receive a “service” but enjoy an “unforgettable experience.” To that end, we focused all of our efforts.

What's your backstory and how did you come up with the idea?

Some years ago, my former girlfriend came to visit me and said she was having trouble running her spa and needed help turning it around. At that time I was in real estate but wanted a change because in real estate you’re as good as your last deal. So I took her up on the offer, and helped turn the business around. It’s primarily a “woman's business” and I am the odd one out. But I just loved how customers felt after their service and how happy they were. For me, it was not a job, or career, but a calling. And after being in the cutthroat business of real estate in Manhattan, New York, the spa business seemed like a “slice of heaven.”

I think when you get some measure of success, people do not see the struggle behind it. It was only recently in the past 2 years we began to see much success. However, before that, for many years I struggled with one spa after the other and did not quite make it. There was always something missing and I could never get it right; unfortunately, there was no “overnight” success for me. I could fill up 3 or 4 pages tabulating all my mistakes and failures. However, I never gave up. I was always short of money, and I can’t even begin to tell you how many times I barely made payroll or how many times I had to use my personal credit cards to pay the bills and keep the doors open.

However, I always felt I had the greatest job in the world. Whenever I meet someone at a gathering and they asked me what I did for a living, I always said, “I make people happy for a living!” Who doesn’t like to come to a spa? And everyone leaves happy. It is immensely gratifying.

I strongly believe that if you’re resourceful you don’t need money to open a business, because you can always find ways around it.

I think my “aha moment” in this business was when I truly understood the impact of providing an “unforgettable experience” that is above and beyond the expectation of the guest. We try to kill our customers with love and kindness. We give them more than they expect. The customer is always right (even when they are not).

We don’t have policies, we simply have guidelines that can be overturned by any staff member if it infringes on making a guest happy. Elon Musk of Tesla says it all the time, “Create a compelling product or service that is of value to the customer and you will succeed.” For some reason, my brain is not wired to think that I have to be rich or wealthy. I just want to create something unique and special where we never quit learning and improving. Where going to work is a pleasure.

I’m sure many readers of Starter Story are folks who want to be entrepreneurs and who seek inspiration through these stories. There is no question that the strongest pillar of success for any business is creating something “compelling and extraordinary” for your customers. On a personal level, after failing multiple times, I found that having a “purpose and being useful” to others is a good way to live, regardless of the results.

Take us through the process of designing, prototyping, and manufacturing your first product.

Like a fool, after opening the spa, I thought I could attract a ton of clients by partnering up with Groupon, a company that sells heavily discounted services. While Groupon did fill our spa with clients, and we had a full schedule, I was only getting paid 20-25% of our retail price. It was a financial nightmare. There was immense pressure to lower our prices to attract more customers. Essentially, it was a race to the bottom. Unfortunately, I was too scared to lose those low-paying clients and too ignorant about other profitable marketing avenues and almost ran the spa into the ground.

It was only after I attended a seminar on “customer experience” that I realized I had to take the price off the table and create a service that was so compelling, that customers would be more than willing to pay full retail price. That shifted our business from being unprofitable and on the edge of bankruptcy to being one of the most profitable in the industry today. It was a hard lesson to learn, but well worth it.

Describe the process of launching the business.

When I opened the spa, I did not have a dime to my name. I knew I could not afford to buy or build a spa. In Manhattan, it would have cost me at least $600,000 to open a new day spa. This was money I simply did not have. So, I had to get it for free. I kept looking at available spas until I found a listing for a spa for sale on Craigslist for $265,000. It had been losing money every month and the owners were tired of having a money-losing operation.

While the spa was losing money, it was located only one block from the Empire State Building and was in the heart of the city. The location was amazing. It took me four months to convince them, but I ultimately persuaded them to give me 50% of the spa for free in exchange for turning the business around and making it successful. This way they could get their investment back without losing all of their money.

While it took longer than expected, 2.5 years later I bought them out using the profits that I generated. Soon after, I opened a second location. Now 3.5 years after that first deal, I have two locations that I own 100%. I strongly believe that if you’re resourceful you don’t need money to open a business, because you can always find ways around it.

Since launch, what has worked to attract and retain customers?

Through a stroke of good fortune, I met an expert on Google Ads named Michael. Through this relationship, I discovered the magic of Google, Instagram, and Facebook ads, not to mention SEO. I believe we are not living in the “information” age, but living in the “digital” age. You have to master digital marketing and all of its facets to attract clients. This has worked very well for us, and since first learning about digital marketing, we have not looked back.

Our social media and Google ads bring us an 8-fold ROI. Through SEO, we have pushed ourselves onto the first page of Google search, because as they say, “Companies go to die on page 2 of Google search.”

The best way to retain clients is to become the most customer-centric company in the world. Do whatever it takes to make the guest happy, even if that means lower profits in the short run. A happy guest is a returning guest, which is what we aim to achieve with every new guest that walks through the door.

Every day do your best to move the ball forward. Once you decide, the universe will come together to reveal all kinds of opportunities to propel you forward.

Additionally, it’s not just the spa that makes the customers happy, it’s the people who work there that make the customers happy.

Hiring the right people and creating a culture where there is positivity and respect between team members is integral to success. Allowing their voices to be heard creates an atmosphere that is conducive to a positive guest experience. By paying our team 10% above the average spa wage, we take the question of money and salary off the table. At ZZ Day Spa, our mission is to provide everyone with a good living wage.

How are you doing today and what does the future look like?

We are currently one of the most respected, loved, and highly rated day spas in New York City. Our incredible team of associates work very hard to live up to our core value of being the most customer-centric day spa in the world. Where better to test ourselves in the competition capital of the world, New York?

“Just do it!” Nike’s quote, not mine, says it all. Put one foot in front of the other and get going. There is no better day than today. It will never be perfect. Every day is a learning experience.

When we reopened after the coronavirus lockdown in July 2021, we only did $35,000 in business the first month. Last month we did a $224,000, and almost 650% increase in business. As crazy as it sounds, we are aiming for $880,000 per month in revenue by the first quarter of 2023.

We will be opening our third location on June 1, 2022, and our fourth location on November 1, 2022. Currently, we are focused on our home market of New York. However, in 2023 we plan to open at least 2-3 locations outside of New York. We are not going to open new locations just for the sake of growth. We will only open it if the other locations are profitable and successful, with positive cash flow always as our top priority. This is also one reason why we have decided not to take on any bank loans or debt.

Through starting the business, have you learned anything particularly helpful or advantageous?

Through starting ZZ Day Spa, I have learned four HUGE lessons:

(1). If you’re resourceful, you don’t need a lot of money to open or start a new business.

I had no money and was able to acquire a $600,000 brick and mortar day spa in the heart of Manhattan without paying the previous owners upfront. The lesson here is to dream BIG and negotiate fair, but hard.

(2). There is magic in Google, Instagram and Facebook advertising and SEO.

We live in a digital age and content marketing and advertising on platforms like Google, Instagram and Facebook are non-negotiable. This was a huge lesson for me and the business.

(3). Profit First

Most businesses function on the accounting principle of revenue minus expenses equals profit. Most entrepreneurs work exceptionally hard but never pay themselves. They will slave for crazy hours, pay everyone who works for them on time but barely pay themselves anything. That always seemed completely upside down to me. When I read the book “Profit First” it opened my mind to a completely new way of thinking. Now, our operating principle is revenues minus profit equals expenses.

I first set aside 35% of our revenue as monthly profit, and then I use what is left as operating expenses, forcing me to monitor expenses. Believe it or not, I started by setting aside only 4% of revenues for profits initially. It took 7 months to get to 35%. It was a radical shift in thinking and one of the most valuable business lessons I ever learned. Once you take profit first, you are forced to operate with what’s left. Now the company has $0 debt, we are profitable every month and I take a good salary for the hard work I put in. Entrepreneurs must learn to pay themselves first. I highly recommend reading the book, Profit First.

(4). Be the most customer-centric company in the world.

I wish I could take credit for this foundational business principle, but it comes from three of the richest people on earth, Elon Musk, Warren Buffet and Jeff Bezos. They strongly advice to be the most customer-centric company in the world in whatever you do. Or in other words, create a compelling product or service that customers value. If you can create an unforgettable experience for the guest, not only will they come back, but through word of mouth and word of mouse (reviews), they will spread the word. Tesla is a new car company that is upending the automotive business. Tesla spends $0 annually on advertising, while GM spends $3 billion annually, however, Tesla’s market cap is 11 times higher than GM. When you aim to become the most customer-centric company in whatever you do, price becomes irrelevant. People will pay for great service or a great product. It should be your first and foremost driving principle.

I spend one hour every day on this simple question, and it has made all the difference. What can I do in the next one hour that will be worth $25,000 or more? Asking this question forces you to leverage everything.

What platform/tools do you use for your business?

We work with:

These allow us to book and charge for appointments, maintain our website, and monitor our digital marketing.

What have been the most influential books, podcasts, or other resources?

Reading should be a mandatory part of an entrepreneur’s life. Here are some books I highly recommend:

I’d like to share one more important lesson:

I spend one hour every day on this simple question, and it has made all the difference. What can I do in the next one hour that will be worth $25,000 or more? Asking this question forces you to leverage everything.

You learn to leverage your ideas, time, money, resources, and people. If you try answering this question for one hour every day, magic will start to happen. You will begin to get all kinds of marketing, guest experience, accounting, culture, client retention, and other useful ideas that, when implemented, create and lead to a successful business.

Advice for other entrepreneurs who want to get started or are just starting out?

“Just do it!” Nike’s quote, not mine, says it all. Put one foot in front of the other and get going. There is no better day than today. It will never be perfect. Every day is a learning experience, and every day do your best to move the ball forward. Once you decide, the universe will come together to reveal all kinds of opportunities to propel you forward.

We don’t live in the industrial or information world anymore. We live in the digital world. This means you could be anywhere on the planet and start a business. Don’t let anyone or anybody stop you.

And if you’re in New York, email me at [email protected] and tell me you found me on Starter Story and I’ll set aside some time to meet with you over a quick cup of coffee. Nothing like paying it forward.