Med Spa Success Key No. Two: It Takes Money!
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Key No. Two: It Takes Money to Make Money.
Everyone knows that it takes a fairly substantial capital investment to start any business. We have all heard stories about businesses being started with an initial investment of only about $200.00 years ago (the Curt Carlson (Radisson Hotels, TGI Fridays, etc.) legend), but that doesn't happen very often in today's world. If you don't adequately capitalize your business from the outset, you will not be able to properly take care of any of the 15 keys to success and you will fail. Start up expenses are important, but equally important is your ability to provide an adequate cash flow for the business during the first several years to keep the boat afloat as you make the mistakes along the way that we all make-- no matter how well prepared or well funded we are.
Many of us think nothing of spending $500,000 or more on our education, but then try to start a business on a shoe string. For your med spa, even a single room with adequate equipment and supplies may set you back from $100,000 to $300.000 depending on whether you lease or buy your equipment and how many devices you decide to purchase. Oftentimes you will be able to negotiate a substantial portion of your build out expenses with your landlord, and even roll a certain percentage of these costs into your lease. For a larger med spa, many physicians have financed over a million dollars for the proper set up (my build out of 2800 sq. feet -- for example-- was $250,000 and my equipment retailed for over $500,000). Once you are established you will face difficult decisions each day about how many employees to hire, how much to spend for equipment and product, and how much to allocate to advertising and promotion. As a general rule, the more you spend on advertising and promotion the higher your gross revenues will be-- provided you have adequate staffing and your personnel are well trained, motivated and suited for the task. Since sales of aesthetic services and products are 100% discretionary-- as opposed to traditional medical services which are largely paid by insurance and are generally more of a necessity-- the difference in sales results with an excellent and properly trained staff as compared to a mediocre and poorly trained staff can be astonishing.
A big mistake that many med spa owners have made is that as expenses rise and profits shrink they often panic, throttle way back on advertising, and try to "get by" with a smaller staff. The end result of this scenario is that the clinic gets into a "death spiral" which oftentimes leads to insolvency or bankruptcy. Don't allow this to happen to you. Start with a sound business plan and adequate financing for at least twelve months. If you sell treatment "packages", don't succumb
