Congratulations – you’ve done it! Your med spa has passed the tipping point of start up and become a profitable operation. Should you take those earnings as income to reward yourself, reinvest them to grow the business or repurpose them into diversified assets?
Although most owners choose to reinvest in their business to some degree, every med spa is different, and there are no one-size-fits-all answers to these questions that triangulate on the “correct” amount for re-investment vs. reward vs. re-purposing of profits.
During our years working with a variety of entrepreneurs and business owners, we’ve identified five common mistakes that owners make when reinvesting in their business. Fortunately, avoiding these mistakes is easier than repairing the damage.
1. Remaining Solely Service-Based
The med spa industry is service-oriented by nature. Customer service is everything when it comes to turning a profit. But time and team members are finite resources. Leaning solely on services caps your growth potential.
When reinvesting into your med spa, the following tips can help you innovate and boost business profits:
- Find a mentor with industry experience who can help develop long-term vision for retail as well as service line extensions.
- Consider expanding to offer training or consulting services to capitalize on your expertise.
- Evaluate your prices to make sure they support business expansion relative to your ideal client profile.
- Conduct market research to help you make educated, data-drive decisions rather than “gut feeling” ones.
2. Over Relying on Social Media Marketing
Likes and follows are purely cosmetic unless they translate to dollars in your business account. We get it. It’s important to establish a strong online presence and maintain brand awareness. But if the goal is to increase revenue, what you need is a comprehensive marketing strategy.
You start by understanding what your customers want and need. Then, you find a balanced approach that captures leads. You customize your content to engage your audience and develop funnels to extract the best leads. With a marketing strategy that’s tailored to your med spa, you can:
- Create the proper lead magnets and decide how you will deliver them
- Learn the marketplace to determine what works for your ideal client profile
- Grow brand recognition while building trust to shorten the buying decision timeline
- Forecast sales growth based on a clear plan of potential deals in your pipeline
3. Spreading Your Team Too Thin
It can be difficult to decide whether to grow your team or customer base first. While you explore the right balance between the two, beware of spreading yourself too thin. Doing so can diminish customer satisfaction and damage your med spa’s reputation.
When it comes to reinvesting your business profits by expanding your staff, refining your hiring process might be a wise place to start. For example:
- Finding a good HR manager
- Establishing a hiring process
- Determining your hiring standards
- Spending time onboarding and training new team members
4. Premature Scaling
Scaling is the dream for most MedSpa owners. But expanding too soon could lead to cash-flow mistakes that slow down your business in the long run. It can also foster disorganization, bad hires, and lackluster customer service.
To activate sustainable growth, we suggest taking a step back and remembering your why and how. The following approach can help you determine the best places to reinvest your earnings:
- Thoroughly test your market before offering new products or services.
- Document your processes and create a repeatable system.
- Stay focused on the company’s mission.
- Leverage automation to make scaling more affordable.
5. Reinvesting Every Single Dollar Back into the Business or Yourself
When it comes to reinvesting profits back into your med spa versus spending them on yourself, it shouldn’t be an either-or choice. As is often the case as an entrepreneur, it’s about striking an appropriate balance between both.
To start, pay yourself a fair salary that your med spa can afford and compensates your efforts. In order to determine that figure, you must first:
- Clearly understand your med spa financials
- Factor in your business debt
- Research statistics for business owner salaries in your market
- Stay consistent with your paycheck and adjust your personal budget
Reinvesting in your med spa can seem daunting at first, but it’s a critical step toward long-term results. Growing a successful business requires planning and foresight. By avoiding these common mistakes, you can map out your plans for the future and set up your med spa to thrive in the years to come. For more guidance on reinvesting in your business, reach out to the Med Spa Money team.