One of the biggest challenges for any business owner is aligning your personal finances with your professional goals. We also know firsthand how being a med spa entrepreneur means juggling a lot of responsibilities and expenses, and it’s easy to lose sight of your own financial wellbeing while you’re laser focused on building a thriving business.
So what’s a busy med spa owner like you supposed to do about it? How can you stay in that sweet spot of having enough money to run your business and pay yourself a sustainable salary? We’ve rounded up strategies to structure your personal finances in a way that works to promote the long-term success of your med spa.
Separate Business and Personal Expenses
While in theory it’s easy to keep business and personal expenses separate, doing it in practice is a different story. To grow your med spa, you may forego a salary or pay yourself the bare minimum, only to end up dipping into your business accounts and taking resources away from the med spa when cash is tight.
What some entrepreneurs don’t realize is that keeping your personal finances in order is the foundation of a healthy business. It starts with asking yourself the following questions:
- How much money do I need to cover my personal expenses? By creating a budget for your household, you can get a better understanding of your personal finances and how much you need to earn every month.
- Can my med spa afford to pay me this kind of salary? According to the American Med Spa Association’s 2022 Medical Spa State of the Industry report, the average annual revenue for a med spa is nearly $2 million. But revenues are very different from profits, so you need to have a strong grasp of how expenses eat into dollars generated by the business.
- Could I adjust my lifestyle to receive a smaller paycheck? Taking a thorough look at your nonessential spending keeps your personal finances healthy, which can be especially important when you’re trying to grow a business.
- What personal expenses can the business cover? Since tax laws are always changing and vary depending on where you live, consult with your tax advisor about any personal expenses your med spa business can pay for you. Setting up a Health Savings Account or a Flexible Spending Account could also be helpful tax reduction strategies.
The Benefits of Sticking to a Budget
Keeping your monies separate is only the beginning. Once you’ve set up and organized your financials, it’s important to stay disciplined. This means taking an honest look at your family budget—not from a restrictive standpoint, but to understand your personal financial needs and make sure they’re met.
Think of your budget as an ongoing process that you continuously sculpt and perfect. Following are suggested personal budgeting techniques that can help med spa owners to do just that with the goal of growing their business:
- Keep your personal expenses below your income
- Automate as many bill payments as possible
- Include saving and investing in your budget
- Revisit and adjust your budget on a regular basis
Credit Scores Are More Than Aesthetics
As an entrepreneur, access to a credit line may allow you to finance business expenses without tapping into your personal savings. This is especially true when your med spa is just starting out or expanding. Maintaining a good credit score and making responsible use of credit can make all the difference when your business needs cash to:
- Finance operations
- Cover payroll
- Purchase new equipment
- Move to a new location
Yes, You Need an Emergency Fund
Variable income is a reality of entrepreneurship. While some months are very profitable, others may fall short. Since there is seasonality in procedures and services offered by med spa, and market competition is a reality of this growing industry, having an emergency fund can help to shield your personal finances from these ups and downs.
Should You Diversify Your Income?
Diversifying your revenue streams can be a reliable strategy to lower your personal financial risk as a med spa entrepreneur. This can allow you to focus on growth while you develop a client base and start generating profits.
How you set up your other sources of income depends on personal preferences and circumstances. For serial entrepreneurs, this means setting up multiple businesses that are independent of each other. For investors, income diversification could come from passive income or rental properties. Others prefer to keep a full-time job while running their med spa on the side and creating a plan to transition once the business is more established.
Save for Your Retirement
Putting your retirement savings on hold while the med spa grows is a common mistake – and one entrepreneurs may regret. While it’s important to focus on your growing business, you must also plan for the future.
As a business owner, you can take advantage of Simple IRA and 401(k) plans to meet your retirement goals and help your employees save. With the assistance of a financial advisor and tax planner, you can determine which type of retirement plan is right for your med spa and how much you can personally afford to save on a regular basis.
Boost Your Business Financials
The intersection between personal and business financials is inevitable for most entrepreneurs, and med spa businesses are no exception. And just like a solid personal foundation supports your business goals, stable business accounts allow you to thrive as an individual.
Following are some of the steps you can take to strengthen your med spa business:
- Get professional advice from business experts
- Outsource the business tasks that you cannot handle to focus on what helps you grow
- Establish the proper business entity type to take advantage of tax benefits
- Budget for major capital purchases
- Prioritize recordkeeping and accounting
- Run a lean operation with predictable systems
- Use technology to optimize your scheduling
- Focus on sustainable growth
- Look for savings opportunities
- Explore small business financing options before you need them
- Make sure you have proper insurance coverage
A Holistic Approach to Money Management
Personal financial management is a critical part of being a med spa entrepreneur. It’s something you should think about from the earliest stages of business development, whether you’re making $100 or $100,000 a month. With holistic guidance and careful planning, you can find that balance to make your money work for both you and your business.
To learn more about how Med Spa Money can help, schedule a consultation today.