As med spa enthusiasts and financial professionals, we believe that medical aesthetics industry entrepreneurs who’ve enriched our own health and wellness deserve to thrive in return. That’s why we’ve compiled this essential guide to achieving sustainable success as a med spa owner. We’ll show you the financial fundamentals your med spa business needs to function and flourish.
- The three key financial vital signs
- How to assess a med spa’s expense ratio
- Critical performance review metrics
In addition to personal experience in med spa ownership and management, our insights come from studying industry trends, interacting with thought leaders, hearing directly from owner-operators and being loyal med spa clients, ourselves.
Know Your Vitals
Financial statements are the vital signs of a healthy med spa business. Three core financial statements can tell you how your business is performing from the inside out:
- Balance sheet: an overview of your assets and liabilities
- Income statement: your revenues and expenses during a specific period
- Cash flow statement: an estimate of money coming in to cover your overhead
Comparing your current numbers to the previous year’s financial statements and industry benchmarks can reveal symptoms of potentially bigger underlying issues.
The Golden Expense Ratio
Treatment results are only as good as the efforts that go into them. To optimize patient outcomes, you apply ample product with adequate frequency. Managing your business expenses is similar.
To keep things running smoothly, you’ll need ample cash reserves to make sure you’re prepared to respond to needs and opportunities that arise. As a med spa owner, that likely means lowering expenses and building up a cushion of cash.
It’s all about expenses versus income. Signs of a healthy expense ratio include:
- Variable expenses that increase in proportion to revenue growth
- Fixed expenses that stay constant year over year or decrease through negotiated buying power over time
- Expenses become a smaller percentage of your income as revenues increase
When your expense ratio is imbalanced, it’s time to get strategic. Fast. But how do you translate those numbers into an action plan? How do you know you’re making the best move for your med spa?
To find the answers, take a deeper dive into your data:
- Revenue per hour: This will help you determine whether services are priced appropriately, treatments are efficient, and your time is being well spent.
- Average revenue per ticket: Analyzing your fee schedule versus costs will provide insight on profitability.
- Conversion rates: If marketing leads aren’t turning into sales, this breakdown will help you evaluate your existing strategy and how to better nurture those leads.
- Lead acquisition cost: Testing different sales methods, reviewing their costs and assessing their level of success will help you identify the most affordable way to generate leads.
Would you let a broken laser or fat freezing machine languish unrepaired at your med spa? Of course not. Your business operations require equivalent attention, which can be extra challenging when your calendar is booked, and revenues are rising.
The ongoing goal is aligning your operational costs with your business’s revenue. If not, admin is a common area for potential profit improvement. To gauge how efficient your operations are, consider:
- Does your current lease include tenant improvement allowances?
- How do your team members use their time on the clock?
- Is your software suite synced up and accessible for all team members?
Marketing That Matters
Paid advertising and promotion is key to any med spa’s growth. But with so many marketing options out there, it’s easy to feel overwhelmed. It’s also easy to throw good money after bad and invest in the wrong tactics for your Med spa.
Most med spa owners express uncertainty when it comes to marketing. Fortunately, your data contains major clues:
- What is the current average lifetime value of your patient?
- Which of your digital channels generates the highest ROI?
- Does at least 20% of your business come from face-to-face marketing?
- Can you describe your ideal client in five words or less?
Marketing is far from one-size-fits-all in the med spa world. So rather than spending on a tactic that worked for another entity, focus on what’s likeliest to work for yours and your ideal client profile. Depending on your ideal customer, for example, you could test Facebook campaigns, cross-promote with Instagram influencers or create branded content for TikTok.
Complete Health Check Package
When you’re leading patient care and running a business at the same time, keeping an eye on your expense ratio is easier said than done. Analyzing your marketing campaigns often lingers at the bottom of your to-do list.
How do we know this at Med Spa Money? Because we’ve asked. We’ve had countless conversations with med spa owners who feel lost when it comes to finance and marketing. It’s clear to us that medical training programs aren’t preparing practitioners for the reality of running a healthcare business.
Our Med Spa Money team is here to help you with the business side of things. We take an objective look at your financial situation, operations and marketing and diagnose what’s going well, what could be better and everything in between.
If you’re willing to accept some tough love and professional honesty, we can identify specific ways to improve your marketing strategy and tactics with the goal of attracting new patients and retaining existing ones. We can collaboratively create an efficient plan with targeted guidance designed to help you and your med spa grow.
With Med Spa Money, you can focus on serving your patients while working toward treating yourself to long-term financial security.
Take the first step toward better health for your business. Book your appointment for a complimentary consultation.