Three Stages of Medical Spa Ownership

Posted By Madilyn Moeller, Wednesday, August 4, 2021

At Blush Aesthetics, man hands tablet to woman at front desk

By Michael Meyer, Content Editor/Writer, American Med Spa Association

You don't know what you don't know—it's true in all walks of life, but the challenges faced by medical spa owners and operators are perhaps a bit more complex than the obstacles many other businesses have to clear. For one thing, the dual nature of a medical spa as both a medical practice and a retail outlet multiplies the issues facing owners. Medical spa owners have to operate their businesses in accord with the many regulations governing medical practices; but unlike traditional medical practices, they also need to market themselves effectively to attract new customers. Add in the ever-evolving available technology and the shifting tastes of consumers, and it's a wonder how any medical spa ever manages to succeed.

But they do, of course, and the most successful ones understand that they need to be prepared to course-correct at a moment's notice. The challenges faced by a medical spa are going to be different in different stages of medical spa ownership but knowing about the issues others are dealing with and preparing yourself for them can help you become light on your feet and ready for all the obstacles this unique industry throws in front of you.

The Beginning

Not many people open a medical aesthetics practice knowing exactly what to do. Something that seems as simple as determining what products and services you want to offer can, in fact, be a challenge. What if there's another outlet that's already established in your area offering the same sorts of treatments? How can you differentiate yourself from your competition? Do you want to be a full-service medical spa, or do you want to specialize in a small number of treatments? These are just a few questions people need to ask themselves during the conception of their medical spas.

But even if you do your due diligence and make informed, sensible decisions about your medical spa, there may still be unforeseen circumstances that emerge to provide new challenges.

Consider, for example, what happened to Michael Tichy, CRNA, APN, and his wife, Emily, as they prepared to open their medical spa, The Skin Spot Laser and Skincare Club, in Cape Coral, Florida, in 2020. In Cape Coral, they have a booming population—the population of the city has grown by approximately 50,000 people in the past decade—which is, on the surface, something someone opening a medical spa should definitely be looking for. However, this created an unexpected new set of obstacles.

"Our greatest challenge is Cape Coral is fabulous," Emily Tichy says. "We're getting new people from all sorts of areas, but the dilemma also is that there are limited locations available. Everything's taking longer trying to find a location to lease or to buy—it took two or three times longer than we thought it would. All the contractors are busy—everyone's building or purchasing something. We went through seven contractors trying to just even get bids. We would have an appointment where we'd have five or six people come to give us an estimate, and we wouldn't get any estimates back. We'd be following up for months asking for pricing, and they're just too busy."

The Tichys did manage to secure a small location in Cape Coral, and they planned to open The Skin Spot in June 2020. Of course, as they were making their preparations, the COVID-19 pandemic hit and complicated the medical spa's opening, although not quite in the way that one might expect.

"Everything in Florida had shut down," says Emily. "It had been seven weeks of no elective surgeries, everything was closed. And then once things opened up, the demand for aesthetics was so high that it's just been non-stop. So, the challenge that we had immediately was that we needed a larger location—we needed more space."

The pandemic has also made it more difficult for new medical spa owners to properly evaluate equipment and establish supply chains, which are key to a medical aesthetic practice's success.

"There are no conferences or trade shows because of COVID, so that's made it really hard to have hands-on looks at products," Emily says. "I'e had challenges with choosing electric treatment beds, medical devices—even finding simple things like steamers and towel warmers for my aestheticians has been an issue. Our greatest challenge right now is being able to choose the right products and choose the right vendors without having access to these shows." (Editor's note: Since this interview was conducted, shows such as the Medical Spa Show are once again taking place. Save January 28 – 30 for Medical Spa Show 2022.)

The couple also joined several social media groups dedicated to medical spa ownership to pick the brains of people who were already established in the industry, and they took part in a variety of webinars about medical aesthetic best practices.

And while this would seem to be the worst possible time for a medical spa to open, by addressing these common issues, the Tichys have been able to establish themselves in Cape Coral in just a year, and soon will be moving from the two small suites they currently occupy into a new 2,300-square-foot space. Despite the difficulties they'e encountered from overwhelming demand, Emily advises prospective medical spa owners to find a similar situation to help ensure success.

"Look for an area that's not being served—like, our current market is not being served. It's kind of that 10-to-2 or 10-to-3 sleepy retiree type of business," says Emily. "There are so many people out there who want aesthetic services, but they can't take a day off of work to go have a treatment, and they're looking for results. This client is going to be a long-term relationship, and you want to choose what's going to work best for them. If you always have their best interests at heart, they're going to keep coming back."

The Middle

Once a medical spa owner finds their footing and begins to establish a client base, their priorities and needs tend to shift. Small practices tend to become larger, and the growing number of patients can cause owners to reassess the way they do business.

"It was definitely much simpler when it was a one-person practice," says Erin Hennessey, APRN, DNP, owner of Blush Aesthetics in Perrysburg, Ohio. "Now, we sometimes manage patients that, frankly, I don't know, because they're being managed by another provider. I went from being very intimately involved with every single patient's care to now having others in the business that are managing patients' care. So, learning how to delegate and learning how to train people really well and trust that they're going to do what they need to do, and what's best for the patients has been a learning process."

Since Blush Aesthetics was founded in December 2016, it has grown from being Hennessey's solo practice to employing 10 people, including four nurse practitioners and two registered nurses, as well as a few office staffers. In that time, the practice moved from a single-room space to an upscale retail space. But the practice's success didn't happen overnight.

"We started out slowly and moved along the way," Hennessey said. "Certainly, we'e made some mistakes, as far as business decisions go, but every year we're learning, and as we know better, we do better."

As a provider like Hennessey becomes a manager, they have to shift their focus to creating a positive workplace that maintains the attitude and enthusiasm that existed when the practice was created.

"In the beginning, when it's just yourself, there's no personnel to manage," says Hennessey. "As we have brought on more folks, with the mix of personalities, managing our staff and managing our providers and making sure that the culture stays consistent has been something that's really important to me. We really have a culture of support, of teamwork, and of taking really excellent care of patients and making sure that they have a great experience with us. I always have felt like if we take really good care of our people, they're going to take good care of the patients. We have tried to choose people to come onto the practice with us who share those same visions and goals, and who really want to work in a team environment."

And while she's not at the same point in her career as the Tichys, Hennessey similarly understands the value of education, whether it be about the industry itself or the practices and procedures that lead to medical spa success.

"The more you can invest in your education, the better off you're going to be," she says. "I think it's important, even when you're doing well and things are going well, to never stop learning, never stop growing and never stop challenging yourself. You just don't want to become complacent."

The End

Nobody gets into the medical aesthetics business thinking about getting out of it, and it might seem counterintuitive to think this way, but the fact of the matter is that from the day you begin planning your medical spa, you need to begin setting yourself up to sell it.

Now, that doesn't mean circling a date on a calendar or committing to an exit, but rather, committing to business and legal best practices that will allow you to sell your practice if you want, or make the transaction easier if you receive an offer you can't refuse. First and foremost, you must keep detailed records of your business and track your costs as closely as possible.

"You need to do all the heavy lifting and have a good plan in place," says Bradford E. Adatto, JD, partner at ByrdAdatto, a law firm that specializes in health care and business issues. "You'e got a good idea of who your employees are and how much your machines are costing and how you bring in your revenue, and you have a really good basis for understanding who you are as a business."

Second, a business needs to be properly structured to scale up operations and add investment income if and when that becomes possible.

"Understanding on that growth piece is really making sure that your legal model is the right model for scaling, and that can make a huge difference, because if you have the wrong entity in the beginning on the planning side, it's going to be hard from a scaling side to grow," Adatto says. "It could be your growth model is that you're going to bring in some inside investors who want to help put in some money and capitalize it, or you might go get out and get some commercial debt itself—just go to a bank and get a line of credit or borrow cash. You can use that money to go buy another practice, or you can start thinking about, maybe I want a joint venture with somebody and I can partner with that group down the block that has something a little bit different from us and we'll scale together."

Third, a business that's looking to sell needs to know the value of the practice, understand its position in the market and find the best deal, rather than simply selling to the first person or group that makes an offer.

"You just don't want to take any unsolicited offer that comes through," Adatto says. "Even if you're like, ‘Wow, that's an amazing offer,' you may not realize that they're low-balling you massively because you just never thought about the value of your practice. Hopefully, though, you have a business plan that you put together, and as you were scaling, you had an idea of what your exit would be."

Knowing the true value of your practice helps prevent potential buyers from taking advantage of you, even when times are tough.

"We'e seen situations where someone has had a really bad a couple of months—financially it's just not working, employees are tired, they're beaten down, they haven't taken a vacation forever—and someone walks in the door and makes an offer and they're like, ‚ÄòSure, I'll take it,'" Adatto says. "We always tell everyone to hit that pause button before that and make sure that you're ready to sell and, if you do make that decision that you want to go through with the sale, make sure you're negotiating from a position of authority, because it's your practice. It's what you'e worked on so hard to build it and put it in a position to sell."

Past, Present and Future

Your career in medical aesthetics is likely your life's work and going through its different phases is a defining journey. If you want to give yourself the best chance to prosper, make sure you're set up for success and then work as hard as you can to satisfy your customers and grow your business. And if you're not set up for the success you want, consult legal and business professionals to help get you on track.

"Take a giant step back to answer that question—why are you starting this business? When you look back five or 10 years from now, where do you want it to be?" Adatto says. "Even if you are uncertain, set it up so that you're in a good position, so that if you do start developing and growing, you have a good plan. For those who just kind of went out the door and hung up a shingle and now realize they probably don't have the right plan, or they don't know how to scale, it's not too late. Many of us in this profession work with individuals who finally realize they need to hit the pause button, restructure their entity or restructure their business model because they'e tapped into something, but they're not in a position to take advantage of it."

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