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Most medical spas have grown out of an existing physician practice. The idea of having technicians producing revenue, low additional overhead, increased patient flow, and
feel that “I could do that” is attractive to a large number of doctors who are tired of
grind of medicine. (We’ve been approached by a surprising diversity of physicians looking to enter this market including; anesthesiologists, cardio-thoracic surgeons, and even podiatrists.)
Multiple Locations: After some initial success, many physicians and MedSpa owners attempt to open additional locations. (For some reason, these second-clinic startups are often opened by a relative, usually a wife or daughter.) These second locations never achieve
success of
first clinic for a very simple reason; their a completely different animal. If you’re thinking of opening multiple locations you’re work load just tripled. Multiple location sites are outside
abilities of most physicians and involve a much greater financial risk. Staffing and human resources, legal issues, medical oversight… most fail within
first year.
Successful multi-location practices are built around systems. If your first clinic doesn’t run without you there, you’re not ready for a second. Expanding to fast is a sure why to overextend your resources. Then you’re in big trouble. If you’ve closed a second clinic, lenders are going to be very wary of lending you money.
The Turn Key Solution: Franchises and consultants love to drop this phrase. The idea is an attractive one. Experts will guide your steps to financial glory. Marketing, financing, training, everything will be delivered in a nice little box with a bow on top. But, knowing a number of franchise owners and
problems they’ve encountered, I would give this advice; beware.
The current crop of franchises have a lot of problems. (One of them in California was shut down for selling medical practices to non-physicians. They’ve since reopened and are among
most aggressive advertisers.) Franchises are attractive because they claim to have all
answers. If you’ll just write
checks all of your troubles will be over. Not so fast. What you’ll really get are some manuals, pre-written scripts for sales, and bad ad-slicks. You’ll also get: locked into specific technologies that might be second-tier (the franchise gets kick-backs), spend money you could use elsewhere, and pay royalties on all of your income. (The franchises that offer a flat fee are an even worse idea. They have absolutely no motivation to help you.)
Big dogs eat little dogs. The next five years will see dramatic and disruptive changes in this marketplace. Large, well-financed medical businesses with smart physicians and high-quality care are going to open up next door to you. (You’re
corner store, they’re Wal-Mart) These businesses will be category killers and if you’re not well established with a broad market presence and multiple revenue streams, you’ll be gone.
The $80,000 towel dryers. Choosing
right technology is one of
things that will let you move ahead a step, or put you in cement boots where you stand. I always think of
way one physician described
pair of IPLs [Intense Pulsed Light devices] that he’d bought; as $80,000 towel dryers. Before you decide on which system to buy you’re going to need to crunch
numbers. How many shots will
IPL heads last for until they need to be rebuilt? How much support is included? What kind of training is provided? Does
device work better than its competitors? Before you sign your next few house payments away, make sure of your technology decisions.
Buy or lease. Leasing is
best way to go if you want to pay for your equipment as you use it while preserving your capital. Many of
technology companies have delayed payment plans as long as six months. Buying used equipment is often
best way to save money if cash flow is not an issue. (We purchase used medical lasers and IPLs online from a broker we trust and sometimes negotiate with our buying power for other physicians.) You can often save up to 40% off
price of a new machine if you have
cash on hand.
Don’t guild
lily: Cash flow is a problem many start-up medical spas face. Revenues and growth projections are commonly exaggerated in
excitement of a new business. Before you invest in embroidered leather treatment tables, make sure you can pay your bills. One medical spa startup spent $350,000 on build out and didn’t have any money left to attract patients. They were out of business in four months.
A few simple finance rules: • The Golden Rule is actually translated as: He with
gold makes
rules. • You will end up being personally responsible for
money: Physicians sometimes think that they can use equity in their medical practice or future earnings as security. Nope. • Be frugal: Take only
amount of money you need. It’s tempting to take as much money as you can get. Don’t. All
money you take will come with strings attached. • Take enough money: Lenders hate it when you need additional money. They worry something’s going wrong in
original plan. • Sometimes you can’t get there from here: Competition is fierce. If your market is already “owned” by a competitor, think carefully before going into debt to compete in a market you can’t win.
Tighten your belt: Financing is like anything else. In order to really find
best solutions you’re going to need to do some research. Find a mentor, someone who’s done it before and knows what to avoid. And remember,
most common reason that businesses fail is not lack of capital, its poor decision making.
Resource links for all of
businesses and information discussed in this article are available online at www.surface-med.com

Jeff Barson Managing Partner Surface Medical Spas http://www.surface-med.com and Managing Editor Medical Spas Online Magazine