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Will You Add? - Common Mistakes When Planning Your Medical Spa
1.Know your past achievements. An achievement is something that excited you, gave you a feeling of pride, something that you enjoyed doing. Each achievement is made up of factors that have made you successful: creativity, for example, or management, directing, leading, or selling.2. Do your research. Gather and analyse information about the company and the companies’ competition. Your painstaking research should include: what the company produces, who the company’s customers are, what their culture is like, and if they have a company mission and, if so, what it is. Also find out if they are growing and why, what their plans are for the future, and who their primary competition is. Your knowledge about them will not only contribute to your self-confidence, but also show that you have sincere interest in them.3. Answer all questions directly. Don’t get long-winded or go off on unrelated tangents. The best insurance for a direct response is to listen: do your company research; and know your skills, achievements, values, and personal qualities. Listening and preparation are the keys to a winning presentation at an interview.4. Be prepared to answer personal questions. Your personality and core values are strongly considered in a competitive market. Every person counts. You will not only contribute to the profitability of the company but also to its culture. You may be asked, “What are your strengths and weaknesses?” “Describe your best or worst boss” “What
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 the 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 the right technology is one of the things that will let you move ahead a step, or put you in cement boots where you stand. I always think of the way one physician described the 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 the numbers. How many shots will the IPL heads last for until they need to be rebuilt? How much support is included? What kind of training is provided? Does the 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 the best way to go if you want to pay for your equipment as you use it while preserving your capital. Many of the technology companies have delayed payment plans as long as six months. Buying used equipment is often the 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 the price of a new machine if you have the cash on hand.
Don’t guild the lily: Cash flow is a problem many start-up medical spas face. Revenues and growth projections are commonly exaggerated in the 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 pa
Effectively reading non-verbal messages can dramatically improve your sales relationships, as well as your sales results.Everyone communicates on two levels. Verbally and non-verbally. Verbal communication, or the spoken words we use, represent a very small portion (less than 10%) of our overall message. People can lie, misrepresent or mislead you with their words. Non-verbal language represents over 50% of our total message.If there is an inconsistency between the verbal message and the non-verbal message you are getting from a prospect, I would advise paying more attention to the non-verbal. The non-verbal message will always be more a more accurate representation of the person’s feelings, attitudes or beliefs.There are a number of ways we communicate non-verbally. There are: gestures, facial expressions, eye movements and eye contact, posture and body position, verbal tone, inflection, pauses, pace and volume. The way people dress also sends a non-verbal signal.An easy way to determine what someone is thinking or feeling is to observe whether their signals are open or closed. Open signals represent openness, acceptance, willingness, enthusiasm, and approval. Closed signals represent the opposite of all of these. Closed signals are crossed legs, arms, hands. A lack of eye contact, rigid posture, leaning away from you, and the hands on top of the head are also examples of closed signals. Open signals are exactly what they imply: open hands, u
Remember that this is a medical business and comes with special requirements. Non-physicians can not employ physicians, medical oversight, HIPPA compliance, and a host of other regulatory issues need to be addressed. Play fast and loose with these rules and you’re asking for trouble. (One of our local competitors in Utah was not providing adequate physician oversight. The state walked in one day, confiscated all of their technology and patient records and closed them down.) All lenders want to know how you’re going to handle these issues. ADVERTISEMENT
Financing is easy. Financing smart is hard: Speak the words “medical spa” as a physician and you’re everyone’s best friend. Banks, lenders, technology companies will all have big smiles on their faces and papers in their hands, ready to lend money or finance everything you need. If you’re not a physician it’s going to be harder.
If you need money or a line of credit for needs other than technology, a bank will probably be your first stop. Banks will provide the best rates but are the most rigorous in investigating borrowers and have the least tolerance for risk. Banks will require that you have spotless credit and that the entire loan is secured. In most cases, everyone who owns 10% or more of the business will be personally responsible for the loan and have to provide two or more years of tax returns. Be prepared for a blizzard of paperwork. Banks will want to see financial statements, cash flow, a business plan (although they don’t read it), and have a little visit.
The bank is going to want to know what the funds are intended to be used for. They want to see tangible assets that have a market and can be sold if the business fails or you can’t make the payments. They don’t want to hear that you need more money for marketing and advertising or salaries that don’t have any resale value.
The money that banks will lend you will take the form of a loan, or a line of credit. Loans have a set schedule and payments. A line of credit is somewhat different. The idea is that the bank extends a line of credit that you may draw on. Interest is paid only on the amount of money that is used. However, banks usually require that the entire balance is paid off and unused for one month every year to ensure that the business is liquid. If you can’t meet this requirement, the entire line reverts to a loan.
Some bankers are helpful and some are not. In one instance a branch manager told one of our accountants that wanted some information that “he didn’t need our business and we could just live with that”. Avoid these types if you can. A friendly banker can go a long way in securing loans and providing a little flexibility if things don’t go exactly as you planned. If you find a great banker, send him a Christmas card and some cookies once in a while.
If you are in the fringe of what a bank can tolerate risk wise, they will often suggest or apply on your behalf for an SBA (Small Business Administration) loan that’s partially guaranteed by the government. (www.sba.gov/financing)
Half of something is better than all of nothing: If you’re going to need more money than you have in assets, you still have a couple of options. These involve partnerships, joint-ventures, venture loans or equity.
Most start-ups involve some form of equity trade. Partnerships are a good example. Sweat equity in the early stages provides ownership in lieu of payment or salary. It’s very common for entrepreneurs to take little or no money, sometimes for years, until the business is on its legs. Sweat equity at this stage usually extends only to the founders but may extend to badly needed partners. When we started Surface, I took more than an 80% reduction in income.
Equity: The simple rule is; the more money you need and risk you entail, the more equity you’re going to give up.
Angels: This is the first stop for most entrepreneurs. Angel financing (also called seed money), is usually raised from friends and family or “high net-worth” individuals. In some cases you may find “Angel Groups” that meet together and look for investments. Angels are usually found a the early stages of a business and are often bought out when larger investors come in.
Venture Debt: A recent surge in venture debt has made its way into the market and is worth discussing. Venture debt is basically a venture loan. The lender charges a higher interest rate than banks are allowed to (often around 14%) and accepts more risk in return. In addition, you will have to give up a small percentage of your company in what are called warrants. This small percentage (usually less than 5%) allows the lender to share in any potential upside. Venture debt is worth considering if you’re sure of success and you don’t want or need to give up a large equity position in you company. But you’ll still be personally responsible.
Venture Capital: When most people think of raising large amounts of money, they’re thinking of venture capital. For most start ups, venture capital is not an option. VC money has some downsides though. It is hard to get and extremely expensive. When you add up the entire enchilada, you’re looking at about 80% compounding interest each year in return for that money. VC’s are looking for an investment term of three to five years and a ROI (return on investment) of 700% or more. Whew. You’re also going to loose complete control of your company and have someone constantly looking over your shoulder. There are cases where this actually makes sense. Many VC are extremely well connected and bring these resources to the table.
So, now you’ve got the money you need. What are you going to do with it?
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 the feel that “I could do that” is attractive to a large number of doctors who are tired of the 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 the success of the 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 the abilities of most physicians and involve a much greater financial risk. Staffing and human resources, legal issues, medical oversight… most fail within the 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 the 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 the most aggressive advertisers.) Franchises are attractive because they claim to have all the answers. If you’ll just write the 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 the 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 the right technology is one of the things that will let you move ahead a step, or put you in cement boots where you stand. I always think of the way one physician described the 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 the numbers. How many shots will the IPL heads last for until they need to be rebuilt? How much support is included? What kind of training is provided? Does the 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 the best way to go if you want to pay for your equipment as you use it while preserving your capital. Many of the technology companies have delayed payment plans as long as six months. Buying used equipment is often the 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 the price of a new machine if you have the cash on hand.
Don’t guild the lily: Cash flow is a problem many start-up medical spas face. Revenues and growth projections are commonly exaggerated in the 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 pa
These suggestions came from a survey conducted regarding what has been useful for various businesses and organizations. Pick ones that you would use for your organization and use them. If you require coaching or training for the implementation, contact us for professional support.1. Focus groups…discussion of issues and solutions2. Survey employees regarding issues and possible solutions3. Divide issues into ones where there is control and ones where is NO controla. Acceptance of no controlb. Possible solutions or enhanced practices (Tackle the difficult situations and not just talk but solid follow-through…with accountability)4. Invite input and participation from every sector and all personnel5. Educate or at least update all personnel regularly and have supervisors explain the roles and expectations that will accompany any changes/transitions (help create “buy-in” for each of your “key” personnel.)6. Get support networks developed and working7. Create recognition for positive organization stress management suggestions (reward positive participation, celebrate the best suggestions…follow through)8. Get leadership to role model stress management- positive re-enforcement for individuals or groups that demonstrate improvement.9. Educate all personnel on how and when to use EAPs10. Reduce stigma of admitting effects of stress by training/educating personnel on why we are more stressed now tha
The money that banks will lend you will take the form of a loan, or a line of credit. Loans have a set schedule and payments. A line of credit is somewhat different. The idea is that the bank extends a line of credit that you may draw on. Interest is paid only on the amount of money that is used. However, banks usually require that the entire balance is paid off and unused for one month every year to ensure that the business is liquid. If you can’t meet this requirement, the entire line reverts to a loan.
Some bankers are helpful and some are not. In one instance a branch manager told one of our accountants that wanted some information that “he didn’t need our business and we could just live with that”. Avoid these types if you can. A friendly banker can go a long way in securing loans and providing a little flexibility if things don’t go exactly as you planned. If you find a great banker, send him a Christmas card and some cookies once in a while.
If you are in the fringe of what a bank can tolerate risk wise, they will often suggest or apply on your behalf for an SBA (Small Business Administration) loan that’s partially guaranteed by the government. (www.sba.gov/financing)
Half of something is better than all of nothing: If you’re going to need more money than you have in assets, you still have a couple of options. These involve partnerships, joint-ventures, venture loans or equity.
Most start-ups involve some form of equity trade. Partnerships are a good example. Sweat equity in the early stages provides ownership in lieu of payment or salary. It’s very common for entrepreneurs to take little or no money, sometimes for years, until the business is on its legs. Sweat equity at this stage usually extends only to the founders but may extend to badly needed partners. When we started Surface, I took more than an 80% reduction in income.
Equity: The simple rule is; the more money you need and risk you entail, the more equity you’re going to give up.
Angels: This is the first stop for most entrepreneurs. Angel financing (also called seed money), is usually raised from friends and family or “high net-worth” individuals. In some cases you may find “Angel Groups” that meet together and look for investments. Angels are usually found a the early stages of a business and are often bought out when larger investors come in.
Venture Debt: A recent surge in venture debt has made its way into the market and is worth discussing. Venture debt is basically a venture loan. The lender charges a higher interest rate than banks are allowed to (often around 14%) and accepts more risk in return. In addition, you will have to give up a small percentage of your company in what are called warrants. This small percentage (usually less than 5%) allows the lender to share in any potential upside. Venture debt is worth considering if you’re sure of success and you don’t want or need to give up a large equity position in you company. But you’ll still be personally responsible.
Venture Capital: When most people think of raising large amounts of money, they’re thinking of venture capital. For most start ups, venture capital is not an option. VC money has some downsides though. It is hard to get and extremely expensive. When you add up the entire enchilada, you’re looking at about 80% compounding interest each year in return for that money. VC’s are looking for an investment term of three to five years and a ROI (return on investment) of 700% or more. Whew. You’re also going to loose complete control of your company and have someone constantly looking over your shoulder. There are cases where this actually makes sense. Many VC are extremely well connected and bring these resources to the table.
So, now you’ve got the money you need. What are you going to do with it?
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 the feel that “I could do that” is attractive to a large number of doctors who are tired of the 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 the success of the 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 the abilities of most physicians and involve a much greater financial risk. Staffing and human resources, legal issues, medical oversight… most fail within the 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 the 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 the most aggressive advertisers.) Franchises are attractive because they claim to have all the answers. If you’ll just write the 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 the 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 the right technology is one of the things that will let you move ahead a step, or put you in cement boots where you stand. I always think of the way one physician described the 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 the numbers. How many shots will the IPL heads last for until they need to be rebuilt? How much support is included? What kind of training is provided? Does the 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 the best way to go if you want to pay for your equipment as you use it while preserving your capital. Many of the technology companies have delayed payment plans as long as six months. Buying used equipment is often the 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 the price of a new machine if you have the cash on hand.
Don’t guild the lily: Cash flow is a problem many start-up medical spas face. Revenues and growth projections are commonly exaggerated in the 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 pa
Developing rapidly since the introduction of the first fully automated plain-paper photocopier by Xerox in 1959, present-day copiers work more like computers, combining copying, faxing, laser printing, scanning and more into a single machine.Although there are two types of copiers – analog and digital – the former is no match to the latter these days. In fact, most manufacturers have stopped producing new analog models. To make matters worse for the analog models, the more modern digital machines with similar features are now available at almost identical prices.The digital type enjoys a lot of advantages over its analog rival. Digital models combine copying, network printing, and faxing. As there are fewer moving parts in the digital type, the instances of mechanical breakdown are less. Less noisy, the digital copiers are more efficient in reproducing fine lines and photographs.Some people argue that analog copiers are more simple and user-friendly. You have just one button to press to get a copy. But the digital copiers are not difficult to operate either. A minimal amount of training is sufficient for the employees to learn how to operate them.Before purchasing a digital copier, you must have a clear idea of your requirements from the copier, as well as the volume of work the copier is expected to perform, and how fast you want it to perform. You must also decide if you require a color copier or not. Although color copiers are not as expensiv
Venture Debt: A recent surge in venture debt has made its way into the market and is worth discussing. Venture debt is basically a venture loan. The lender charges a higher interest rate than banks are allowed to (often around 14%) and accepts more risk in return. In addition, you will have to give up a small percentage of your company in what are called warrants. This small percentage (usually less than 5%) allows the lender to share in any potential upside. Venture debt is worth considering if you’re sure of success and you don’t want or need to give up a large equity position in you company. But you’ll still be personally responsible.
Venture Capital: When most people think of raising large amounts of money, they’re thinking of venture capital. For most start ups, venture capital is not an option. VC money has some downsides though. It is hard to get and extremely expensive. When you add up the entire enchilada, you’re looking at about 80% compounding interest each year in return for that money. VC’s are looking for an investment term of three to five years and a ROI (return on investment) of 700% or more. Whew. You’re also going to loose complete control of your company and have someone constantly looking over your shoulder. There are cases where this actually makes sense. Many VC are extremely well connected and bring these resources to the table.
So, now you’ve got the money you need. What are you going to do with it?
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 the feel that “I could do that” is attractive to a large number of doctors who are tired of the 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 the success of the 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 the abilities of most physicians and involve a much greater financial risk. Staffing and human resources, legal issues, medical oversight… most fail within the 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 the 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 the most aggressive advertisers.) Franchises are attractive because they claim to have all the answers. If you’ll just write the 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 the 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 the right technology is one of the things that will let you move ahead a step, or put you in cement boots where you stand. I always think of the way one physician described the 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 the numbers. How many shots will the IPL heads last for until they need to be rebuilt? How much support is included? What kind of training is provided? Does the 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 the best way to go if you want to pay for your equipment as you use it while preserving your capital. Many of the technology companies have delayed payment plans as long as six months. Buying used equipment is often the 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 the price of a new machine if you have the cash on hand.
Don’t guild the lily: Cash flow is a problem many start-up medical spas face. Revenues and growth projections are commonly exaggerated in the 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 pa
For such a simple statement, this is one of the hardest things for people to do. It goes back to that damn survival instinct each of us is born with. If an animal draws attention to itself in the wild, it might soon find itself the main course of a larger animal’s next meal. That fear of being chewed up and spit out has survived all our millions of years of evolution and is alive and well in today’s business environment.Fight or flight is another instinct many of us haven’t yet learned to manipulate. It’s easier to run away from a new idea than it is to stay and fight for it. With today’s leadership-by-committee mentality and intense public scrutiny, the easiest solution is unfortunately the most popular. Companies today often miss the forest through the trees. They tend to concentrate so much on short-term profit that they fail to make investments or take advantages of opportunities that promise long-term profit simply because they require a short-term loss.It may also be argued that fighting for a new idea—whether that means pushing for the development of a new product, staving off competitors or supporting a slumping brand rather than letting it die—is usually undesirable because of such costs.Certainly that might be true in the short term, but in the long run, giving up too soon my actually cost your company far more in lost revenues, public outrage or shrinking market share. It requires a different way of thinking. Ad
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 the success of the 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 the abilities of most physicians and involve a much greater financial risk. Staffing and human resources, legal issues, medical oversight… most fail within the 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 the 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 the most aggressive advertisers.) Franchises are attractive because they claim to have all the answers. If you’ll just write the 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 the 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 the right technology is one of the things that will let you move ahead a step, or put you in cement boots where you stand. I always think of the way one physician described the 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 the numbers. How many shots will the IPL heads last for until they need to be rebuilt? How much support is included? What kind of training is provided? Does the 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 the best way to go if you want to pay for your equipment as you use it while preserving your capital. Many of the technology companies have delayed payment plans as long as six months. Buying used equipment is often the 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 the price of a new machine if you have the cash on hand.
Don’t guild the lily: Cash flow is a problem many start-up medical spas face. Revenues and growth projections are commonly exaggerated in the 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 pa
If You’re the Guru, Vice Versa – If you are the expert, the reverse is also true. You could JV with a middleman to bring people to you to pay for access to your expertise. Coaching programs are an obvious choice for this approach.JV a Dealmaker – If brokering deals isn’t your forte, you can always JV with someone who sells well and knows how to negotiate to pitch and put the actual deals together for you. This way you can sit back and pull all the strings while your “agent” handles the stuff you aren’t comfortable doing.Painting Fire Hydrants – One of the first deals Jay Abraham put together was paying kids to paint fire hydrants. He’d put all the deals together, the kids would go out and paint, and he’d pay them a percentage of what he was getting paid. His value was that he was the one to put it all together, he set up the deals, and he got the labor organized. This approach works well anytime there is someone willing to perform the service for less that you are getting paid.Even ‘ol Tom Sawyer did this when he had to white wash a fence in Mark Twain’s Tom Sawyer. He got the local kids to do it, and they loved it.Overstock/Surplus Selling – It’s not difficult to find businesses with excess inventory, tie up the rights to unload it at a discount, then find outlets to sell it at retail. You pocket the difference. On the flip side, if you yourself have excess inventory, you could JV to find someone to unload it from you in the same fashion.
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 the 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 the right technology is one of the things that will let you move ahead a step, or put you in cement boots where you stand. I always think of the way one physician described the 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 the numbers. How many shots will the IPL heads last for until they need to be rebuilt? How much support is included? What kind of training is provided? Does the 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 the best way to go if you want to pay for your equipment as you use it while preserving your capital. Many of the technology companies have delayed payment plans as long as six months. Buying used equipment is often the 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 the price of a new machine if you have the cash on hand.
Don’t guild the lily: Cash flow is a problem many start-up medical spas face. Revenues and growth projections are commonly exaggerated in the 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 the gold makes the rules.
• You will end up being personally responsible for the money: Physicians sometimes think that they can use equity in their medical practice or future earnings as security. Nope.
• Be frugal: Take only the amount of money you need. It’s tempting to take as much money as you can get. Don’t. All the 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 the 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 the 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, the most common reason that businesses fail is not lack of capital, its poor decision making.
Resource links for all of the businesses and information discussed in this article are available online at www.surface-med.com
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