By Cheryl Whitman

What makes a medical spa tick or better yet, profitable and successful?

Several factors and traits go into a successful and profitable medical spa including, but not limited to, capital adequacy, marketing, medical supervision, staff, menu of services, technology, training and differentiation.

Capital Adequacy – Most start-ups fail, primarily because they are under-capitalized.  A medical spa needs sufficient capital in order to be able to afford investment in technology, space, staff, training, marketing and operations.  Medical spas need to budget at least six months to a year of fixed costs in order to survive until they attain profitability.  Even during profitable times, it is wise to maintain a cash cushion for seasonal and economic slowdowns. 

Start-up Costs – Keeping your start-up costs under control is key.  We get this question a lot, “How much capital do I need?” and the answer invariably is that it depends upon the market and the situation.  Leasehold improvements can be a large chunk of the start-up cost budget. 

Marketing – Marketing is a necessary evil.  It is an investment; not a cost, particularly if spent wisely.  Marketing and advertising need to be efficient, effective and need to be tracked by media source.  Otherwise, it is equivalent to garbage in-garbage out.  Research your market thoroughly; identify your target market; and advertise in media that are frequented by your target segment.  Furthermore, you must know your key marketing metrics including, but not limited to, lead acquisition cost, patient acquisition cost, return on investment by media, conversion rates by media and staff, no show rates, etc.

Medical Supervision – In this era of a physician surplus and particularly as more doctors seek to enter the medical spa arena and perform elective procedures, it is not difficult to find a qualified physician to supervise your spa.  Most patients feel comfortable in a physician-supervised setting and get comfort from having access to a doctor, if necessary.  Ideally, physicians should sign off on all patients prior to the first treatment and monitor progress of treatments while being accessible to staff and patients when necssary.  The greater the degree of medical supervision, the higher a premium you can charge for procedures and services.

Technology – Technology selection is key.  If your market is diverse with a mixture of skin types, you need to acquire technology that works well on light and dark skin.  Furthermore, no one technology fits all.  You may need a laser for hair removal; an IPL for photo-facials; radiofrequency for skin tightening; etc.  If necessary, seek the help of a professional, experienced independent consultant during your technology selection process.

Staff – Your staff can make or break you.  A late entrepreneur in the hair restoration field once said, “Don’t worry about your vendors; don’t worry about your competitors; but do worry about your employees.”  Another great leader said, “There is no substitute for experience.”  Ideally, experienced staff with a prior background in the industry and a strong service orientation tends to do well.  Also, a more mature staff tends to bring stability to the organization.  If staff are well compensated, above market, and heavily incentivized, they will be more likely to stay.  Also, periodic staff meetings, feedback, interaction, training and motivation are key. 
 
Menu of Services – Too narrow or too broad of a menu of services can kill your medical spa.  Laser hair removal is becoming commoditized and so are fillers.  Offering cutting edge, yet proven services, can keep your medical spa in demand and at the forefront of the market.  The old-fashioned medical spa offers laser hair removal, photo-facials and microdermabrasion.  The present day medical spa, in addition to the above, offers cellulite reduction, non-surgical face lifts and skin tightening procedures.  The futuristic medical spa offers anti-aging, age management, laser hair re-growth, private label product line, men’s health and other emerging procedures and services.

Training – Vendor training is insufficient to get your staff properly trained for your medical spa.  Staff require sales training, lead management skills, computer database training, education in skin care and products, and other advanced training that is not offered by vendors.  Investment in professional training is invaluable. 

Differentiation – It is imperative that you define and understand what is different about your medical spa vs. the competition.  This differentiation must be clearly communicated in your marketing as well as during the sales process.  Differentiation could stem from price, direct physician supervision, cutting edge technology, ambience, service or other factors.

Plan – Define your plan, goals, objectives and expectations from the start.  Having a business plan is very useful along with financial projections.  Also have a good idea on what your expectations are in terms of income, time invested and return on investment and time.  One common element of highly successful people is that they write down their goals. 

According to Mac Fadra, a executive consultant at Beautiful Forever Medical spa business firm and entrepreneur in the field of consumer and cosmetic medicine, states, “The real keys in making a project successful are to be in the right market; fund the project sufficiently; higher a great team; have a good doctor to handle medical issues; and market efficiently and sensibly.”  He also added that, “This business can be labor-intensive although some companies have attempted and proven scalability and a corporate model for rapid growth.” 

According to Hannelore R. Leavy, Founder & Executive Director of the International Medical Spa Association, “As the industry is becoming more and more visible and many doctors and entrepreneurs are discovering this lucrative market, so are the regulatory bodies watching the industry. Legislation differs from state to state and different agencies are regulating certain procedures and licenses.”  “It is of most importance for any medical spa owner to first and foremost get acquainted with the current laws in their state and then keep a close eye on them. New bills are introduced and laws are being passed without their constituency ever knowing about it. Ignorance of a law is no excuse in our society, especially if it affects the welfare of a patient/client. One of your best resources are professional organizations who alert their members of new bills being introduced and urge their members to act accordingly she added. 

Beyond critical success factors, other important pre-requisites for success include:

• Keeping an eye for industry trends and new products/services
• Adding new products/services that are efficacious, compatible and profitable
• A solid product line that can augment your menu of services
• Strong internet presence including search engine positioning and web marketing
• Being in the right market at the right time
• A pleasant, if not high end, facility and environment
• Competitiveness in pricing, services, menu, marketing and operations
• A strong orientation towards customer service – treat each client like a king/queen
• Have good professional help (industry consultants, attorney and CPA)
• Be creative, innovative and think out-of-the-box.

Finally, affordability is a big factor.  While demand for cosmetic medical services is strong across all economic strata, a large number of consumers are unable to undergo such procedures because they simply cannot afford the price tags.  Moreover, most consumers want to undergo not just one but multiple procedures.  It is vital that your practice offer multiple financing options, primarily through third parties, in order to make your services affordable to your clients.  One such lender is Care Credit, owned by GE Consumer Finance.  They not only offer multi-year financing options at no cost to the medical spa but also zero interest plans to consumers for a small fee to the spa. 

In conclusion, while there is no cookie-cutter or turnkey approach to developing a successful and profitable medical spa business, paying attention to the above-mentioned factors will go a long way in helping you succeed