While it may seem as if the medical spa business is burgeoning beyond the seams, there can be some real pitfalls and challenges, particularly for those with little or no prior management experience in the industry.

As a large number of family practice physicians and OB/GYNs are virtually abandoning their traditional practices to go the medical spa route while entrepreneurs from other fields are jumping into the fray as well, merely making this transition or entry into the medical spa business is not a green card to success and profitability.

While the double digit annual growth in the bread and butter services offered by medical spas is real, this business, in many respects, is much like any other business or industry, both in terms of profit potential as well as challenges and risks. Some of these are outlined in this article.

The first challenge that medical spas face is intensifying competition. Laser hair removal is becoming commoditized and may no longer remain the bread and butter of medical spas in the foreseeable future. Diversifying and broadening the spectrum of services is clearly the answer.

Another challenge facing medical spas is that many of them are undercapitalized . This is probably the leading reason behind failures of start-up companies in virtually any industry. Adequate capitalization can help a medical spa raise entry barriers in the marketplace and increase it's chances of success over time. This can be achieved by proper funding or even teaming up with a financial partner. Smaller ownership of a larger but profitable entity is certainly worth more than owning 100% of nothing or an unprofitable business.

A common issue that medical spa owners face is that of personally guaranteeing equipment leases. With the intensifying competition amongst laser, IPL and other device manufacturers, medical spa owners and physicians have greater leverage in negotiating revenue sharing, per procedure deals, percent of gross and other out-of-the-box, non-lease arrangements with laser companies.

Medical leadership and clinical supervision is yet another challenge. Rubber stamp medical directors will only increase liability, patient complaints, incomplete medical records and poor word-of-mouth and referrals among other problems. A reasonable degree of involvement by an experienced physician is an important pre-requisite to success.

Finding and retaining the right staff is yet another issue. Experience and sales abilities are key here. Employees need to know what they are doing and must be able to sell. Another common mistake is when medical spas promote good sales people into management, essentially taking them away from sales. By the same token, it is not uncommon to see a significant increase in sales over a very short period of time by bringing in a proven sales person.

Staying on the cutting edge is one of the answers to greater competition but can also be very challenging, expensive, yet essential. According to Mac Fadra, a consultant in the industry, early mover or first mover advantage can be a key in establishing a leadership position in a certain procedure/service. Attracting that initial flurry of patients, by advertising a relatively new service, can be key to building a long-term stream of referrals for that particular product/service. He added that the one risk with this approach is if the efficacy of the technology or service is not what is promised by the manufacturer or your medical spa which is not uncommon. Yet another way to stay on the cutting edge is by negotiating technology upgrades with vendors including system swaps.

Most medical spas lack the written, perennial business plan , particularly one that is executable, sensible, fundable and well defined in terms of goals, objectives, budgets, strategies, etc.

Also, a number of medical spas also spend an excessive amount of capital on leasehold improvements when the reality is that a medical spa can be started within an existing facility, then spun off physically into it's own space if successful and necessary. This is due to the fact that the common mind set is that a medical spa needs to be and look like a traditional day spa and this notion may not necessarily hold true in most markets and situations.

Finally, most medical spas lack a marketing plan that is written; based on market research and target demographics; and one that clearly outlines product, pricing, promotional and distribution strategies. Additionally, not being able to have a tracking system to capture lead acquisition costs and patient acquisition costs could result in throwing marketing dollars in the wrong direction.

While this is certainly not a complete list of challenges and issues facing medical spas, the strategic challenge facing medical spas is that the core mix of services in a medical spa is also changing. The combination of laser hair removal, microdermabrasion, Botox, Restylane and products is shifting towards non-surgical face lifts, meso therapy, thread lifts, cellulite, private label product line and other services in addition to the traditional core services.

The future medical spa is going to be a technology-laden, broad-based center that offers a myriad of elective and cosmetic medical services under greater physician involvement than at current levels.

The industry will also get increasingly capital intensive due to the need for more technology with more service offerings; certainly more competitive; larger and probably more invasive in terms of services.

For physicians and entrepreneurs with limited management and marketing experience, an experienced consultant or partner can go a long way in making the transition into the medical spa business a lot easier. The first in the industry to create success is the Medical Spa Success system. It will walk you thru the business planning stage thru the opening and staffing. At any stage it is an invaluable educational tool. WWW.MedicalSpSuccess.com . Beautiful Forever is the parent company. CEO Cheryl Whitman WWW.MedicalSpaConsultant.com or Email Cheryl@MedicalSpaConsultant.com . Call 877-SPA-MEDI.