Back To Profitability
When push comes to shove, medical aesthetics practices are businesses just like any other. Even though they provide a service that is clinical by nature, they are still a business. If you struggle with the idea that a medically based practice is a business, the odds are you are either not a practice owner or if you are, the chances are your practice is either struggling to stay afloat or stagnant.
As anyone in the medical aesthetics industry knows, investors have taken a liking to the space. As such, they are actively seeking out highly successful practices for acquisition. Ideally, they want a multi-unit opportunity with strong leadership, strong financials, solid operations, and a strong team. However, as the opportunity to acquire multi-site practices becomes highly competitive and the inventory dwindles, the next best option is to roll up a number of single unit brands within a market that share similar characteristics.
This is great news for practice owners who have treated their practice like a business and embraced the fundamental attributes that lead to success. However, we are learning that there are far fewer examples of a well-run medical aesthetics practice than one might expect. Maybe it is because of the frenzy around the industry that led practitioners to jump into entrepreneurship before they fully understood what it took to run a successful practice. Maybe it is increased competition that has taken away market share and subsequently shined light on poorly operated practices. Practices that could have gotten by with marginal business acumen when they were one of the only games in town.
Regardless of the reason, if you find your medical aesthetics practice struggling to achieve the financial performance you desire or are worried because your cash burn rate has become an inferno, it is not too late to stop the bleeding. There is nothing worse than lying awake at night stressed about making payroll, having enough money to purchase supplies to cover this week’s appointments, pay the electric bill, pay rent, and have something, if anything, left over to pay yourself. Owning a medical aesthetics practice should be enjoyable, not sickeningly stressful!
If this describes your current state, there is hope. That is if you are open minded and willing to change. It will not be easy, but it is possible. It will require tough decision-making and possibly being disliked from time-to-time. It will also require reflecting on your role as a leader, owner, and manager. It will require asking yourself some tough questions and answering honestly.
Questions like:
Have I become too comfortable with my team? A better question may be, “Has my team become too comfortable with me?”
Do I consistently hold my team and myself accountable for high performance?
Do I lead by example?
Does the team know what is expected of them?
Does the team know what success looks like in their role?
Do we use data to drive behavior and manage decisions?
Do we have a client centric culture that is built around executing on a clear set of core values?
Do I know the numbers? Better yet, “Do I know the numbers that will lead to success?”
Am I able to change? Am I willing to change?
Questions such as these will help you figure out where things truly stand. It is not until you have a good and honest understanding of reality that you can begin to change. Once you’ve made the decision to do things differently, implementing a few simple changes can help to ease the transition with the team and make change a much more manageable endeavor.
Now you’re probably asking yourself, “Where do I start?” Begin by getting a lay of the land. Then, identify quick win opportunities. Then, gain buy-in from the team by painting a clear vision for a better future.
Look at your financial data and not just the P&L. If you get into the habit of running your practice by a P&L you’ll always be chasing trailing indicators. You need real-time data that tells you where you are today. Look to establish key performance indicators (KPIs) to help guide your day-to-day decision making. Train the team to do so as well. KPIs to consider tracking daily are schedule utilization, number of new leads, new lead conversion, average invoice, revenue per hour, etc. As you can see, these are daily performance metrics. KPIs to track monthly are total revenue, cost-of-goods sold, labor as a % of revenue, marketing as a percent of revenue, marketing ROI, retail sales as a % of revenue, and reviews.
Look at behaviors and determine if the behaviors you are seeing from the team support the vision you have for the practice. If the team is not greeting clients properly, answering phones properly, managing leads properly, consulting clients properly, building their knowledge and skills properly, and working together as a team you will have a tough time achieving the desired result. As such, you may discover that further training or change may be warranted.
Look to your operational execution for signs of inconsistency. Evaluate the opening routine, closing routine, daily routine, lead management process, client intake process, client consultation process, marketing and business development strategies, product and service offering, pricing strategy, etc. All the business operating systems must support achieving your long-term goals.
Assess your client base and determine if your marketing efforts are targeting the right client. Does your marketing align to your brand? Marketing agencies will many times push out creative and content to mark it off their to-do list so they can move on to the next client. They can also get into the habit of letting ads run without managing them accordingly. This can lead to increased expense and inefficient ad spend. It is up to you to hold them accountable for creating content, images, messaging that aligns to your brand, and managing performance. They do not know your brand and your brand cannot fit into a cookie cutter marketing model. Pay attention here and take control. If your agency is underperforming, hold them accountable for results. This is one area where you can overspend and underspend. Neither are good!
Seek commitment from your clients. Client loyalty comes in many forms. If you do not have a membership program of some kind, you should create one. Memberships encourage clients to come to you before they go elsewhere. So do consultations that seek to understand. Comprehensive treatment plans built around understanding client needs, wants, and desires can lead to long-term relationships.
The suggestions we present here are merely a few areas you can begin to look to if you find your practice underperforming. There are a host of little nuances to each and supporting behaviors that also can make or break a business. However, you must start somewhere. These are as good a place to begin as any.
💌 Are you ready to take on an investment partner to help you grow your medical aesthetics practice? If so, we are here to partner with you every step of the way. Fill out the contact form or send us an email at info@baraesthetics.com and we will schedule a call to discuss the possibilities.
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