Louology, Crushing It In Aesthetics - Starting a Medspa? Must-Haves

Here's some good direction for the basics and creative approaches to opening a medspa, finding your point of difference, your location, finding and negotiating with your medical director or key hires, and so much more.

Opening up your own medspa can seem daunting, but it's not.

Opening up a medical spa is an exciting venture, but it’s good to be smart, practical, and well-informed before you begin. If you have money to blow, you don't need to do your research, but if you want to play it smart, abide by these first-things-first.

EXPENSES

Hey, don't forget to get creative! Two of the biggest expenses will be the aesthetics equipment and supplies you might need to buy up-front, or your office space and the construction and design of your space (tenant improvements, TIs).

If cash is painfully tight, you can consider starting out with a home-based practice, or negotiating free space from someone complementary who has extra space by using your puppy dog eyes - or you can bite the bullet and commit to your own space, at the get-go.

Your start-up expenses are nothing to sneeze at, so conserve your cash!

One of the most important expense to think about is renting a facility.

Finding and renting office, medical, or retail space for a medspa cost you hundreds or thousands of dollars, and it’s important to complete thorough research on price points in your area before committing.

Consider sharing space with an established complementary organization, or look for desperate sub-lease opportunities! You might be able to take on nice space at the fraction of the price, and if you like it at the end of the sublease term, you can negotiate staying!

Plus, by then, you should have cash flow momentum, right?

You want to make sure the space you choose reflects how you're positioning yourself in the market. Are you going to be a high end spa that is competing with fancy plastic surgeons? Will you be a middle market competitor that offers an average price, with some specials here and there? Or, will you be a discount spa, offering prices similar to Groupon deals?

You can negotiate free months up front and tack them onto the term of your lease at the end. Or, negotiate graduated rates year-over-year.

What's of the utmost importance?

Know what your market needs and can sustain, and make sure you know what you're going to offer and it fills those needs.

Lou Silberman, founder of National Laser Institute and Louology says. “There's no right or wrong answer to what it is you're planning on being known for. It’s a positioning statement on your company, and that needs to align with, and speak to, your market.”

TECHNOLOGY EXPENSES

Another important expense to consider is your laser technology. You have to ask yourself what you need and what you’d like to offer, whether it’s laser, IPL, or radiofrequency technology. Any device you choose is going to cost money, which is why we consider this another big expense to budget.

“I recommend never, ever paying cash for a device,” Louis Silberman, CEO and owner of the leading medical aesthetic school and spa, National Laser Institute says. “The smarter decision is putting as little money down on a device, and then make payments over a period of time–which is typically five years.”

Here’s a realistic example of purchasing a cosmetic laser device. The cost of a device will vary from $60,000-$100,000. The best decision would be to put down 20% of the cost, which can vary $12,000-$20,000, and then make payments on the rest.

We recommend never buying a used cosmetic laser. You will end up paying 5 times more than you should for a used one, and may not receive the best possible warranty. This means if it breaks, you may be looking at 2-3 weeks of repairs versus 1-2 days with a new one from the manufacturer.

If you must buy a cosmetic laser, buy it new. This way you’re covered by a good warranty and won’t lose a lot of time or lose business if it happens to start acting up, or break.

But how do you know what equipment to choose when there are so many out there?

Another piece of advice Silberman recommends is talking to a third party expert, maybe an experienced and successful practitioner in your field in another state, who just wants to help.

“Laser reps have the financial incentive to sell you their equipment,” Silberman says. “You can't trust all sales reps to be advising you with your best interests in mind. Favor doing your research through someone who has used a wide range of devices, and who can give you honest opinions.”

ESSENTIAL EXPENSES

To open up your medical spa, you’re going to need basic essentials to open up your doors. Our Louology members often ask, "What basic cosmetic treatments are good to start with?"

You should start with what you took to naturally, and what you're most passionate about!

If you honestly believe in something, you’re going to "sell" it better, and you're going to enjoy life more. This goes for your services and your products too. However, this can work against you if what you want to offer does not represent the well-known treatments, or what your market needs and is excited to pay for!

In the world of medical aesthetics, Botox is the #1 most popular nonsurgical cosmetic treatment with many millions in treatments every year, and demand keeps growing.

Dermal fillers are ranked as the second most popular with a few million treatments performed every year. However, you may not be qualified. You need medical credentials to perform cosmetic injectables, and that’s okay. Many medical spas will find a doctor or nurse to come in and inject patients.

Laser hair removal is also on the chart as a highly in-demand cosmetic laser treatment. There’s a huge market for laser hair removal! Although it’s not a big money maker, it does get people in the door so you can introduce them to other services they may not have heard about. Plus, laser hair removal requires multiple visits/maintenance treatments.

This is where you can begin introducing your clients to the services that you’re passionate about, such as eMatrix, eLight, VelaShape, etc. Chances are, your clients appreciate learning that these treatments exist, and it's very possible they'll be interested!

And because treatments like C02 have high price points, you’ll be able to generate bigger revenue streams and better-quality clients - as long as your market will bear it!

“There is no right or wrong to what you offer,” Silberman says. “But we've had the most success leading our marketing by offering the well-known treatments, and then talking up the lesser known treatments that also command higher price points later in the client journey.”

MEDICAL DIRECTOR

Every facility in the country needs a medical director in order to operate a medical spa.

“Your medical director is essentially someone who signs a piece of paper as a medical supervisor of your facility,” Silberman explains.

One of the best routes to finding a medical director is asking family or a friend of a friend if they know or recommend any MDs. That way you can negotiate giving them free treatments if they sign as your MD for free. Another way medical spas pay their medical directors is through a set price, which could be anywhere from $300-$800 a month – possibly more.

You can get creative! A third way of paying a medical doctor to be the medical director of your spa is, negotiating to pay them a certain percentage of your profits.

“In most states where medical spas exist in providing cosmetic injectables, a medical director can be off-site,” Silberman says. “This is called 'indirect supervision'. Medical directors of aesthetics practices and medspas don't have to be in the building.”

When it comes to laser technology, many states require direct supervision of the medical director. That means the medical director does need to be on-site regularly. It all depends on the laws of your state, and if it’s direct or indirect. Direct supervision only means the doctor is in the building when treatments are being provided. Indirect can be off-site and more passive in nature.

Louology has a sample contract that spells out the basics of what you'll want to cover when negotiating with your Medical Director. It's available to free and full access Louology members. (one-time $69.95 gets you Full Access & Mentor Support from Louology for life right now).

INSURANCE

You must have insurance in order to open up your medical spa facility. Your medical director will already have malpractice insurance, but it’s a good idea for you to obtain business insurance. This cost may vary from state to state as well as your background.

Insurance is another important expense needed to open up a medical spa, so always be sure to keep it a priority in order to protect yourself! You want to be well-covered, especially if you're selling care packages to corporations and buying marketplaces!

INVENTORY OF PRODUCTS

You will need initial inventory upon starting your medical spa. Products are very important, as you want to offer your clients top-of-the-line options. This means completing research to see what kinds of chemical peel products, anti-aging serums, and other medical aesthetic products are being used in spas across the country.

There are also start up costs when opening a medical spa. You’ll most likely need computers, printers, faxes, chairs, sanitation products, and more. We suggest coming up with a list of things you think you’ll need, and then talk to experts in the industry to make sure you are not forgetting anything important.

Another thing to be aware of is your utility bills. Be sure to budget and plan accordingly in order to cover electricity, water, maintenance, taxes, internet, common area fees etc.

STAFFING

Staffing all depends on how big you want your medical spa to become. You may be the only person working there, so you’re essentially working for yourself. On the other hand, you may end up needing a staff of 5-8 people.

Some things you need to consider and budget for staff are the cost that you’re going to pay them, the labor costs for those who do treatments (laser technicians). This is usually an hourly or commission rate, or both.

You'll enjoy our "How to Build and Keep a Dream Team" video course! https://louology.com/library/how-to-build-and-keep-a-dream-team/lessons/how-to-build-and-keep-a-dream-team-intro/

SALARY

So what should you pay your staff and technicians? It’s going to be different across the board.

“National Laser Institute pays our laser technicians $20 an hour and a commission of 10%-13%,” Silberman states. “We pay our cosmetic injectors $20 an hour with a 20% of profit. We pay commission for those part time, 30% of the profit.”

The important factor when opening up your business is being able to cover the cost of your product as well as what you’re paying your staff.

TRAINING

Of course, the people working for you are going to need to receive proper training. There are two ways to go about the training process.

The first way to receive training is through a medical aesthetic school that specializes in cosmetic injectable and laser technology. These institutes will offer students extensive training, multiple instructors who can offer different styles and techniques, and hands-on training with clients for students to practice on so that they feel comfortable and confident in providing treatments to your clients.

The second way to go about training is to obtain free education from cosmetic injectable and laser reps. Although this is faster, the knowledge is limited. There is typically only one person teaching, and you don’t receive wide access to clients for hands-on training.

MARKETING

Another important factor you need to consider when opening up your own medical spa is marketing. Decide what marketing efforts you want to partake in, whether its print, TV, radio, newspaper, internet, trade shows, your own events, etc. Whatever you choose to do, you will often find out pretty fast what works and what doesn't work.

You can save a lot of money by starting out with guerilla marketing and natural social media strategies that don't cost you any money. You'll enjoy "How to Soar in Social Media" (free) www.louology.com/library, and Louology's "Guerilla Marketing" video course! https://louology.com/library/guerilla-marketing/lessons/guerilla-marketing-intro/ (free)

WORKING CAPITAL

The most expensive part of opening any business–not just a medical spa–is working capital. Working capital is basically the money you need in your bank in order to open and operate your business - cover all your expenses so you can stay keep it open.

First, you need to estimate how long it will take you to start up. Then, you need to make sure you have enough money in the bank to cover your losses.

This sounds simple, right? Maybe not. According to the Small Business Administration, over 60% of new businesses fail due to lack of working capital. Don’t fall into that 60%!

The reason most businesses fail is because they are undercapitalized,” Silberman says. “This basically means they didn’t have enough in their working capital account for those ‘rainy days, or they underestimated their expenses.”

Also, keep in mind that businesses or geographic regions that are seasonal will require more working capital to stay positive during the off-season. For example, "snowbirds" flood Arizona during all of its cooler months, yet there's a mass-exodus of these "snowbirds" just before the grueling summer months.

Silberman's advice? “Whatever you think you need to start up, double it!”

COMPETITION

Another common question we get from people who want to start their own medical spa is, “how do I beat my competition?”

The people who do better business are the ones who find a way to get more traffic for less money, and include a point of difference. Oh, and offer things your market needs and wants but that your competition does not have!

Here’s a good example of how to do this. Say you have the option of opening your doors in a room in a fancy plastic surgeon’s office that sees 10 people walk through the doors on a daily basis or a busy hair salon that has 100 people coming in and out every day. You want to position yourself in a high traffic area so you can talk to more clients, so the hair salon would be the best way to go.

But what about your point of difference? Be unique! Don’t necessarily offer what everyone else is already doing. For example, Clinique gives clients a special product with purchase. This is a point of difference that can set you apart from other medical spas because it’s an added value to your clients.

You might want to give a free head massage with every facial...get creative!

REGULATIONS

Another imperative thing you must do before opening your doors is to become familiar with your state’s regulations. Regulations will vary from state to state.

To gain regulation information, if you call the office, the receptionist may over-regulate something or mis-interpret laws for you, which is not a reliable way to gain information.

Plus, state laws change.

You need to go to your state board's website and read the laws for yourself. If your state’s laws are very black and white, you’ve obtained that information. However, if these laws are gray or confusing, you may want to have a health care attorney interpret them for you. It’s always better to be safe than sorry.

You can also get creative and ask other experienced owners in your state for real-life insights, but make sure they're not anywhere close to your service area or see you as competition.

LOCATION

Opening up your doors requires choosing the best possible location. There are two ways to go about this:

First, a "high traffic location". This means you’re paying for heavy exposure to those who are walking or driving by. An example of this would be locations on the strip in Vegas.

Second, a "destination location". This is a location that is not near any high traffic, but you promote yourself and get yourself out there with marketing. This is typically more affordable, but you do not get the traffic exposure. "Off the strip".

Your location decision completely depends on how you want to place and define yourself, and the opportunities you find.

BUSINESS PLAN

Finally, everything we’ve discussed here boils down to taking this information and putting it in a business plan for your company. You don’t need to pay some fancy corporation to create a business plan for you. It’s easy to do it yourself, and a great exercise for you to experience!

You have to be at least a free member to access this, but this is an outstanding Success Guide that walks you through creating your Lean business plan!

Lean beauty biz plan template – Louology

To begin creating your business plan, start with mapping out every possible expense you think you’ll need. It’s just like owning or renting a house–you know how much you need to cover water, electricity, food, supplies, etc. The same goes for your business. Add in staff salaries, technology payments, marketing money, etc. At the end, this should give you a good idea of what you’ll need to make on a monthly basis to cover your end, even during slow periods.

Remember, a business plan is not a perfect map. Like we stated at the beginning, you wouldn’t leave for a cross country road trip without mapping it out, but even with a plan, you could possibly make some wrong turns along the way. Your business plan is going to give you a strong direction as to where you plan on going, but you can always tweak, twist, and adjust it based on unexpected roadblocks or unexpected opportunities!

BTW, we have two great video courses on this subject of planning and opening a medspa:

https://louology.com/library/first-steps-to-opening-a-medspa/lessons/opening-a-medspa-intro/

https://louology.com/library/logistics-of-opening-a-medspa/lessons/logistics-of-opening-a-medspa-intro/

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