Season 2 Ep.2 | The Real Expense of Starting a New Medical Spa

Many aesthetic entrepreneurs underestimate what it takes to launch—and run out of money before they ever become profitable.

AJ pulls back the curtain on what it really takes to build a scalable, sustainable medical spa business, emphasizing that success in aesthetics isn’t about guesswork—it’s about strategy, structure, and financial precision.If you’re planning to open a medical spa, aesthetic practice, or wellness clinic, this episode could save you hundreds of thousands of dollars—and potentially your entire business.

In this high-impact episode of MedSpa Unlocked, Ashley James (AJ), Founder & CEO of DermAesthetic Consulting Group, breaks down the real financial blueprint behind launching a successful, profitable medical spa—and the costly mistakes most new owners make before they even open their doors.

Drawing from experience launching 80+ medical spas nationwide, AJ reveals the true startup costs, hidden expenses, and budgeting strategies that separate thriving multi-million dollar practices from those that fail within the first year.

Key Takeaways:

•  The real cost to open a medical spa (and why Google is wrong) 
•  How to properly budget for build-out, rent, equipment, staffing, and marketing
•  The truth about tenant improvements (TI), triple net leases, and construction costs
•  Why buying too many devices (lasers, equipment) is one of the biggest startup mistakes 
•  How to calculate ROI per treatment and revenue per hour
•  The most overlooked startup expenses (EMR, inventory, malpractice insurance, IT compliance) 
•  Why cutting your marketing budget is the fastest way to kill your growth 
•  How to financially survive the critical 3–6 month ramp-up phase
•  Real-world examples of medspa owners who succeeded—and those who struggled

If you’re serious about building your medical spa the right way—from day one—this episode is your financial foundation.

DermAesthetic Consulting Group
DermAesthetic Consulting Group: Your partner from seed to success in building and scaling medspas

Medspa Business Builder
Business Builder: More than a CRM—scale your medspa & boost revenue up to 150%

Amspa
American Med Spa Association: Education, compliance, and resources for medspa success

Disclaimer: This post contains affiliate links. If you make a purchase, I may receive a commission at no extra cost to you.

Transcript

Welcome And Season Focus

SPEAKER_00 0:00

Welcome to MedSpa Unlocked, the podcast for ambitious medical spa owners who want to build, scale, and dominate in the world of aesthetics. Each episode delivers the strategies, tools, and insider knowledge you need to create a thriving multi-million dollar practice. Hosted by Ashley James, known to many as AJ, former award-winning multi-practice aesthetic owner and operator, international speaker, sales and business mastery expert, and best-selling author of the MedSpot Growth Formula. AJ is also the founder and CEO of Durham Aesthetic Consulting Group and the visionary behind MedSpot Business Builder, a cutting-edge performance and sales system that accelerates growth and drives real results for medical aesthetic practices. Today, she's one of the most highly sought-after aesthetic practice consultants in the nation, widely regarded as one of the industry's top authorities, and she knows exactly what it takes to rise above the noise, outpace the competition, and build a truly profitable, sustainable business. Join AJ and industry leaders as they unlock the secrets to success in aesthetics right here on MedSpa Unlocked. Now, let's get started.

SPEAKER_01 1:12

Hello, hello, my friends. Welcome back to MedSpa Unlocked. I'm your host, AJ. I'm the founder of Dermasthetic Consulting Group, MedSpa Mobile Solutions, the National MedSpa Training Institute. I'm so happy that you guys are here today. Um this is your first time joining uh MedSpa Unlock. Welcome. This podcast is really dedicated for business owners and professionals who are looking to really make their mark on the aesthetic industry. Um I designed this podcast to really just be everything empowering for owners. Um we teach you how to launch successful businesses, um, scale successful aesthetic practices, and really just unlock the secrets to you know building a multi-million dollar entity. So welcome, welcome, welcome. Um, this is episode two, season two. Um, this season we

Why Budgeting Makes Or Breaks

SPEAKER_01 2:03

are talking about um really the the startup blueprint. You know, what does it take? What financial foundation do you need to have for a new practice to be successful? And if you tune into episode one, we talked about the importance of knowing your numbers, the importance of planning financially properly for your for your startup. And today we are gonna kind of dig in a little bit deeper and we are gonna really hone into budgeting, um, budgeting throughout the planning and execution process and really what you need to know. Um, and you know, what in what owners need to try to avoid in order to really do things correctly? Because the worst thing you can do is run out of money before you ever get started. So in today's episode, we're gonna be talking about we're gonna be breaking down the startup costs, you know, what's the build-out look like, what's equipment look like, you know, staff compensation, marketing, what is really needed when you're launching a business? What budget categories are you maybe forgetting about? Um, software, signage, training, things like that. Um, and then how to prioritize your spend if you have a limited budget and stretching those dollars to make sure that you're not cutting corners. Um, I really also want to talk about realistic timelines and, you know, from the moment that you decide that you want to open a medical spa to what it really takes and how much time it actually takes to do things the right way until you're ready to open up your doors. So um that's what we're gonna be talking about today. Um, here at Dermastatic Consulting Group, we have helped more than 80 practices launch from C to Success. So um we're we're opening more and more practices every year the longer that our firm has been open. And I just have to tell you, like I love the startup process. And to be honest with you, I actually like them more than growth growth projects because, you know, when you're a brand new business, I'm very creative. So I love creating the model, I love creating the strategy, what this business is going to do, how is it going to be different from other med spas? And, you know, new owners are so eager for education and so eager for knowledge and they don't know what they don't know. And so I tend to find that new med spa owners um listen better. Um, they're they're so eager and so willing to kind of listen to the guidance, listen to mistakes that have been made so that they're not making those mistakes and really just take all that information and apply it to their business. I have a lot of great, you know, clients who also come to us for growth. But, you know, one of the things that I see in a growth project is that, you know, some of these owners are kind of stuck in their own ways. And if they're looking to grow, it's really hard to kind of retrain them from habits that maybe aren't the best. But um, whether you're growing or you're starting, I I love it all. But, you know, um, in order to do any of that, whether you're starting or you're growing, you've got to have the right budget, right? So in episode one, we talked about what those financials need to look like, why it's so important to know your numbers in advance. You never wanna be in a situation where you've got kind of an estimate in your head. And then once you start actually going through the steps, you realize, oh shoot, I don't have enough money. So we're gonna really break down what it takes, what kind of budget you actually need to have to launch a med spa, which is why I think this episode is super exciting. So anyway, so yeah, let's talk

Real Startup Cost Ranges

SPEAKER_01 5:29

about that. So, you know, how much money do you need to open up a med spa? That's the million dollar question, right? Um, you can Google it and Google is probably gonna tell you anywhere from a million to 1.5 million to open up a mid-size med spa. And, you know, you definitely can invest that much if you have that kind of cash or if you, you know, have been able to acquire a loan that will allow uh that type of loan. However, I would say, you know, with with our clients, the average med spa all in is gonna be anywhere from I would say 450,000 up to like you know 850. Um and that really just is dependent on your space. Um, if you are, you know, planning on building out a location or if you're planning on renting a location, um, there's gonna be some type of tenant improvements, if not a full on blowout, uh flow, I can't talk today, a full blowout renovation. Um, and so that's really, you know, what is gonna determine if you're gonna be closer to the 450 or closer to the 850,000 build-out. So it just really depends. But, you know, a lot of a lot of med spas don't really know, you know, that this is really a critical portion of your business. So, you know, your brand identity, what you're gonna bring to the market needs to be so unique to your business. And your location needs to to kind of outline that. So I'm a big believer in, you know, customizing your location. I'm a big believer in in doing some kind of build-out that helps to make your clinic yours, if that makes sense. So um, you know, what does that build out look like? I would say, you know, when we talk about budget for your space location, there's a couple different things that we need to account for, right? So, one, when you go to Lisa location, you're gonna be charged a price per square foot. And

Rent Math And Triple Net

SPEAKER_01 7:30

on top of that, you're gonna be charged um, you know, essentially taxes and and improvements for the building as a whole. So that's called triple net. And essentially that's an additional price per square foot that you want to tack onto the price per square foot. So for example, if you have a 3,000 square foot facility that you're looking at, and let's say that the cost per square foot is $35, that's $105,000 per year that you're gonna pay for that space. However, if you have an additional, let's say $17 triple net, you have to add that on to your price per square foot. So that's an additional $51,000. This is just an example. So I'm just throwing numbers out. Um, so total, you're looking at $105,000 for your base rent plus the additional $51,000 for a total of $156,000 that you're gonna be responsible for your space. Divide that up by 12 months and your lease or your rent every month is gonna be about $13,000 in that example. So, you know, why that's important is because when you, you know, it's more than just going and finding a location, paying a deposit, and and then the space is yours. Um during ramp ups specifically, like after you get to the point where you launch, you have to support the business until you're making money. So is that gonna be three months? Is that gonna be four months? Is that gonna be six months? And going back to episode one where we talked about cash flow and operational cash flow during the ramp up phase, you have to know what your space is gonna be. You have to know all the costs that are gonna go into, you know, the your overhead and your rent is just one major piece of it, but it's also just one very small piece of the entire budget. So um, you know, knowing what your rent is gonna be, um, knowing what your build out's gonna be. And this, you know, is is very important. So um I would say, you know, in most leases that we negotiate on behalf of our customers, we're trying to get as much tenant improvement as possible so that this space has some of the build-out covered by the landlord. Um, unfortunately, you're still paying for it regardless because it either gets wrapped up into your lease anyway, um, or you know, you're you're you're still paying for it. So, what is a tenant improvement? A tenant improvement is a dollar amount that the landlord is going to give you as a budget for renovations. Um, usually tenants will give you a very low amount, like $15 or $20 a square foot. Um, if you are a new business and you're doing a complete renovation, I tend to push my customers or, you know, we do it for them to negotiate close to like $70, $75 a square foot. If I can get $100 a square foot, I'm a happy girl. But the reason that I'm pushing for as much tenant improvement as possible is because this is not your space. You know, like you're renting this space. So if if you don't own it, then this is just money that you're spending to make this facility better. And at some point in time, hopefully you're gonna, you're gonna outgrow this space. And all of the money and all the investment into the space is just gonna benefit the landlord. So, you know, that's a very key point that I always try to point out is look, like we're not only leasing this space, but we need to make it functional for us. But like everything that we're gonna do is make it better. So that's a win-win for you, it's a win-win for us. So the more money that you give us as an allowance to make this space better, the best, you know, it is in your interest as well. Um, now, I'll be very honest, if you are going to um ask for a lot of tenant improvement money, they're typically going to ask you for a longer lease. So if you're going into this and wanting a five-year lease, you're gonna get a lower TI typically. But if you're prepared or want to secure a 10-year lease, you typically can get a higher amount of money for your tenant improvement. But all of these things have to be planned out or, you know, thought about in advance so that again, you know what you're getting into financially. So um, you know, that's just securing your lease. You know, how much is it per square foot? What is your what is your TI gonna be for your renovations or to make your space yours? And what's the triple net gonna be? And all of those costs will determine what your monthly rent is going to be. So as you can see, there's a lot of variables there. But then let's talk about the build out. So, and this is gonna blow your mind a little bit. And again, like this is not your space typically. Most new owners are not buying their locations, they're renting. Um, so you know, if you're gonna build out, if you're gonna renovate, I tend to try to get you to to be there long term because it's money that you're not gonna get back. You're just not. So, um,

Tenant Improvements And Lease Tradeoffs

SPEAKER_01 12:33

what does a build out look like? If we are, well, the first of all, there's three different terms. There's the gray shell, there's a vanilla shell, and then there's just, you know, as is. And as is, is they'll you typically change fixtures, they'll typically replace the carpet, paint the walls, like very basic stuff. But a gray shell versus a vanilla shell is very important to understand. So, and that that really varies when it comes to like how much you're gonna invest per square foot for the build out. A gray shell is like nothing is in the space. You're talking about gravel flooring, there's no plumbing, there's no electrical work done, there's no walls, like everything in that space has to be built. And so in a gray shell situation, I'm always pushing to have a heavy, heavy amount provided. If I can't get um uh, you know, 150 Ti, I'm asking for the minimums. I'm asking for them to do the floors, I'm asking for them to put the water in or the plumbing. I am asking for to at least get to a vanilla shell before we get our tenant improvement. So that's something to be very um aware of that a gray shell is is means you're there's nothing in there. A vanilla shell is just what we talked about. It's essentially a vanilla box. So the walls are up, the drywalls are up, the um they have basic flooring, um, basic electrical, maybe a little bit of plumbing. And um, that's an ideal location

Build Out Costs And Shell Types

SPEAKER_01 13:58

because at that point, you know, you've got the basics, you're gonna have less of an investment for the build out. Um, if if you're building out from a vanilla shell, I would say right now with prices and um, you know, inflation, the last couple of years we're seeing the cost per build out. Now, again, depending on where you're at in the country, um obviously like Chicago, New York, some of the higher uh populated areas um are gonna be more expensive than like the Midwest or, you know, Idaho. Um, but you're gonna be wanting to understand that the minimum investment per square foot is probably gonna be anywhere from $200 a square foot to $275 a square foot. Um, and that's a lot. So, you know, let's go back to our example, a 3,000 square foot facility, let's just say $200 a square foot, you're looking at a let's see here. You're looking at a $600,000 renovation. So that's a lot of money. So when we go back to how much does a mud spot actually cost to open, a big chunk of that is your space. Um, now if we're doing a a gray shell, you can expect to spend a minimum of $350,000 per square foot to get that space to where it needs to be. Um, now, if if I if you're listening right now and you have a little bit of sticker shock, that's okay. Um again, like a lot of people getting into this don't have a clue on what the costs are actually going to be. Now imagine if you went ahead and you signed a lease, you gave them a deposit for a month or two of rent, and then you had no idea that the TI wasn't going to give you everything that you needed to do, and that you had to dump in extra money to replace the flooring or to add a new wall or to move plumbing into your treatment rooms. It can be very, very expensive, which is again why I cannot stress enough how much financial planning in advance before you even get to this point is so critical for the success of your business. So build out, you know, is a good chunk of your startup. Um, again, it's gonna range anywhere from like 200 to however much, you know, you want to invest in your space. Um, I think we do an amazing job. Um, my my partner at Medspa Mobile Mobile Solutions, Michelle Flaffice is amazing. She's just the best in the biz. Um, she's one of my dear, dear friends. Um, and she just, I mean, she just has a knack for taking uh your vision and your personality and my strategy and putting it into a space design. So together we work really, really well at making sure that we're designing the most efficient patient journeys, that we are utilizing the best of your space as possible, that we don't have any wasted space because it's expensive, right? Not only is the bailout expensive, but just the cost of it is expensive for a new business. So um, you know, when we're looking at a new space, we're gonna help you with negotiations, we're gonna help you with space planning, and we're gonna create the most beautiful um space for you and we're gonna manage that build out for you. But, you know, you definitely wanna be budgeting, depending on the size of your space, you know, I would say minimum of $200,000 if you're doing a build-out. But if you're negotiating TI and you don't really want to spend any of your own money, I would definitely shoot for anywhere from like $75,000 to $100 a square foot. You're not always gonna get it. You know, you do have some landlords that are a little bit cheaper. I would say the average is like $45 to $50 a square foot, but this is definitely something that you can use as a negotiation tool. And, you know, having that knowledge going into a lease negotiation is so valuable. Um, I would never recommend that somebody uh negotiate a lease without an agent. So, you know, don't try to do it on your own. Landlords will take advantage of you, and your lease can end up being a lot more expensive than you initially anticipated.

Branding That Actually Differentiates

SPEAKER_01 17:55

Um, so another area of your budget that you really want to talk about or your cost is, you know, your branding. Um, branding is more than just a logo. And, you know, it it really is your identity. You know, your branding is how do you want your clients to feel about you when they see your logo, when they see your colors. Um, your branding really should tie in your mission and your business strategy. Um, and if it doesn't, then there's nothing special about it. You know, you can have a beautiful logo, but nothing kind of resonates with your customer. So branding is expensive as well. You know, you you can definitely find somebody online to develop you a cheap logo, um, but you really should be working with somebody that can put your identity into a new brand. And so you definitely want to be budgeting for that. Not a lot. You know, there's definitely companies out there that will do a brand style guide for, I'm not kidding you, six figures. I think that's a little ridiculous. Um, but you know, like we here at DAC, we do a brand strategy for, you know, a couple thousand dollars. You could probably find it for less than that if you wanted to. But again, like your brand is your identity. So it is important. It's kind of like putting your best face forward. You know, what do you want your clients to feel when they see your brand? What is what do you want it to say? Um, and then how are you gonna, how are you gonna have that incorporated into your business? What's your tagline gonna be? What's your mission gonna be? All of this is considered branding, and it's very, very important because it's really what sets you apart from your competitors. Um, another area that you really want to take into account is equipment.

Equipment Strategy And True ROI

SPEAKER_01 19:40

Um, opening a med spa, it, it it it the equipment can be really expensive. And if you've listened to any of my podcasts before, one of the things that I always talk about is, you know, don't be one of those owners that buys all the laser devices and just expects the revenue to come in. It it doesn't happen that way. Um, be very intentional with the equipment that you are purchasing. Um, when we're developing a business model or a business strategy for a new customer, we're taking into account, you know, what they're passionate about, what their expertise is in. Maybe they're an NP that just really loves injectables, PRP, things like that. And that's what they want to start the foundation of their business with. In that scenario, there's not a lot of equipment that you need. You need some good ring lights, you need some good video, um, you need, you know, uh supplies like, you know, centrifuges and needles and all the things like that, but you don't need a lot of equipment. Um, but if you're gonna be a full-blown med spa, you may be thinking, oh, I've got to have, you know, a BBL laser, I've got to have a hair removal laser, I've got to have, you know, CO2, I've got to have, you know, M-Face, I've got to have hydrophase, I've got to have all these different things. And I just, I just don't believe that. Um, it is always my recommendation to be very intentional when you launch. So pick several, you know, a good handful of the top five services that you really wanna be known for and bring in the equipment that's needed for those. So if you want to do, if you want to offer lasers, pick one modality that either can be multifunctional or one that you know is gonna be kind of your bread and butter, and then build the practice from there. You do not need to have five different devices to be successful. Um, and and quite honestly, the practices that have come to me who are struggling financially are typically the practices that went ahead and they purchased all these devices and then they can't sell the services. Um, and you know, in any honestly, in any business strategy that I've started, I never start off with a laser purchase from the get go. Um, I usually build if they want to do lasers, I usually build that into their plan either three to six months after they open. Um I like To bring in the laser as a second thought to be then utilized as like, hey, guess what? This is new. We're bringing it into the clinic. But, you know, it, it's, it's, it, it's very important to know that you don't need every single device in order to be effective. But, you know, you also, when you're looking at these devices, I think it's important to also understand, you know, what the consumables are. Um, what is the cost going to be to have this device or this piece of equipment in my clinic? And then what is it going to cost for me to operate this device? Um, you know, there are some, you know, companies out there that provide facial treatments that, you know, have a very, very high cost. And it it feels like you're constantly, constantly buying consumables, you're constantly buying serums, you're constantly buying tips. And so those, those costs need to be put into your performance that you understand what your return on investment is per treatment. If you are, for example, buying, you know, um, a hydrofacial, you know, great, great, great company. I love, I love the treatments, and you're selling, you know, your signature hydrofacial for $225 or $199, you need to know what it's gonna actually cost you, how much serum you're gonna be using, how much the tips are gonna be, and and what you're gonna be actually generating in that treatment. And um, quite honestly, just you know, for reference, if if a vendor is telling you that this is your cost per treatment, I would tack on an additional 20% because you're gonna be using a lot more than what they're indicating, just in my personal experience. So um, you know, that being said, you also want to look at what your revenue per hour is gonna be. Does it make sense to bring in a device, let's say is $60,000 that is going to produce $250 an hour? Or does it make better sense to bring in a device, let's say, that, you know, is $150,000 that can produce $800 every 30 minutes? So these are the types of things that we work through with our clients when we're building out a financial performa, when we're building out a strategy, we want to know like what are the what are our key services going to be? What equipment is needed, and how can we do this in the most budget-friendly, efficient way financially? And so when it comes to equipment and your budget, these are the things that you need to think about. It's not just the cost of the device. How much is the cost to actually perform these procedures? And how much money am I actually going to be generating from this piece of equipment every hour? Um, so those are things that we look at. The next critical part of budgeting is gonna be your staff. Um,

Staffing Costs And Hiring Reality

SPEAKER_01 24:49

this is, you know, aside from your build out, this is one of the most important, most expensive costs in your startup because, you know, part of opening a med spa, part of growing your med spa, the heart of your med spa not only is like your mission and your vision and what you're offering to your community, but it's your people. Um, you will hear me say, if you follow this podcast or you followed any of my social media, or if you've listened to any of my sales um talks or ever, you know, um done if I've ever, if you listen to one of my speeches at AMSPA or, you know, any of anything that I've ever done publicly, you'll always hear me say that people purchase with people. And think about it, it's so true, right? Like if a client is coming into your med spa, they're wanting something fixed, that they're looking for a solution. And they're they're pretty much insecure too. They either want something correct, they don't, they don't like how something looks, they're feeling insecure about something. And so they're looking for a solution. So when they come into your med spa, they're they're looking for two things. Can you provide the the solutions that I'm looking for? And then do I trust you? And that trust comes from your professionals. So do you have the experience? Do you know how to customize treatments for me? Do you know how to practice safely? Do I trust that I'm not gonna have side effects? Do I believe the things that you're telling me? Are you educating me? And, you know, are you gonna put a treatment plan together that's customized? It's just for me. And guys, I cannot tell you how valuable that is. I mean, your employees, I I've seen employees break a business before just by not being seasoned, not being experienced, not giving a shit. Um, and so, you know, your investment into your employees needs to be considerable. Um, you know, and it's kind of like what you say, like you pay for what you get, right? Or you get what you pay for. If you're gonna bring in an entry-level RN who, you know, doesn't have a lot of experience, you're gonna have to pay for their training. You're gonna have to continue paying for their training. Maybe they don't know how to do sales, they don't know how to do a concentration, you have to pay for sales training. There's a lot of expenses, a lot of money that it takes to invest in somebody that's very green versus paying a little bit more for somebody who's been doing this five, six, seven, 10 years and like can come in and grab the bull by their horns. You know what I mean? So either way, whether, you know, you're you if your strategy is that you want to bring in someone that's new because they're cheap, understand that there's a lot of extra money that's going to be invested into that employee to get them to where you need to be to be a provider that produces. Um, you know, just to kind of give you some some realistic expectations here, if you've never owned a med spa, you may not understand what this cost actually looks like. So I'm gonna blow your mind here. And this is this is another reason why the industry is booming because nurses in this field, they're so sick of working in the medical hospitals and dealing with sick people. They see the money. So this is where they're they're gravitating towards. But a good RN, a good one, someone that can come in, who has a clientele base, who knows how to sell, who knows how to do consultations, who knows how to build her book a business, you're looking at a base salary of between anywhere from 85,000 up to 150,000. Um, all in compensation, an average is again, based on where you're at in the industry, anywhere from like 120, I've seen up to $200,000. So, you know, if you're going in and you think because Glassdoor told you that an RN is gonna cost about $70,000 and you try to bring in an RN to your med spot and you don't offer them what industry is is saying that they're worth, not only are you gonna have high turnover, but you're also bringing in someone that just doesn't have the experience. And when you're launching a business, you don't have the time or the money to make mistakes, if that makes sense. So it's also why you hire a consultant. But knowing how much your employees are gonna cost as an investment is very, very important. So, you know, how many employees do you need for a new business? That depends on your strategy. Um, I definitely think that you need to have a really rock star patient coordinator. You need to have definitely, you know, somebody that can do injectables. And, you know, you definitely need to have either an aesthetician um or somebody to do, maybe that the RM does kind of everything, but obviously a medical director, somebody that's going to be on site all the time is what we typically recommend. But, you know, you don't want to overhire. You you don't want to bring in too many people too soon. Again, I'm a consultant. So let's start with what we need as a basic. So front office coordinator, which is a very, if not the most important role in your practice. You need an NP or a provider who's going to be there on a regular basis because they have to do those good faith exams. We'll get into that in another episode here about compliance. Um, and then you need your aestheticians who understand the skin and can do all the little things like the derma planing and the microneedling and the hydrofacials and the diamond glows and the things that maybe the RNs don't need to do. If you can find an RN or an NP that does all of it, that's great. Um, I think the most valuable employees that are out there are your nurses who are also duly licensed as aestheticians.

Book Recommendation And Quick Break

SPEAKER_01 30:10

So before we jump back in, if you're building your practice from the ground up or refining and scaling what you've already started, my book, The Med Spa Growth Formula, was written specifically for you. It's a clear data-driven blueprint for planning, launching, and scaling a profitable, sustainable medical aesthetic practice. Inside, I distill more than 20 years of experience building and scaling successful practices into an actionable roadmap that covers how to avoid costly startup mistakes, how to create predictable revenue, and how to navigate operational challenges, all while outlining the 10 most critical elements of a practice you should master to build a business that lasts. The MedSpa Growth Formula is now available on Amazon in print and Kindle formats, as well as through other major ebook retailers. I've included the link in the show notes so you can access it in the format that works best for you. Whether you're taking your first steps or preparing for your next phase of growth, my book, The Medspa Growth Formula, is designed to help you move forward with clarity and confidence. All right, guys, let's get back to today's episode. There's

Marketing Budget And Social Proof

SPEAKER_01 31:19

a couple other areas that I think are are also very important when it comes to budgeting and you in your launch. Um, and you know, your staff is probably the most important investment you're gonna be making because again, you know, you're launching a business and you're going to rely on those employees to build your business. Um, they have to be likable. People purchase with people. So they have to be able to connect with your patients. They have to be able to properly assess their skin and their goals and develop a treatment plan. Um, and they have to be able to give amazing results that are going to bring your customers back. So that is the number one area you need to be investing, and it's an investment that will keep rewarding you over and over again. Um, but the next one I would think is, you know, marketing. And this is honestly an area that a lot of new owners um, I wouldn't say forget about, but um they they don't take seriously. Uh a lot of new owners think, you know, or go into this with the expectation that, you know, I'm gonna post on social media, I'm gonna maybe boost some ads on Facebook, and that's gonna be my marketing. And the reality of it is, is there's a lot more to marketing than just that. And this industry is highly, highly competitive. So if you're a new business, there's most likely 10 other med spas or practices that you're gonna be competing against within a 10 mile radius, if not even, you know, less than that. And so, how are you gonna position yourself in the market? How are you compete with people that are already established? And that really comes down to a marketing strategy. Um, there's a lot of things that you need to be doing, um, but it it's not cheap. And and quite honestly, you know, when I see a business who hasn't budgeted correctly or hasn't managed the money that they've acquired for their practice correctly and they feel like they need to cut money, I don't know why, but the very first area that they cut is marketing. And it makes no sense to me because you need the marketing to attract the customers to get the appointments booked. So if you're struggling financially to get revenue in, why the hell would you stop the engine that's bringing in the new customers? It makes no sense to me. Um, and so, and unfortunately, you know, I have had customers that do that. I've had customers that, you know, acquire the right money to start up, then they maybe like start offering employees more than what was budgeted for, or they just don't, they have unexpected expenses and and you know whatever the reason. And they're like, we just need to tighten up the budget a little bit. So they cut the marketing. I'm like, oh my gosh, like cut something else other than that. Um, and then they always come back within like 30 days, like, AJ, you were right. I'm like, I know, I know. So we need to get your marketing going again, and we need to do what's in the plan, and the money will start coming in. So, you know, what is a right marketing? What is what is the right strategy? You know, first and foremost, it's social proof. Going back to people purchased by people, consumers these days are so much more educated than they ever were even 10 years ago. They know what these services are, they have friends that are doing these services, they're gonna research these services, but they're gonna go to your Instagram and your Facebook and they're gonna look for social proof first. They're gonna wanna see your before and after photos and they're gonna wanna look and learn about you. And only after they like your content or they kind of stalk you for a couple days, a couple weeks, whatever, and like what they see is when they pick up the phone. So, you know, if you are not savvy in social media, if you are not savvy in social media strategy and how to build your following or how to um, you know, uh get your brand or your business identity to resonate with your ideal customer, you need to invest in somebody that knows how to do it. Um, this is so, so, so important. Don't be the owner that tries to do it themselves unless you're really good at it. I'll be honest with you, um I have an amazing team behind Dermacetic Consulting Group that understands marketing strategy. They're beautiful graphic designers that we have. We build bomb.com websites. I mean, my team, I just cannot say enough amazing things about them. They're great. But if you were to ask me, AJ, to create a reel, you don't know what you're gonna get. You're not gonna get anything very good. And and my teenager daughter like makes fun of me all the time. She's like, How do you not know how to do a TikTok? How do you not know how to do a real? I don't. I'm I'm in my mid-40s. Like, we didn't even have Facebook until I was well out of college. Like we got the internet when I was in, you know, elementary school. So, you know, um, don't be like me. Not that I would do this, but you don't want to take someone that's very inexperienced in this and try to manage your social media. You need a professional to do that. You also need to have compelling campaigns to market yourself. You know, when we are launching a business, we typically will do a brand identity strategy a good six weeks before we actually open. And what that is, is it's not really like campaigns or any ads that we're running. It's really just introducing our brand and who we are or what the clinic is before we open, you know, coming soon. This is what we're gonna offer. Meet the team. We're so excited to be in your community. Guess what's coming? Uh, join us on our opening day, like all these things that get your consumer interested in you. But you have to be, you have to be intentional about it. You can't just open and be like, boom, here I am. It takes time for people to recognize you. It takes a couple touch points of of people seeing you, your brand, who you're about, before they they really, you know, think, oh, okay, I'm gonna follow these guys. Um, and then when it comes to, you know, new businesses, you always want to do, you know, some type of offer. You you you want to do some type of like lead generation campaign, which can also be very expensive. Um, but you have to be intentional. And in that, you know, you want to make sure that you're not not cheapening your brand, you know, so you don't want to do like, you know, $150, you know, 20 units of Botox. You know, you don't want to attract the group on clippers, but you definitely want to be intentional on the offers and how you're attracting customers. And if you don't have the company that can do that and you're listening, we definitely can help you there. Um, but marketing, you know, needs needs to be somewhat of a hefty budget. I would say, you know, what we typically recommend our customers to invest is anywhere from, you know, I would say $1,500 to $3,000 per campaign. Um, that's a nice little healthy budget. Now, if you're in a heavy populated area like Miami, it might be more than that. But, you know, throwing a couple hundred dollars behind a post to boost it or investing a thousand dollars or two thousand dollars in your total marketing strategy just isn't gonna be enough. Um, you can do it that way, but you're gonna grow a lot slower. And the goal here is to make sure that you're breaking even as fast as possible and then start getting a return on your investment. So, you know, you need to have a healthy marketing budget. Um, you need to have a healthy budget for staffing so that you can bring in the right employees with the experience to help build your brand. You've got to be intentional with your equipment. Don't buy everything that that you see because you don't need it all. And invest in a beautiful brand development. You know, make yourself unique. What is your mission? What is your brand identity wanna be? What do you want your clients to feel? And then, you know, taking into consideration, you know, what's your build out going to be? And, you know, before we move in, let's just talk about the equipment too. Because let me just warn you guys listening. And for those of you who have already been open, you're gonna laugh when I say this, but it's like a siren goes out when you open up your doors. The siren notifies every laser rep that ever walked the planet. And before you know it, you're gonna have Tom, Dick, and Harry walking through your doors, trying to sell you the most amazing device and tell you that it's this and tell you that it's that. And if you buy it, all this money will come in and it's all lies. Okay. Um, don't fall for that. Like, don't fall for a sales guy. You know, give me a call, we'll talk about equipment, we'll talk about strategy and and you know, be very intentional in what you invest in your business. But I just I want to warn you that this is what's gonna happen, and they're gonna make you feel like you need everything under the sun. And guys, that is just not true. That is the fastest way to fail, is by biting off more than you can handle. You do not need every device under the sun to be a multimillion dollar business. You just don't. Um, so you know, those are kind of the main areas that you want to think about when you're developing your budget for startup.

Forgotten Costs And Ramp Up Cash

SPEAKER_01 40:23

Now, let's talk about some of the forgotten areas because not only do you need a budget and the right money to get you to the open phase, but you also have your operational expenses that you have to float for the first couple months during your ramp up. You know, I've seen businesses break even. Um, most of my clients are breaking even by month three. Um, I have had clinics that are breaking even their first month, if not their second month. I would say the average is typically 90 days, which is great. Again, going back to our strategy, we're very intentional. Um, but you know, a lot of some ramp ups, you know, a lot of them, you know, take a good six months before they really start seeing any money left over as a profit. And so you have to be prepared for that. You know, how are you gonna keep the lights on? How are you gonna pay these employees? How are you gonna afford marketing? So, you know, when you're budgeting and putting together your performa and planning for your startup, these are things that you have to think about that a lot of people forget about. Most people are just like, here's what I need to open. I'm open. Now what? It's not enough. It's not enough. And you don't want to take the money that you've already invested into getting the doors open and throw it away because you didn't, you didn't plan for a couple extra months of operational cash flow. Um, so you know, some of the things that a lot of people forget about are, you know, there are a lot of little expenses, but they all add up. Like your EMR system, like how much is that gonna cost on a monthly basis? You know, what are your opening vendors going to require to open up an account? For example, you want to do Botox. Allergan has a minimum requirement to open up account. And it it could be a couple thousand dollars based on your area, but you know, a lot of them are gonna want a good 20, 30, 40,000 investment in products to open up that account. Um, Galderma is the same the same way. Um, you know, a lot of these skincare reps like Skin Medica, Zio, they have minimum orders before you can open up an account. So you have to account for all of that. Um, it's not just, you know, buy, you know, open up a vendor account and then pay it off over time. You can do that as a new business. And and we typically try to negotiate that for our customers. But, you know, when we're doing a business financial plan, we typically account for anywhere on the low end, low end $50,000 for, you know, your supplies. And that's your medical supplies that you're using. Um, and we typically want to account for at a minimum $10,000 for retail. In a perfect world, it's typically $75,000 and $75,000. So we want to have a full spectrum of retail ready to go. And we want to make sure that we have all of our Galderma products, all of our allergin products. You know, if we're bringing in hydrofacial, we want to have all the serums. You know, we want to have all the things that we can function properly. And we want to order enough that's gonna get us through the first couple of months so that we don't have to think about it. Um, the other thing is, you know, IT setup, you know, we are building compliant, HIPAA compliant practices. And that does require specific internet services, you know, to have specific types of IT set up to make sure that your systems are compliant, that no one can hack into them, you know, good firewall. So there's a there's an investment there as well. Not a lot, but you know, a couple thousand dollars that you need to account for. Um, insurance and malpractice, cybersecurity, liability, this is also a cost. Um, if you are a new practice, not saying that it can't be done, but I would say what I've run into is that most malepractice insurance companies want that payment up. front. And it's more than, you know, your liability by any means. You know, liability, workmen's comp, things like that are going to be a couple thousand dollars a year with male practice, depending on your experience for your providers, um, any any any past issues you've had with insurance with any of your providers, not saying that any of them had any, but if there's been like a claim on them, that'll increase your your male practice fees. But, you know, your services and how many of those services you estimate you're going to be doing per year is going to be, you know, where that quote comes from. So I've seen new practices get male practice coverage for, you know, $8,000 a year. I've seen practices with male practice coverage, you know, up to $25,000 a year. So, you know, this is this is a big area where, you know, if you're trying to do it on your own and you you're just kind of estimating what your fees are going to be, this isn't, this is an area that a lot of owners kind of get blindsided by is the male practice insurance. And um because it's it's expensive and if you're a new practice, very rarely do you get to make payment plans on that. Most of the time they want you to pay for that up front. So that's an area to think about. Licensing and legal fees, um, you know, this is not necessarily a huge expense, but it's one, you know, minimal couple hundred dollars here and there that people forget about. Another expense that I think is very, very important that a lot of people forget about would be ongoing training and education for your team. I've already kind of touched base on what it looks like if you're hiring someone that's newer to the industry, you're going to have to invest in that training. But it's just also really good practice to roll that into your budget anyway because you know at the end of the day you want your team to have training on the best techniques, right? You you want your team to be knowledgeable so that they can empower your clients, right? So, you know, investing in their education, one, it's going to come back to you tenfold because you know that you're having your employees practice safely, effectively and giving the best results with the newest, most advanced techniques. But two, you're also, you know, this is an employee perk. You know, the training can be expensive and this is another area where you can gain loyalty from your staff by investing into their education, investing into their career. And you know when we when we do recruiting for our clients, um, this is one of the the areas that we provide guidance on in their employment offers is, you know, what are you gonna do for continual education? And if we have an owner that's like, well, I think that's their responsibility, yeah, it is to a certain extent, but it's gonna do so much more for you if you're investing in your employees as well. A lot of employees these days are looking at continuo education allowances and their employment offers equally as they would with you know medical, dental and healthcare healthcare benefits and retirement benefits. So this is an area too that maybe new owners kind of doing this on their own don't anticipate need to be planned out in the budget, but it it can be a hefty cost. Especially, you know, let's say for example you bring in PDO threads if no one on your team has ever done PDO threads, they're gonna require that you have that training and pay for that training before you can open up an account. Same thing with Allergan they do a lot of free trainings but they have a lot of ongoing trainings that do cost something and um to in order to be able to use their product or or um have an account with certain other certain product lines. So these are areas that you want to you want to think about. Now you know getting into other areas of the budget, you know, we you really just you know you want to prioritize where your money's being spent and what I mean by that is you know if we have a financial plan for you and we've got a budget for here here and here and here when you're there are things that happen where you're like oh wow I feel like I need that and I didn't anticipate it. You need to prioritize so do I want it or do I need it? And what I always tell my customers is you know there's there's a lot of time to buy these things. Maybe you want to have an employee photo shoot and it's going to cost you $2,500. Is this

Prioritizing Spend And Laser Cautionary Tale

SPEAKER_01 48:30

something that you need right away or is it something that you can wait a few months to have that's what I mean when it comes to prioritizing your budget. You need to think about the money that you have and how you want to stretch that during the ramp up now let's say you open and you're first month first month out of the gate, you break even, you're ahead of your financial goals you're ahead of what we anticipated for you, then you do have a little bit of extra money and so you can splurge a little bit in extras that you maybe didn't account for or didn't think that you wanted and now you feel like you need. Does that make sense? So um you know making sure that you're prioritizing how you're spending and what you know I want to go back to kind of talking about the lasers you know it is it, you know, I I have worked and I've had the privilege of working with some of the most amazing people. And and I cannot tell you how rewarding it is for me to take someone's vision and kind of work through all the process, you know, all the little details to and then like opening day gosh like it's just it's so rewarding for me to see my clients thrive. I may get a little emotional um but like when you when you can change someone's trajectory in life and help them to accomplish their dream it it's just it's it's the most amazing feeling in the world. But it's also a really really difficult feeling when you have clients who don't necessarily follow the guidance after open. So like what I mean by that is I've had clients who you know they're on a great trajectory they're following the plan and then they don't prioritize their budget. They have a laser company that comes in and even though we've planned to bring in a laser at month six, they decide they're going to bring it in in month two. And that is not prioritizing your budget. And I always get very worried when a client who's new to the industry kind of shifts the plan and doesn't talk about it with me first. Not because I'm a little bit of a control freak, but because my first thought is okay, do we have the budget for that? Do we have the patient volume? Are we confident that our team can can immediately start moving into this type of service offering and you know I I've had clinics who bite off more than they can handle. I had a clinic in particular several years ago who you know initially wasn't going to bring in lasers for the first year and then went to an AMSBA event and you know had a laser rep tell them, oh this is an amazing thing, blah, blah, blah, blah, blah. And they bought this $200,000 device. And, you know, I always do my check-ins. If you guys have been on my social media recently, I did a really cute reel about like, you know, I'm always peeking in on you. But I did a I did a random follow-up with them a good like two years after they'd opened. And I'm like, hey guys, like how are you doing? Like things look good. And they're like, well, you know, AJ, we've just kind of plateaued at revenue. And I was like, well that's odd. Like, you know, let me kind of dig in a little bit. And and what I discovered was that they had bought this device and their staff just wasn't even talking about it. They were just kind of stuck in um I'm gonna recommend Botox, I'm gonna recommend filler, I'm gonna recommend these facial treatments. And they just were not talking about this this laser treatment that they had purchased. And you know, on top of that, they they weren't growing because they were just kind of stuck in their comfort zone, which we can talk about in in season three when we're gonna talk about sales. But they they bought this device that was costing them $4,500 a month plus additional insurance and it was just sitting there. So again like going back to you know prioritizing your spend in this example that I'm giving yes they wanted the laser. Yes, they saw value in it, but they weren't ready for it. You know, they would have been ready for it in a couple months when they had a little bit more cash flow, when they were making a little bit higher profit and very, very strategic on you're gonna make this month, this this much this month, this is going to be your operational cost, da da da da da like you can clearly see in our performance that we create for our clients when you're gonna start making that money. And they were making money and they're like, oh yeah, we can afford an extra $4,500 a month, no big deal. But then what they didn't anticipate is that they're they weren't up with their employees. They weren't keeping on their employees on doing full consultations and and they weren't doing consultations in an in a consultation they were doing an exam room and their staff was just recommending things that they like to do. And before you knew it, you know, they were a little bit upside down. And you know we can correct that and we can get back on track but it's so much easier if you prioritize and you have intent behind those extra purchases. So in that situation, you know, how I would have approached it is okay this is a great device. I understand that you're gonna get a great deal by purchasing an AMSBA, but we can also negotiate that on our own we don't need the gimmick of an event or we don't need a gimmick at the end of the year, you know, discounts to make this happen. And then let's let's be prepared. Let's let's do a survey with our clients. Are they ready for this? Let's talk to our staff do they need additional training are they comfortable doing this? Like what is it going to actually take to bring in this new modality? So prioritizing when you're gonna do a purchase or prioritizing where you're spending your money in the first six months of opening you guys it's just it's just so important. Okay. Um and and I I just cannot stress enough that you know having a budget planned out in advance before you open up your business, having a good idea of what the expenses are going to be to get your business open and through the ramp up phase, you guys is just it it has to be the foundation of your business. You know, so I I want to talk a little bit more just kind

A Hard Lesson From My First Med Spa

SPEAKER_01 54:24

of about that. If you're listening to this episode and you're contemplating opening up a med spa and in your mind you're like, okay, I've got $100,000 to do this and I'm gonna rent a space and I'm gonna order some Botox and I'm gonna, you know, make myself a website. You can do it that way, but I'm gonna tell you that what you are expecting in return is going to be far less than what you're anticipating because you don't know your numbers. You don't know how much it's gonna cost for insurance. You don't know how much money you're gonna get back from those customers. You don't know what your cost per acquisition is you don't know the return you're gonna get on your marketing. You don't know your direct costs and you you can't know that information unless you do a financial blueprint like a performa. And like I said in in episode one of this season, um, you know, I did it that way. I did it in my first med spa. I went in I I remember it like it was yesterday. I had $50,000 to my name I put that down on a deposit I put that as a deposit for a business loan, a very, very small business loan and I went and opened up my doors and I learned very, very quickly that what I thought was going to be my monthly expenses was just a very small portion of what it actually was. And um it was very scary for a long time. I opened up my first business when I was 23. I got married not very long after that I got pregnant on my wedding night and so all of a sudden I had to be an adult and you know trying to grind and make things work you know as a single person not a big deal but when you got a baby to take care of you now have a family to support like it it I should have planned better. Thankfully for me it worked out my business thrived we expanded I I opened up several other clinics after that but you know as a consultant if I can prevent you from having to make those same mistakes that I made way back when like that that's my mission. It is very, very easy to get a business loan. It is very easy to just take some extra steps, build out your business model, figure out what your costs are going to be and do that before you commit to all of this. And I promise you promise you promise you it's gonna end up better for you in the long run. There's no negative in that you spent a couple thousand dollars to do a business plan and to get your actual numbers and maybe you realize like oh wow this is a lot more than I'm comfortable investing or wow I didn't really know that it was going to be this much money. So now you've lost a couple thousand dollars and know what it's going to be and then maybe you save up for a couple years and then you're ready versus like I'm gonna invest everything that I have and then realize after the fact it wasn't enough and you lost everything. So I hope that listening to today's episode resonated with you guys. I really hope that you learned some things about average cost for some of the major expenses going into launching a business. Also you know thinking about that that that ramp up phase that can be anywhere from like three to six months, making sure that you have all of your overhead your employee costs covered during that ramp up phase is just going to help position you guys for just greater success. And you know the first six months of launch is the toughest. And but if you strategize and you financially plan properly it it's not stressful at all. And if we can mitigate and minimize that stress like that that's what the goal is here. So um I I've really kind of enjoyed talking about um you know this this episode today I really love talking about startups. I love giving uh my listeners information to empower them. And I really hope that you guys have have um learned something from today's episode. So

Next Steps And Closing CTA

SPEAKER_01 58:20

um we have a really exciting episode coming up tomorrow. Tomorrow we're gonna dig in a little bit deeper into the construction, what construction looks like, you know, what to look for in a construction company we're gonna dig in a little bit deeper when it comes to costs of construction really things that you need to think about when you're renovating your space or just even beautifying it on any budget. We we're gonna talk about that talk about equipment and some of those hard costs that go into your space and um you know just kind of going from there. So you're not gonna want to miss tomorrow. Tomorrow is really exciting as well. You've been listening to MedSpawn Lock today where we kind of pull back the curtain and help you to understand what it takes to build scale and develop a sustainable profitable aesthetic practice. I really hope that you've enjoyed listening to us today. If you like us please don't forget to subscribe leave a review share it with another entrepreneur share it with a friend who's ready to level up we we love that. And remember that success isn't about just luck it's about strategy it's about structure it's about showing up every single day with purpose. I'm your host Ashley James known by everyone as AJ and until next time keep dreaming keep building smarter keep unlocking the secrets to building your multi-million dollar med spa.

SPEAKER_00 59:37

Have a great one see you next time guys thank you for listening to Med Spa Unlocked true success in aesthetics is never accidental. It's the result of vision precision and disciplined execution if today's episode resonated with you we invite you to subscribe so you won't miss future conversations and to continue unlocking what's possible for your business your brand and your legacy for more resources education and strategic support visit us at dermastheticconsulting.com or connect with us on social media at dermasthetic consulting and if you're ready to take the next step in building your aesthetics practice the right way we'd love to help until next time lead with intention operate with excellence and never stop evolving