Navigating the World of Medical Aesthetics: A Journey with John Bergano

Join us with John Bergano, founder and CEO of Aesthetics Card, as we explore the world of medical aesthetics. Tapping into his background in luxury sales and marketing, John and his wife were able to transform a salon studio space into a tranquil aesthetics practice. Their story illustrates the importance of creating a unique value proposition for clients and navigating the demanding space of medical aesthetics. 

We dive into the innovative strategies John and his wife utilized when starting up, including designing brochures and going door-to-door to spread the word. Listen to how they read market indicators and prepared for an eventual exit from the business. The episode also ventures into the challenges of raising capital in the medical aesthetics space, the importance of excellent customer service, and the role of team management.

In our conversation, John sheds light on the significant learning curve they experienced in managing cash flow and expenses. They leveraged promotions, flash sales, and discounts to boost cash inflow and product movement. The discussion also revolves around the macro factors considered during the sale of their medical aesthetics practice, and gives a snapshot of the current state of the economy and the retail market. This episode is a wealth of information for anyone looking to understand the intricacies of starting and managing a medical aesthetics practice. So grab a cup of coffee, sit back, and enjoy this insightful conversation with John Bergano.

Get in touch:  aestheticscard.com john@aestheticscard.com

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Transcript

Speaker 1: 0:00

Yeah, I love the fact that you went door to door making these businesses, because I think a lot of times people View tasks as below them, right or like that. You're good for doing certain things. So there's this. Were you ever thinking to yourself, like you know, this is beneath me to go do this type of thing, or did you know that there's just a certain amount of time that you had to put into arrive on?

Speaker 2: 0:23

the other side. No, I never thought that it was. It was beneath me because you know, I knew we had to do something to try to get, you know, patients in. And you know I designed brochures, design one sheets, you know, got them printed up at the local printer. You know, walk those door to door, drop those off. You know really just everything in an effort to help build business.

Speaker 3: 0:44

The goal of this show is to help health care organization scale by leveraging real estate strategies and interviewing high-level health care executives who are actively in the trenches in order to pull out lessons learned along the way. If you'd like a free site selection analysis from our team, or you'd like to learn more about how we're acquiring real estate Through our fun on the blockchain, visit us at wwwreuniversityorg and drop us a line that's RE as in real estate Universityorg.

Speaker 1: 1:10

Hello everybody, welcome back to another episode of helping health care scale. I'm your host, austin, here, and like to welcome our guest today, john Bergano. He is the founder and CEO of aesthetics card, which is an elite rewards business mastercard, and he and his wife started a medical aesthetics practice back in 2015 and successfully exited three months ago. John, thanks for coming on the show, appreciate it, thanks so much Austin.

Speaker 1: 1:32

Yeah, we just love to hear your story, because going from aesthetic spa or aesthetics, medical aesthetics practice to Business credit card is quite the jump. But what was it like for you growing up? How did you have entrepreneurial parents and was what was childhood like? Really oh.

Speaker 2: 1:49

You're throwing me a curveball here, austin. I, I think I've always been interested in owning a business, to be entrepreneurial, and that's what led me early in my career to find success in sales of marketing and luxury hospitality. And so when my wife graduated residency and she wanted to start her own medical aesthetics practice, it was a very natural fit For me to bring that passion to build businesses, to contempt of aesthetics and to Really just bootstrap and build a practice from the ground up. When you say you your background in luxury sales.

Speaker 1: 2:21

You're talking about our luxury aesthetic sales. That's different. That was prior to opening up this practice.

Speaker 2: 2:29

Correct, I was in in food and beverage and then sales and marketing luxury hospitality. So started out with hotel groups such as the roots, carlton, the Biltmore, and then I worked with some restaurants as well.

Speaker 1: 2:39

Okay, because I do Airbnb as well like it's passionate of mine have a few doors, so yeah what exactly was your? Role within as director of sales and marketing, with.

Speaker 2: 2:47

Yamashiro, for example. Yamashiro in Hollywood, california. I was brought in to help raise the profile of events in the space. They had a very small events department when I started and it was bringing that hustle in and that entrepreneurial spirit to building up a sales and marketing team on profile and we went on to book some very exceptional Events premier parties, rap parties, working with Netflix, hbo, disney and then tripled event sales within within a year. Wow, and what kind of like price ranges are we talking for events there? That's going back like 10 years, yeah, yeah very different now.

Speaker 2: 3:28

So that was $50,000 events, hundred thousand dollar buyouts. It was yeah, so I took it. Stuff. I take it yeah for sure.

Speaker 1: 3:35

Yeah, because I like, I like the event space a lot, like we have a Airbnb that also dual purposes, is a wedding venue or event space, and I think it's really interesting space, so it's funny. I didn't even know that you're in that space as well.

Speaker 2: 3:47

Yes, and I really feel having that background in luxury hospitality it allowed me to to flourish in medical aesthetics, if you would, because I feel, between my wife and I, we had a very clear vision for what we wanted to To present as far as the brand. I think it's a really interesting space. We had a very clear vision for what we wanted to to present as far as the brand and the image of the practice and the type of clientele we want to attract as well.

Speaker 1: 4:10

Yeah, I can see that it's a lot of the same type of appeal, like going for luxury event space or luxury aesthetics, and because when it comes to aesthetics it's all Selective, right, like you don't, like you need to get this done. It's not like it probably insurance is not covering most of it. So you really have to paint that picture of what this looks like when you book here. Come here, come on in this other side.

Speaker 2: 4:33

Yeah, and that's just it. You have to create that value proposition when, in the eyes of your client base and you in your perspective, clients as well medical aesthetics is extremely demanding. There's a lot of people that are trying to get into it, trying to break in, start their own practices, and it helps to have a better understanding of what it takes to succeed in the space Before you go ahead and try to dive in head first for sure.

Speaker 1: 4:57

Okay. So yeah, let's talk about that transition like what happened that got you guys in the medical aesthetics practice in front like going how did you transition from luxury event space to our luxury hospitality, to medical aesthetics?

Speaker 2: 5:16

It was always my wife, dr Rachel's vision to get into medical aesthetics after residency, and so she had trained extensively for about two years, all still going through medical family medicine residency and when she graduated she took a look at a lot of different options where she could start or launch her own practice, and we ended up finding a situation where she was on a one-year contract with a family medicine practice that allowed her to sublease one room to start seeing patients for aesthetics treatments after hours and weekends. And, thinking back, it was really hard. This was a medical building that didn't have air conditioning on weekends, so we bought and plugged in a portable AC to try to keep things as cool as possible, while still seeing patients on Saturdays and sometimes even Sundays, we were seeing patients night time. So Rachel was seeing patients for eight, nine, ten hours during the day and then we continued to see patients in the evening.

Speaker 2: 6:14

I was going door-to-door trying to build partnerships with different businesses, try to bring in patients for us for contempt aesthetics. So it was a grind when it was a good grind for at least the first year or so Until we built up a solid patient base of about 300 patients and at that point we said, okay, from here we should be able to grow in scale to be sustainable, and so that was when Rachel was able to focus on contempt aesthetics. Full-time was after about a year.

Speaker 1: 6:41

Yeah, I love the fact that you went door-to-door making these businesses, because I think a lot of times people view tasks as below them or like they're too good for doing certain things and but they think that too early on, before they've really proven a track record, and so there's this. Were you ever thinking to yourself this is beneath me to go do this type of thing, or did you know that there was just a certain amount of time that you had to put in to arrive on the other side? I'm just curious what your mindset was like during that time.

Speaker 2: 7:10

No, I never thought that it was beneath me because I knew we had to do something to try to get patients in. And I designed brochures, designed one sheet, so I've done, printed up at the local printer, walk those door-to-door, drop those off really just everything in an effort to help build business. And so you've got to have that hungry, you've got to have that drive, you've got to be resourceful and you've got to figure out ways in which to reach your potential audiences. You're building your business.

Speaker 1: 7:38

Yeah, so when you guys started in 2015,. Like, what was the, did you go? This was that when you first went and found a space and leased it out or what, Like. What is? Because there's like a transition, like it seems like there's a little bit of a slow transition from when she was taking on side clients to when you guys actually pulled the trigger.

Speaker 2: 7:56

Yeah. So we were sub leasing in the family medicine practice for about six months and then, just as a growing that space, we actually moved into a salon studios type concept. So there were about 40 different suites rented out by hairstylists, barbers, nails, makeup estheticians, and we were like a compliment to those services and in the early going it was actually very strong for referral source because women were coming in. Predominantly women were coming in to get their hair done to, to see someone else in the space. They would pass by and say, oh, do you do Botox? Oh, do you do lip filler? When it became an excellent referral source in the early going to attract new clientele, just as a matter of being in that space. So we were there for about two and a half years and then towards the end of that process, we started to build out the location that we were in for the last four years, which is the location that was acquired by skin spirit. So that was a build out right in Colorado Boulevard in Pasadena. That was a single free standing building. No, it was. It was an Avalon Bay building with commercial downstairs and then residential up top. So we were one of three spaces, about 2200 square feet. It was previous and automated, like spa it was.

Speaker 2: 9:19

It was a little bit interesting to try to do the remodel on it. You had these deep, dark purple walls. I had a lot of walls, a lot of small, very tiny rooms. So we took down walls. We brightened up the space. We did like a light, very neutral gray, try to keep it very calming on the inside, painted the ceiling white and really made the space look what we used to call contempt Very modern, modern aesthetic, very clean, very like tranquil, like you want people to come in. You were upset. You had to drive 45 minutes in traffic. You wanted you to be able to feel calm. It's a nice, cool space, relaxing music. We provide water, coffee, tea to help our patients feel at ease prior to their medical aesthetics treatment.

Speaker 1: 10:02

Yeah, I want to ask two questions. Number one, we can get to them separately, I'm just I don't want to forget. The first one is like the exact scope of services that you offered at your location versus the aesthetics industry in general, and then, secondly, things that you specifically did, either intentionally or you found out later, that really helped contribute to your exit to a larger group. So I guess we'll start with the first one, like what kind of what you guys offer exactly?

Speaker 2: 10:27

Majority about 85% of all revenue was injectables predominantly.

Speaker 1: 10:33

So that means Botox and fillers type thing.

Speaker 2: 10:35

Botox, dermal fillers Rachel's an expert at PDO threads, bio stimulators such as Sculptra so there's a lot of non-surgical modalities that could really make a dramatic effect for patients, and so that was most of what we did. And then throughout the years, we dabbled in different devices, some practices, and that's just. This is just medical aesthetics some practices. They could really take off with devices that might bring in a radio frequency micro needling device, and they're doing that all day, every day. We tried body contouring devices, co2, radio frequency micro needling. So it was a constant evolution of device based services over the years. I would recommend to practices that are trying to grow in scale like just choose your devices carefully, really try to get some feedback from your patients, find out if it's something they're really interested in. Maybe try to do some pre booking sales before you even commit to the device, all in an effort to try to figure out if it's really the best choice to be making or not. There's so many devices on the market that you've got to know your patients and what they want.

Speaker 1: 11:46

Okay. And then when it comes to these, that there's that book and that saying begin with the end in mind, right, think about how you want to exit this. I don't know that you guys necessarily did that, but what do you think are some things that you did right? And what do you think PE groups are looking at, like private equity groups or larger groups are looking for, and what do you think you could have even done better? It's a little question, I know.

Speaker 2: 12:09

So so, first off, we didn't go into building contemporary aesthetics with the mindset that we would actually be exiting anytime soon, especially because we actually signed a 10 year lease and it was just four years into the lease that we did sell. But I've always been someone who's read market indicators right and always try to stay ahead of the curve. We had, for example, introduced a subscription that was very successful for us Titian based services many years ago before caught on and there was a bandwagon effect for offering subscription.

Speaker 1: 12:44

Just to clarify. You're saying like they can get a certain amount of Botox a year and they pay like a consistent monthly fee to get that. Is that what you mean?

Speaker 2: 12:50

No, no we were actually doing it just for us to Titian services like chemical peels, hydrofacial, like a monthly reoccurring subscription.

Speaker 1: 12:58

And they come in once a month type of thing.

Speaker 2: 13:00

Yeah, and it worked out quite nicely. We had introduced it in 2017. So we were doing it ahead of the curve as far as subscription.

Speaker 1: 13:08

Oh yeah, they get Kline's, get a big discount, but you get a lot more consistency or something like that.

Speaker 2: 13:12

Yeah, exactly, and it was a pretty sizable discount that we were offering, and then we don't. We treated it almost like a membership where you could get additional discounts off of products and services, as well.

Speaker 2: 13:23

But, just taking a look at market indicators right Coming back from COVID, there was a very strong ramp up period from the moment our doors opened after quarantine through 2021. And then, being on that same track in 2022, just started to take a look at macroeconomic conditions. Parallel to that ramp up period, I was also trying to raise outside capital for aesthetics, and I was having a very tough time and talking with different investors in the space. They needed to be educated about medical aesthetics and learn medical aesthetics. I was finding that there was a lot of challenges with it with raising capital for aesthetics charges, because of the lack of investor knowledge in the space, but then things started to change and I started to see private equity having an interest in the space, but really more on the practice side and when consolidation, where they're building platforms or creating platforms and certain to group practices together.

Speaker 2: 14:16

When I started to dig into the research on that, though, I started to see this is something that we're going to have to, especially being in a very desirable market. This is something we're going to have to explore sooner rather than later, because when these consolidators come in, you start to get You're pricing, you start to create tiers, you start to get recognition in the space that that, what is already a very fragmented space, it's consolidating, but it's not consolidating for everyone, right? It's only consolidating again for those top practices that are becoming part of a platform. I just I always looked at it and, of course, it was a very tough decision to make for us, and so we spent several weeks, several months, actually talking through it, even while we started to begin the process of going to market with our practice, just to figure out is this really the best decision for us and our family.

Speaker 2: 15:08

But ultimately, what we wanted, what we feel like we've been able to achieve, is work-life balance by trading in just everything right Managing patients, managing staff, being on call 24-7 to your business and selling and being able to focus more on for me, my venture is for Rachel patient care and her existing client base, and we were able to remove a lot of things off of our plate at the same time. It made a lot of sense, and I think that there's a lot of interest, though, in the space from a private equity standpoint, because medical aesthetics practices that are run right and that are maintaining healthy margins can be very profitable, and so when you start to build a platform, you start to consolidate, you start to put performing practices together. You actually, as I was saying, you start to get more incentives in terms of group ordering and setting up some.

Speaker 1: 16:02

We're trying to have EBITDA margins. Do a lot of these practices hit? Do you think?

Speaker 2: 16:07

EBITDAs, yeah yeah, it ranges on the lower end to 250 to 500. On the higher end, 1 million plus.

Speaker 1: 16:16

Do you know what that equates to as a percentage?

Speaker 2: 16:21

About 20% to 25%.

Speaker 1: 16:25

Okay, yeah, and it's like we were talking earlier. It's just I think you mentioned a statistic like less than 8% has PE backing as of right now, like the by far majority is solo practitioners.

Speaker 2: 16:36

Yeah, so from what I have read as a statistic is about 7% consolidated. There was a statistic pre-COVID that 83% of practices are solo owned and operated. So I would imagine, even with the private equity consolidation, some multi-unit locations, still the majority of practices are still solo owned and operated.

Speaker 1: 17:00

So, yeah, all that makes sense. It sounds like one of the biggest things you guys did was that service the membership, monthly service that helped boost your margins, and then, I'm sure, just running a clean shop right, kind of what you would call basics, but a lot of people skip over them as they start to grow, which is like good customer service, treating your team, all those types of things. I'm guessing those are things that you guys focused on too.

Speaker 2: 17:23

Those were the details that I think kept us up at night. To be honest with you, Really like how do we employ, how do we train the best team possible, how to recruit the best talent? We developed training manuals, front office, back office, standard operating procedures. We drilled down on everything and the teams that we would hire and the people that would stay with us the longest were the people who got that, the people who understood that we wanted to see the waters replenished, that were out in the lobby, that there's certain verbiage you're going to use on the phones, that you're going to maintain certain powers of skin care, that you're going to communicate effectively if guests are late, if they're not going to get roomed on time to communicate the schedule. There's certain things that, as a business owner, when you have a team, you're just constantly worrying about.

Speaker 2: 18:11

And we feel like the patients. They appreciated those things Our good patients, our VIPs, our very loyal patients. They appreciated how we did business. They always appreciated the transparency with which we would run promotions, that we would do our very best to get them fit in for holidays or head of big events and that we really tried to take care of them. They saw Rachel and I and some of our staff, as an extension, almost concierge for their medical aesthetics treatments.

Speaker 1: 18:42

Yeah, I like that. And then we were talking earlier. I know one of the biggest learning experiences was managing your expenses when they exceeded cash flow. So can you talk a little bit more, maybe tell that story you guys did.

Speaker 2: 18:55

It was just. It was a grind in the early going right, Like the first two years. You that you're in business, you're just trying to survive, especially, I think, at the time when we had opened a medical aesthetics practice and we were trying to get bank loans through institutional banks and they'd say you're a medical, you accept insurance? No, we don't, we're cash paying. Banks have very, you know, rigorous lending requirements. So it was extremely difficult. We got to two years. We were finally able to get an SBA loan. But you're just constantly in survival mode and so you know, as a as an owner operator, you have to make tough choices and you know, figure out how you're going to survive to the next day when you're running thin on cash.

Speaker 1: 19:36

Was there anything specific that comes to mind? Like that, you like when you're backed into a corner? I love this podcast called the All In podcast, and what I'm thinking about is a story they told where it's like when you give founders too much money from beginning a lot oftentimes those companies blow up because it becomes a burden to manage all the cash and also you just never really learn how to be creative or adapt, and so a lot of the best companies they started with like very little cash, like founders, are backed into a corner and they have to be extremely creative to survive, but that's what keeps them going over the long haul, right? So yeah, just curious if there's any specifics that come to mind Sometimes.

Speaker 2: 20:16

Rachel and I, we would just get creative with a flash sale or promotion and so we would set it up so it's like people could prepay for their appointments and it brings in a little bit of cash ahead of a payday. Or if we thought we were going to have a great weekend and then also a bunch of patients, no show, and so we're down $5,000 ahead of our next rent payment. You got to get creative. We do a flash sale by this. That and the other thing take 15% off. It's still money coming in the door and we're still moving product and potentially getting bookings on the books as well.

Speaker 2: 20:50

There were times the first few years that we had to get extremely creative in that instance where we'd have to open up the cabinet and say, okay, what do? We have a lot of product, let's try to move this. So we would run those types of promotions. After that, thankfully, like once we started to get into a groove when there was demand and bookings were two, four weeks in advance, it became less of a concern. But yeah, nearly going. When you don't have those financial cushions like you really just have to keep scraping by and I think that just constantly diving back into that patient base and marketing to them and trying to build that trust and loyalty so that way when you do run a promotion they actually bite. That's something that helped us.

Speaker 1: 21:34

And then is that something that you just do less and less as you stabilized, or was it just kind of become part of the ongoing business model?

Speaker 2: 21:42

It was not part of the business model. And then we had gotten to a point, probably about four years ago, where we we stopped discounting Rachel's injectables and we brought on a new nurse or we were trying to move that petition Services. We would run promotions around that and that actually became very effective for us as a business and preserving our margins Was actually not discounting the injectables, which was the bread and butter and most of the of the revenue for the practice, but rather the adjunctive services and products as well.

Speaker 1: 22:16

So offer like one of the adjunctive services at a discount on the command and you can upsell them on some of these injectables.

Speaker 2: 22:23

Yeah, it's basically so. If someone's interested in trying, say, the RF micronenoling or or an esthetician service of facial chemical peel, we could try to incentivize them through those adjunctive services and sometimes we would see they'd come in and they say actually I also really want Botox with dr Rachel today, and then so we're able to also try to fit them in for a subsequent injectables appointment as well. But I think that the thing that that we learn, realized over the years, is always stay in front of your patient base, always make sure that they know that you're there, that you're trying to be innovative, that you've got new products to offer, new services to offer your stay on top of your technologies as well. So that that was a big thing with our patients.

Speaker 1: 23:07

Yeah, that's cool. So what do you think that you could have done? Better to be more desirable for a PE group?

Speaker 2: 23:15

For private equity group. I think the one of our biggest things are Achilles heel was always finding a dependable Mid-level provider to complement what Rachel was doing. So I think that kind of held us back in terms of what we were capable of Producing for revenue, and particularly in our commercial space, because we had built out of space with five treatment rooms with a very healthy retail area. So I think that we were always a little bit missing there and Potentially too well when we got to market. Things ended up working out with skin spirit and we're very happy with with how that worked out. But we might have had more interest on the open market had we really been able to identify one to Very good mid-level providers. That really would have taken our, our revenue and ultimately our margins and our EBITDA to, you know, to a higher place.

Speaker 1: 24:10

Yeah, that's cool. And then when, like, how did you start thinking about this aesthetics card? What was there a problem that you were facing in the business when you come up with the idea or what's?

Speaker 2: 24:21

yeah, oh, trying to source capital when you're going so early going. It's like we applied for a capital one card when we had Gray credit but very new business, and that credit line literally stayed the same eight years later, despite having much higher FICO scores, much higher business revenues. Sba loans are a bear to go through to try to get. We had done that process twice. We refinanced one after COVID in order to bring in new capital equipment. But in the when your growth stage, like two to five years, sourcing those avenues of capital is extremely difficult and I wanted to introduce a card in the marketplace that would help those growth stage practices to not only find a dependable source of Capital they could use for some of the smaller capex purchases in the five to twenty thousand dollar range, like Plasma pens, my canine lean devices, nitrous oxide devices, buy-ins for skincare lines, back bar Retail, retail skincare as well for their patients. So when you look at a lot of these capital expenses in the marketplace, I really want to develop a product that would fit the needs of those practices and so I Began to take a look at how could you deliver capital to a practice quickly, easy, efficiently and and better than what's currently being done and, being such a fintech fan, started to dig into how can I build this and started like meeting mentors, advisors and in the payment space in FinTech and start speaking with banks, fintech friendly banks to really figure out how.

Speaker 2: 25:54

I put a credit card together and I wanted to always focus on the business aspect and we had found partners to get to market with a visa rewards business credit card last year and we tested that out in the marketplace self-funded that and then relaunched as a world-delete mastercard I mean conjunction with mercantile Hatch bank and mastercard in just a couple weeks ago. And this new card again it's doing everything that I envisioned the first time around quick, easy, seamless approval process, no annual fee, no harding for a solid credit lines and in line with the cash flow of the business. And we're bringing in partners that will also speak to the needs of these growing practices as well. We were finding that Practices that were applying for the first version of aesthetics card they were about four to five years in business, they were doing about $80,000 a month in gross revenue, so they're profiling very nicely as far as Practices that really just wanted another go-to credit card that they could use for their day-to-day expenses but hopefully find a partner solution with they could use for these, these one-off capital expenses.

Speaker 1: 27:07

Okay and like what's the process, like how much can people qualify for? I guess a better question would be what would be the ideal client for you that you're looking for and what part of the journey is? Does a medical aesthetics practice need your services and what you're offering?

Speaker 2: 27:26

Yep. Much of the underwriting criteria. It is proprietary, but I think an ideal practice is one that is established. They're in the marketplace, they're generating revenue, they're growth stage, they're getting ready to ramp up. So practices and providers that have healthy credit are all welcome to apply and hopefully they can get a sizable credit line that can help them with their capital expenses. But so far we're seeing great credit lines issued upwards of 20,000 credit lines, these credit lines that we're offering with aesthetics card. They should be very helpful for small businesses.

Speaker 1: 28:04

So yeah, the need is because of the fact that most medical aesthetics don't take insurance, so it's hard to get lending from the bank, and so this card kind of serves that purpose a little bit.

Speaker 2: 28:16

Yeah, because the card comes in and again you could potentially get a higher limit with us with aesthetics card than you would, say, a Capital One or American Express. You've got to pay back every month and plus there's annual fees on there that are hefty. So again, we're looking out for the bottom line of providers and practices. We want them to feel like, when they're using their credit card, that it's an investment back in their business. So, between the cashbacks, the perks that we've curated and the partnerships that we have in the space, that by being an aesthetics card card holder, that you're getting more value and value from a partner, a banking partner that understands you and what you're trying to do with your practice.

Speaker 1: 28:58

Okay, no, that makes sense. Thanks for the clarity on that, and I want to harp in on two things that you said earlier. You said you're a macro guy and you said you're a fintech guy, and I think that's interesting because I have very similar interests as well. And when you say fintech, does that relate to the blockchain or or just innovative financial technology? That's unrelated.

Speaker 2: 29:17

Yeah, innovative financial technology that could be applied towards towards growth stage businesses. I really liked some of the products that were being developed about the time that we had started, like on deck and blue vine, with our lines of credit. I banked with stash, with M1. So I'm always interested to see who's coming out with the best solutions for both personal and small business. The partnership with mercantile it was one that I had initiated because I saw a lot of similarities with with regards to the types of credit cards that we were both building a and then be, our approach to small businesses and made a lot of sense for us to team up because of the fact that we were approaching small businesses, practices, providers in the same way.

Speaker 2: 30:00

Here's a card that's not going to cost you anything. It's not going to incur a harding for you. We're trying to underwrite based on the health of the business. We could potentially give you a higher credit line than you could from an institutional bank. Plus, we are cultivating partnerships and rewards that would speak to the needs and the expenses of your businesses. Okay.

Speaker 1: 30:21

And talking macro real quick. I know you mentioned you saw like you try to zoom out and see the macro timing, so can you explain a little bit more what you're talking about?

Speaker 2: 30:32

Yeah, at the time that I began to speak with Rob Chepic and TREP advisors again we were on that upswing but there was whispers of private equity having an interest in the space and at that point I think we were probably approached by about three or four firms and I would go through the exercises for the valuation and figure out is this really the right fit?

Speaker 2: 30:56

But we really connected with Rob on a lot of different levels and thought that it's at least best to explore what the marketplace has to offer.

Speaker 2: 31:04

My biggest fear for Contempo aesthetics was that we would continue to run, operate, not seek outside private equity and we become a mom and pop shop, literally that we're spending more than I'm like maintenance, upkeep of the space, trying to get market share among in a market that has a lot of private equity and consolidation and everyone's trying to get in the Pasadena medical aesthetics and over the years we've seen other groups come in from the West side, from other West side of LA, other regions and two different, varying levels of success and I took a look at all of those things considered and I said I feel like now we've got to try to sell when we're at the top of our game rather than ride this out, potentially have a tougher time down the line to either a sell or exit, or be treat Contempo aesthetics like our chief source of income down the line, 510 years down the line. So I just thought that that the timing couldn't have been more appropriate than than last year.

Speaker 1: 32:10

So I used to have some fitness centers, and the Rolander area had three of them, and I sold in 2019, but I had the same feeling. It was just like we're doing really well, we're profitable and I see a lot of competition coming into the space and it seems like we might be in for a recession soon Now. I would have never guessed that it was a pandemic on a recession, but yeah, luckily was able to sell 20, literally sold last one November of 2019, and then COVID was like too much later, honestly.

Speaker 2: 32:37

I started to get that feeling too, and we had gotten an SBA loan in 2017. But right before COVID, I started to go through the process again and I just I said to my wife I was like I don't know, just I feel like something that there's like recession indicators and I said I feel like we need to try to get get another SBA loan, put more money in the bank just to have in case of emergency, in case something does happen. Obviously, no one new code was coming. Covid came. The SBA talks were stalled. We ended up getting the PPP stuff afterwards, so that sustained us until we were able to wrap up the SBA afterwards. But again, you get that gut in your stomach, especially with like when you're reading the news that if you're actively investing, you're watching the markets, you start to pick up on all of those conditions and how they relate to your business. And so I think that, yeah, you just got to go with your gut on things, and my gut was saying now's the time to engage private equity and to explore selling.

Speaker 1: 33:34

Do you guys still have a significant equity percentage of your practice?

Speaker 2: 33:38

No, it was. Yeah, it was, it was sold.

Speaker 1: 33:42

Do that affect the price? Do they offer more if your wife were to stay on?

Speaker 2: 33:46

Or not. Rachel did stay on as a director.

Speaker 1: 33:48

Yeah, yeah okay, and then in general, where do you see the economy going from here? I?

Speaker 2: 33:56

Still feel like we're in for a tough ride. When you take a look at consumer debt and consumer debt being a possible trigger of a recession, I think that there's still economic conditions that are swirling that Indicate that we're still going to be in for a tough time. So I think, as a small business owner, we've always got to watch your costs, make sure that your benchmarking, do price increases as you need to, and really always try to renegotiate With your vendors. Negotiate with your landlord if you can, especially as there's a lot of commercial spaces opening up. Are you saying a?

Speaker 1: 34:26

lot of retail opening up in your area. Yeah, we are, we're not saying yeah, and we're not seeing that very much anywhere where we're states that we're working in like we're doing a lot, and it's southeast and Texas and stuff like that, but yeah, it's hard to get retail space.

Speaker 2: 34:41

Yeah, I think it's. It's California. Right, like a lot of people are leaving California, southern California. We had seen, post COVID, a lot of like longer established businesses. They closed, so there's actually quite a bit of commercial spaces that are available right now.

Speaker 1: 34:58

Yeah, all right. Is there anything that you want to talk about that we get a good chance to talk about? I know you sent over some questions.

Speaker 2: 35:05

I wasn't sure if there was anything from there that you wanted to touch on.

Speaker 1: 35:08

Oh, yeah, yeah, I feel like we addressed a lot of them, so it's been yeah, it's been great. I think it's been awesome sharing about your journey, what you guys did to like what you guys did, what you guys could have done better. I appreciate always appreciate the transparency, and I think listeners are gonna get a lot out of it.

Speaker 2: 35:25

Yeah, I appreciate it too. Thank you, awesome.

Speaker 2: 35:27

I guess the last thing to add, too, is that my my goal with aesthetics card is to really make it a platform and a resource for medical aesthetics providers practices either from the idea stage all the way through to exit strategy, and that's why the boutique firm trep advisors that actually had broken our deal with skin spirit.

Speaker 2: 35:46

I ended up joining them as a partner after the sale and I actually add that healthcare component now, so it's really what I enjoy doing. We had boots draft our practice into a very successful exit, and so if I could work with other practice owners along the way, that's part of the goal, and I'm glad that you and I have had this chance to connect Austin, because I'm getting Approached all the time from different private equity groups and also different practice owners that are thinking about Expanding, moving to different markets, taking a look at the Novo Practices and locations, and I think that having an expert in the space who knows where to put your practice where it's gonna succeed the most, that's where we could really team up and really try to work with some of these doctors who want to really maximize their presence.

Speaker 1: 36:31

Yeah, I love that because I think you're mentioning you thought the nobo strategy has been underutilized and we agree too, because there's so much benefit that you can reap from out positioning your competition, like looking for those metrics, like popular practice, you know, provider to population ratios and when are your target clients already visiting? Like how can we just pay back off of where they're going and what they're doing? What would you place are gonna give us the best visibility? Even things like that you don't think about off the bat. Do you have a right in right at that thing? Right, some people don't even like to turn left to go into places. So there's a lot of factors and a lot of variables that go into the site selection process that I think gonna help a lot of these people Really succeed, and that's the other thing about, like our sale up in tempo aesthetics to skin spirit.

Speaker 2: 37:16

We were actually in a very desirable location and Secondary to dr Rachel's expertise and standing in the medical aesthetics industry. The location really stood out to skin spirit street front visibility, ample parking, retail parking that you didn't have to pay for and prominent signage. And, plus, we had a very you know, very usable space five treatment rooms, five offices, large retail and lobby. These are things that you really have to consider when you're looking to grow and expand, particularly when it comes to medical aesthetics, and I think that the practice that we, the location that we had identified, and that was passed along on the sale, it was really a good selling plan, a good selling tool for us. Hmm, that's cool, all right.

Speaker 1: 38:03

And if anybody wants to get in touch and learn more, like what's a good resource for that.

Speaker 2: 38:08

Yep aesthetics card calm. Aes T H E T I CS card calm and my email address is John john at aesthetics card calm perfect, I.

Speaker 1: 38:21

Will drop that in the show notes for anybody listening. And yeah, definitely really appreciate your time. Thanks for hopping on the show today.

Speaker 2: 38:29

Thanks so much, austin.

Speaker 4: 38:32

If you need help finding the perfect location for your practice or you're ready to invest in commercial real estate, email us podcast at leaders read calm. That's podcast at leaders re are e as in real estate calm or go to leaders read calm and fill out our form. See you next time.

Speaker 1: 38:50

You.