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Med Spa CEO
How to Protect Your Profit as You Grow
00:27:59
Just because your revenue is growing doesn’t always mean your profit is. In this episode, I talk about the exact moment most Med Spa owners get stuck when they shift from a solo referral-based model into a growing team and multi-channel marketing...
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50% of small businesses fail within the first five years. The number one reason is because they have a cash flow problem. When you grow your team, your revenue grows too. When you grow your marketing channels, your revenue grows too. But oftentimes this happens at the expense of your profits. There was a McKinsey study that showed that businesses with defined systems and processes grow 2.7x faster and with higher margins than those without. And then in esthetics, average med spa profit margins drop from 20 to 25% for solo owner operators to 10% or less when scaling without systems. Are you growing a business or creating the most sought after med spa in your market? Welcome to the MedSpa CEO podcast where growth means better results, bigger profits and a schedule that actually gives you your life back. I'm Heather, strategist to the industry's most profitable aesthetic practices. From solo injectors to multi seven figure teams. I'm here to help visionary leaders like you package your brilliance, scale with clarity and build a business that feels as beautiful to run as the results you give your clients. It's time to set the standard, not blend into the industry noise. If you're ready to lead, to be seen and to grow a category of one brand, you're in the right place. Hey beautiful friend. If you're a longtime listener of the podcast who's been dying to work with me but hasn't pulled the trigger yet, I have an incredible opportunity to work with me for a fraction of the cost. If your estheticians can't explain your signature plans or your new injectors panic every time they have to sell a high ticket consult, it's not their fault. It's the system or more specifically, your lack of one. That's exactly why I built Ask Heather AI, the first strategist level tool for aesthetic and wellness CEOs who want to scale with precision and stop flying by the seat of their pants. Inside you get three powerful tools, each designed to solve the exact gaps that keep your growth tied to you. Turn your basic menu into a branded high ticket signature offer suite your whole team can sell. Train every team member to lead premium consults with confidence, even if they've never sold a thing. Write magnetic messaging that attracts premium patients without sounding like every other clinic online. These are the same frameworks we've used to scale clinics to seven figures and beyond, and they used to cost five figures to access. Now you can have them in your back pocket. Try ask Heather AI for 30 days and see what happens when you stop guessing and start scaling with Words that work. Head over to heathertravine.com trial to learn more. Why, hello, my beautiful friend. Welcome back to another episode of the podcast. On today's episode, we're talking about how the model that got you to whatever revenue that you are at right now and certain profit margin that you are at isn't the same model that's going to take you to the next profit height, the next level of revenue and profits. And so I had a client who started working with us. This was probably, I don't know, maybe a year and a half ago. And when she had started her business, I'm wondering if many of you can relate. She was actually a solo injector. Okay. So she started just herself. She eventually had like a part time, I think ma assistant helping her part of the time. So she started that way and was super profitable from the beginning because she was renting like one room and most of her patient base came from referrals. And so she was solo with predominantly referrals. And then what happened is, is she got so busy and so booked out that she started to expand. So she expanded into a new beautiful location and then hired team members, a patient coordinator up front, and then she hired two more injectors and a new esthetician. And what happened was, is that her revenue grew but her profit margins dropped significantly and which isn't totally abnormal. Okay. But it dropped so much where she felt like she was working like 10 times harder than when she was solo. So today we're going to talk about how the systems that make many of you, when you start off more solo, if you will, whether you're a solo injector or solo esthetician, are not going to be the same ones that, that are going to help you scale once you expand. Okay. I have seen this time and time again with many of you is that when you are solo, you can get away with not having as many systems built into your business. So when you think about expanding your growth, when it comes to team, your growth, when it comes to your marketing channels as well, you will have to actually it will require a different sort of operating model. Okay, so here's the problem. Now for those of you who are listening to this episode, you may want to, you can continue to listen to the episode. It's going to be great. But this episode is also being uploaded to my YouTube channel. And if you haven't had a chance yet, go over to eathertaveen on YouTube. Probably saying @heathertovine on YouTube isn't even correct. But my YouTube channel is heather Terveen and there is a channel that is all the podcast episodes in video format. And so I'm going to be sharing with you a graph. I'm going to be describing it to you for those of you who are just audio listening right now. But you may want to put a pin in it and then actually check out the video so you can see the graph. Okay, so this graph is called the model that got you here. Won't get you there. Okay, so on the Y axis, right, the vertical axis of this graph, I have profitability from customization on the fly. Okay, so on that Y axis is the percentages of profit margin that you have related to when you are just customizing everything. Okay, so this means customizing the treatment plans, this means customizing the consoles, like not having a really strong consult process as well too. Then on the X axis, that horizontal axis, you're going to find that we have solo referral, okay, over on one side and then the next tranche over you're going to see we have small team, light marketing, and then the next one over from there is multi channel marketing and you know, full blown team. And so what you'll see is that the profitability is really high for when you're solo referral based business and you're customizing on the fly. You can still have pretty high profit margins. What happens is, is that profit margin line, as you'll see, starts to really drop down as you move over to the small team and like marketing. And so what I mean by this is when you're solo, it's just you and all of your marketing is really pretty much predominantly word of mouth, referral based what have you, you'll discover that you get away with a lot less in play. So you can do customized treatment plans, you can, you know, kind of wing your consults and still be pretty darn profitable. Especially when you have what we call that founder's magic of you're doing everything right. Like you are able to handle consults in a way and you're able to sort of walk folks through things and sometimes just the magic of your certainty and your confidence in what you're doing, you're able to actually get a pretty high patient visit value, average patient visit value, and then a really great lifetime customer value as well. So but what happens is, is when we go over and you can see on this chart, when we hop on over to small team and light marketing, so maybe here you've now hired one or two other providers that are actually delivering services and then you've added in some other marketing channels, right? So you might have started to do Facebook ads. You might be taking your organic Instagram marketing more seriously. You might finally be getting results from your SEO and you have people coming in and finding you through search, right? So then what you find is that when you don't have, when you are customizing on the fly still as your primary business model on the back end, that your profit margin is going to start dipping. And then what I found with so many of my clients and this client that I'm sharing with you, the same thing was true for her, was that when you get over to where you have a more robust team and then you have a more robust multichannel marketing platform, where now you've got ads and SEO and referrals and maybe you're doing some publicity as well, the profit margins really start to dip if you're still relying on that customization on the fly style of operating model. Okay, so the question then becomes, okay, Heather, what you're telling me is when I go from solo to small team to larger team, and when I go from referral based, word of mouth marketing to, you know, a more multi platform, multi channel marketing system, my profit margins are going to dip if I still keep that customization on the fly model. So what is the answer? So the first answer is, how do we. This is what I call the profit engine formula. And it comes down to two main numbers. Okay, you've maybe heard me say them before, if you're a longtime listener to this podcast. But the two main numbers that we want to become obsessed with, average visit value and then lifetime customer value, those two numbers. If we can make sure that we are becoming obsessed over those two numbers, that is the formula that will add up to a profit engine. And so that we can. So then the next question you should be asking yourself, okay, Heather, what can we do to actually ensure that we have a really strong average visit value and a really strong lifetime customer value? So those are the questions you want to keep in mind, because we know that 50% of small businesses fail within the first five years. And the number one reason is because they have a cash flow problem, right? When you grow your team, your revenue revenue grows too. When you grow your marketing channels, your revenue grows too. But oftentimes this happens at the expense of your profits. Okay, so there was a McKinsey study that showed that businesses with defined systems and processes grow 2.7x faster and with higher margins than those without. And then in esthetics, average med spa profit margins drop from 20 to 25% for solo owner operators operators to 10% or less when scaling without systems. Okay? That is thanks to AMSPAS data in 2023. All right, so we know that this is a phenomena that's going to be happening as you scale. So what I want you to really think about is when you are moving and that journey that you are on. Because in order to actually scale where you are just not an employee in your business, that you're not just that technician that has to do everything fore, we want you to actually go from solo referral to small team with light marketing to over to a more robust team with multi channel marketing as well too. That X axis we actually is the trajectory that I want for most of you. Now the Y axis, right, where we are reliant on customization on the fly is where we get into trouble, okay? This is where we, when we don't switch out of that operating system, our profit margins are going to drop down. So what we have to do is actually make sure that we're creating the systems and the structures that are going to actually migrate over from the customization on the fly. So we have to actually ensure that we are putting in the structures around our offer suite, right? We have to make sure that we have a, a menu that is going to actually help with the average visit value, help with the lifetime value, right? And then we have to have a consult system that is actually mapped out ahead of time. An intentional roadmap that gives everybody on your team the understanding of what should be said to whom and when, right? We will know what we are going to actually be selling to. Selling what to whom and when. And then secondly, what is that conversation process going to look like? So at the time of this recording, inside of msa, we are kicking off one of our live implementations of our 30 day sales challenge that we do a live implementation of about three to four times a year. And the reason why we do this is because so often if you've been listening to this podcast for a while, you're not new to like, okay, we should put a signature menu together so that we have clarity on our unique offerings, that we actually put a name to our clinical protocols so that we really define who it is that we want to serve, right? And then we should have a clear consult process that actually helps folks walk. Every single team member will actually understand how to take a person from point A to point B, right? But inevitably where things start to break down after this is that you get confused on how to actually implement this with your team. And it is a process, right? It is a new leadership opportunity for you to actually step up and say like, hey, this is what we're doing. In fact, I recommend that you involve your team members and with the team members especially that you really trust their clinical expertise, that you actually bring them in to actually help co create and collaborate on creating those packages so that they have some ownership in to the new offer suite as well. And then actually, you know, I recommend obviously our CARES console process. C A R E S, right? Stands for clarify, affirm, recommendations, explain show using that structure and giving your team members that roadmap. So now they've got, they've got a menu that is clear, right? It should tell them what should be recommended to whom and when. Then they've got a structure of a conversation for their consults, right? And we're going to name our consult too, right? So now they have that clarity. Why is it breaking down after that sometimes? And so this is part of why I'm so bullish on these 30 day sales challenges where you really start to adopt a positive accountability system with your team members. So how we do it in MSA right now is that we actually have fun prizes. We actually track with all of our clients team members every single week. They can submit a form where we're tracking with them their new habit goals and their outcome goals. So when you are looking to implement this new operating system with your team members, that will be a requirement really truly for you to have a sustainable, profitable business. You will want to have a system to actually ensure that you can help coach them to implement it consistently. Because it is human nature for you, for your team members to actually not want to implement something new because new habits take new energy. And we as humans have that motivational triad going in the background psychologically, right? We seek pleasure, avoid pain and then we look for efficiencies, okay? That's the motivational triad. You have to know this is happening in the background for you and your team members when you try to implement a new operating system, okay? So they may have resistance to it simply because doing new things requires discomfort. It requires establishing a new habit. It requires them having conversations with patients that maybe they've never had before. It requires them being leaders and experts and showing up in a new way as a provider when they're having conversations with patients when maybe historically they have really defaulted to letting the patients tell them what they want, right? Instead of really guiding and uncovering what the patient's desires and problems are, and then matching the recommendation to be a fit for that and really learning how to develop the skill set and the capability of being able to have those conversations. But you, as the owner will have to have a way to actually guide your team members and yourself. If you're still solo, this is perfect, right? If you're solo and you can adopt this system before you hire folks, great, right? Because then when they come in, you will already have the menu, you already have the consult, you'll already have that expectation when you're doing interviews for folks. Right. And for those of you who are hiring new people or you have people leave inevitably or what have you, it's a great new fresh start with those new hires that they're able to actually come in. And you already have this system set up so it's no longer, hey, we, you know, customized treatment plan, everything's on the fly, right? No, we actually have a really elegant system, if you will, and there's still plenty of opportunities for them to sort of work their authority and expertise in those conversations as well, too. So. But then over time, we want to have a consistent way to actually track, because when you have a consistent way of tracking with your team members, then we can actually diagnose the problem. I can't tell you how many times I will be meeting with a new potential client or it's a new client that we're just onboarding into msa and they will say to me that, you know, we have this person who's able to sell a ton, who has everybody on really well thought out treatment plans. And then we have these two other folks where we're looking at their numbers and they're not doing it and they're perplexed as to why. Right. And the reason why is because they're doing different things, they have different expectations in there that two out of three folks don't have clarity on how you want it to be done. And this is why you will see that you will have inconsistency across providers. And once you start implementing this system, we need to know, what problem are we solving for? You know, it's easy to have the story, well, this person just has mindset issues. I'm sure they probably do, but that's so esoteric, almost like it's so broad and vague. How do we solve that? Oh, they have mindset issues like, it's not a problem that we can solve for. Right. So we want to make sure that part of your system and structure is that you have a way to actually measure what every single team member is doing. And so when you can measure that, a team member is like, oh, wait, the problem isn't that they lack confidence with delivering this recommendation. Right? Which is probably true for some of them. The problem is actually they're not even making the recommendation. That is 9 times out of 10, what's happening, right? They're just not presenting the packages, they're just not presenting a long term treatment plan. They're just not presenting the memberships in addition to a package. Right. Or whatever the expectation might be for this certain type of, type of human that they're walking them through. So when we can start to peel back the onion on that, and part of your system and structure is implementing that consistent tracking so that you can say, oh, Jane saw this many people last week and she presented this to these folks, right? She did use our glowing skin roadmap consultation and she did present this many times, right? Or she saw 40 people last week and she only took four of them through the glowing skin roadmap, which is what I'm naming their consult. Okay, I'm making it up right now. And so when we're like, oh, she only did the glowing skin consult with four of the 40 people she saw. That is part of the system that you need to have in play. Because then we're like, ah, that's a problem. That's the problem we actually want to solve for first. We want to solve that problem first. Yeah, I, yeah, no, part of the reason she only did 4 out of 40 is a mindset confidence problem. Of course. Right. So we, we want to help coach her through that too. But we can fix that problem of, hey, it's going to be uncomfortable right now. Because doing the glowing skin roadmap is actually a new process. It's a new habit that Jane is forming. And so we have to just affirm for her that she's going to experience that discomfort. You know, when you get back into exercise after you've been out of shape, if you decide you're going to run a marathon and you haven't been running for a couple of years, which is the equivalent, you are going to have to make a progression to actually work up to the 26.2 miles. I've never actually ran a marathon, so this is just hearsay on my part. And what I've heard from my marathon running friends, because I don't really run. I mean, I exercise and I strength train, but running for miles I have not done in years. Used to do it when I was younger, but you don't jump right to the 26.2. You come up with a game plan to develop the running habit, but you have to actually start, start running and then you have to run more and then you have to run more. And so the first month, you know, might be 4 out of 40 per week. The next week we want to make sure, hey, can we get that to 10? Can we get that to 15 out of 40? Can we get that to 20 out of 40? And then from there we are helping support them, actually establish the habits and they are going to have all the emotions that pop up. But that is part of the system coming it wrapping this all in a little pretty bow present with the bow on top is that yes, we need to have the system and the menu and the structure that will help you and your team know what should be recommended to whom and when, right? So we don't want that customization on the fly. So we don't have that really sharp dip in profit margin, right. And so as we go from solo referral to small team and more like light marketing where we have some different work than just word of mouth marketing. And then we go over to team with multi channel marketing so that we can actually still become even more profitable so that the line looks like this instead of like this, then we will be able to have a system that will grow with us. So it's the menu, right? So recommend what we want recommended to whom and what the console actually having that game plan that everybody on the team. So like if I come to your clinic and if I see you or if I see one of your team members, it can be trusted that I'm going to get walked through a very elegant conversation about what my roadmap might look like for the upcoming year with you guys. This will help dramatically improve your average visit value, dramatically improve that lifetime customer value and that retention that you have. Many of you, many of my clients, especially for those of you who have folks who come in consistently for microneedlings or facials or tox, right? Many of my clients, they have 30, 40, 50% of their patient base is just tox. They've got the retention, right? They're coming in consistently every three to four months, but it's with slim profit margins. So we want that lifetime customer customer value to be going north. And then we also want the average visit value to go up at the same time so that we can ensure that we are profitable. But it will only happen if you have the menu structure, the consult system and then a consistent way to actually keep everybody on your team accountable. All right, my friend, like I mentioned, since the majority of you listened to this episode in the audio format, this episode is probably when you're going to want to put a pin in it. Head on over to YouTube. Search in the search bar for Heather Turvey, you will find. And then hit that subscribe button over there because we have some more episodes coming up where we're going to have some visuals in addition to the audio format as well too that you will want to check out over there. That is what I have for you this week, my friend. I will see you next week. Week. That's it for today on the MedSpa CEO podcast. If this show's been valuable to you, the best way to say thank you is to leave a quick rating and review. It means the absolute world to me. I read every single one. And it helps more women like you find the support they need to grow something they're proud of. I'm so glad you're here.