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Med Spa Success Strategies
Better Financial Planning & Management For A More Profitable Med Spa - Interview with Jessica Nunn
00:44:25
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- [00:00]
Host
Welcome to the MedSpa Success Strategies podcast, where MedSpa and aesthetics practice owners come to discover strategies and tactics to help them better market and manage their practices so they can grow, improve profits and have more financial freedom. Excited to be joined today by Jessica Nunn. Jessica is the founder and CEO of Maven Financial Partners. She founded Maven with a vision to make strategic financial advice accessible to every small business owner. She understands that her clients carry the responsibility of maintaining a business, meeting their goals, paying their employees, paying themselves, and providing for their families. Her job is to make the complex world of revenue, profitability, and key performance indicators clear and simple. She provides clients with financial solutions that can change their businesses for the better, which in turn can change their lives. Hi, Jessica. Thanks so much for coming on the podcast. We're excited to have you today.
- [00:49]
Jessica Nunn
Thank you. Thanks for having me.
- [00:51]
Host
So do you want to start off just giving people a little bit of a background on yourself, your business, and what you all do?
- [00:56]
Jessica Nunn
Sure. I'm. I tell people a recovering cpa. So I started my career doing tax returns and, you know, preparing financial statements for small business owners and realized that that's not actually that much fun. So I learned that what I prefer to do was talking with business owners about their business, giving them some strategy, some direction, while using, like, the numbers of the business as kind of the guiding point and just the data that allows us to make those better decisions. So that's all we do. We form Maven Financial Partners to help people better understand their business from a financial lens and use that data and their financials to put together a really solid plan to get really clear on, like, where they should take their business, how to be more profitable. You know, there's a lot of decisions you have to make as a business owner. So, like, from our perspective, should you hire someone? Should you. Should you invest in a device, should you expand your space? All of those are better answered when we have the right financial data to support the decision either way. So that's what we do. We help kind of like a CFO capacity. So we're really trying to help people understand their numbers and use that to make a strategy going forward.
- [02:04]
Host
Yeah, I love this topic. And I know sometimes for practice owners, it's not the sexy thing. They don't want to focus on the numbers. But the reality is most of you listening to this, if you're listening to this and you're kind of struggling to. To get your bearings, you wish you had better profitability, a better. A better feel for how to manage your Business, most likely it's because you don't know your numbers and you're not confident in the decisions you're making financially. It's especially in the, in the medical space, the med spa space. So many people have a medical background, but not a business background.
- [02:30]
Jessica Nunn
Yeah.
- [02:31]
Host
And if you don't have the, the knowledge or someone in your corner to manage the financials, things can get really sideways on you quickly as a business owner.
- [02:39]
Jessica Nunn
So.
- [02:39]
Host
I know. Go ahead.
- [02:41]
Jessica Nunn
Even for practices that are doing really well. Right. They are doing really well. They have profitability accidentally in spite of numbers. So it can go either way. Right. So, you know, we're not, we don't meet with clients and say, we promise to make you more money. That's not what we're saying at all. We promise to make you more aware so that you can make either better decisions to make more money or at least know why it's going well and what to continue to do.
- [03:04]
Host
Yeah. And for a successful practice is probably just you're. If you find 10, 15% incremental areas for improvement that can be really, really substantial by understanding your numbers and find better financial planning.
- [03:15]
Jessica Nunn
Yeah.
- [03:16]
Host
So, yeah, there's. There's no stage of business, obviously, where this is not important.
- [03:19]
Jessica Nunn
Nope. Knowing your numbers is gonna be important your whole life, so get used to it.
- [03:23]
Host
Yeah. And I know we've talked about this because it is not the sexy thing, but you have to do some of this stuff. You have to go through this exercise, you have to take this part of your business seriously or you're going to struggle to be as profitable as you would be otherwise. Like you said, sometimes you can succeed in spite of. Of lack of knowledge or doing things maybe the wrong way or just kind of getting lucky and falling into it based on good instinct. But this, this is really an important thing to, to get you from where you are now to where you want to be. So I know one of the things you wanted to talk about is kind of just the different roles you mentioned. You all act as kind of a cfo. So the difference between some people think, oh, I've got somebody that manages my finances. My accountant does my taxes. The difference between your bookkeeper, your accountant, and someone really acting that CFO role.
- [03:59]
Co-Host
Yeah.
- [03:59]
Jessica Nunn
To run a successful business, you really need a team, you know, especially on the financial side of things. So you definitely need someone to file your taxes for you. Right. Because we're, we're going to remain compliant with, with the tax people. So we're going to file the taxes. Usually that's your CPA. You also need someone to keep your QuickBooks or whatever accounting software you're using current. So some practices do that themselves or they'll have an office manager, but we really recommend that an accountant do your day to day accounting. So whether that's, you know, your cpa, they might be able to do that for you on a monthly basis. Or maybe you have what's called a bookkeeper, right? That's someone who truly just keeps your QuickBooks or whatever you're using up to date on a regular basis so that every month you have a profit and loss and you can review your profit and loss that's been prepared by an actual accountant who knows what they're doing. So then a CFO comes along and takes that profit and loss, right. And uses it to have a conversation or couples it with other data. Like we also extract the information from your practice management software. So we want to know not only like this was your revenue last month, but who generated it and how. So what actually happened in your office to generate that amount of sales last month? We want to know exactly how that came about. That helps us that in the P and L helps us understand where you are today financially. And we have to know where you are today financially to build out where you want to go. So a cfo. Think of a CFO as someone that takes your business finances, right, all the numbers and uses it to make forward looking strategy. Whereas your bookkeeper or your accountant are kind of living in the past. They're talking about what you've already done, you know, last month. This is what happened. Okay, cool. We're here to tell you what's going to happen next month and what should happen the month after that and next year also in order to kind of create the vision of your dreams.
- [05:53]
Host
So if people aren't like working with someone that's sitting in that CFO seat, most practices that you go into, I'm assuming it's the owner kind of sitting in that role and winging it. Is that generally the situation that you're.
- [06:03]
Jessica Nunn
You know, more and more, I will say we'll start talking with people and they'll say we do have a fractional cfo. And I'm like, really? Wow. But maybe they don't know anything about the aesthetic space. That's been a challenge trying to teach, teach them the industry, right? So that's sometimes been a challenge, but in most cases, most people don't have a CFO and they think that maybe they need a better bookkeeper or better cpa. Who can kind of have these strategic conversations with, and sometimes the bookkeeper. CPA can be really good at that. But oftentimes the bookkeeper and the CPA are doing just great with, you know, their scope of work that they're, that they're hired for. And what you actually need is more of a CFO role.
- [06:42]
Host
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- [08:02]
Jessica Nunn
Yeah, so we are looking at two things. Number one, we're going to get access to either your QuickBooks file or, you know, whatever it is that your accounting belongs, whether it's Xero QuickBooks. QuickBooks Online is honestly our recommended accounting software. It's just the one we're most familiar with. Most of our client like most meaning 99 of our clients are on some version of QuickBooks and we prefer the online version. So we're going to get access to that. We want to be able to log into that to see exactly what your expenses are, exactly what your income is. We want to see all the transactions. We want to make sure it's coded properly. So we're doing like a high level. I wouldn't call it a review necessarily, but we're really doing a double check to make sure that your accounting is in good shape and everything is accurate. Then secondly, we're going to log into your practice management software. So whatever that might be, Zenoti, Aesthetic Record, NexTech, whatever that might be, we're going to get a login. We want to dive in there and see exactly how your providers are performing. How many appointments do they have, how many patients are they seeing, what's their revenue per appointment, how busy are they?
- [09:06]
Co-Host
Right.
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Jessica Nunn
Here's the schedule of when they're working. How often are they actually seeing patients in their day? Are they full or do they have a lot of open time? You know what's going on there. So we're going to take all of that information and put it together in a way that allows us to tell the financial story of the practice. So that's where we want to start. Right. Our first meeting is actually called Review and Roadmap because the first half of it, we're really reviewing what's going on in your practice to bring you to where you are today.
- [09:34]
Host
Okay, so, so going into that, you're analyzing the numbers, you're finding some of these potential issues that are popping up. The in terms of areas for improvement, what is traditionally the next step after that? So let's say you're looking at those things and you find that they've got an injector or an esthetician that's sitting around half the day and it's actually costing them more money than they're making.
- [09:51]
Jessica Nunn
Yeah.
- [09:52]
Host
How do you bridge the gap with that conversation? I guess where does your role kind of stop when you're making the strategy guidance from a CFO standpoint to whatever the next steps are?
- [10:00]
Jessica Nunn
Yeah, so that's a good question. So we'll look at practices and we'll identify like, are you as profitable as you should be? And how do we know? Well, we know because we have, you know, dozens and dozens and dozens of med spas likely just like you all around the country. So we know what a healthy med spa looks like financially. So we're going to identify the opportunities that each practice has. And right now our biggest opportunities are around payroll. Right. It is hard to find people. And when you find them, boy, do they want a lot of money.
- [10:27]
Co-Host
Right.
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Jessica Nunn
So I know you've probably heard it time and time again that payroll has been a real challenge. And also inventory, especially for med spas that are heavy, like injectables or heavy, you know, with those inventory related items, we're having to wrangle a lot of those costs and identify why are perhaps some of our services not as profitable as we thought they would be or as profitable as they can be. So those are two areas that we're focused on a lot. And so when we identify any opportunities that the practice has, it might even be in things like marketing or it might be in things like rent, you know, whatever those costs are. Honestly, I've just mentioned it. Those are the four costs that tend to get out of whack when that's when the practice is overspending. It's either payroll, like consumables and supplies. Right. That's an inventory problem. Rent, because maybe your space is too big for the production that you're. That you're doing within the space, or marketing. And honestly, the problem there is usually people aren't spending enough to achieve their financial goals. So, you know, we're trying to assess what. How much are you spending in each of these areas and what should you be spending in each of these areas?
- [11:37]
Host
Not to dig too deep on, on one of those, but one of the things that I see come up a lot is, is the thing that's hardest to maybe get out of is, you know, payroll. You can make staffing decisions with pretty short turnaround if you need to. But if you're in a situation where your rent is way too high and maybe you made a bad decision where you. You purchased a space that was way too big for what you need in terms of the demand that you have for services right now, what do you usually do with that conversation? Where does that go next?
- [12:03]
Jessica Nunn
You know, luckily we don't see that that often. I feel like practices are really good about starting small. And, you know, more of our conversations are around, we barely fit into this space. We're having conversations around expanding. Like, can we expand?
- [12:16]
Host
Much better place to be.
- [12:17]
Jessica Nunn
Do we need. Yeah, but the times that we do have payroll that is much too high and there's not a lot you can do about it.
- [12:22]
Co-Host
Right.
- [12:22]
Jessica Nunn
Can you take two of the rooms and have some sort of unrelated service provider come in? Maybe that's something you can do. Sublease the space.
- [12:29]
Co-Host
Right.
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Jessica Nunn
But usually what we have to do is grow into the space. So something tells me if someone, you know, got into a location that has five or six treatment rooms that they didn't intend. Intend to be the only provider themselves. Right. That's not their vision. So then we just need to. Again, like, what does it take to make that vision happen for you? You intended on hiring a team. Let's Start that now.
- [12:53]
Co-Host
Right.
- [12:54]
Jessica Nunn
Is it that you don't feel like you're busy enough to hire the team or maybe you can't find the right team members? What is it? So, you know, if, if you signed on for a big space, you signed on for the vision of having multiple providers and having a larger practice. So like, let's get it, let's make it happen, let's get after it. So we got to grow out of the problem.
- [13:17]
Host
Yeah, that's. Yeah, you're right. It's not, it's not just looking at how to cut expenses. Sometimes you do have to grow out of the problem. So it's looking at both sides of the equation there in terms of benchmarks. And when you're first going in and you say, like you have some of these things that you should be looking at payroll as a percentage of revenue, profitability. What are some of those general guidelines that you're usually referencing?
- [13:36]
Jessica Nunn
Yeah, so typically we want our. And it depends. All of this. It depends. Right. We're going to take the it depends routes because it totally depends on the type of practice that you have and where you're located.
- [13:46]
Co-Host
Right.
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Jessica Nunn
For a practice that has a good mix of injectables and lasers and other services, you know, you've got a pretty wide variety of services that you're offering. We really like our consumables, injectables, supplies, retail products to be around 20 to 30%, kind, kind of depending again, on the mix of your practice, the services that you provide. Payroll, we like it to be around 25 to 35%. Again, the caveat there is, if you're an owner and a provider, are you paying yourself as much as you should be paying yourself? So sometimes that number is a little bit hard to identify. Right. So we might have to like, dig in a little deeper there. The rest of your fixed expenses, we want to be about, in total, everything left over after you've paid all of your bills. Right. Your profit should be about 15%. So the rest of your expenses might fall somewhere in there to yield the profitability of about 15%. We usually like to see marketing and advertising. Again, it depends.
- [14:41]
Co-Host
Right.
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Jessica Nunn
Are you brand new? Because then it's probably going to need to be quite High, maybe 10% or so. If you're, if you're just starting, if you're been in practice for a while, maybe 5 to 6%. If you're so full that you have a wait list, probably less. Right?
- [14:56]
Host
Yeah, exactly. I love that answer. It's so true. I did a whole video on that. So I totally agree. Yeah, there's some situations where you don't even really need to spend because you're as busy as you can be. You don't have the space, you don't have the providers. And some people, like, they. They want to be a solo practitioner or they have the certain office size and they wanted to maintain the office size. So then the conversation becomes raising prices maybe, Right. But yep, yep. So the conversation on what do you spend on marketing is. Is just like these other things totally dependent on the situation and what you're trying to accomplish.
- [15:22]
Jessica Nunn
Well, in that first meeting, we always start out by defining the client's vision. We need to understand where you're headed, because are you. You know, there's a big difference in the recommendations that we're going to make for your practice. If you're like, no, I'm going to have three locations, or if you're like, it's mostly me, I may hire one person maybe eventually.
- [15:39]
Co-Host
Right?
- [15:39]
Jessica Nunn
Those are two different businesses that we're designing and building together. So let's clarify that. And that's where I would encourage your listeners to start. Like, do you know what you want with your practice? Is it. Do you have a clear vision? Because sometimes I think people do struggle with that. They're like, well, I have this other provider, but they're not that busy. And it was just easier when it was just me. But I know that I want to grow, and I don't want to be the only one providing services. And so, you know, you just really got to decide, what do you want in your business? Let's get clear on that, and then let's build out that financial plan to get there. Right? So another thing that you said was, we're usually it's not your expenses that are the problem. That's really so, so, so true. And when we're reviewing these numbers with people and, you know, after we've done the review part of the meeting, we go into the roadmap, right? And this is the part where it gets fun. This is the CFO part, Right. This is the part that most people aren't doing. We can. If we've got statistics and data around how your providers have been performing, then we can use that to estimate how they'll perform into the future. And, you know, a lot of that is just goal setting.
- [16:53]
Co-Host
Right?
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Jessica Nunn
Where do you want your providers to be? How busy should everybody be? What amount of sales should they be doing every month, every year? You know, how do we map that out then once we've got that mapped out at a provider level, then the next step is you sum it up and that's what the practice should be doing. So now we've got an idea of what the practice can produce or can achieve in terms of revenue for the next several months. And then once we've got that mapped out, let's figure out what the expenses are.
- [17:22]
Co-Host
Right.
- [17:23]
Jessica Nunn
We know what our consumables should be as a percentage because we've got that historical data. We know what our payroll should be because we know how we're paying people. We know who we've got. But then do we want to make any changes? Are we looking to hire people or do we want to change our marketing budget, or do we want to buy a device? What impact does that have on cash flow? Can we afford it? Because we've got all the pieces of that mapped out, so it really becomes a fun way for us to run scenarios. Or what do we need to do to generate that profitability. We've got it all here mapped out. And then once you're set, it's like, okay, this is the plan. I know exactly what I need to do. But you know, in business as well as I do that, like, plans change. You know, you might say, okay, I've got exactly, I know exactly what all of my providers are going to do, and I am going to invest in this device and next month I'm going to do 120,000 in sales. I got it ready to go. And the month after I'm going to do 125,000 in sales. Sounds perfect. Let's go. Two weeks later, right. Two of your providers come in and they're pregnant and going on maternity leave. So now you have to make a change.
- [18:32]
Co-Host
Right.
- [18:33]
Jessica Nunn
Or two weeks later, you learn about a new device that you'd like to, to invest in. So it's these continuous conversations because the business never remains static.
- [18:43]
Host
Yeah. In terms of looking at, and looking at that initial map and analyzing data, where do you see the common categories are? You said it's usually not rent. Where do you see people overspending?
- [18:52]
Jessica Nunn
Yeah, it's usually payroll and consumables. And, and those are. Because on the payroll side, we're not busy enough. Truly. Like what?
- [19:02]
Host
So, so when you're mapping out, like, hey, I'm hopeful, my hope is I'm going to do this amount of revenue next month. This is our capability is the bridge that, that, that covers that divide marketing. Are there other things that you're looking at?
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Jessica Nunn
No, there's a ton of things that we're looking at. Sometimes we're spending too long on each type of treatment.
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Co-Host
Right.
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Jessica Nunn
Maybe we're doing a talks appointment in an hour.
- [19:26]
Co-Host
Right.
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Jessica Nunn
And is that going to allow our revenue per hour to be where it needs to be in order to see the profitability that we need to have? So is it streamlining appointments? Is it scheduling differently or better? Is it marketing? It could very well be. You just don't have enough patience. Is it that, you know, maybe you just have too many providers right now and even though you may have marketing going on, you need to pull that back a little bit? You know, maybe we need to not have as much capacity or availability as, you know, we have the team for, because we're not quite ready for it. Maybe we need to expand our services, maybe we need to raise our fees. Maybe we need to bring in another device or something else to again expand the services. So there's really a myriad of things that can be the bridge between what you're doing now and what you need to be doing. The interesting thing too is that a lot of times practices know, they know. We just met with someone before I hopped on to do we do a complimentary, like, practice profitability assessment. And all of her expenses were perfectly in line except for payroll. Payroll was much too high. So, you know, we gave her this information and said, what? How do you feel about it? And she said, I knew, I knew my payroll was too high.
- [20:39]
Co-Host
Right.
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Jessica Nunn
She just either didn't have the data to confirm it or like, didn't want to believe it, but deep down she knew, you know, and we dove into that a little bit. We'll. Do you think you have too many team members? Maybe, but probably not. Okay. Are they paid too much? Maybe, but probably not. Okay. Is it that you have providers that maybe aren't as productive as you would like? Yeah, I think that's it. Like, I have too many people who could be seeing patients that aren't seeing patients.
- [21:10]
Host
Gotcha. So, yeah, you have to look at the entire picture and try to figure out where those holes are.
- [21:14]
Jessica Nunn
Yeah, totally. And then once we get clear. Okay, well, you know, if they were busier, would that solve your problem? Because if that's not going to solve the problem, there might be many problems to solve.
- [21:24]
Co-Host
Right.
- [21:24]
Jessica Nunn
But yeah, once you map it out. Okay, if they were busier. Yes, it turns out my payroll is great. Okay, well then let's fix that. Right. So before you go in and fire half your team, let's strategize on how to get your Existing team members busier, more productive. Now we can say, what are you doing for marketing? All right.
- [21:45]
Host
Yep.
- [21:46]
Jessica Nunn
How are your calls being answered? How is your reappointing? Are patients leaving with an appointment, that sort of thing?
- [21:51]
Host
Yep. So you manage kind of looking at cash flow and then. And then perhaps one of these solutions being additional lasers. So that's one of those things that I think is going to be a little counter to a lot of the stuff that I've talked about on the podcast. So could you talk a little bit more about the situation that arises where you're maybe looking at a financial plan and the recommendation is a new laser and, and the an add on of an additional service, what that generally looks like and why and what the financial planning looks like behind that?
- [22:19]
Jessica Nunn
Yeah, sure. So in generally, we're not, we're not making those operational or clinical decisions. You know, we're not going to say, you know, something that's really been popular is this service. We should really implement that service. Like, we're leaving it to the practitioner and the owner of the business to say, the service I would like to provide to my patients is right. Or my patients are asking for this. So they usually. We don't usually have to convince anyone either to expand the services and to invest in a device. Cause usually everyone's chopping to do that. So the way it normally happens is they'll say, hey, I just bought this one device and I'm loving it. We're using it all the time and I'm thinking about getting another. Can I afford it?
- [23:01]
Co-Host
Right.
- [23:01]
Jessica Nunn
And that's where we have to say, okay, how much is it? How will you pay for it? You know, how will you market it? How will you make sure that you're actually using it? All those things?
- [23:10]
Host
Yeah. You're making sure if you're adding on a new device, it's because it's going to be profitable.
- [23:14]
Jessica Nunn
Yeah. How do we make it profitable? And again, we're not going to say, no, don't add that treatment. No one wants it. It's awful. Like, we are not clinicians. We are the numbers people. It's not for us to tell you what services you should bring in and whether that's what your patients need or want.
- [23:31]
Host
This episode is brought to you by Med Spa Magic Marketing, my agency. We help med spas and aesthetics practices grow with more effective marketing strategies. And I know that's a vague phrase, right? That's a vague claim. So I have an offer for you. I offer this to any new prospects. If you're interested in exploring any of them. Another marketing option, a new agency, or just getting into Facebook, Instagram, Google Ads for the first time. I'd love to show you why we're different, what we're doing for clients. And we can do that via a one and a half hour planning session where I'll outline a specific marketing plan and I'll give you all of the blueprints that we would implement if we were to do business together. Now you can take that, use that on your own, hire someone else to help you execute it or work with us. We really don't hold anything back on that strategy call. And I think you'll have a lot of confidence in how you manage your marketing investment moving forward. Understanding some of the nuances that can help you implement more effective marketing strategies for your business. So if you want to do that, you can go to medspa magic marketing.com so anecdotally from my conversations with the practice owners, one of the things that I feel like comes up a lot is people are maybe sold a vision that sounds really good from the medical device sales reps about in the perfect scenario, you buy this, this product, this laser and you've got your books completely full, this is what the financials look like and it sounds really great. And so people kind of go down this rabbit hole of purchasing devices with this vision in mind that they're just going to make a bunch of money and then three months, six months, a year later, they look back and they're, it's, it's, there's not a lot of demand for the service, they're having trouble booking appointments and that laser sitting on the shelf actually is an expense and not a revenue generating asset to the business. So any advice? Kind of there is that just again, going back to making sure that the difference between what you're buying is actually going to be profitable versus just doing your research as a clinician.
- [25:18]
Jessica Nunn
That's a hard thing, right? You do need to make sure that it's like your patient population is going to want this. And how do we find out? We ask them, you know, or we let them talk about what other services they have or what we're seeing in the office.
- [25:30]
Co-Host
Right?
- [25:30]
Jessica Nunn
What we're seeing. You really got to get behind the device and be passionate about the service because again, that's what you're going to be doing in your office and what you're going to be diagnosing or treating your patients with. So you really got to get behind it and make sure that it is clinically operating as you would want. Like, is it providing the results that you want to see on your patients? But from our perspective, we want to make sure that you're paying for it properly. Right. Are we. We hear a lot of people who buy advice and then they say, we want to pay that off in three months and they're using all of their cash flow to pay it off. And we really prefer that you manage your cash, you keep your cash, and that you maybe get some good financing terms for the device and pay it off over time and don't be in such a rush to get it paid off that, you know, you potentially forego anything else that needs to happen in the practice. We're going to forego hiring that next person. We're going to forego our marketing budget. We're going to not have a good working capital. All because we want to pay off the device. I don't know that that's the right answer. So.
- [26:32]
Host
Yeah, so. So is the balance there to maybe if you want to pay off the device, make sure that you're planning your financials and budgeting so you still can do these other things and just make that a part of the strategy, but maybe don't handcuff the rest of your business.
- [26:44]
Jessica Nunn
Ex. Make that a part of the strategy. But understand, like, what's the reason behind that? Is it because we're scared of owing money? What's the reason behind that? You know, and. And should we be scared of owing money? Is having one equipment lease on your financials going to make or break your practice? You know, what's the fear around owing this for this device? That if you're using it properly and implementing it into your practice. Right. Is making you money.
- [27:09]
Co-Host
Why.
- [27:10]
Jessica Nunn
Why do we have such heartburn with owing money?
- [27:13]
Host
Yeah. Yeah. So that's, I guess, the thing that's a little counter to what we generally talk about. But the idea there is you're confident that you know, because you're knowing your numbers and you're analyzing this data, you know that that thing is actually making you money.
- [27:26]
Jessica Nunn
Yeah. And you have a plan to pay it off. You're not going to. What's worse, and I see even more is when people have grown huge credit card balances in their practice.
- [27:36]
Co-Host
Right.
- [27:36]
Jessica Nunn
Buying inventory, trying to tear up to that next level. Right. And so they put it on the credit card and they can't pay it off, or they have these huge terms that they can't pay with their suppliers. And to me, I would want to get a handle over that versus that Makes sense. Paying off my device.
- [27:53]
Host
Yeah. Because like you said, hypothetically, if the device is doing what it's supposed to do, your payment is. You're, you're making more money from that device every month than the payment. But the credit card is maybe more indicative of bad financial habits where you're actually just racking up bills that of things you can't afford in cash flow. Because in that sense, in your example, you're cash flowing the payment of the device, the device is paying for itself every month when you're making bad decisions by trying to get to the next tier in terms of purchasing power or other things with the credit card. And that's where things maybe start to go really, really sideways with financials.
- [28:22]
Jessica Nunn
Yeah.
- [28:22]
Host
Is there anything you see in terms of common. Oh, go ahead. Sorry, Jessica.
- [28:25]
Jessica Nunn
Oh, I was just going to say we've seen it a lot, truly, with, with people coming in and being really nervous because they haven't been able to get a handle on the credit cards because it is really easy to put stuff on the credit cards. Okay. Okay. I'll start my marketing plan. Okay. I'll, I'll get this, you know, initial order. I'm. And then you just can't pay off the cards. And then it gets out of control because with 25% interest or whatever it is right now, like, of course it does. So we really, really work with clients to consolidate that into a bank loan with like normal 7 to 10% interest in term it out where you're paying it over five years. It's a very affordable monthly payment versus like a stress and keeping you up at night. So get a handle of that, consolidate it. And then, and then. Right. We're not going to do that anymore. We're not going to put it on the credit card unless we know that we're going to pay it off. We're going to have a clear budget for all of our expenses that we know we can afford.
- [29:19]
Host
Yeah, that makes a lot of sense. So I don't want to focus too much on the, on the people that are, you know, in the situation that's maybe a little bit more desperate. But when you do see someone that's in a hole, like they, you come in, they, like you said, they don't have one machine. They've got six or seven machines and the machines aren't cash flowing and they've got a big credit card debt and they're overstaffed.
- [29:36]
Jessica Nunn
Yeah.
- [29:37]
Host
What's the rescue plan? Yeah, that's probably the hardest question imaginable.
- [29:41]
Jessica Nunn
In a Perfect world, we would refinance all of their debt and bring down their payment. Like you know, we have several that we're saving 7, 8, 9, $10,000 a month just by restructuring their debt.
- [29:53]
Co-Host
Right.
- [29:53]
Jessica Nunn
And I know that there are a lot of med spots who are like, I can't get a bank to talk to me. Banks don't like me. Yes, they do. Keep looking. Right. You do have to, you can't have terrible credit and you know, be a personal financial wreck necessarily. That might work. But if you have good credit and you have a good personal financial health, right. Some assets accumulated at home, then there's, there's, we know banks that can help, we're happy to pass those along. But refinance that debt to get yourself some immediate cash flow help and then let's stop the bleeding.
- [30:23]
Co-Host
Right.
- [30:23]
Jessica Nunn
If there's people, if you're, if you're truly overstaffed, which we don't see that much if I'm being honest, because people are so hard to find. But if you're truly overstaffed, like I did just talk to one, she's probably overstaffed and she said I need to probably make some of my people part time because I don't need them every day, I just need them a couple days. But they're single moms. Or this, or this. Listen, it's a business. If you need them to be part time, you need a part time employee and if this person needs a full time job, you might need to go let them get a full time job and you can look for a part time employee. Right. So what do we need in terms of staff?
- [30:58]
Host
I, I feel like I've had that conversation with clients too and it comes from a good place. But you have to understand you're a business, you can't make bad financial decisions or you're not going to be in a position to help anyone. You're not going to be in a position, you're not going to be successful, you're not going to be able to, to, to pay for maternity leave or to give people the extra hours when things are a little bit slow. So you can't always have this charity mindset of like, I, I don't want to cut that person off because it would hurt them temporarily because long term your business is not going to succeed if you're making bad decisions. That person's just not even going to have that part time job or it's not going to be available to them at all.
- [31:30]
Jessica Nunn
So, so wrangle the debt, wrangle the people. Right. And then, then we really need to look at maybe expanding the marketing.
- [31:36]
Co-Host
Right.
- [31:36]
Jessica Nunn
And if that means going to get a line of credit to give you a little bit of working capital to make those investments. Because let' like they're making an investment in our services. You know, we try to be priced affordably for, for, to be available for, you know, almost any kind of practice, but it's still more money out. How can I pay for you when I'm already feeling poor? Right. Marketing. Well, you're asking me to spend more money. You got to dig yourself out of a hole. So maybe let's get a line of credit or something to provide a little bit of capital to allow you to dig out of the hole.
- [32:02]
Host
And then what you're doing has to work.
- [32:04]
Jessica Nunn
It does. So.
- [32:05]
Host
Yeah. Do you, do you have any benchmarks that you use from a marketing standpoint or is that a little bit outside?
- [32:12]
Jessica Nunn
I've kind of talked about in terms of percentage of spend. You know, we do watch like the number of new patients coming in and we want to understand what you're spending for new patients. But we understand too that it's not about the new patients that come in. It's about keeping your existing patients.
- [32:27]
Co-Host
Right.
- [32:27]
Jessica Nunn
We can't be paying for all these new patients and then they never come back. So there's a lot around just growing your active patient base and keeping your existing patients and, you know, getting people reactivated or reappointed or, you know, there's a lot of different ways to define marketing versus just going, going out and chasing new patients.
- [32:45]
Host
Yeah. There. If you, if you've been around for a while, especially you're sitting on a pile of money, if you're not doing some sort of re. Engagement strategy, especially with text message, but even emails and, and when the books are slow, guess what? Look at the, look at the schedule for Thursday and pick up the phones on Monday and give people a little bit of a promo to come in Thursday if you have to. So there are all sorts of creative ways you can market without spending money on advertising, especially in the short term. When it, when it comes to budgeting, this is. You know, you mentioned that a lot of people work with a CPA or a bookkeeper, which is kind of looking back retroactively at your financials. But I'd be willing to bet very few people are actually creating a budget. They're kind of just looking at the numbers and making sure nothing's going sideways retroactively. What do you recommend in terms of some strategies?
- [33:27]
Jessica Nunn
Yeah, so it's exactly that process that we described earlier. So it's looking at your historical information and using that to set the forward looking goals. So what can we expect out of each provider going forward, even if we need to ramp them up?
- [33:40]
Co-Host
Right.
- [33:40]
Jessica Nunn
If someone's at, you know, we look at the revenue per hour, if someone's at $250 revenue per hour right now, and we know they can be at 5, they're not going to be at 5 tomorrow. So let's kind of grow them slowly and set those goals and stay close to them so that they're working to achieve those goals. But so we're budgeting out the revenue, you know, we're not just saying, hey, the practice should do 100,000 next month. We're saying who's going to do what and how to get us there. And then what are the expenses of the practice going to be when we're achieving that hundred thousand?
- [34:12]
Co-Host
Right.
- [34:12]
Jessica Nunn
We got to pay the team to do that. We have to pay for the supplies to do that. We had to pay for any kind of marketing strategy to bring in those patients. We have to pay, obviously the rent and, you know, the other ongoing costs of the practice. So we truly, every line item in that P and L, we're going to put a budget towards so that we know exactly where the money's coming from. Right. And exactly where it's going.
- [34:41]
Host
To. Planning is basically understanding that you have to move the needle on both ends. You have to understand your numbers, you have to have control of your numbers, you need to manage your expenses and you also need to have strategies for growth because one without the other, it's going to, it's going to get you partially, partially where you're trying to be. But when you have a holistic picture of the long term vision of the business, you need to be thinking critically about some of these things. From a financial planning standpoint. Are there any sort of other common threads that you feel like when you, when you walk in there? Like the obvious quick wins when you first start talking to somebody that you're always excited to share?
- [35:14]
Jessica Nunn
Well, I would say we're always spending a lot more time than people think on the key performance indicators, the revenue side of things. So we really want to see what's happening with patients when they're in your office, when they're in your treatment room. Are you, are the providers busy enough? Do you have enough patience to generate the amount of revenue that you need to generate to be profitable? So a lot of times people think, oh, she's going to do a budget. She's going to. I'm not going to be able to spend anything anywhere. But it's really much less about expenses than people think. We really want to optimize the practice in terms of revenue generation and then see if there's any expenses to cut. But I promise we're not going through there and slashing all of your costs. Hardly ever do we do that. We really spend a lot more time helping on the revenue side of things than we do on the expense side of things, for sure.
- [36:04]
Host
Could you really quickly speak to the. You talked about the benchmark of profitability kind of shooting just as a relative number. 15% profitability. And for the owners listening, that doesn't mean that there's 15% left over, especially if you're like the injector. Right. That doesn't mean there's 15% left over for you. After all expenses are paid. Before you pay yourself, you have to. 15% profit means that your business can basically operate without you and you're making 15% profit, essentially.
- [36:30]
Jessica Nunn
Right. If you're, if you are a, an injector, right. And you're, you're a provider in your practice, it assumes that you're paying yourself fair market value, meaning if you had to replace yourself, that payroll is covered. So it assumes it includes. So if you're, A lot of times people will be like, I'm doing way better than that. I'm netting 30%. This is amazing. But you're not paying yourself. You're working for free, so it doesn't count. So first impute, how much would I have to pay myself if I didn't own this place? Now, you should be at 15%. But that 15% does not include loan payments. It does not include investments in things like devices. So it does not include anything that's not on the P and L, which includes the assets that you buy and the loan payments that you have. So you've got to think of that separately. So, you know, for people listening who are netting 15% or more but still feel like they have no money, that's. They probably need to look at, you know, what it. What are my loan payments looking like? How much am I taking out for distributions? All of those things.
- [37:36]
Host
Is there a range in profitability? Do you see, like the most successful practices at a certain number? Like, what's, what's the top end of that profitability? Profitability?
- [37:44]
Jessica Nunn
Well, it's hard because people aren't paying themselves as the owners.
- [37:48]
Host
Yeah, you have to pay yourself as the CEO basically. And then look at profitability after whatever your role is.
- [37:53]
Co-Host
Yeah.
- [37:53]
Jessica Nunn
You have, what would it take to replace yourself? Then look at profitability. But we do have some in the 25 range. 20 range. We are working kind of on our own internal analysis on like at least normalizing for their own compensation so that we can say your true operating profit is this. And we can kind of identify that. Yeah. Because right now it's very messy. And you know, anytime you get profitability or benchmarking figures from people, you need to kind of think about, especially if it's self reported, you know, people are like, hey, I'm telling you that my profitability is 30. You need to think about, well, are you paying yourself $5 an hour to do your role as CEO and primary injector? Because that of course your labor is really cheap, of course you're profitable. You know, on average, our clients in 2023 netted about 15, that 15% on average.
- [38:46]
Host
Cool. Gotcha. Any, any common threads to the practices that are maybe the, the high performers that are closer to that 2025 mark? What would you say the common threads are?
- [38:54]
Jessica Nunn
Two things, as you would expect. One, the providers are very, very productive. Meaning they, the injectors are producing at $1,000 an hour or more.
- [39:03]
Co-Host
Right.
- [39:03]
Jessica Nunn
So they're very productive, they're very full, they're very efficient with their time, their prices are high or healthy.
- [39:09]
Co-Host
Right.
- [39:10]
Jessica Nunn
And two, just as you would expect, they're managing their expenses. So it comes down to exactly those two things that you described when you.
- [39:18]
Host
Look at optimizing performance in that thousand dollar an hour benchmark. And I know this is maybe a little outside of the financial question, but there's also this concern of like patient satisfaction and making sure you're spending adequate time for a, with a patient to give them a great experience. So kind of balancing that out. Do you have any benchmarks for sweet spots in terms of when you're looking at appointment slots on the calendar, how much time should be allocated for certain appointment types?
- [39:40]
Jessica Nunn
Well, that's something that we would review one on one with the clients because it totally depends not only on, you know, their own style of treating, but also on their team. You know, do they have a medical assistant that can come in and that can really do the numbing or doing the charting or, you know, is it more of a team approach with taking care of the client or is the client really just going to see that one and injector? So it kind of just depends on how your team is structured and, and how you're building your practice. So, you know, especially if you're somebody that, that prides yourself on lower prices, then you're going to have to also pride yourself on quantity because you're not going to be able to see just a few patients that be profitable. So we really look at that individualized with each practice.
- [40:17]
Host
Yeah, I love that. Dr. Carol Clinton, on one of our episodes mention this idea of Right. Sizing. That if things really feel like they've gone sideways on you potentially and you're looking at your books and things just feel really out of hand, you don't have enough patient flow and marketing seems so far off. It's such a substantial budget to get you where you want to be and your expenses are so over inflated. I know you mentioned that most people you talk to don't really have a major issue with rent or payroll, but is there a time and a place where you have that conversation about Right. Sizing and, and really actually trimming down staff and trimming office.
- [40:51]
Jessica Nunn
They definitely have a problem with payroll. So payroll and inventory and consumables are their biggest issues. Rent we don't see as often, but definitely like payroll is probably the number one place where people are. And again, it comes down to identifying like if you're going to Right. Size.
- [41:06]
Host
Sure.
- [41:06]
Jessica Nunn
That's the dream.
- [41:07]
Co-Host
Right.
- [41:07]
Jessica Nunn
I want to fix this. How do I fix it? How do I fix it? We got to understand the problem. Is the problem that we're paying people too much or that we're paying people incorrectly? Right. It doesn't matter how, how much money we spend on marketing because if the providers get busier and busier, we're paying them an amount that is not going to sustain profitability. That happens a lot. So we have to understand where the problem lies. Is it that they're not busy enough and getting them busy will solve the problems? Let's model that out. Is it that they are busy enough but in fact we're paying them?
- [41:38]
Co-Host
Wrong.
- [41:38]
Jessica Nunn
Let's model that out. Is it that, you know, maybe we don't have enough team members.
- [41:44]
Co-Host
Right.
- [41:44]
Jessica Nunn
Maybe we have more demand and we need to hire more people. Or maybe we don't have enough space. Space for the demand or, you know, it could be a myriad of problems.
- [41:54]
Host
So. Right.
- [41:54]
Jessica Nunn
Sizing is obviously the goal, but I think the key is identifying the, the actual problem.
- [42:01]
Host
Yeah. And there's nothing better to identify what the actual problem is better than your financials.
- [42:07]
Jessica Nunn
Yeah.
- [42:07]
Host
So it's a, it's that gritty exercise to do. Yeah. But those that's the one thing that doesn't lie. It's not your gut. It's not perception. It's not what you wish it was. It's actually telling you the truth about your business and where things currently stands. I love that. Any final words of wisdom?
- [42:23]
Jessica Nunn
No. You know, I know that talking about this stuff stresses people out. Right. And looking at your numbers can be really uncomfortable, especially doing it with someone that you've never met before. Right. We've had client meetings where they'll say, I feel like. Felt like you were making me get naked or something. Like, it just feels very vulnerable to go through the. Your business is your baby. And you're like really stripping it down and going through all of the numbers. And that doesn't always feel great. So we get that. So know that you know when, when you're doing that, if you have uncomfortable feelings, like, that's not uncommon. And the more and more that you look at your numbers and you get comfortable, you'll get more comfortable with it, I promise. So eventually it's just going to be, this is another tool in my toolbox as a business owner. I can't ignore it. So let's, let's work to get more comfortable around it. But I do understand if it's uncomfortable at first.
- [43:14]
Host
Yeah. Ignoring. Ignoring them is not going to make the situation better. It's like the night after you have a bad bar tab. Looking at the bank account doesn't make it go away.
- [43:21]
Jessica Nunn
No. No, it doesn't.
- [43:23]
Host
Well, yeah. So, Jessica, thank you so much. Where can people learn more about you and what your company's up to and next steps?
- [43:29]
Jessica Nunn
Yeah. So we have a lot of videos that we put out on social media to kind of talk about things like this. Like, what are we seeing right now? What solutions, you know, are we working with with clients? And that's on our Instagram at Maven Financial. Or we have a website, Maven FP as well. MavenFP.com we have a newsletter that goes out and, you know, different blogs and other resources available for folks if they want to learn more.
- [43:54]
Host
Awesome. And I'll make sure those are all linked in the show notes too. So if you're watching this on YouTube or listening on podcast platform of choice, those should be in the show notes. You have the links readily accessible. Jessica, thank you so much. We really appreciate having you on.
- [44:04]
Jessica Nunn
Yeah, thanks so much. It was a fun time.
- [44:05]
Host
We'll have to do it again. Thanks everyone for tuning in. This podcast is a production of medspa Magic Marketing. If your medspa or Aesthetic Practice is in need of digital marketing services. Help with advertising on Facebook, Instagram, Google lead generation and booking more appointments, please visit medspamagicmarketing.
- [44:25]
Jessica Nunn
Com.