Med Spa Success Strategies Podcast

Episode: "Profit Management for Med Spas Made Simple"

Host: Ricky Shockley
Date: September 29, 2025

Episode Overview

This episode dives deep into the concept of profit management for med spa owners, presenting a clear, actionable cash flow system designed to lock in profitability, ensure stable growth, and provide predictable owner compensation. Ricky Shockley shares practical strategies, common pitfalls, and a shift in mindset needed to put profit at the center of your med spa business model—so you’re not just generating impressive revenue, but actually taking home healthy profits.

Key Discussion Points and Insights

1. The Profitability Problem in Med Spas

• Many med spa owners focus on growing revenue but still "feel broke" because profitability is treated as an afterthought.
• Despite healthy revenue numbers, owners struggle to pay themselves adequately or feel financially stable.
• Quote (03:55):

  "There are a lot of med spas that have really good revenue numbers...where the owners are struggling to attain and obtain the level of profitability that they should have as a successfully operating med spa."
  — Ricky Shockley

2. Mindset Shift: Profit First, Not Last

• Traditional formula:
  Sales – Expenses = Profit (profit is whatever’s leftover)

• Profit-Focused Formula:
  Sales – Profit = Expenses (set profit aside first, then spend what’s left)

• Owners should benchmark a profit target—ideally 15% or higher, after accounting for a fair market owner salary.

• Owner pay should reflect what it would cost to replace you in the business, depending on the “hats” (roles) you wear.

  Quote (08:02):

  "We're going to decide, say, that number is 15%, 20% that we want to lock in after owner's compensation is the key here."
  — Ricky Shockley

3. Practical System: Allocating Revenue into Bank Accounts

• Use separate bank accounts to earmark funds for different purposes:

  • Operating Expenses
  • Taxes
  • Owner's Pay
  • Profit

• Example allocation (hypothetical percentages):

  • 60% Operating Expenses
  • 15% Taxes
  • 25% Owner’s Pay + Profit

• Implement a Consistent Rhythm:

  • Allocate incoming funds on a schedule (e.g., weekly on Fridays).
  • This ritual helps “tame” Parkinson’s Law—the tendency for expenses to rise to meet whatever’s available.

  Quote (13:58):

  "Every Friday I've got a time block on my calendar where I look at the bank account and I manage the cash flow. So let's get a consistent rhythm..."
  — Ricky Shockley

4. Building Cash Reserves

• Maintain 2.5 months of operating expenses as a cash buffer (e.g., if you spend $100,000/month, hold at least $250,000 before distributing further funds).

• Excess above the cash floor is allocated for taxes, owner's pay, and profit.

• Consider additional "sinking funds" accounts for large or irregular expenses (e.g., equipment, team retreats, bonuses).

  Quote (21:42):

  "You want two and a half months minimum of cash in your operating expense account to fund the business..."
  — Ricky Shockley

5. Addressing Parkinson’s Law

• If there’s money in the account, you will find a way to spend it—unless it’s intentionally allocated out first.

• The system of multiple accounts creates natural “caps” on how much is available for each spending category.

  Quote (12:28):

  "Your expenses rise to meet what's available. So many of you, you're just doing this on a whim...you're constantly chipping away at your profitability..."
  — Ricky Shockley

6. Common Profit Pitfalls

• Overspending on Payroll:

  • Payroll can eat up profitability if not tightly managed.
  • Roles and compensation structures must be monitored and adjusted as needed.
  • Referenced a previous episode with Ben Hernandez on ideal payroll percentages.

• Excessive Device Purchases:

  • Payments on new equipment can drain profits if not carefully timed and justified.

• Marketing Spend:

  • Avoid fluffy, low-ROI tactics (e.g., overpaying for organic social or SEO too early).
  • Focus spend on marketing initiatives with strong, measurable returns.

• Not Separating Owner’s Pay from Business Reinvestment:

  • Allocate funds for both personal compensation and reinvesting in growth opportunities.

  Quote (31:28):

  "Other things that creep up—new devices, device payments...those things can really eat into your profitability."
  — Ricky Shockley

7. Emphasizing Profit Over Revenue

• Revenue is easy to brag about, but profitability is what actually matters.

• Success metric:

  • The size of your tax bill at year end (a big tax bill = high profits).

• Treat profit as a habit, not a one-time event; routine planning and discipline are crucial.

  Quote (38:49):

  “The thing to brag about most at the end of the day is really profitability. We're running a business here. A business is designed to be profitable."
  — Ricky Shockley

Timestamps for Important Segments

| Segment | Timestamp | |-----------------------------------------------|-------------| | Why most med spas lack profit clarity | 02:42 | | Flipping the profit formula | 06:45 | | How to determine proper owner compensation | 08:35 | | Implementing multiple account system | 13:05 | | The importance of weekly cash allocations | 13:58 | | Sample account % allocations | 17:13 | | Cash reserves and the 2.5 months rule | 21:42 | | Addressing common spending pitfalls | 27:57 | | Profit vs revenue mindset | 38:19 | | Key takeaways and action steps | 41:30 |

Memorable Quotes

• "So many med spa owners grow revenue but still feel broke. This happens all the time..." (02:46)
• "Profit is a habit, not an event. Making this a routine and planning for it is critical." (39:22)
• "Revenue does not equal profitability." (38:49)

Key Takeaways and Action Steps

• Focus on profit, not just revenue. Set profit aside first, then spend what’s left.
• Use multiple bank accounts to earmark funds for operating expenses, taxes, owner’s pay, and profit.
• Establish a weekly (or consistent) routine for allocating funds to the right “buckets.”
• Maintain adequate cash reserves (2.5 months of expenses) to keep the business stable.
• Regularly review payroll and equipment spending to prevent profit leakage.
• Separate owner’s pay from business reinvestment for clarity and security.
• Treat profit as a non-negotiable business habit.

Call to Action:
Set up your accounts and allocation system, start giving every dollar a destination, and cement profitability into the structure of your med spa business.

For questions, ideas, or to share your approach to profit management, leave a comment or reach out to Ricky.

See you on the next episode!