By Alex R. Thiersch, JD, Founder/Director of the American Med Spa Association (AmSpa)
In this space, I often discuss the legal peculiarities of running medical aesthetic practices from a viewpoint that generally deals with medical issues. However, while it is critical that medical spa owners and operators understand what’s expected from them in terms of rules and regulations, they must be equally adept at managing the business side of the aesthetics equation.
To that end, I highly recommend reading “6 Business and Financial Terms Every New Entrepreneur Needs to Know” by Jeff Haden on Inc.com. In general, Inc.com is an extremely useful resource for people who wish to develop a better understanding of the ways business works. It has given me some really valuable, practical tidbits over the years, and I would highly encourage anyone who is serious about developing their business savvy to follow Inc.’s Facebook page or regularly visit its website.
In this article, Haden gives basic but very informative explanations of these six metrics:
- Customer acquisition cost,
- Customer lifetime value,
- Customer retention rate,
- Repeat purchase rate,
- Redemption rate, and
- Revenue percentages.
This piece is extremely applicable to medical spas. Practice owners who take the time to learn the specific metrics that are referenced in this article tend to be the ones who are the most successful—the ones whose practices bring in millions of dollars in revenue every year.
You can spot a dedicated business owner from the types of metrics that they look at, and the ones mentioned in Haden’s piece are the ones that AmSpa’s industry experts discuss in our Medical Spa & Aesthetic Boot Camps. They are all vital when it comes to managing your medical spa, because a medical spa is much more akin to a retail store than it is to a doctor’s office, even though you have to follow the same rules and regulations concerning the administration of medical procedures that a doctor’s office would.
If a medical spa owner truly wants to be successful, he or she needs to realistically understand the dual nature of the business. If you are a nurse or a doctor, you need expand your horizons to better understand the ins and outs of the retail business. Sometimes, that means taking a 30,000-foot view of what your data shows you. Any initiative that you’re taking must be measured, tracked, and eventually evaluated.
The decisions you make should be based on the data you’ve compiled. The metrics mentioned in “6 Business and Financial Terms Every New Entrepreneur Needs to Know” are vital to helping you develop a more thorough understanding of the way your business functions. I think it explains these concepts very well.
At the end of the day, a medical aesthetic practice must make money. This might seem to go without saying, but when you’re in the process of starting up a medical spa, several other aspects of the business might seem to take precedent, especially if you’re coming to the medical aesthetic business from a medical background. And yes, it’s vitally important to set up a compliant practice and make sure that you’re following all applicable state and local regulations to the letter, but if you’re not doing everything you can to understand and utilize business concepts such as these, you’re not giving your medical spa a fair chance to succeed.