Secrets to Selling Your Med Spa for Top Dollar
By Pacific Reliance Medical M&A Advisors
Contemplating selling your successful medical spa? Excellent! Whether you have retirement on your mind or perhaps you are wanting to explore new business horizons, we have a wealth of insights to ensure this process is as seamless as a med spa treatment.
First, let’s talk about what truly matters – getting the most out of your medical spa sale. When selling, it’s all about maximizing your med spa’s value, ensuring top-dollar returns. Perhaps your journey to this point has been a rollercoaster of dedication and sacrifices, all aimed at building up your successful med spa business. You’ve put in plenty of hard work, and now, it’s time to make sure you get every bit of value you deserve from it.
One key lies in professionally prepared financial statements, and it’s of utmost importance. Now, I understand that diving into financial discussions might not be everyone’s cup of tea, but bear with me – this is where the genuine gains take place.
Professionally prepared financial statements aren’t just dry numbers on paper; they’re the compelling story of your med spa’s financial journey. Transparent financial statements build trust, enhance the credibility of your med spa, and facilitate the sale of your med spa on more favorable terms.
Secret #1- Professionally Prepared Financial Statements
Think of your financial statements as the “dashboard” to your business. Just as your car has a dashboard, which informs you if you’re low on fuel, engine overheating or doors left open, your med spa also has a dashboard.
The monthly profit & loss statement is your dashboard to your med spa. If prepared well, it will inform you of issues such as revenues declining, cost of goods running too high, labor costs out of whack and if the net profit is in line with industry standards.
How do you achieve this level of financial finesse? Bring in the experts. Get yourself a seasoned professional to organize those books. When you first opened your med spa, perhaps you or a family member prepared your financial statements in an effort to save money. As your med spa grows, it’s a wise idea to hire a professional bookkeeper or accountant who understands your business.
Your bookkeeper or accountant should keep track of key performance indicators, essentially giving your med spa a financial health check-up.
The key performance indicators you should be following MONTHLY are:
- Gross Revenues
- Cost of Goods per category in income
- Labor cost broken down by provider and non-provider
- Net profit
Each indicator tells a story.
Gross Revenues
Monitor sales per major category of income monthly. Separate your income by:
- Injectables/neurotoxins
- Lasers
- Retail sales
- Etc. etc.
This data should be pulled from your EMR/EHR. Compare month to month and make sure your sales are steady or even better, increasing monthly.
The average single location med spa has revenues of over $120k per month. How does your med spa compare? If it’s below the average, work on hitting those numbers.
Cost of Goods
Monitor your COGS by category of major income. Your target should be between 20-30%, with neurotoxins running at the higher spectrum. A high COGS could indicate theft or improper usage.
Labor Costs
Separate your labor costs by providers and non-providers (administration). Compare monthly and in relation to your revenues. Labor costs above 40% should be an indicator of higher than average costs and should be examined.
Net Profit
The net profit of a med spa should be minimum 20% of revenue, with highly efficient med spas running at 30-35% profit.
Analyze each number monthly as well as quarterly and look for significant increases or drops. Compare the numbers monthly as well as quarterly and discuss with your accountant.
Selling a med spa may involve a lot of paperwork, but think of it as a spa day for your business – a bit of revitalizing mixed with deliberate procedures.
For additional questions regarding your financial statements or for a no-cost valuation of your med spa, please contact us. We look forward to working with you.
For more information and tips on getting ready to sell your practice, contact us.
Pacific Reliance
Medical M&A Advisors
Jerry Diza, Managing Partner
Email: Jdiza@pacificrb.com
(949) 427-0304
