Last week, we shared how the concept document drives the key inputs for the architectural program, leasehold improvements, furniture and equipment, and startup costs when developing a proforma for your business. This week, we look at how all of this information pours into an income statement, balance sheet, and cash flow to complete the proforma.
The income statement is broken down into three main parts: sales (service and retail), cost of sales, and expenses. The team at Acara Partners calculates service sales using our vast industry experience to estimate utilization percentages and price per hour, depending on the service. Retail sales are determined with a product factor, which is based off a percentage of service revenue. There is a direct correlation between service sales and retail sales. Cost of sales considers projected sales volume and labor/resource cost. After cost of sales, all expenses are forecasted and weighted using the growth rate resulting from increase in year-to-year sales. Once this information is gathered, we can use it to calculate the practice’s potential “earnings before interest depreciation amortization” (EBITDA) through year 5.
Balance Sheet and Cashflow Statements
The balance sheet is extremely important when making suggestions to a new or existing aesthetic medical practice. The balance sheet outlines all assets and liabilities that the practice holds. All assets and liabilities are forecasted out 5 years in the proforma and are based off the expected growth of the practice. When creating the balance sheet, Acara also creates a statement of cashflows to show the total cash against operating activities, investing activities, and financing activities – leaving you with the cash at the end of period for each year. All of these components combine to create a business’ proforma.
Anyone interested in launching a new aesthetic medical practice needs a proforma to lay the groundwork for business success. Inaccurately forecasting growth can be a costly mistake. If you’re interested in knowing exactly what an investment into an aesthetic medical practice will look like and understanding the profitability and viability of growth, turn to the experts. Contact the team at Acara Partners today to start developing your medspa, plastic surgery, dermatology, or other aesthetic practice.
Fill out our form to contact us for more details on how to implement a proforma: https://www.acarapartners.com/lets-talk/