“The make-up of a $6 million-dollar medspa”
“How to make millions in your practice!”
“The medspa millionaires’ team”
We cringe when we see these statements from industry consultants and associations. It’s not that we don’t love the potential of these aesthetic medical practices. We love success stories, and have contributed to many of them. We just know what reality looks like for these businesses, and have seen people get into financial trouble when that reality is exaggerated. Our goal is to paint an image that is still exciting while remaining realistic and conservative.
One of our favorite proverbs at Acara Partners is “the proof is in the pudding.” Our organization has a treasure trove of financial metrics, general ledgers, and data from hundreds of practices throughout the United States and around the world. Using this database, we decided to put the myths to rest regarding the numerous multi-million dollar “cash-cow” promises that we see presented by other organizations.
Our team took a random sampling of 75 practices from which we have regularly collected financials. This list includes everyone from celebrity doctors and 10,000 square foot facilities to rural medical spas and smaller scope practices. This is by no means an “apples to apples” comparison of practices or the aesthetic medical industry, but rather a realistic sampling and analysis of what is happening in these businesses today.
Our list ranges from small-scope, low-overhead practices with around $500,000 in annual sales to larger practices in major metropolitan areas with renowned doctors that produce $7M per year. We see it all, and it is characteristic of the wide spectrum of the aesthetic medical industry.
Think of a medical spa like an aspiring musician. Everyone wants to be Ed Sheeran, and many will commit their lives to reaching this level. But only a very small percentage of music artists will ever achieve this goal. The same can be said of aesthetic medical practices.
There are many factors that play into this reality – location, timing, scale, scope, and startup capital. Within our sample of 75 practices, only 8% have achieved over $4M in annual revenues. The majority of these practices fall in the middle when it comes to average annual revenue.
Why Average Is Important
Within our random sampling, the average total sales is $1,648,632. This is a fair number and, honestly, lower than we had anticipated. Our team forecasts and models newly-developed, full scope practices (1,800-2,400 sq. ft., with full service sets) to reach anywhere between $1.6-2.4M in their fully penetrated year (year 5), depending on the demographics and competition within their region. We consistently see these numbers being achieved throughout the United States.
Why Average Works, and Is Profitable
Now, take this ultra conservative (even for our standards) average of $1,648,632 with an industry standard profit margin of 20%. With this, you are pushing $329,726 to your bottom line each year. Turn your single site into a multisite operation (with a margin of 22% due to efficiencies between the locations), and you’re pushing $725,398 to your bottom line with two locations.
Knowing the reality of the financials is important to keep people safe and our industry standards high. But it’s also important to note that this reality is still an extremely attractive investment. Ignore the hubbub of the top 5%, and focus on the middle 50%. There is far less risk, and a much greater reward!
Why Choose Acara Partners
At Acara Partners, we take our job very seriously and aim to serve our clients with the highest level of integrity. Our team has owned, financed, and launched more single-site medspas than anyone else in the world, using a systematic approach that has proven successful time and time again. Our medspa development process will help you produce a practice that is both successful and profitable to achieve the realistic results that we forecast. We know that our team can make your dreams a reality. Contact us today to get started.