It’s been 10 years since Lehman Brothers shut their doors and the world spun into a global recession. There is a good chance you have heard in the news that we are expecting another recession within the next 1-3 years.
While it’s not our place to speculate on the timing of another economic recession, we can comment on our experience with owning, operating, and managing aesthetic medical practices during recessionary periods.
Acara Partners is notorious for doubling the sales of 12 aesthetic medical practices and medspas during an 8-month period in mid-2008 (AKA, “the great recession”), when these practices came to us for an Acara Business Booster program. Our team first reported on these findings via a blog post in early 2010, and the story can still be found on other sites, including Massage Magazine, Spavelous, and American Health & Beauty.
The Lipstick Effect
Many cite the “lipstick effect” as the reason behind the continued growth of the aesthetic medical industry through recessionary periods. Investopedia describes the lipstick effect as “when consumers still spend on small indulgences during recessions, economic downturns, or when they have little cash. They do not have enough to spend on big-ticket luxury items. However, most find the cash for purchase for small luxury items.”
We believe the same economic principles apply to the aesthetic medical industry. Cash-strapped consumers still want to treat themselves to something that lets them forget their financial problems. The accessibility to procedures is amplified even further by options such as 0% percent patient financing.
Recession-Proof Your Practice
You need to play an active role in “recession-proofing” your practice to ensure that sales increase throughout the next downturn. As Francis X. Acunzo, CEO of Acara Partners, always says:
“It’s all about planning – creating the right marketing plan, promotions plan, advertising campaign. You can’t just run an ad every week and figure out what the ad will be that week. You need to act in advance—typically 60 days—and come up with a promotions plan.”
Having a plan of seasonal promotions that is tied to a sales revenue goal will allow you to maintain a steady course and, potentially, even increase sales during a recessionary downturn.
Too often, we see marketing budgets being slashed when a recession hits, even prior to a drop in practice sales. This only feeds the problem, and doesn’t help to turn it around. When sales are slow, you need to infuse cash into the business to build demand and patient leads. By supporting your business efforts, you can try to repair the damage with new and repeat business.
Don’t wait until it’s too late to resuscitate your business or prepare for a potential economic recession. Fill out our form today to contact our team for a free consultation.