How to Create a Pro Forma for Your Next Med Spa Location
As the saying goes, “Those who fail to plan, plan to fail.” When our clients at Skytale tell us they’re ready to scale their med spa, we want to nail down a few important details first. This is where a med spa pro forma comes in handy.
What is the cash outlay going to be to build out a new space? How will you lock in a lease? What are the upfront costs of opening? Do you understand the working capital requirements, and can you go get funding from the bank?
Before we get ahead of ourselves, let’s start with a quick definition.
What Is a Med Spa Pro Forma?
A pro forma is a financial statement that predicts a future—or hypothetical—situation. It’s a forecast that can guide decisions and help take multiple scenarios into account. Pro formas might include balance sheets, income statements, and cash flow statements.
A med spa pro forma is critical for determining the success of your medical spa growth. Think of it like a roadmap that tells you where you’re headed and how to get there.
Skytale helps our clients put together a pro forma for the future. Here’s a look at how we do it.
Calculate Projections for a Med Spa Pro Forma
Start by creating two years’ worth of projections. You’ll want to understand what the ramp-up to a breakeven point entails. Plus, you can see how much loss you’ll face in the beginning and if you’re comfortable with it.
Next, estimate the number of patients per day and the revenue per patient. What does that ramp-up look like? Do you have to be open five days a week? Or can you start by opening two or three days a week with your current provider and increasing your schedule in future months?
Finally, compare your new space to your med spa’s service mix. How many rooms do you need? What equipment do you need in each room? It’s worth knowing the total expense of your rent and buildout.
Budget Cost of Opening a New Location
Now, it’s time to dig into the opening costs of your next med spa location. Start with the pre-opening expenses. $500,000 to $700,000 is a common ballpark we see for a buildout budget. You might spend $350,000 on equipment, $150,000 on working capital, and $200,000 to $250,000 on construction.
As for marketing, consider the cost of getting patients through the door. You might benefit from word-of-mouth of your other location’s customers. But your new location will need to gain traction in the new part of town and among new clientele. Advertising, sponsorships, and print materials cost money—but it’s worth the investment. Patient volume is key. When your business makes a lasting impression, patient retention stays high and you can compound the patient flow with both returning and new patient visits.
Another cost could be credit card processing. When you choose a credit card company, check what they charge for fees.
When it comes to staffing, how many employees do you need? How much will they be paid, and how quickly do you need to ramp up production per revenue for the numbers to make sense?
Other big bucket expenses to consider are professional fees. This might include accounting, legal paperwork, med spa consulting, and utilities.
Plan Out Service Mix
Knowing what services you offer—and what percentage of your business they make up—helps maximize your med spa revenue. First, identify what procedures you’ll offer at the new location. Then, compare the COGS (Cost of Goods Sold) to the volume of patients to check for profitability. Finally, how many providers will you need for the services you provide?
While there is no perfect formula, many successful spas we see have a mix of around 55-60% injectables and 40-45% estheticians. But it may depend on your target audience and specific goals.
Investing in devices like lasers cost relatively little to run but can help your business grow. And ultimately, an esthetician can help upsell patients. You’ll begin to see how fine-tuning your services can make a big difference in profit over time.
Skytale Group Can Help You Build a Pro Forma
We specialize in helping healthcare organizations take steps to grow. From monthly strategy meetings to financial projections to pro formas, let’s work on scaling your business together. Get in touch with us today to learn more.