Boost The Profitability of your Aesthetics Practice Today Without Spending a Dime

Growing an aesthetics practice is where most practice owners focus their time. Afterall, the only way you can make a difference in the lives of those you serve is if your practice is around to serve them. Being noticed, becoming top-of-mind, and getting clients through the door are crucial for launching and growing a successful aesthetics practice.

However, marketing is a process. It requires that you consistently bang the dinner bell until the cows come home. Sometimes, they are stubborn to move. Maybe it’s because they believe the grass is greener in the pasture where they stand. Maybe they are waiting for you to prove you have something tastier or for the field they are in to dry up before they take a step. Hammer away long enough by offering great visual proof of work, excellent testimonials, and spectacular services and products, and they will eventually be lured home to you.

If you are looking to realize greater profitability in the short-term while you work on the long-term impact that great marketing will have on your practice, there are a couple things you can do today to make a difference. Both are simple. However, each require strict implementation to be successful. They are also two of the most difficult behaviors for most practice owners and managers to adhere to consistently. They are also why many fail to achieve operational excellence.

COGS – Cost of Goods Sold is an expense number that everyone who analyzes a P&L will look to as they seek to understand how effectively the business is managed. Some only include in COGS those things that are directly related to the costs associated with producing a product or service. Others incorporate labor. I prefer to separate the two when dealing with small businesses, as it allows for a better understanding of where the opportunities for improvement lie. For an aesthetics practice COGS would include retail products, neurotoxins, fillers, testosterone pellets, IV solution, IM shots, needles, syringes, alcohol wipes, etc.

To have a true understanding of COGS you must be very detailed and include everything that goes into producing a service. It requires knowledge of the service, knowledge of everything that goes into making the service, the amount of products needed to make the service, and the cost of each item used. This total becomes your COGS.

By way of simple example, let’s say you offer a neurotoxin injection to the forehead as a service. The following are costs that may be associated with the service:

• $7 per unit of neurotoxin x 40 units

• $0.25 per syringe with needle X 10 syringes

• $0.05 per alcohol prep pad x 10 pads

• $1.75 per underpad chuck x 2

Note that COGS do not consider overhead or operating costs (i.e., rent, utilities, insurance, leases, etc.). Those are calculated separately and would be another exercise that would be helpful in knowing your true cost of doing business. However, those are most likely fixed costs that you can do little to change. Yes, you can turn off lights and adjust the thermostat up or down, which should be automated, but that change may not be nearly as significant as managing COGS and it is sometimes driven by factors outside your control, such as mother nature.

The example above should be easy to manage, right? Hold your horses! Imagine an inaccurate pull of neurotoxin from a vial. If 42 units are pulled and used, but 40 units are invoiced, you’ve just increased COGS for that service by $14. Now, imagine that happening 100 times per month. You’ve bumped COGS for that one service by $1,400 for the month. Now imagine an extra syringe is used. While 25 cents does not seem like much, it adds up over time. 1,000 syringes x 25 cents equate to $250 over the course of a year being unnecessarily eliminated from the bottom line.

This represents one very simple service example. Imagine the numbers over the course of a year if you offer 50 services of differing types per day. Imagine if your other services are more intricate and require the use of more products. The loss to the bottom line could be incredibly substantial.

Labor – Labor represents the people necessary to run your practice. Each person is a cost to the practice. Some are revenue generation centers (injectors, estheticians, surgeons, etc.), while others are cost centers (managers, receptionists, etc.). However, all are necessary for the practice to operate and thrive. How you manage each is important for effective service delivery and cost management. If you do not monitor the schedule tightly, labor cost can get out of control quickly.

By way of simple example, let’s imagine your total cost (wage, taxes, insurance, etc.) to pay a service provider is $40 per hour. Let’s also assume fulltime (8-hour workday and 40 hours per week). A 15-minute gap in the provider’s schedule twice per day is equal to $20 in labor. Labor that did not generate revenue. Now, imagine this occurring 4-5 times per week for 52 weeks. That’s $4,000 - $5,000 per year in additional non-revenue generating labor. Sure, you can have them do extra cleaning or other things, but that is not as good a use of their time as driving revenue. Now imagine this happens with 6 or 10 people.

There are a few things you can do to ensure the efficient use of labor. One is to make sure gaps in the schedule are eliminated. This can be done by having your scheduling team suggest appointment times to clients versus having the client tell them when they are available. Another is to review the schedule for the days ahead daily and work to fill gaps. Sometimes it may require moving clients between providers and shifting employee schedules. No matter the case, an efficient schedule is the goal and should be achieved without fail.

These are two very simple operating examples that every practice should be implementing. They are also two ways you can increase money to the bottom line without spending a dime. While they are not as sexy as marketing, the contribution can be as impactful. Do it well and you just might be able to sell your practice to an investor for a multiple that makes you smile and allows you to buy the farm of your dreams some day!

Randy Stepp is a Principal with Renaissance Leadership Group, a full-service practice development company.

Visit Renaissance Leadership Group at www.renaissanceleadershipgroup.com to learn more.