In this episode, Cameron discusses the evolving landscape of medical aesthetics and the importance of understanding key business metrics for practice owners. He emphasizes the significance of utilization rates, effective marketing strategies, and maximizing EBITDA to enhance practice valuation. He also encourages practice owners to adopt a business mindset, focusing on numbers and metrics to ensure sustainable growth and success in a competitive market.

Transcript

This is medical millionaire the podcast, helping your Med Spa increase in status, visibility and profitability. Join your host as he dispels myths, shares trends and gives you actionable steps today that will take your medical practice to the next level. Here’s your host, expert marketer and founder of growth 99 Cameron Hemphill,
Hey, what’s up, everybody? Cameron Hemphill, here your host for medical millionaire. Hey guys, thank you so much for taking the time to tune into the podcast. Our goal is to give incredible value and insight for practice owners. So if you’re thinking about becoming a practice owner, you have a practice you’re looking to scale it, take it to the next level, depending on wherever you’re at in your journey. Like this podcast, it’s 100% designed for you and to help you take your practice to the next level. My team and I, we have consulted with some of the most notable practice owners throughout the country for years, and I have personally been an esthetic Since 2016
In fact, I remember going to the first American Med Spa conference. And my goodness, has the landscape changed completely? It’s very interesting when you look back at history and see exactly what’s changed, like the amount of technology that’s coming into effect on just the platform, on how to run your practice right, the amount of technology that’s coming in on the neurotoxin level, the laser level, the modality level, GLP ones, like, we weren’t even talking about GLP ones a few years back. Now they’ve seen to just like be the topic of conversation. They’re only 8% of the market in terms of total revenue, but my prediction is that that number is going to go up dramatically in the next few years, and it’s a result of people wanting to feel good and look good, right? Like that’s what the patient experience is all about. I want to feel good, cool. I want to look good. And if you both those two together, you’re obviously going to give a great patient experience. So I haven’t recorded a personal episode in some time. I apologize for that. I think some of the listeners really do value that we’ve had so many guests on that have reached out and want to be a part of the journey and everything we have to offer. So keep in mind, if this is your first time tuning in, this is a business podcast. We talk about business marketing, numbers, KPIs, benchmarks. My entire purpose and goal, guys, is to help you take your practice to the next level like that. That’s it. And I hope you get a ton of value out of this. And one of the things that has just been on the top of my mind that I feel like I have to share with you is utilization rates. And sometimes when I tell a practice owner or ask them, like, what is your utilization rates. I almost get, like, the cross side look, which is like, what do you mean by that? Basically, it’s, are you running at full capacity? So zoom out. Take a look at your practice. I know that everybody is super busy. Your books are full, especially if you’re, like, a single provider owner. Maybe have like, one or two other providers or thinking about bringing one in, like, chances are you’re at full capacity, right? For the most part, okay, I hear it time and time again, like, I opened up my practice, I’m super busy. I’m booked out, but I’m looking to hire providers, or I just brought on other providers, and I need them to get as busy as me, right? The problem is, is you’re so busy working with your patients. You’re so so busy helping them with their journey, their treatment journey, their planning and building a connection, that it’s really hard for a practice owner to say, Okay, I’m going to slow down on taking care of my patients so I can get my other providers busy. Because one of the things is going to break right? You’re going to basically lose revenue and connection with your current patient flow. I totally get it. The thing that I see though, guys time and time again, this is almost, like
almost 100%
of practices that I work with and talk to and don’t work with
they’re underfunding your marketing campaigns consistently, like time and time again, not spending enough based upon market demand and supply. And so if you want to position yourself successfully for 2025
you need to really look at your utilization. How many rooms do I have? How many providers do I have? I may be at full capacity, full utilization, but my providers are not right, and oftentimes too I’ll see practice owners want to open up location two, location three, before they’re at full utilization on practice number one. So that should be your goal. That should be your objective is, hey, zoom out. What’s my utilization? I know you can track some of this stuff in EHRs and EMRs. Some do a better job than others, but make sure, like this is a very important number, and if you’re thinking about selling your practice, because.
I always say this, there’s an expiration date. I don’t care if it’s today, if it’s tomorrow, if it’s five years from now, 10 years from now, 20 years from now, there’s an expiration date. You’re going to sell your practice, whether it’s to strategic buyer, private equity, one of your other providers, or maybe a family member, whatever it is like there’s an expiration date. So position yourself now to look at your utilization rate and fund the marketing correctly. I constantly see, especially like practices that are in big, affluent markets that have high population consistently underfunding their marketing, or they’re only investing in like website SEO, and they’re doing some organic social and maybe posting on like YouTube and Tiktok. Most of it’s organic, and that’s the hard part. I constantly see people kind of investing in marketing a little bit. And in fact, I was talking with a practice owner recently. They’re looking to sell, and I think that they’re just like, they’ve been at it for a few years. It’s a great business. They’re running at like, $2 million EBITDA, and they just kind of want to move on, right? And so I had a conversation with them, and I was asking them these questions. I was like, All right, what’s your utilization rate? You know, where are you spending your money on marketing? Because if you guys are at $2 million EBITDA, and you’re going to sell, if you’re going to go to market right now, it’s going to take you about eight to 12 months to sell. And so what can you do now to increase your valuation and increase your EBITDA so you can get the highest trade value possible? And so I started peeling back the layers, and we were talking, and I’m like, All right, what? What’s your overall revenue, right? We got into the me, got into the details, what’s your utilization? They didn’t have any idea, and I was able to find this information for them. And what’s interesting is they’re leveraging, like most of their clients, are repeat, which is great. They have great retention, and they’re only running at about 50% utilization. They have rooms that are not being utilized, and providers that are sitting around. And I’m like, you want to sell right now before your utilization, is it like, benchmark of like, 80%
like, you guys should be utilizing, like, it should be north of 90% right? Like, let’s just say benchmark 80 85% is going to produce good results. Okay, so they’re running at about 50, and they have rooms that are empty. They have a great brand. And I’m like, All right, where are you spending your money on marketing? Their marketing budget for this practice is like, I think it was like $3,000 a month, which is so if you’re running at $2 million EBITDA, the practice is doing. I mean, I think it was doing around six and a half to 7 million top line something like that. Don’t quote me on the actual top line revenue, but I do strongly remember the EBITDA ranges. So I’m like, Okay, how can we what moves can you guys make in order to increase your EBITDA and get a higher valuation right? So as you look at like a $2 million EBITDA practice, and again, I’m not a private equity guy. I don’t claim to be, but I do know some numbers. And you know, if you’re going to go sell your practice at a $2 million EBITDA, I think some of those right now may be trading at like five to 7x right? Something like that. So let’s just, let’s just use like, a low number. Let’s just say it’s five, five times EBITDA, that practices valuation would be 10 million, and that’s running at 50% capacity or 50% utilization. So I’m over here thinking, Okay, you’re clearly not spending enough on marketing. And so if you’re going to go to market and you’re going to sell your practice, and you’re going to sell it, let’s just say, like, because a closing takes time, you have to put it on market. You have to get an LOI. You have to go through diligence. There’s quality of earnings that take place. I’ve been through it personally, so I guess I can kind of talk to it, not on a practice side, but other business sides. And it takes time, right? Like they want another numbers they want to, like any strategic buyer or sophisticated buyer is going to peel back the layers if they’re going to write a check for that. That size, right? So what’s interesting, guys, is their marketing is Instagram, Tiktok, some Facebook posts. They they have a website, no SEO, great Google reviews, not running ad campaigns on Facebook and Instagram, where their patients hang out, not running Google ads, and I’m over here thinking like, Man, you’ve done an incredible job the hard way. Like, an incredible job the hard way. So why don’t we look at it like this? Oh, okay, one thing they have a billboard the max, like, their marketing spend, I think a three grand to, like, three to three $500 a month was for this billboard. And so, like, all right, how many patients are coming from that? How are you applying attribution to patients that are coming in from the billboard? And truth be told, it came out to be it seemed like it was more ego driven, which is okay, like, it’s cool to drive down the freeway or highway and see your brand and your face and your image. I totally get that like. And if that’s important to people like, I get it.
It, I totally get it. Like you built a business. It inspires you. It’s cool that others see it. I totally get it, and I resonate with that. The same time, I’m always looking at return on investment, or return on capital. And so as we got into I was like, Look, it sounds like you’re only getting maybe one to two patients a month from this billboard,
it’s brand awareness, right? They get that. But why don’t we look at doing this as you are going to go to market? Why don’t we focus on increasing your utilization rate? And it started to click, because where it clicked, I was like, Look, you have rooms that are available. You have providers that are not busy, why don’t we actually take the marketing spend, increase the marketing spend, and blow the utilization rates up. And so before you actually transact, I think we can get the EBITDA to north of 3 million. And if I can get their EBITDA from 2 million guys, this is what’s interesting. And I’m just going to pull up my phone so I can give you guys some math here. I’ll pull up my guys some math here. I’ll pull up my calculator. Okay, if I was to take this from let’s just call it I said 2 million at a 5x that that would trade at 2 million times five that would trade at a ten million transaction. Well, let’s take it to 3 million. And what’s interesting is, the higher your EBITDA, the higher valuation. In return, they’ll give you, okay? And again, like, every buyer is going to be different, but I’m just going to say, at a $3 million EBITDA, they’re going to pay you a higher multiple. So let’s just take 3 million and I’m going to times that by I’ll just do I’ll times it by seven. Okay, that is a completely different scenario. Okay, so a 7x return on $3 million EBITDA is a $21 million transaction, versus a
$2 million EBITDA at 5x which is, I mean, that’s, that’s $11 million that could, we could potentially be living on the table, which is material like that is a material amount of money, and this is just one scenario. And so I know that there’s other providers and practice owners out there that need this information, and I think it’s super, super important, especially as the market is changing from a very competitive landscape. You we need to get ourselves in position to be very knowledgeable and understanding of our numbers. And if I was a practice owner right now, I would be getting deep into my numbers. This conversation I had with them was only about maybe 45 minutes. And you know, it’s interesting. I’m just like consulting to help out. It’s actually, like, it’s a personal friend of mine, and they don’t even use our services either, which, which is, you know, I’m like, Look, guys like, why don’t you try to lower some of the expenses, right? Because I they’re also leveraging the business to to offset some of the tax exposure. I’m like, Look here, at the end of 24
you know, do what you’re doing and then change things in january 2025 right? Because you’re gonna have a tax bill, because the profits that you’re gonna have for 24 right? So I get, like, leveraging the business to offset the the ordinary income and the taxes, but as like, as you go to market January, I like start taking things off the books that you’re leveraging to for the business, to like fund other things and focus on that EBITDA number and that utilization, EBITDA utilization, and start investing in marketing, right? So my playbook for them was, okay, what are the services that are giving the highest return that you are selling? And they’re heavy on neurotoxins and fillers, and so I’m like, okay, they’re, they’re in a demographic that is high density, pretty competitive, but she’s got a great brand and great reputation, right? So my playbook for them is like, let’s take a percentage of your top line revenue and deploy it correctly. Like my playbook was 6% of top line. So 6% of top line deployed in marketing, right, which some of you may think is substantial. However, what I’m going to do is I’m going to blow up the utilization rate, and I’m going to take her from 50%
to 80, 85% utilization. Her providers are going to be busy. She probably she might even change her mind. She may change her mind and realize, Oh my gosh, I’m not working as hard. And now all my providers are starting to produce, and now I can actually, like, move away from the day to day business objectives and now focus on working on the business versus in the business so much, she could totally change your mind, and she could then say, oh, okay, I figured out how to run this business correctly, versus myself. And that’s even that’s an interesting thought, if you focus on your utilization rate and increase it with your providers, it will give you the ability to pull back a little bit from always having to be there, right? Because you guys sell time like you, extra time for value your patients. They buy results. They buy confidence. They buy feeling good, looking good.
It, and you guys sell time to deliver those results for it, right? So, like, utilization rates are extremely critical.
Thank you for listening to medical millionaire. I wanted to take just a few short moments and tell you all about growth. 99 University, naturally, if you’re listening to medical millionaire, the success of your Med Spa is extremely important to you, and as it should be. And if you’re listening to medical millionaire, you are obviously looking for the best, most effective ways to take your Med Spa to the next level in both profit and customer success. Enter growth 99 University ranging from online education courses all the way to the full suite of marketing and web services. Growth, 99 has your Med Spa covered. No matter the challenges that you’re facing, we are ready and able to help you achieve your next level in business profit and freedom to inquire about all of our support services and products. Please visit growth 90 nine.com
and while you’re there, click the university link and check out the companion course to this very podcast. Back to the show. The other
thing I want to call out here, guys is is the the revenue for medical, esthetics practices.
We were recently looking at some data, and I’m a big data guy. I have am spa put out their recent report that I have, like, dissected. We have crazy data because we’ve ran, you know, ads in marketing and stuff and like and basically every demographic and every population density around service. So if you’re a practice owner, you want to know how much you should spend on ads based upon a service. I could tell you exactly what the number is, and then am spa or, sorry, skytail group just came out with a white paper, and there’s some PE groups that have come out with some really compelling data, and I’ve put all that, all that data together, and I created an AI component that kind of shows me exactly what to do if you’re a practice owner. The interesting thing, guys, is your your revenue, most of your revenue, or like, from an optimization standpoint, like your costs, okay, you can optimize your revenue because your costs. A lot of your costs are fixed, like most of them are, right? If you look like rent, utilities, salaries, commission, because it’s based upon the overall sales, most of it’s fixed, right? So when, when you look at like how you can improve your your profits and your revenue, again, this comes back to showing that most practice owners are not funding their marketing correctly, right? So high utilization rates lead to incremental revenue that is often as a high contributor margin,
since the primary costs are already covered by the fixed expense, additional appointment strike profits like more directly, and this dynamic can make every additional hour or room use a treatment a high value, in addition to the bottom line like it’s super, super important. The other thing that we found is
one of the big things that private equity firms are looking for, and if you’re looking to sell or thinking about selling, you should run your practice at like you are preparing for it to be sold, even if you’re not even going to sell, because it’s going to make you a better owner. It’s going to make you a better business person, and it’s going to put you in a position to be ready whenever the time is so like private equity firms. They’re smart. These guys are financial wizards, if you will, right? They look at revenue margin, KPIs, utilization rates, EBITDA margin, gross margin, net margin, like it’s pretty wild. And so when you look at the business from a mathematical standpoint, they want to see utilization rates. They want to see EBITDA. They want to see where your costs are, right and so and what you’re spending on marketing. And a reason for, like, I think a private equity company getting a good deal is them coming in, seeing a practice owner that’s a little bit burned out, good brand, good location, spends a little bit of money on marketing, not much. They have great social, great patience, and they can quickly see, wow, I can come in and buy this practice, and all I have to do is just like, put the marketing component onto it and then blow up the utilization rate and, like, basically increase the EBITDA very, very quickly. And I just told you what happened if you took your your $2 million EBITDA practice at a 5x to a 3 million, at a 7x like you could have a private equity come in. Let’s say you’ve been working on this practice for seven years, 10 years, whatever it is, and you can have a private equity come in, or a strategic buyer come in that under.
Stanza stuff, they could come in by the practice, apply everything, because they dissected the practice with math and implement marketing strategies to blow up the utilization rate, and then turn around and trade the company in, like, two to three years, right? That and you’re the one that’s still there working, because they they’re going to want you to stay on. If you saw the practice, they’re going to want you to stay on for a certain period of time. Make sure, like, transaction, it make sure, like, transaction is smooth, and everything like that. So, you know, like, I don’t know, guys, it’s, it’s, it’s interesting, it’s, um, it’s a way where somebody could potentially come in, put fuel on the fire and make a tremendous amount of capital, you know, kind of off of your hard work, if you will. So, you know, my closing with this is as we go into 2025, like as you are prepared as a practice owner,
start carrying a business mindset. Start carrying a business mindset everywhere you go. You know, if you think that you can just let your CPA, you know, run your P L and give you the the amount of money that you need to pay Uncle Sam at the end of the day. Like that is not knowing your numbers. You should be looking at your P L like daily.
Take courses in finance, you should become very familiar with how financing works. Like, there’s people in our network that know this stuff. Contact them. They know your industry. They know what the benchmarks are, and they know where you should go. Okay, take the time. Like, carry this business mindset. They’re like, I just got back from GAC. I may have mentioned that, which is in Miami, fun conference, by the way, great networking, but
there’s so much clinical going on and dabble in with a little bit of business, right? And so
I’m excited to go to the conference here coming up for us, which is a terry Ross conference. I will be speaking there, and we’re going to be talking about this stuff. And I think, like, if you it’s in Fort Lauderdale for us, Summit. Terry is incredible. She’s she’s got so much to say when it comes to how to run a very successful consultation, how to build out a treatment plan. There’s another component of it that talks about now your P and L and your balance sheet. And I think, like, it’s so important, especially this day and age. I think, like early on a few years ago, it wasn’t as important. But now, if you are a mature practice, like you’ve had your practice for a few years, you’re looking to optimize it. It’s your duty to really start investing in the business side of being a practice owner. Okay? And I get that like, you know, you may listen to this podcast, this episode, and you’re gonna wake up, or you’re gonna go into your practice and you’re booked, like you’re busy, and you’re just gonna do what you’re gonna do. And I think, like a lot of times we get stuck in these specific areas where we have a day it’s booked out. I’m gonna go do my day, and then I’m gonna go home and I’m exhausted, right? You have to break that. Like, break break that, and take the time to focus on your practice and become a business owner. It’s time to become a business owner at this point. Like, when I look at what’s going to happen in 2526
27 the next three years, these are the make it or break it years. I truly, truly believe that I have seen a lot of practice owners close close their doors, like in the past two quarters. I have seen a lot of practice owners close their doors. I have seen other practice owners that are running their business very successfully, like a business owner, accelerate growth, and what’s going to happen is these patients, they still want services and treatments done. So if you’re not focused on the numbers, focused on investing your marketing correctly, focus on your conversion rates, your utilization rates, your cost per lead, your CAC, I call it PAC, patient acquisition cost. Know what your margins are, right? Like, should you be selling more micro needling services versus neurotoxins and fillers? Right? Because the profits and the cost to run those devices are lower, the margins are higher, right? This is these are decisions you have to make, obviously, right for to service your patients, but really start thinking from a business mindset, and the ones that do and position themselves to really start looking at numbers, and I’m going to say it like numbers versus emotions, are the ones that are going to take market share, and some practices are going to close. Others are going to take those patients, and because they’ve invested in tech, they’ve invested in their marketing correctly. They’ve invested in their processes. They know their KPIs, they know their utilization rates. And you’re going to have providers out there that are going to want to go.
To these other practices because they’re being ran efficiently, effectively, know how to scale and like, that’s, that’s my prediction going forward in 25 I’m having, I’m starting to have conversations with practice owners that are
much more about numbers,
which which is exciting, and because I’m a business guy, and I love talking about the numbers and and really helping practice owners thrive. You know, I’m a big, big fan of entrepreneurship. And when I see somebody that has worked tirelessly to build their baby their business, that brings like, I get that. I’ve been through that. And you know, I think, like, if we’re not paying attention to the numbers, like, truly, you know, the wins are in the margins, not not the not the margins of cost of goods, but the margins of how you work on your business, the incremental inches of how you work on your business. And the ones that do, like, really take the time to say, You know what, maybe I’m not going to take patience on on Mondays or Tuesdays or whatever. I’m going to take one day a week back. That doesn’t mean I’m going to go shopping. That doesn’t mean I’m going to go chill. That doesn’t mean I’m going to take a break. Like, look, I get it. Everybody deserves a break, but take that day to go study business, go study finance, go look at your network. Look at what you’re spending on marketing. Look at what the demand is in your market. Look at what services you’re providing. Does it make sense for you to provide these services, or should you start to offload some of those services to some of your other providers and you focus on other profitable tickets that are more predictable, you know, GLP ones, micro needling, like stuff like that, is super important. And obviously, like you have the neurotoxins right there in your back pocket, right? So that’s, that’s my thesis.
I haven’t recorded a personal podcast here for a while, but this has been on my mind, guys. And you know, we’re closing up 24 and it’s time for us to get in position to be ultra successful. And that man, the ones that do are just going to just just take it and have fun with it, and the ones that don’t, you know, there’s, there’s, you know, business is tough. It is what it is, but it look as if you found this podcast and episode valuable. Do me a favor like share it. Please just share it. I know that you have friends and colleagues that are either in the space or or in this position, or you are, or share it with your internal team members or your leadership team, and because there’s somebody out there that can get value from it. And I’ll leave it at that. Guys, short and sweet, I appreciate you guys. Thank you so much for taking the time to tune in and until next time, happy injecting you.