1.0 Executive Summary
The purpose of this business plan is to raise and examine the allocation of $100,000 for the development of a medical spa based in the greater Philadelphia metropolitan area. Medical Spa, LLC will provide a host of skin treatments that will be rendered by the owner, Dr. Peter Smith, as well as physician assistants. Dr. Smith is a licensed dermatologist that will seek to provide medical spa treatments with a focus on skincare. The business will generate great substantial revenues not only from the direct patient payments, but also from medical insurance when specific services are rendered.
The Financing
At this time, Dr. Smith is seeking $100,000 of debt capital in order to launch the operations of the medical spa. The terms of this loan are to be determined. However, this business plan assumes that the business will receive a seven year loan carrying a 7% interest rate. The funds will be used for the development of the company’s location, medical equipment, and for working capital purposes.
The second section of the business plan will further document the usage of debt funds. Dr. Smith will contribute $25,000 towards the venture.
The Services
As stated above, the medical spa will provide a number of laser focus treatments with a substantial interest in skincare services. The business will also recognize revenues from the sale of topical treatments their used in conjunction with the services. The company will also provide laser hair removal in addition to other specific types of medical spa services.
Management anticipates that each visit will generate $300 to $600 for the business.
The third section the business plan will further document the services rendered by the company.
Revenue Forecast
Management anticipates a very strong rate of growth upon the commencement of operations. Below is a chart showcasing the anticipated profits and revenues of the business during the first three years of operation:
Expansion Plan
Dr. Smith will continually expand the business not only by increasing marketing campaigns, but also by hiring additional board-certified dermatologists and physicians assistants that can render the services on-site. The company may establish additional locations after the third year of operation.
2.0 The Financing
2.1 Use of Funds
The $100,000 sought in this business plan will be used as follows:
- $25,000 – Office Development
- $50,000 – Medical Equipment
- $10,000 – Initial Marketing
- $40,000 – Working Capital
2.2 Management Equity
Dr. Peter Smith retains a 100% interest in the business
2.3 Exit Strategies
In the event that Dr. Smith wishes to retire or relocate, he will most likely transition the business to an associate dermatologist or physician’s assistant that is able to operate the medical spa on a day-to-day basis. Based on historical sales figures, medical spas can have a sales price equal to one times revenue or approximately four times the prior year’s earnings. Dr. Smith would hire a qualified business broker to manage the transaction.
3.0 Medical Spa Services
As stated in the executive summary, Dr. Smith will render a host of treatments to his patients. These medical spa treatments include:
- Laser skin treatments, prescriptions for topical solutions to treat specific issues
- Laser hair removal
- Minor surgery on site
- General wellness
- Advisory services relating to anti-aging
- Botox treatments
The company will receive substantial revenues from these services directly from patients. Depending on the specific service required, the company may be able to bill private insurance or publicly funded health systems for specific procedures performed on-site. The company will also receive a moderate amount of revenue from the sale of topical solutions and related products for anti-aging.
4.0 Market and Industry Analysis
4.1 Economic Analysis
At this time, the economic climate within the United States is strong. Unemployment rates have declined to historical lows, while acid prices have read risen substantially among all major asset classes. Interest rates remain low despite substantial improvements in the economy since the end of the economic recession. The last 10 years has seen substantial economic growth within the country.
In the event of an economic recession, the medical spa will be able to remain profitable given the fact that the high gross margins rendered from services will cover all underlying expenses. Additionally, Mr. Smith is a licensed dermatologist that can render medical services on-site and bill them to insurance entities. As such, drastic sways in the economy may have an impact on top line revenue, but again – the business will be able to remain profitable at all times.
4.2 Industry Analysis
Within the United States, or approximately 4000 businesses that operate in a medical spa capacity with either a physician, nurse practitioner, or physician’s assistant who is appropriately licensed providing the services to the general public. Each year these businesses generate about $13 billion revenue, and the industry employs about 50,000 people. This is a fast-growing industry given that many people from the baby boomer population are seeking medical treatments in regards to anti-aging and skincare. The anticipated five year growth rate of this industry is approximately 25%.
One of the common trends within the medical spa industry is to integrate whole body and wellness services into the overall service infrastructure. Medical Spa, LLC will provide the services in conjunction with skincare, anti-aging, Botox, and other services that are normally rendered within this type of setting.
4.3 Customer Profile
Among customers that we use the medical spa services, Dr. Smith has developed the following demographic profile that will be used in conjunction with the marketing plan:
- Predominantly female
- Annual household income exceeding $75,000
- Lives within 15 miles of the medical spas location
- Has private insurance for healthcare
4.4 Competitive Analysis
Within the greater Philadelphia metropolitan area, there are a number of dermatologists and medical spas that render services that are very similar to that of the company. Most importantly, Medical Spa, LLC will maintain a strong competitive advantage given the fact that Dr. Smith is a licensed dermatologist that will be rendering whole body wellness in conjunction with the medical spa services. This includes medical weight loss services as well. As such, given the large amount of services offered – the business will be able to maintain a strong differentiating factor from the onset of operations.
5.0 Marketing Plan
Medical Spa, LLC will use a number of marketing strategies in order to drive traffic to the location. For most, the business will use an expansive online marketing campaign coupled with the social media in order to create awareness of the brand. Company’s website will be mobile friendly and listed among all major search engines. Dr. Smith intends to hire a search engine optimization firm that will ensure that when a person does a search for medical spas in Philadelphia, the website will appear on the first page of the search. Additionally, the business will enroll in a number of online review portals that will ensure that people have had a positive experience with the business can leave a strong review for the company. This will allow the business to more effectively reach a broad spectrum of potential clients moving forward.
Dr. Smith will also work with his existing patient base in order to inform them that he is rendering medical spa services the general public. As he has been in practice for many years, he has developed a strong reputation among thousands of patients. Many of these people, predominantly women, are expected to become clients of the medical spa.
Finally, Medical Spa, LLC will maintain strong referral relationships with area physicians, nurse practitioners, surgical clinics, and allied health professionals. This referral network will be very important to the business given that many people trust referrals from third-party medical professionals.
6.0 Personnel Summary
7.0 Financial Plan
7.1 Underlying Assumptions
- Dr. Smith will receive a $100,000 loan carrying a seven-year term and a 7% interest rate.
- The owner will contribute $25,000 towards the venture
- Medical Spa, LLC will settle most short-term payables on a monthly basis.
7.2 Sensitivity Analysis
The medical spas revenues are moderately sensitive to negative changes in the economy. In the event that there is a severe economic recession, medical spa services are expected to decline given that these are paid for with discretionary income. However, Dr. Smith is also able to render dermatological services to the client base. These fees are often paid by publicly funded health systems as well as private insurance companies. As such, the business – given its high gross margins in large revenues – will be able to remain profitable and cash flow positive at all times.
7.3 Profit and Loss Statement
7.4 Cash Flow Analysis
7.5 Balance Sheet
7.6 Breakeven Analysis
