Creating an aesthetics business plan
The aesthetics sector has been deeply affected by the coronavirus pandemic, reliant as it is on close face to face contact. Arguably, practitioners have experienced some of the most severe financial and practical impacts of all businesses. Aesthetics practices and clinics have been forced to close their doors completely for significant periods of time with very little notice. Operating only sporadically and at much reduced capacity, while offering a limited range of procedures with extensive restrictions in place has put immense pressure on individual businesses in the aesthetics sector.
The new variant of coronavirus has dealt a further blow to the industry, and many practitioners are understandably fearful as to whether they will be able to recover. Yet, although the current situation may be disheartening, now is the perfect time to think about business planning for the future.
By being proactive you are also more likely to find yourself shifting into an increasingly positive state of mind. This will be beneficial to making good decisions and motivating those around you – as Ron Myers, Director of The Consulting Room Group, explains in his latest guest blog, Emerging from the pandemic – business planning for 2021.
At Hamilton Fraser Cosmetic Insurance, we have closely followed the challenges faced by the sector throughout the pandemic, with practitioners sharing their insights through our regular surveys.
Although practitioners have shown flexibility, swiftly adapting their businesses to cope with the changing requirements, legislation and hygiene practices, our first survey, carried out in March 2020 at the start of the pandemic, revealed that 72 per cent of practitioners did not have a contingency plan in place should they not be able to carry out cosmetic procedures. We consider how practitioners can be better prepared for unprecedented situations like COVID-19 in our blog, Contingency planning: Future-proof your clinic.
Whether you are just starting out or have been running your aesthetics practice for a while, business planning is key to establishing a sustainable, profitable and successful business. A business plan provides a flexible structure and a framework to refer back to as your business grows. Invest time in creating your own business plan to ensure that you are fully committed to your goals and the strategies through which you are aiming to achieve them.
In this guide, we take an in depth look at how to go about creating an aesthetics business plan. We’ll explore some of the key considerations you need to be aware of when thinking about your business planning. And in our linked video, Eddie Hooker, CEO of Hamilton Fraser and Owen Woods, Head of Marketing at Hamilton Fraser, offer their tips and advice, ranging from where to start with your business planning, to why you might need it for funding and what to do if your goals change.
Why do you need a business plan?
Creating a business plan helps to clarify your business idea, spot potential problems, set out your goals and strategies and measure your progress. It should also inform potential stakeholders of your plans, for example by convincing customers, suppliers and potential employees to support you. Crucially, it is instrumental in securing investment or a loan from the bank. This is of course particularly relevant if you want to take advantage of any government business support schemes or loans which are available to businesses to help sustain them through the coronavirus pandemic.
Where should you begin?
Writing a business plan from scratch can seem daunting, but it doesn’t have to be. Following a clear structure will help you to visualise your goals and objectives.
A standard business plan usually includes the following elements:
- Executive summary
- Mission statement
- Competitor analysis
- Marketing strategy
The content of each section should be concise and specific, providing a short overview of the main points you want to get across in a clear and professional tone. Save the detail for the operational and marketing plans.
It is advisable to review your plan regularly to ensure you stay on track. Business requirements will most likely shift as your business grows and you may choose to adapt your plan, or as we have seen in recent times, be forced to adapt due to unforeseen circumstances. Who’d have predicted that so many practitioners would return to the NHS to use their skills to help in the fight against COVID-19?
Remember, a business plan is a continuously evolving document that is tailored to your business, so keep it in a format that is easy to locate and simple to amend.
Key factors to consider when writing your aesthetics business plan
1. Executive summary
An executive summary is a brief section at the beginning of the business plan that provides an overview – a synopsis – of the main points of the plan. Lead with a compelling statement explaining the rationale for your business idea; whether it is a growing interest in non-surgical interventions to enhance the skin, shifting societal views on cosmetic procedures or something specific to your location such as the need for a mobile practitioner providing botulinum toxin out of office hours.
Outline the ‘problem’, your proposed solution, the opportunity you have identified and your competitive advantage. This section should be no more than two pages long. You may find it easier to write it at the end, once you have drafted the more detailed sections of your business plan.
2. Mission statement
Your mission statement defines and communicates the purpose of your business. It should illustrate what success means to you in three to four sentences that capture your goals and purpose. Research the mission statements of other aesthetic professionals and organisations for inspiration, but focus on what success looks like for your own aesthetic business. Are you, for example, offering state of the art treatments in a luxurious environment, or catering to the needs of busy professionals who require flexible appointments?
Include a little background on the aesthetics sector, highlighting any relevant industry trends and provide a short summary of how your business fits within the industry in your geographical area.
You can also include information here about your own background and training in aesthetics. As a business owner it is important to convey that you have expertise in your field and demonstrate your commitment to continuous professional development as your business grows.
It is also vital to ensure that you are up to speed with developments in the rapidly evolving aesthetics industry. This can be achieved by carrying out research online and via social media, as well as by attending exhibitions and conferences, many of which are now available virtually, which enable you to learn, to ask questions and network with fellow aesthetic professionals.
Whether you plan to trade as a company or a sole trader, building a network of peer support around you will provide you with an invaluable resource of ongoing guidance to help with both the running of your business and any complication management issues that may arise. You will meet practitioners experiencing similar challenges to you at training courses, exhibitions and conferences. Networking with others in the industry will help inform your business decisions and direction.
4. Competitor analysis
Identifying your unique selling point and client demographic at the outset of your business planning is critical. Carrying out a thorough analysis of potential customers and competitors within your area is key to this process.
The demand for aesthetic treatments continues to grow, in large part due to the prevalence of social media and its enormous impact on the aesthetics industry in raising awareness of aesthetic procedures and how people perceive and project themselves. COVID-19 has of course had an impact on the way aesthetic businesses operate, but there is also evidence that it has heightened peoples’ awareness of their appearance, with many practitioners seeing a rise in demand, which some attribute to the ‘Zoom effect’.
While social media has made people more comfortable and interested in visiting aesthetic clinics, it is important to be aware that aesthetic businesses do operate in a fairly saturated market. A thorough competitor analysis is therefore important to help you to identify your unique selling point so that you can stand out from competitors.
You also need to consider the patient demographic that you will be targeting so that you can tailor your offering when it comes to your marketing strategy.
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5. Marketing strategy
Successful marketing will be key to establishing yourself with potential customers and building your business’ reputation. Your business plan should provide a high level overview of your marketing strategy, but you will also need to create a separate, more detailed marketing plan.
In this section of your business plan you should refer back to your unique selling point and explain how you intend to take it to market. This will involve defining your target market and summarising how your sales and marketing strategy will cater to their needs. It should include information about the products and services you will offer, your plans for pricing and promotion activities and the premises that you will operate out of.
Identify the products and services that your business will be offering, along with their benefits. Explain why you have opted for the specific treatments you have chosen. As well as including the benefits it is also advisable to acknowledge any potential disadvantages or risks. Identifying these early on can help to produce a well-rounded plan that can be adapted to adjust to challenges along the way.
Your pricing will vary depending on where your business is located in the country. For example, if you are based in London or another major city, it is likely that the local price of treatments will be higher than in a smaller suburban town. It is therefore crucial that you research what other clinics and salons are offering in order to make sure you are competitive.
You should also include information about your plans for promotion. For example, will you offer promotions and discounts to entice new customers? There is nothing wrong with this approach, but when advertising a promotion it is important to be aware of the parameters that exist and ensure that you comply with them by referring to the Advertising Standards Agency (ASA). The aesthetics industry is particularly active on social media platforms such as Facebook, Instagram and Snapchat so don’t forget to include a social media plan in your digital marketing strategy and marketing plan and reference it in this section of your business plan.
If you are planning on opening your own premises then an effective way to raise awareness of your business in the local community could be to hold an open day or evening, inviting potential clients and local media to see the premises and the range of treatments you will be offering. If you are renting a room within a clinic, salon or leisure centre, then you should focus on identifying ways in which you can tap into their existing client base (mindful of course of any GDPR implications).
In aesthetics, there are a number of options available to you when it comes to the physical location of your business – you may intend to work from your own home, as a mobile practitioner visiting patient’s homes, renting rooms within existing clinics or setting up your own clinic. Your physical location may evolve as your business grows, for example you may begin by renting a room in a salon/clinic to keep costs to a minimum while you build up your own reputation. You may then plan to expand into your own premises once you are more established. Although your strategy may change as your business grows, it is important to mention your intentions in your business plan, so that stakeholders have a clear idea of your aspirations and you can ensure that you are working towards your ultimate goal.
The marketing component of your business plan can also touch on your processes, for example you may decide that your processes should be customer focused. In which case you might prioritise building rapport with potential clients during the consulting process, or focusing on incorporating patient wellness services in your practice in order to establish a reputation for good customer service and to benefit patients overall wellbeing. You may also consider offering video consultations as standard, now that these have become the norm as a result of COVID-19, and offer greater flexibility. This should help you to attract and retain customers but will also require you to allow more time for consultations.
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This section of your business plan should cover any details concerning your day to day operations, such as hours of business, equipment you will require and how you will keep track of inventory. Additionally, if you are intending to employ staff you should summarise how they will be recruited and managed here.
You should also highlight any internal procedures that you anticipate you will need to implement when the business is up and running. These are not set in stone and will most likely evolve, but it is a good idea to note them in your business plan in order to maximise transparency and ensure that you have everything covered. Such procedures include your consulting and consenting process, your approach to patient selection, how you will deal with complaints, your appointment booking, payment and record keeping systems, stock and waste management. It is also important to consider your obligations in relation to GDPR compliance as you will be holding confidential client information.
Don’t forget to display your Terms & Conditions clearly – it is important to be transparent with your clients at all times. This is also crucial in the event that there are any subsequent issues relating to payments for treatments/services.
Building a support network, both online through social media and offline at industry events, can help with ongoing guidance and networking, as well as facilitating the exchange of best operational practice between peers in the aesthetics industry.
Last but certainly not least, you must include a financial section in your business plan. This component should provide facts and figures showing how fast you expect your business to grow and how you plan to fund that growth. You also need to demonstrate how you will monitor and report on the finances.
If you are starting out, you should include an assumption of startup costs, taking into account the purchase cost of any equipment or fixtures, wages, benefits, lease and utility costs, insurance and other
expenses such as membership of a professional body. In addition, you should include an estimate of earnings based on your market research and likely market share for the first three to five years.
The financial section of a standard business plan includes four key financial statements:
1. Cash flow statement
The cash flow statement shows how much cash you will need to meet your obligations, when that cash is going to be required and from where it will come. It shows a schedule of the money coming into the business and expenses that need to be paid. These figures go into a profit and loss (P&L) statement, which is generated on a monthly, quarterly or yearly basis.
2. Break-even analysis
A break-even analysis is a composition of costs and sales revenue. Costs are broken down into variable costs and fixed costs. Variable costs fluctuate from month to month and include the products you will need to perform treatments, utility costs, operating expenses, equipment and employee wages. Variable costs can be direct or indirect. Direct costs are those which are directly attributed to production such as wages and products like botulinum toxin. Indirect costs are not directly attributable to production, such as the maintenance of any equipment.
3. Balance sheet
The balance sheet outlines a business’ assets, liabilities and equity. Assets include cash, inventory, accounts receivable, and equipment and fixtures owned by the business. Liabilities include any loans, or outstanding bills. Equity is the amount of worth a business obtains by amortising loans and the worth of company issued shares or stock. Assets must be equal or balanced to the company’s liability and owner’s equity.
4. Income statement
An income statement is a scorecard based on the financial performance of your business that reflects a balance between sales and expenses. It is calculated by combining earnings, business expenses, capital, and inventory and raw material costs. Using these financial categories, an income statement will show a net profit or net loss, usually over a company’s fiscal year.
The key points to remember when putting together your business plan are:
- Be concise – potential investors should be able to understand what your business is about from your plan
- Be specific – explain how you are going to deliver your plan
- Know your market – show that you understand your target audience and competitors
- Be clear about how you are going to make a profit
Your plan will be useful when it comes to securing loans or investment, but it is also provides a useful framework to help you understand your objectives and how you are going to deliver them.
At some point, hopefully in the not too distant future, the world will transition to the next ‘new normal’. Many consumers will be looking to spend on services they’ve gone without, and this will likely include aesthetic treatments, as people are gradually able to start mixing again in person. There is therefore no time like the present to plan for the future success of your aesthetics business. ABC 2021 is designed to provide insights into how you can build a successful career in aesthetics and take your business to the next level. Sign up now.
Creating an aesthetics business plan