Generally, the startup costs for a medical spa or medical aesthetics spa range from $150,000 to $500,000. This variance is primarily due to the scope of equipment that will be acquired to launch the medical spa’s operations. For medical aesthetic companies that focus on injections and general wellness services, the costs are on the lower end of the spectrum (in the $150,000). For medical spas that provide laser therapies and have highly complex wellness installations on site (such as infrared saunas and other complex machines), the costs can increase to as much as $500,000.
The location of the business is also a determining factor. For medical spas that are in suburban markets, the cost is typically less. For locations in highly dense urban areas, these costs are higher given that labor is more expensive as is the buildout of the facilities. The startup ranges for establishing a medical spa are typically as follows:
• Rent and Utility Deposits – $5,000 to $10,000
• Location Development – $50,000 to $200,000
• Medical Spa Equipment – $25,000 to $200,000
• Working Capital – $50,000 to $100,000
• General Furniture, Fixtures, and Equipment – $25,000 to $75,000
Of special importance is to note that working capital allocations should include a budget for pre-launch marketing. Many entrepreneurs that establish medical spas often focus more on the grand opening period rather than creating substantial interest prior to the launch date. The most successful medical spas often have extensive pre-launch marketing operations in place so that they can have initial brand name awareness prior to launching their operations.
An additional expense that should be addressed is the cost of retaining a medical director. You should work with your attorney to determined whether or not your medical spa requires an affiliation with a licensed medical doctor. Most states do have this requirement and although the medical director does not need to be on site – they are still required to be part of the medical spa’s organization.
The cost of personnel for a medical spa should also be taken into account when determining your working capital needs. Usually, these businesses employ a receptionist, location manager, and registered nurses that are properly trained to render medical aesthetic services. As these are highly trained professionals, appropriate salaries and benefits need to be included within your working capital calculations.
As it relates to access to capital, medical spas are able to easily secure funding from a wide range of sources including banks and private investors. Given the substantial contribution margins that these businesses generate and their relative economic stability, many financial partners are more than willing to provide the necessary capital to establish these enterprises. The average mid-range medical spa produces over $1,000,000 of revenue each year with EBITDA ranging from 25% to 40% depending on the number of employees hired. As such, these businesses can achieve substantial ROIs which is highly attractive to a wide range of potential funding sources.