Montzwan's Blog

Improving the business of health, wellness and spa.

Plan For Your Best Year Ever!

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There is an old adage “Don’t Ask, Don’t Get”. If you want something to occur, put some focus on it! For the life of me, I can never figure out why many business owners don’t apply this to their business.

The start of the fourth quarter marks the end of summer. The season has changed and the kids are back in school. We’ve experienced 3/4 of our business year and have a sense of how we expect the rest of 2014 to finish up. So how was it? During the past year did your business meet, disappoint, or exceed your expectations? If you didn’t define what you expected, what are you measuring against?

Stop, get quiet, and breathe. Sit down with your laptop and a blank Word document and start typing. Don’t stop to edit or spell check. I want you to list 100 things you want in 2015. Some are business, some are personal, some have to do with money, and some are things you want to buy. Some will be places you want to go, others will be relationships you want to have in your life. Don’t edit, just type. If you can’t get to 100 things, save the file, sleep on it and re-open it tomorrow. When you’re done, save it on your desktop. Name it “The 100 Things I Want”. This is your choice, but I can guaranty that this exercise changes lives. I can have you speak to some of my clients as references if you want.

Now, where are you with your business planning for 2015? It’s time to plan, to define your road map. Your budget is the tool we use, and we can help you build yours. If you know where you want to go (or need some help defining this) you can develop a comprehensive plan as to where you’re going after you do a brief assessment of your starting point and history. What’s working? What needs to change? How are we going to do this? How are we going to get there from here?

Don’t try to do this yourself. You have your skills and talents. I’m going to bet that building a business plan isn’t one of them. Use your vision and energy doing what you do well. I have a deal with my clients; I don’t do facials, and they don’t do budgets. This works out pretty well for both of us.

Fourth quarter is upon us. It’s time to paint a picture and create the map for where you are heading. We offer a free initial consultation to talk about your business. Call us. Let’s plan to make 2015 your best year ever. Remember; Don’t Ask, Don’t Get.

For more information, please visit our website. We can be reached via e-mail (Monte@WellnessCapital.com) or telephone 888.727.5489. We look forward to hearing from you.

Upcoming Events:
I’ll be teaching in Beijing at the
Beautec 2014

October 25-27, 2014

For Non-International Travelers
I will be at IECSC in Fort Lauderdale, FL

November 9-10, 2014
I’ll be teaching “Keeping Your Business Relevant” and “Business Plans that Work”.
I hope to see you and spend some time together in Florida

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Buyer Says. Seller Says. Different Views of the Same Transaction.

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Montzwan's Blog

SELLER SAYS: “It’s time to sell. I’ve got an established location and great clientele. I want to move on with my life.”

BUYER SAYS: “I want to buy a business. Can you find me a turnkey situation in great location with limited local competition and a motivated seller?

SELLER SAYS: “Here are my financial statements, leases and contracts.  I’ve been waiting for an update of my financials since June from my CPA”.

BUYER SAYS: “I’ve never been in the industry, but because of my vast corporate experience, I know that by bringing my marketing and accounting experience, I can increase the sales, profitability and value of any business I buy.”

SELLER SAYS: “My financials need to be tweaked to show a net profit. I put a lot of personal expenses through the business and not all of the sales are showing on the financials (wink-wink). I want the asking price…

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Written by Monte Zwang

December 9, 2013 at 4:03 pm

Posted in Uncategorized

Buyer Says. Seller Says. Different Views of the Same Transaction.

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SELLER SAYS: “It’s time to sell. I’ve got an established location and great clientele. I want to move on with my life.”

BUYER SAYS: “I want to buy a business. Can you find me a turnkey situation in great location with limited local competition and a motivated seller?

SELLER SAYS: “Here are my financial statements, leases and contracts.  I’ve been waiting for an update of my financials since June from my CPA”.

BUYER SAYS: “I’ve never been in the industry, but because of my vast corporate experience, I know that by bringing my marketing and accounting experience, I can increase the sales, profitability and value of any business I buy.”

SELLER SAYS: “My financials need to be tweaked to show a net profit. I put a lot of personal expenses through the business and not all of the sales are showing on the financials (wink-wink). I want the asking price of the business to be based on what I claim the collections and business expenses to be, not what is shown on the financial statements and tax returns.”

BUYER SAYS: “How did you come up with the value? I’d like a business that has growing income, and is profitable.  I don’t want to pay anything for the business value, only asset value. “

BROKER SAYS:  “Most medical practices are valued at 2x Adjusted Net Income and 65% of Gross Revenue. Most spa businesses are valued at 4x Adjusted Net Income and 45% of Gross Revenue.

SELLER SAYS: “A buyer can make a lot more money that I did if they raise prices, change the therapist’s compensation program, bring in a med-spa partner and negotiate a new lease.”

BROKER SAYS (TO SELLER): “You are selling what you have today; revenue, cash flow, assets and liabilities. You are not selling blue sky or business based on changes the buyer could make. Be aware of the importance of the Curb Appeal of your business.  The financial, operational and physical presentation of the business should look the way you would want it to see it if you were going to buy it yourself”.

BROKER SAYS (TO BUYER): “You are buying the business as it exists today; Assets, liabilities and cash flow. When you negotiate a price, there should be adequate cash flow to service the debt. The lease on the premises should be of adequate length to service the debt.” 

BUYER SAYS: “Why should I pay for business value? I can build a facility from scratch in that new retail development downtown and save some money.”

BROKER SAYS (TO BUYER): “You are purchasing a known commodity and your investment carries less risk.  You are banking on your ability to maintain and grow from and established base of business.  You are not starting from ground zero. Some of the benefits of buying an existing business are (1) established sales. profit and cash flow (2) working equipment that is installed, functioning and licensed, (3) a lease that is in place and probably lower than today’s market rate (4) training and transition by the seller and the benefit of the Seller’s experience, (5) established business procedures and systems (6) established trade name and location that clientele identifies with this type of business (7) existing clientele that can be marketed to and build on and (8) the ability to walk in and operate a going business.”

Some other thoughts that help the deal get done. A successful transactions should remain completely confidential until it closes. An asking price is a starting point. The actual purchase price is finalized as negotiations progress. When one side tries to “win” or dominate the transaction, it’s unlikely that the deal will be completed. When Buyer and Seller respect each other’s perspective and enter negotiations with an attitude of cooperation, it is more than likely that a transaction will close to everyone’s benefit.

Wellness Capital Management brokers the sale of medical practices and businesses in the health, wellness fitness and spa industries.  For more information, please visit our website (www/WellnessCapital.com). If you are a buyer or seller, we’re happy to offer you a free initial consultation.  We can be reached via e-mail (Monte@WellnessCapital.com) or telephone (888.727.5489). We look forward to hearing from you.

Adding Medical Spa or Wellness Services? Make Sure You’re Legal. It’s Programs, Not Procedures.

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It was good to see many of you at IECSC in New York and Las Vegas. I look forward to seeing you again in Fort Lauderdale in September.It seems that every week we are contacted by spa operators who want to transition their business to include wellness or medical spa services. It is not as simple as hiring an acupuncturist or finding a doctor and hiring them as your medical director.The questions are: 1) “Can I do it?” and 2) “How?” The answers will depend on the state you are located in. The information you need may be difficult to find and contradictory depending on who you ask. There is research to be done before you hang additional shingles outside your business.

DIFFERENT STATES HAVE DIFFERENT RULES

Start with your own license and make your first point of research your state board of licensing, medical or nursing board. What are you licensed to do? By clearly understanding your own scope of practice you will know which services you are legally licensed to provide. Other issues that affect your ability to add medical spa or wellness services may include whether you operate in a state that permits the corporate practice of medicine and what services are covered by your liability insurance. Around the country, medical boards are cracking down. If it’s not within your scope of service, you can’t do it.

Some states require that in addition to the license of the practitioner, the facility itself must be licensed to perform specific services. Make sure you and your facility are licensed to provide the services you are providing.

A short answer to the “Can I do it?” question is that if you are not a doctor, you cannot employ a doctor. A service that penetrates the skin is considered the practice of medicine and can only be performed by licensed medical professionals. In some states (Minnesota for example) the use of lasers is considered surgery and hence is considered as the practice of medicine.

IT’S THE PROGRAM, NOT THE PROCEDURE

Wellness and preventive health care services is not a trend, it’s a lifestyle. Adding wellness and medical spa services is not merely adding services. This is a business transition and will change how you will be perceived. It requires a re-write of your business plan.

Every operator needs to take honest assessment of what they offer when compared with their local competition. Who is the guest and why should they come to your business?

As we bring wellness and medical services into our businesses, traditional spa services such as massage and skincare are necessary and appropriate. That said, they need to be promoted as part of something bigger. The chances of success in a wellness environment depends on our ability to be part of an collaborative suite of practitioners (medical and non-medical) that offer a mix of Complementary and Alternative Medicine (CAM), nutrition, and preventive healthcare services. This will provide a pathway to optimal health for clientele. No single practitioner can do this by themselves and the ability to co-market all services is much greater than a single. We’re creating hybrids here. It’s not a spa and it’s not a clinic.

To this end, we are creating health and wellness centers that offer integrative programs that heal, prevent, and resolve. We’re not marketing procedures or services. We’re promoting programs that may include Pain Management; Fertility, Maternity & Infant Services; Women’s & Men’s Health; Movement & Flexibility; Personal Growth; Image & Relationships; Stress Management; Weight Management; Skin Health; Healthy Aging; Sound Sleep; and Smoking Cessation – Detox.

This will only work if we have all practitioners operating with the same vision. We need to find practitioners who have comparable care philosophies. In this business model, a strong team will evolve only if it has strong contributing individual practitioners. In the model we are developing around the country the client perceives one business with several practitioners working together. In essence, there are several businesses who co-exist synergistically. Each practitioner is profitable and able to do what they do well. There is one reception, one administration, one retail area, and one marketing plan. This allows co-promotion, cross referrals, and teamwork among practitioners.

In doing an assessment of your business, what will compel your clientele to return to your facility more frequently? Does it make sense to add health and wellness services? Growing and reinventing your business simultaneously is no small feat. Since you’ve opened, your clientele and their needs have changed. Have you?

I’m going to be in Ft. Lauderdale, Florida talking about this at IECSC on September 22-23. Perhaps a quick trip to Florida would be a good place for us to visit. It you’d like to talk about this on the phone, please give me a call. The first call is on me.

Call 888.727.5489 or e-mail us at Monte@WellnessCapital.com or Skype: MonteWCM.

What Happened in 2012; Opportunities for 2013. Happy New Year!

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Happy Holidays to all! Wow 2013! Can you believe it? As the year draws to a close, we have a chance to reflect on all that has occurred in the past year, be grateful and appreciative and to look forward both personally and business-wise. I always take a look at what happened last year, things I know are occurring now and outline where I want to go. Some things impacted me last year; others are coming down the pike that I need to be aware of. There are issues and events that affect how we want to do business and manage our lives in the upcoming year.

WHAT HAPPENED

I think we can all breathe a sigh of relief that the presidential election is behind us. A year of politics put us in a wait-and-see mentality.

What we’re hearing is that compared to the strong revenue growth we experienced in 2011, 2012 was pretty flat sales-wise. We didn’t go backwards, but we didn’t make quantum leaps either. We got over our love affair with Groupon and started promoting business from within and with memberships and loyalty programs. We’re lowering our labor costs and increasing our profitability, but it hasn’t been easy. Our best wishes go out especially to those of you in the northeast. Super Storm Sandy really affected your final quarter and I hope things get closer to normal soon.

States are increasing their enforcement of who can and can’t own medical spas. If you are not an MD (or in some states Board Certified MD) and are performing medical or invasive services, check your licensing laws. Scope of practice and facility licensing is becoming a big deal.

Commercial lenders had more money to lend, but continued to be more rhetoric than lenders. Non-medical spa is not an industry that many lenders have an appetite for. Real estate prices increased as many landlords held firm and were not in an overly giving mood in terms of lease rates.

ISSUES AND OPPORTUNITIES

Today we now know that the Affordable Care Act is real and that the rising cost of healthcare and providing health insurance will impact our businesses. We need to choose to be active in reducing the cost of healthcare. If we wait for someone else to do this for us or we may find ourselves wasting money, not getting any healthier and the unwitting victims of someone else’s decisions.

We are trained care givers to help people with pain management, weight loss, heart health, movement, stress and peace of mind. Our skills help people age gracefully and stay healthy and fit. With less disposable income, our clientele is less apt to go to a spa. If spa-type services are part of an affordable preventive health and wellness program, our clients will buy them. Although our clientele is being more cautious with their dollars and budget, they are willing to spend money. It is important that we don’t define their austerity for them

Do you want hear some scary numbers? In 2010, the total cost of heart disease in the United States was estimated to be $444 billion. Treatment of these diseases accounts for about $1 of every $6 spent on health care. As the U.S. population ages, the economic impact of cardiovascular diseases on our nation’s health care system will become even greater. The spending on stroke care is expected increase to $2.2 trillion by 2050 if there are no changes in treatment, preventative care, or trends of risk factors.

The national obesity rate is over 35 percent for adults. If current trends continue, all states could reach or exceed an obesity rate of 44 percent for adults in 20 years. Currently 10% of health care dollars are spent on overall direct costs related to diabetes, amounting to $92 billion a year. CDC predicts that spending on diabetes care will reach $192 billion in 2020.

Leading a healthy lifestyle—not using tobacco, being physically active, maintaining a healthy weight, and making healthy food choices—greatly reduces a person’s risk of developing heart disease or stroke. Preventing and controlling high blood pressure and high cholesterol also play a significant role in cardiovascular health. Health strategies that promote healthy living and promote control of blood pressure and cholesterol levels are vital to improving the public’s health and saving lives. Ensuring that all Americans have access to early, affordable, and appropriate treatment also is essential to reducing disability and costs. As an industry, we have the capabilities and training to provide services which will lead to the reduction in health care costs.

CLARITY; WHERE WE WANT TO GO

In the past month, my clients have approached me with a sentiment that they are willing to embrace major change in their lives. To this I respond, let’s create a vision. I encourage them to sit down with a pad of paper and list 100 things they want. No editing, no pre-qualification, no judgment. Just sit and write. Go as far as you can in a sitting. Then take a break and walk away. Sometime within the next 24 hours pick it up again. Do this every day until you get close to 100 things on your list. While you’re doing this, think about the roles you play in your life. These may be Professional, Personal, Community, Relationship, Family. Mine are Husband, Dad, Business Owner, Consultant, Me, and Community. After you have your list, categorize them under the roles you play. Do this before the end of the year. Pick it up every quarter during 2013 and see what happens!

I wish you all peace, love, joy and a happy healthy and prosperous 2013. Thank you for the opportunity to serve you. As always, if you want to talk, call.

Call 888.727.5489 or e-mail us at Monte@WellnessCapital.com or Skype: MonteWCM.

EBITDA; Blah, Blah, Blah…

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I would love to meet a CPA that provides sound business advice to business owners that is usable, and understandable.

Business owners own and operate businesses.  It may shock your CPA to know that reading a financial statement was not the first thing you learned when you opened their business or practice. Surprise, the majority of business owners are not financial MBA’s!  Business owners have the courage to make commitments: to sign loans, leases and hire employees. They know (or seek to know) how to control cash and costs. They seek good competent guidance, not high-brow academic theories. 

Sweating payroll on Friday, is one of those little joys we experience as business operators. I can’t say it is fun, but as we grow our businesses, it is sadly a right of passage. As we’ve learned the hard way, money doesn’t arrive on a magic carpet in neat little bundles; it is earned. It is our responsibility as financial professionals is to help you understand, plan and improve profitability. 

Your financial professional should provide checks and balances (pun intended) on you growth, profitability and equity during the year. They should not buzz in at year end and tell you to acquire new equipment to lower your taxes. As a business owner, you go to your financial advisor for tax advice and to help organize your Balance Sheet.  You want someone to guide you through that confusing and bureaucratic tax code; not by making you read it, but by telling you how to organize your finances so you don’t get reamed.  

This is what you should tell your CPA if they are acting as your financial advisor or bookkeeper:

  1. Show me financial statements that illustrate what is going on in my business.
  2. Demonstrate to me what it costs me to operate. 
  3. Give me a Chart of Accounts and tools that help determine breakeven and manage profitability.
  4. Don’t pretend to understand my business if I only see you once a year at tax time.
  5. Help me form a plan that minimizes the taxes I am going to have to pay. 
  6. Take the time to listen to me and don’t be preachy.
  7. Help me form an exit strategy which includes understanding how to value my business.
  8. Look at me and my business holistically. You know that how I am paid from my business and how profitable my business is will affect my personal tax situation.  View them as a whole and give me comprehensive advice.
  9. Be honest with me as to what your strengths are.  If you can’t give me timely financial information that is accurate and useful, don’t tell me you can do my bookkeeping. If there are more cost-effective and efficient services available, tell me.
  10. Please know the tax advantages of setting up my business entities correctly. (For example, that my real estate and my business should be in separate corporations).
  11. Don’t give me rhetoric or fancy language that means nothing to my daily business operation.  EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization) has a nice poetic ring to it, but since I’m not the MBA, CPA or CFA that you may be, can’t you just call it something that I am familiar with; like “Net Profit”?

Wellness Capital Management wants to help maximize your business potential and guide your overall financial vision.  If you’d like to talk about it, call.  The first call is free. 

Wanted: Courageous Doctor-Preneurs, Wellness-Preneurs, Fitness-Preneurs & Spa-Preneurs Willing To Change The Way We Do Healthcare.

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If you could increase your revenues by adding cash paid services that do not require a big investment in equipment, would you be interested? Although this is absolutely possible, it will take courage and an open mind to change some of your perspectives on healing and healthcare. I’m speaking to you, Dr. Family Practitioner and Dr. Private Practice Internal Medicine Specialist. The issue of improving the profitability of your practice is more than likely not your practice of medicine. Your skill and knowledge of your field of will only take you so far. Business and practice management and the systems and tools that you use are affecting your growth and profitability. This is especially true today as the US Supreme Court vote upheld the Patient Protection and Affordable Care Act.

Do we know where the spa industry is heading Ms. Day Spa Owner? If you are not a high-end spa catering to the financially fortunate, you’re learning that the market rate for what mainstream clientele is willing to pay is $59-$69 per month for massage and facials. Yes the market has shifted, and the mainstream has voted. They love spa services and are willing to carve some money out of their limited budgets for these indulgences. But, it takes a lot of services at these rates to pay the rent.

And, what about the wellness, Complementary and Alternative Medicine and preventive health services? Where for art thou acupuncturists, Naturopaths, nutritionists, Ayurvedic physicians, and massage therapists? Are your practices growing? While we experienced a good level of growth between 2010 and 2011, revenues seem to have leveled off in 2012. Naturopathic Physicians are actively seeking a profitable business model. They are out there…

What about you Mr. Fitness or Ms. Personal Trainer? Are you finding a growing number of members to sign those long-term memberships? Or, are you now offering low cost, no-pressure month-to-month agreements? And you, Dr. Physical Therapist or Chiropractor, are those Orthopedic Physician’s referrals flowing and are insurance companies paying as readily as they were a few years ago?

The short story is that Mr., Ms. and Teenage Mainstream are looking for results at a value. Our clientele is getting both younger and older and they are strapped for cash. The want our services, but can’t afford to pay a king’s ransom for them. The spa industry has created the expectation that these posh and opulent services are served up in a palace. How are we going to deliver that in today’s market? The medical and wellness industry is looking for a way to stabilize their income and wants out of insurance paid services. In their mind, cash services are the way to go. Problem is, they still think they’re medical clinics, and can deliver their services in the same manner that they’ve always done sans hospitality and caring for the clientele.

Hospitals caught “Wellness Fever” a while back and started building Wellness and Integrative Health facilities. This, similar to the high-end destination and resort spas is catering to the highly insured and non-cash strapped clientele. Mainstream is (again) left out in the cold. Mr. and Ms. Mainstream are looking for affordable healthcare and need to be educated as to what preventive care is all about. They also need to be confident that investing their efforts and money into preventive care services will result in a declining need for health care services as they get older.

I see a big bang coming that has partially arrived. If we’re going to flourish as a collective group of health, wellness, fitness, medical and spa practitioners, we better start working as a team and playing nicely in the same sand box.

Wow, magic dust? Not at all. How about a fresh approach that encourages a blending of health, wellness, allopathic medicine and preventive care? What if I could show you how this could increase your revenues, profitability and business longevity?

What if Primary Care Medical Clinics become the true gatekeeper of healthcare? Patients need to have a relationship with their physician which is firstly for preventive healthcare counseling as opposed to treatment of illness and symptoms. The next layer of this equation is that there is an available base of trained healthcare professionals; nurse practitioners, body workers, nutritionists, Naturopaths, personal trainers, acupuncturists.

Doctors need spas and spas need doctors. It’s no secret that medical practices benefit by adding non-insurance paid services to their practices. These services are attractive to a cash-paying clientele and are not deeply discounted by insurance companies. Often, having these services offered by a medical professional gives the client more confidence. But the hard-earned “MD” initials after your name may not be sufficient to operate a successful and profitable practice.

Medical clinics are a stressful place. It would behoove the medical professional to step back and learn what their patients are experiencing before delving into a less clinical environment. Look at your front desk, your consultative procedure and patient care philosophy. Get a sense of what it is like to work for you. Do you create a positive and inspiring place to work for your staff? Are you a good communicator? Do you treat your staff the way that you want them to treat your patients? How often do you take the time to appreciate them for doing things well? Yes, you have to do this. Especially if are going to be competitive in either the medical or spa business.

Competitive means you have to earn your patient’s trust and repeat business. You are not entitled to it merely because you were referred by another doctor. It means that that you have to appreciate and care for every patient that comes into your office as though they the only patient on earth. If you value them, they will appreciate your care. It’s not just the knowledge you have, it’s the hospitable and caring manner in which you and your staff communicate it. I can’t tell you how many physicians’ offices I have visited where I am met with a surly and over-stressed, multi-tasking front desk staff that is short over the phone. I am then seated in an exam room where I wait for a physician who races in twenty minutes late, appears professionally dis-interested for the ten minutes he’s in the room, then races out without communicating what my next steps should be. The need to incorporate hospitality into today’s medical practices is what your patients demand. Spa professionals know how to do this.

Preventive health care professionals and Naturopaths may not make as much money as MD’s, but they appear to have the optimal health of the patient more at heart. Treating the whole patient and keeping them at optimum wellness is much different than healing a sick one. It’s also much less expensive. Preventive healthcare saves money. Doctors intuitively know this. Unfortunately, it is not in the financial interest of the health insurance companies to encourage this. Perhaps we should try to convince insurance companies that we (as consumers) are willing to pay insurance premiums that cover reimbursements for preventive and naturopathic care services that focus on optimum and holistic health.

Creating a healing and nurturing environment has been the goal of many spa operators. Is this the case with medical clinics or are they focused on mending the sick? Beyond the legal and licensing issues of who can own and operate a medical spa, physicians need to align with professionally trained therapists who can help them with stress relief, pain management, heart health, joint health, weight loss and fitness. Sounds like a spa and wellness facility doesn’t it?

I am looking for courageous doctors, wellness practitioner, fitness center and spa operators who are willing to be creative. Let’s join forces, band together form wellness teams and become ambassadors of preventive health care. If we jointly offer our services under a single roof, our clients will receive better care at a lower price. The long-term need for expensive health and disease care will be reduced. The services of both spa and medical clinics will become part of the lifestyle of our clients, not a rarely afforded luxury. The end result would be a healthier population who can afford to stay that way. After all, we call it health “care”, don’t we?

Care to talk about it? Give me a call. As always, the first call is always free.