Grow and Scale – That’s the mantra at BootstrapMD.
Our Managing Partner Sara Shikhman was featured in this recent interview with BoostrapMD to discuss how to grow a single room Medical Practice into 12 Multi-State Locations. Sara is an Ivy-League-trained corporate attorney and entrepreneur with over 14+ years of experience. She has managed the sales, marketing, and legal teams for two high-growth medical aesthetic businesses. In this video, you will learn about her exciting journey and how she stumbled into the med spa industry and using her marketing and business knowledge, grew her practice into 12 locations with over $13 million in annual revenue. Discover her key strategies for building a million-dollar practice!
Check out on Amazon: Med Spa Confidential: Lessons Learned from Starting, Growing and Selling 100+ MedSpas
Transcript:
Mike Woo-Ming: This year marks 10 years of being a medical cash practice owner. I own, or co-owned several of them, this is our latest we’re building a med spa up here and on the program is someone who took a single location and then turned it into 12 locations. 12 multi-state locations that generate 1+ million dollars annually You get to hear her story, how she started from e-commerce beginnings, took her knowledge of marketing and then got into the brick and mortar businesses and is now an attorney. And she helps other healthcare, individuals, doctors, nurse, practitioners see their vision and. I learned about her when I purchased her book med spa confidential, which is a Amazon bestseller.
I think you’ll really enjoy hearing her story. My interview with Sarah Shipman on this episode of Bootstrap MD.
Hey guys, this is Dr. Michael Woo-Ming welcome to another edition of Bootstrap MD. And we’re starting a series about talking about how you can get started in private practice cash paid practices. And I got a lot of questions about this as being a cash practice owner. And a med spa owner. I’m a med spa owner opening up a second one medical director for a couple of ’em.
And I thought I knew everything there was to, to med spas until I got a hold of this author’s book. And her story is pretty amazing. She’s an attorney. Don’t get me started on attorneys. I’ve got too many attorneys in my life, but she’s a cool one, an e-commerce expert. And she’s the co-author of the med spot confidential, which is a number one best to learn Amazon in Dermatology.
She specializes in the healthcare tech and beauty industries as a president of an e-commerce company, she achieved 12 plus million dollars in revenue in just under two years after launch she now is a direct general counsel and director of a sales of a multis spa medical practice growing from a single room location to 12 locations in over 13 million in annual revenue.
Actually, I didn’t know her until I was actually looking for a book on med spas on Amazon. I had one that I was gonna pick and then her book came out. I downloaded it on my Kindle, got on the plane, read half of the book on the plane trip and then took more notes when I got home. So I reached out to them and this is just one of the authors who can be joining us.
So here, introducing on the show today is share Sarah Shipman. Sarah, how you doing?
Sarah Shikhman: I’m doing well. Thanks so much, Dr. Mike, it’s nice to be on this podcast with you and thank you so much for the opportunity. And I’m excited to share some of the pearls from the book and my experience with your audience.
Mike Woo-Ming: First off you talk about your story in the book, as well as your, co-authors story. And you started from an eCommerce background and I’ve also have my origins and eCommerce, although. Your eCommerce company is probably one of the strangest names of eCommerce that, I heard. Tell us exactly what, they do.
So, talk about that. And, what you learned from, being involved in that company?
Sarah Shikhman: Sure. Yeah. Long ago when I was working as a corporate attorney at Deutch bank, a couple of my friends approached me and they said, Hey, we wanna start a online startup selling furniture and we want you to be the CEO.
And I said, oh, that’s great. I don’t know anything about furniture or about being a CEO. I just know about being an attorney. And they were like you are one of the smartest people we know. We wanna hire you anyway. And I said I really don’t love the corporate law life. And so let me try this.
And so we started the business from the ground up, literally from zero where we had a small investment and the, one of the first questions was what should we name our company? And this was like back in, I don’t know, 2008. And. We were not very creative. And we were like, okay, but what are we gonna be selling?
And we were like, we’re gonna be selling bedroom furniture at a discount. So we called our company at the website Bedroom Furniture Discounts. It has its advantages because when people would Google bedroom furniture discount, it would come up organically at the same time being known as the discount player forever was not so great.
But it was a fun learning experience.
Mike Woo-Ming: So you, did that, you exited out of that. And I you you, talk about your, story, how you, ended up in this med spa world. So if you could share it with the audience you’re an attorney, you’re not a medical doctor.
So how did you, end up being in this profession?
Sarah Shikhman: I knew nothing about this industry. And I, by that time I knew about running a company.I had scaled that furniture business to be a couple of million dollars a year in sales. I guess about 14 million in revenue and my husband at the time said, “Hey, I’m a dermatology resident, I’ve always wanted to have a side project and open a dermatology clinic doing Botox. Can you help me run the business side of it?”
And I was like what is Botox like who, who is who’s doing that? It’s only plastic surgeons seem to do that. And how are we gonna get started? It seems like you need a lot of money. But in actuality, after doing some research about it and how the special way that these procedures make people feel and how repeatable they are and how trainable they are I realized that it’s an amazing segment of the market.
And we again started the business from the ground up from one room in a old decrepit building to a 12 location, medical spa across several states.
Mike Woo-Ming: That, that’s amazing. What did you learn from cuz I, as I said, I’ve been in the online background as well. What did you learn? When you decided to open up your brick and mortar clinic? Just a little bit of background in my story. I was in the online space and then I was naive and thought I’m smart in marketing. I can do it. And then almost lost my shirt the first two years. How did you succeed?
Sarah Shikhman: I think that I didn’t even decide that. The space was in its infancy and I didn’t really have to listen to how everybody else was doing it. And for example, in the beginning we were told, okay, Instagram this was a long time ago. Instagram people are like real doctors don’t post on Instagram, don’t post on Instagram.
Like we would get advice like that. And we would just ignore that advice because it didn’t… I hadn’t tried it for myself. So I, how could I say for sure that it’s not gonna work? And so we would try a lot of unconventional things or back then Google would give you like a free Google specialist to, to help you set up your Google AdWords account so you could run keywords.
And the Google specialist would say things like you guys are selling Botox, but maybe you should, your keywords that people should search for. Maybe you should bid on plastic surgery. And we were like that doesn’t seem right. We’re not gonna do plastic surgery here. We’re gonna do Botox here.
So we would ignore some of the advice that people would give us. And we would try do trial and error. We had months where we would spend a thousand on marketing and get zero clients. We would have months where we would spend 20,000 in marketing and have 200,000 clients. So it was a big learning experience for sure.
And we were thankful that we were able to place some of those online ad spends on our credit cards, because otherwise I think we wouldn’t have been able to pay the bills.
Mike Woo-Ming: That sounds very familiar. So I wanna take you back to that, first clinic. I just wanna kind of experience that how many employees did you hire, maybe talk about maybe some of the challenges that you faced in that first year?
Sarah Shikhman: Yeah, I think in the, in this business, in the medical wellness concierge medicine, med spa space. One of the hardest parts is employees. And, when I say employees not, just employees in the strictest sense of the word, but your staff, contractors, your medical director, your vendors, just people.
Relationships is the hardest part because at the end of the day, what you’re selling is not the Botox. What you’re selling is a service provided by a person. And what happened in the early days was we didn’t really know that. And we learned that lesson, the very very, hard way. One of the first employees was an aesthetician that we hired.
And I had never hired an aesthetician before. I didn’t even know what aestheticians did. I had to really look at, look up the scope of practice and talk to the board of cosmetology. And, so this aesthetician would come to work and she would do facials and other treatments and she was teaching us, literally teaching us how facials are supposed to be done so we could write the protocols of how they should be done. But what we didn’t realize is how dependent you become on your employees, because if the esthetician would call out sick, like I can’t fill in for her. Or if the esthetician decided to quit and give us one hour notice, which happens in this business, you can’t fill in for her.
You have to cancel everyone. So it’s a very delicate balance of how you have to be to your staff. So one of the first things that happened was the esthetician called out. And she had legitimate reasons for doing so, but in any normal corporate environment, that environment I came from a person has a few, a call out, no show, whatever, they get terminated.
In the aesthetics world, you have to have more flexibility because you are so dependent on the person and the client relationships. And so in the beginning we were very inflexible and we had a lot of turnover. But from that, I learned that. You have to be a little bit more flexible in this particular area.
You could have really great contracts, which we do now, but you still have to sometimes make reasonable exceptions. So your business can function.
Mike Woo-Ming: Got, it. What kind of services were you offering in those beginning days.
Sarah Shikhman: We were offering a very simple menu. I think simple menu was key for any business really starting in this area.
So we were offering Botox, fillers, microneedling, and facials. And that’s pretty much it like just those. No devices.
No. Nothing. Nothing too complicated. That’s it.
Mike Woo-Ming: And that’s usually where I see one of the biggest issues of someone trying to break into this field.
you’re,
they say, you know How can you get a laser sales person to stop bothering you is to buy the laser, right? And the, buy the the $100,000, $200,000. They start off on day one by buying some Cool Sculpting or whatever it is. You didn’t do that. And I didn’t do that as well. And I think that was a big thing that kind of saved me. What, do you have to say to that?
Sarah Shikhman: Yeah, I think the machines are not gonna bring in the customers. That is a, fallacy. I don’t know where they were originated. But I think buying machines ahead of having a client base is not the right strategy for most people. I think if you are extremely well capitalized and you already know and have done the research and you know exactly what machines you need to, accomplish your business goals.
That’s one thing, but if you’re like most people starting in this business, you have no business making the machine. The first thing you get the first thing you should probably get is something that has a cheaper cost, like to start like Botox or Fillers or a Microneedling pen. But yeah, I think machines and the machine contracts are often what brings a business down where the contracts are not easy to get out of their personally guaranteed.
The interest rates are very high and a lot of them have this term in it where even if you pay off your equipment early, you still owe the same amount of money. So if you decide, oh, I wanna pay off my loan for my cool sculpting early. I have enough money for the, let’s say a hundred thousand I own, but my equipment contract says that I still owe 200,000 of payments.
Unlike your mortgage, which if you paid early, you save a hundred thousand, your equipment loan, the way it’s worded, 95% of the time, you still have to owe the 200,000. Bad things can happen if you sign those contracts and they’re not reviewed by a lawyer or somebody who knows those types of arrangements.
Mike Woo-Ming: Yeah. And, it’s funny with these with each of these lasers or the, these energy devices they are, quick to say, Hey, we can provide the financing to you.
A funny story, although really not too funny. When you think about it is they said had. I had someone come in, looked at this device, it was like 150,000.
And they say, oh we do our financing. We just need three months of your previous bank accounts. And I said, okay. And then I forgot about it. And then I never turned anything in. And the next day, oh, you’re approved. I didn’t do anything. But you find out the reason they do it is cuz the rates are really predatory.
And a lot of the examples that you you, talked about. So for someone who is starting up they want to do a med spa, what kind of advice would you give them? Let’s say they’ve got a limited amount of budget that they can start with and their physician.
Sarah Shikhman: I would say thank God or whatever you believe in. Thank goodness that you have a limited budget because that’s that limits the number of mistakes you could make. I would say number one, when starting a business, think about who you actually need to start the business with. A lot of times physicians and other people come to us and they say I wanna start this business with such and such partner.
They’re gonna give me $10,000 or, $100,000 or $2 million, whatever. And I, we always say, is that really the best thing? So first. Think about whether you could really start the business on your own without too many partners, you could always make people partners later, but first maybe you wanna bring ’em on as a contractor or as a consultant to see if you guys get along in business.
Number one is simplify your ownership to be mostly about you. And number two, simplify your menu of services initially, to be things that you truly know how to do. And you think that you’re good at, and number three, you are gonna need to spend money on marketing before you have clients not, oh, once I have clients I’m gonna market.
No, you need to market and then you’re gonna have clients and let’s say you wanna make a million dollars in revenue, be ready to spend a hundred thousand in marketing at least, or more to get to that million. I would say that’s my top advice. You have to be ready to have a simple menu of services. Be the only owner and spend on marketing.
Mike Woo-Ming: Yeah. And one thing too, that I, liked in the book is see how we call it our USP or your unique selling proposition. And you mentioned the book actually scan around your local area. See what you can offer that they’re not offering being as simple as maybe they’re not open on Saturday and you can be open on Saturday, or maybe you provide a service that, that they’re not providing.
What were the, let’s say, game changer for you when you said, “Hey, I wanna go from one location to a second location.” What do you think were, the things that led you to say, oh, I can do this. That really made a difference.
Sarah Shikhman: Yeah. I think we felt like. We had enough processes in place and they were written down to be repeatable.
I think that’s the key to scaling from one to two occasions is processes. So having a written inventory process, having a process of how the phones are gonna be answered, having a process of how every consult is done to using technology in your practice to do online appointment bookings online.
Payments online purchases referral programs that are run through the internet. So making everything as automated as possible. And then opening a second location. I think that a lot of people think that it’s okay to, let’s say you have one location and there’s one injector. And then you’re like, okay, should I add a second injector to location one?
Or should I open location two? It is so much cheaper and better and less headache and everything to just add a second injector to your first location, maybe it looks less cool cause you have one location, but it’s better. Most of the time unless you’ve achieved 100% market penetration, you could always add one more person there and get them busy cuz on the second location…
Someone has to answer the phone, someone to clean the space, someone to count the inventory, someone to see the clients someone to call if the toilets is broken all these things. So it’s much simpler to have big location with lots of people. And we have some clients who literally do five to 10 million revenue from one location per year.
It’s definitely possible, even in a small town. Not a town with 20,000 people, but a town with let’s say 500,000 to a million population. I, know people who do 5 million in revenue, single location, office, no surgery.
Mike Woo-Ming: That’s great. Great. That’s great. Non-surgical services. I wanna talk a little bit about employment, cuz this is a, this is something that I’ve seen experienced as well as some of my, colleagues as is they, find someone, they hire someone or they either like I’ve had it where I’ve basically trained the nurse practitioner.
And I know exactly what’s going on. And then I’ve had one where they’re already like five years out and they’ve already experienced on one place. But when then it, it comes down to one thing that happened in California, nurse practitioners are gonna be more independent and they’re worried about if I just train my competition.
What are some things that you can either avoid? Or maybe some things that maybe you can screen before you hire the hire them? Where, do you in terms of that.
Sarah Shikhman: Yeah. In a lot of states, non-compete agreements are becoming non enforceable. So including New York, California, and some other places.
So what do you do? You can screen for the right person, like you were saying, and what, the way we would do it is there are these online tools that measure people’s personalities actually to see what kind of person they are. So one company that we would use is called predictive index. That literally first you would have somebody who you think would be like your model employee, take the test.
And let’s say the predictive index would say that their personality type is called operator. And you’re like, okay. So for this kind of PO position, what I need is an operator. I don’t need a entrepreneur, for example. So, one, you would screen their personality. Two, you would have a multi-step interview process where you would have them do some zoom interviews.
You would have them to meet you in person. And then for half a day you would do shadowing. So you would really get to know the person and see are they gonna be on their phone all day? Are they gonna come on time? Are they on posting on Instagram every second? And really ask them like, what is their long term vision to see if it aligns with you?
And one of the main reasons I see people leaving is because they don’t see an opportunity for advancement in the current practice. So they’re like, okay, this person’s making all the money off of me. I, there’s no way for me to grow. Maybe you could tell them after you work here for five years, you could buy into the company or become part of a profit sharing program.
If that’s allowed in your state. And three, the legal ways you have ’em sign a pretty tight non-solicitation agreement of your clients, which is still enforceable. In most states, you would do a non-disparagement agreement and a confidentiality agreement with those three things. You could really protect yourself, but at the end of the day the clients may still go with the person. So the other way to protect yourself is also encouraging clients to see not just one injector or provider or one doctor, but everybody in your practice. So making the scheduling such that it almost like rotates. So when clients are booking, they’re booking Botox, not Botox with Amy necessarily, or having a promotion. Oh, you tried Botox with Amy. That’s wonderful. We have a special targeted to you try filler with Matt.
Mike Woo-Ming: Yeah. That’s great. That’s great. Great, advice. I know we’ve got limited time. But one of. Kind of the phrases that I loved in the book is to not think of yourself as just having a med spa clinic, but think of yourself as more of a technology company that happens to do med spas.
At least it turns when it becomes time to selling. And when I’ve always talk about you should always build a business with selling in mind. And I think… did that help? It sounded like that’s really what helped your valuation is because you had the technology and you had all of that at a, like central location.
Sarah Shikhman: It, sounds like everything from outsourcing you’re on the phone and, such is, that correct?
Yeah I think definitely a technology company or a technology powered company gets much higher valuations. 10 times let’s say net income versus an aesthetics company that could get, let’s say three to six times net income.
And the way to do that is to invest money into technology and outsourcing and automating processes. I’m not saying you have to become Google, but you have to say, okay, we have our own proprietary way of doing a patient consult. Okay. Here it is. We have a 10 step document and maybe we also have a video of how it should be done and maybe parts of it after you’ve have written them out, you could hire a programmer to automate so the cus, so the client does part of their self consult at home.
They send you some sort of picture using a template or whatever, so it doesn’t have to be like… Super complex, but I think definitely automation and technology will get you a higher valuation and also allow you to scale. So if all you have are processes on paper or no or, in your head, it’s gonna be very hard to open a second location or sell your business. The technology is really key in this business for sure.
Mike Woo-Ming: Yeah. Yeah. And it’s in the 10 years that I’ve, been in the business, it’s still amazes to me all that technology we’ve already incorporated from just online booking and, getting on the app where most of us are in an industry where. ..Let’s face it, they’re still using fax machines. So I think that’s one of the benefits of being your own boss and embracing that technology. Where do you see the industry? What, is your, thoughts on where the med spa industry is going? Is, this a, still a forward growing industry or are there some things we need to, watch out?
Sarah Shikhman: Absolutely. I think the med spa industry is definitely still in the prime growth phase. It there’s new entrant entering it all the time. I think that a lot of doctors I’m seeing even straight out of medical school are going to this industry specifically not pursuing more traditional paths.
People are skipping the hospital part. I see a lot of consolidation in the industry in buyers. Practices are being bought. So small practices are being bought by bigger practices. And I think in the future, there’ll be right now… There are very few big dominant players.
Mike Woo-Ming: We have, There’s
no Starbucks yet.
Sarah Shikhman: There, there a few in mind, but yeah, there is no
Starbucks. Yeah. The Ideal Image, the LaserAways, there’s a few, but there’s no real big dominant player that everybody knows. And I think that’s gonna change. But, and I think that player or those players will be all based on technology, not so much on oh, we have the greatest provider Amy, no, we have a fully automated process for everything that we do except the actual injections.
I think that’s gonna be the future because. Even the, companies themselves are moving, the vendors are moving toward having pre-filled syringes and making the treatments easier for clients to understand and do so there’s gonna be a future where. I think somebody’s gonna be able to administer their own Botox.
So your, company is gonna have to provide some other kind of service. That’s not a person coming in. This is my, opinion. Of course. I don’t know for sure, but I think that’s what we’re moving toward, like Botox cream or whatever are you put on a mask on your face and you press it in certain parts and then it makes the Botox go under your skin. So I think in that world of the future, we’re gonna need to compete based on something else. And that’s something else’s technology.
Mike Woo-Ming: Yeah, I think half my audience just groaned when you said that, but I definitely it, it’s a word of warning. You can either be part of it or you can actually see it go by you can actually see, it go by and I’m, more inclined to embrace kind of the technology and, what’s.
What’s there.Sarah, Sarah, this has been a wonderful conversation. Tell us about your, services that you offer to either a beginning or maybe an experienced me spa owner that, you currently do in terms of your, legal.
Sarah Shikhman: Sure. Yeah. So we represent lots of med spa owners. We also represent lots of medical directors of med spas and wellness centers and all kinds of different medical businesses where we help people get legally set up or restructure their business or stay compliant. Or if there’s a board investigation, we represent people. And then if people are selling their business or buying a business, we represent the buyer or the seller.
Sometimes both but rarely. And we just help people grow in a legally compliant way. So we don’t really do too much business consulting. Most of our work is legal. Our website is called lengealaw.com it’s a mouthful. I’m sure it’ll be somewhere in this presentation, but We love helping people and being very business friendly in our lawyerly advice.
But at the same time, keeping people safe and helping people grow and take their business from one location to two. Or we have clients who started with us as well, single room business, and now have 10 locations. So that’s awesome.
Mike Woo-Ming: That’s amazing, Sarah, thank you. For, joining us again, lengealaw.com is where you can go and get more information, check out the website. If you need to get contracts, if you need to get legal device, what you do in this field you need it’s, really important that you get the right counsel. Thank you again, Sarah. And thank you for joining us today.
Sarah Shikhman: Thank you so much, Dr. Mike, have a good rest of your day.
Mike Woo-Ming: Thanks everybody. And it’s always this can be very exciting business have follow the people who’ve already been there have already had success and that’s the way that you’re gonna keep moving forward.