Building an Aesthetic Clinic

Business consultant Gary Monaghan gives some step-by-step advice on how to establish your own aesthetic clinic from the ground up

The rise in self pay market – namely patients self-funding their procedures – has paved the way for an increasing number of clinicians to pursue an entrepreneurial venture: setting up their own private clinics and hospitals. However, do you understand and appreciate what is involved? Most practitioners have never undertaken a project of this scale before so are asking where to start and what to think about. We will look at some of the key points you should consider in this article.

What do I need to consider?

Having your own clinic carries great benefits, of course, but it also entails a certain amount of risk and stress. As an example, think of a problem receptionist in your current workplace… that person now becomes your concern! The bills that need paying, the staff who need a salary and the disputes that inevitably arise within teams all become yours. You will either be a building owner or a tenant, and each carries its own challenges to bear in mind. You will potentially become a manager of a Care Quality Commission (CQC) registered entity (or the Scottish, Welsh or Irish equivalents), responsible for all standards and processes therein. Having made you consider all the challenges, let’s readdress the balance. Your own place brings freedom: freedom to buy what equipment you want, open when you want and employ who you want. It also brings great value to your business. All the revenue that you spend renting rooms or facilities is now part of the income of your clinic. You also now have a facility associated with your brand, undoubtedly adding value when you come to expand and ultimately sell. In short, it gives you control, breeding a huge sense of ownership that brings pride, kudos to you and your brand and a sense of achievement.

Where do I start?

With any project, the initial question is what do you want to achieve? More in-depth considerations incorporate the venue you want, what treatments you will offer onsite and how many rooms and facilities you need. Only when these basics are established can you really start to look at the project in more detail. The key to any successful project is its financial viability. Nobody starts a business to lose money, but many do start without really considering the overheads, set-up costs and any unforeseen and potentially costly issues that might arise along the way. These could be industry and economic trends or one-off events. Once the type of venue for your clinic has been decided upon, the next step should be to form a business plan which might serve as an essential document to any investor or bank, and a cashflow. This will tell you a huge amount about what you will be letting yourself in for! It is absolutely essential that a great deal of fact finding and planning is undertaken at the outset. All practitioners will have worked in premises owned by other people, but do you understand what is behind the structure of these venues? Do you understand the issues faced daily by a clinic owner? It just might be that these additional stresses on top of your clinical work are too much! Get to understand them first before you spend too much time on them, or worse still, commit to the project and incur unwanted financial costs.

The main costs are often underestimated. Most people have a rough idea of build costs (although this is frequently underestimated due to rising prices), but certain costs are quite frequently not even considered. Do you know that most landlords require a rent deposit of up to a year’s rent? This could equate to a six-figure sum which has to be part of the overall cost!

We also frequently see a tendency for practitioners to factor in the cost of larger pieces of equipment, but forget to consider the smaller costs which really do add up. Investment in basic disposable items such as needles, syringes, gloves, drapes, drugs and many other considerations easily add up to tens of thousands of pounds. Other factors such as legal costs, fees for registrations and so on, frequently run into the thousands too. There is also the question of VAT, which many practitioners are not registered for.1,2 As such, the huge amounts of VAT racked up in build costs, services and equipment purchases are not to be forgotten. It is vital that overall set-up costs are calculated. It is equally vital that a cash buffer is built in for any unforeseen areas of expenditure and to provide working capital while the project builds to a consistent break-even point.

Your own clinic brings freedom to buy what equipment you want, open when you want and employ who you want

How do I finance my project?

On balance, opening a clinic seems like a good idea. So how can you fund it? Pure cash is necessary, of course. Many lenders will only lend if the borrower puts a certain amount in themselves. Bank loans are viable – even in the current climate of rising interest rates, good deals can be had. Investor finance is an option, although I always feel that the lower this is, the better for the clinic owner. There are a lot of caveats to this statement, but any project is at a weaker point at the outset to appeal to investors than at a later stage in its development. If you go for investment with nothing but a general idea or basic plan, you are likely to get an inferior deal compared to if you already have a part or fully built clinic. Think Dragons Den! Simple concepts are a total punt, whereas projects with existing sales are much more investable. Asset finance is a good option for funding these types of projects. This is a way of funding equipment and tangible items through an asset loan, whereby an asset finance company retains title of the goods until the loan is paid off, at which point it transfers to the borrower. Good rates can be found, and there is appetite within this sector for providing funding to healthcare projects. If you are considering entering this venture with a fellow practitioner, you need to think long and hard about the viability of this. Working in the same venue is one thing but having a colleague as a business partner is very different. Take care about who you invite to join your project, how things are structured and how they work between you and any colleagues you involve. A friend or even current colleague does not necessarily make a good business partner. These are lifelong projects – can you work daily with the person and manage disagreements when they occur? It could work very well indeed, or it could be the worst thing you have ever done. How do I move forward?

By this stage, you’ve considered the pitfalls, costs and benefits of setting up your own clinic, and you want to progress. The venue location, type and size are now your key considerations. Note that until this point, we have not mentioned these specifics. Many people I see have chosen a venue before they have considered these, and I frequently reset clients to the start of the process to ensure they have indeed contemplated every detail involved.

The venue will define the lion’s share of the costs, as well as the overall likely success of the venture. It can be very difficult to envisage the outcome at a given venue as it’s hard to know what space is required to achieve a desired end result. Specialist help is very important here, owing to the rules and regulations that healthcare environments must adhere to such as Health Technical Memoranda (HTMs), CQC rules and fire regulations. Knowledge of how to adhere to or negotiate these is absolutely essential, so I highly recommend seeking the guidance of a specialist builder conversant with all the regulations specific to your desired venue. If you do not do this, these regulations may not be followed and in the worst-case scenario, you will not be permitted to trade.

As we have stressed before, planning is very important at this stage. Get your layout right, even if you have to amend it several times. You cannot do this once your clinic is built without incurring substantial costs and delays.

Another area I see real issues in is that of project planning. How long does something take? When should you apply to the CQC or equivalent regulators? When should you order a treatment couch? In recent years, these questions have become more and more difficult to manage as timeframes that used to be short and pretty predictable have become elongated and wildly unpredictable. Each one could delay your project by many weeks if miscalculated or underestimated.

Timings are very difficult to get right, and with so many tasks to complete, it is a minefield where you really need to seek assistance from experienced business experts. Let us not forget, every hour you are working on the project rather than your clinical practice is an hour’s lost revenue for you. Do not take too much on yourself – these projects can be stressful and time consuming. Delegation and outsourcing are your friend!

Making a big decision

I do not believe everyone wanting to open their own clinic should proceed to actually build or buy one without giving it careful thought! People have different attitudes to risk, stress and ambition, which will influence their strategies of project management. There is no doubt that a project like this is going to cost a lot of money. It is also almost impossible to do quickly – allow four months as a minimum from concept to completion.

Nevertheless, it is undeniable that if everything is considered, thought through and understood, then it is a viable and lucrative opportunity for an established practitioner. It can give real long-term stability, solid financial footing and a legacy. For many practitioners, this is too good an opportunity to pass by.

Gary Monaghan is an aesthetic clinic business consultant. He began his aesthetic career in sales for Nagor, before moving on to set up cosmetic insurance company Premium Medical Protection. After this he ventured into business consultancy for practitioners – The Cosmetic Consultants – which includes setting up clinics for surgeons.

REFERENCES 1. Aesthetics, Understanding VAT Exemptions (UK: Aesthetics, 2020) <https://aestheticsjournal.com/feature/understanding-vatexemptions> 2. Aesthetics, VAT in Aesthetic Practice (UK: Aesthetics 2019) <https://aestheticsjournal.com/feature/vat-in-aesthetic-practice>

13 & 14 Oct ExCeL London, UK

Gary Monaghan will be speaking at CCR 2022 at ExCeL, London on October 13 and 14. Make sure to register for free now to catch his talk! Find out more on p.20