
I can’t believe we are almost at the end of 2023. This year has really flown by. Before we dive headfirst into the year-end craziness, I want to talk to you about something crucial you should be doing now to set yourself up for success in 2024 -- creating an annual strategic plan for your aesthetic practice.
Log in to view the full article
I can’t believe we are almost at the end of 2023. This year has really flown by. Before we dive headfirst into the year-end craziness, I want to talk to you about something crucial you should be doing now to set yourself up for success in 2024 -- creating an annual strategic plan for your aesthetic practice.
Now, I know the idea of strategic planning can be a bit daunting, especially if you’ve never done it before. But trust me, it’s one of those things you can’t afford to skip. You can’t just wing it. As the saying goes, “If you fail to plan, you plan to fail.” So, let’s demystify this process.
Why Strategic Planning Matters for Your Aesthetic Practice
First off, let’s address the “why” behind strategic planning for your aesthetic practice. It’s not just a box to check; it’s the compass that guides your success for the next year. Think of it as a performance evaluation for your practice. You need to figure out what went right and evaluate what went wrong that you can improve upon.
Here are some key questions to ask yourself:
- How did we perform this year?
- Where can we realistically take things from here?
- What goals should we set for ourselves and our team?
- What should be our focus?
- What needs changing?
- How are we going to communicate this plan to our team?
Celebrate the Wins & Learn from Them
Recognizing and celebrating your team’s accomplishments is vital. It not only boosts morale but also helps create a positive team culture. I truly encourage you to make a list of your wins and involve your staff in this process. Their perspective might reveal achievements you hadn’t considered. Financial successes are great, but remember that “wins” can take various other forms, such as:
- Growth in leads, consultations and closure rates
- Successful events that boosted your practice
- Incorporation of new services, requiring staff to acquire new skills
- Hiring and onboarding new team members
- Cultivating a cohesive team and fostering a positive culture
- Expanding your space or renovating it
- Increasing productivity
- Initiating a loyalty program or enhancing
patient communication.
Take a good look at these achievements and figure out what made them successful. Then, instead of dwelling on what didn’t work out, focus on the lessons learned. Part of nurturing a positive team culture is creating an environment of continuous improvement.
When reflecting on areas that need improvement, here are some questions to consider:
- What negatively impacted your practice and team?
- Did toxic individuals or discord affect performance or culture?
- Were there service lines or devices that struggled?
- Did you face challenges in patient acquisition or retention?
- Were there team members who weren’t a good fit, and what made them unsuitable?
- Are there processes or protocols in need of improvement?
- Has your staff received adequate sales training?
- How’s your client feedback? If there’s negative feedback, how can you use it to improve?
Evaluating Your Annual Performance
Now, let’s dive into the nitty-gritty of assessing your annual performance, including revenue, expenses, budgeting and forecasts. These numbers are the gears that drive your practice’s engine.
Revenue: Don’t just look at gross revenue; you need to look at net revenue after all expenses are deducted. Also, you must evaluate revenue by category. Knowing your numbers regarding Profit per Treatment and Revenue per Hour is crucial for your practice’s growth.
Expenses: Keep your total expenses in check. I constantly hear practices say they need to reduce expenses, but then they cut back on the wrong things. Assess the costs of goods for each treatment to ensure your profit margins are aligned and you are not overspending. If something seems off, perhaps it’s time to find a new vendor with better pricing.
Revenue Per Hour and Profit Per Treatment: These two metrics are your secret weapons. They tell you which areas of your practice generate the highest profit margins and where to focus your efforts. You should review these numbers regularly, at least quarterly.
Key Performance Indicators (KPIs): Provider productivity, provider capacity and utilization are essential KPIs to track. Review how many hours providers work compared to your operating hours, revenue-generating hours, available room hours, provider capacity and operational utilization. These metrics help you determine when it’s time to expand or make workflow improvements.
Forecasting and Budgeting
Now, let’s talk about forecasting and budgeting. These are educated estimates of where your practice’s finances will be in the future. When creating your annual strategic plan, consider the current year to plan for the upcoming one. Forecasting refers to anticipated revenue. Budgeting refers to both the revenue and expenses and how they balance together.
Once you have your forecast and budget, it’s time to set goals for the coming year and develop a plan to achieve them.
Setting Goals & Planning for the Year Ahead
When setting goals, think beyond just financial targets. Consider operational goals as well. What do you want to achieve in your practice in the upcoming year? The key isn’t the quantity of goals but the quality and the strategies to reach them.
For example, after analyzing your capacity and utilization, you might set a goal to hire two new team members or consider letting go of someone who doesn’t fit. Maybe you need more space or longer operating hours. Your goals should also encompass compensation structures.
Don’t forget individual team member goals, especially for annual reviews. Measure what each employee accomplished and what they need to improve upon.
Once you’ve set your goals, create a strategic plan to execute them. Use data such as profit per treatment, revenue per hour and your forecast and budget to make informed business decisions.
Some questions to consider are:
- Where should you focus your efforts?
- Do you have the most efficient and cost-effective employees handling specific services?
- Are your providers meeting industry benchmarks for revenue per hour?
- What are your highest-margin services? (Remember, the highest-grossing service isn’t always the most profitable.)
- Which product lines perform the best? Focus on the top ones.
- Is there a service category that isn’t profitable? Consider additional training or more marketing.
When planning, ask yourself:
- What do you want to accomplish this year?
- Are capital purchases on the horizon?
- Do you plan to introduce a new service line?
- Is your facility due for updates?
- Do you want to expand your team?
- Do you want to invest in team culture or employee assessments?
- What new processes, protocols or training do you need?
- Do you have clear job descriptions and room for employee growth?
- Can you reduce expenses by going paperless or renegotiating service costs?
These are the details that affect your revenue and expenses for the year ahead.
Sharing the Plan with Your Team
Setting a big, overall financial goal like, “We want to grow by one million dollars or 10% this year,” can be hard to grasp and motivate your staff. Break those goals down into smaller, more digestible monthly or quarterly targets. This approach makes it easier to understand and stay on track.
Consider seasonality too. Not all months are created equal for your practice. If January tends to be slow historically, don’t set the same goal as you do for busier months. If you have an incentive-based program, set productivity goals for your team. Provide them with a timeline and ensure they have the training and resources to meet these goals.
When sharing your goals and strategic plan with your team, you don’t need to inundate them with all your financial data. However, you do need to communicate your plan, your overall goals, how everyone should work together and individual goals. Transparency and clear expectations are key.
Cheers to your success in 2024!
--
Terri Ross is a world-renowned practice management expert, thought leader, and international speaker in the medical aesthetic industry. She founded APX Platform in 2021. In 2023 after only two years post-launch, APX merged with Engage Technologies Group to offer a complete practice performance system, encompassing practice optimization and patient engagement. Terri now serves as President of Aesthetics at Engage Technologies Group.