#170: Why Knowing Your Numbers is Sexy: Financial Clarity For Aesthetic Success With Stephanie Simkins

Cameron is joined by Stephanie Simkins, owner of Harper & Faye Financial, and they discuss the critical importance of financial clarity for aesthetics practice owners. They explore various aspects of financial management, including bookkeeping, P&L statements, payroll, cost of goods, and cash flow. The conversation emphasizes the need for practice owners to understand their numbers to drive business success and prepare for future growth or exit strategies.

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Thank you for listening to this episode of Medical Millionaire!



Takeaways:

• Understanding your numbers is crucial for business success.
• Bookkeeping is often overlooked but is the backbone of your business.
• P&L statements provide insight into your financial health.
• Cost of goods sold directly impacts your profitability.
• Consistency in bookkeeping is essential for long-term success.
• Payroll management is a significant expense that needs careful consideration.
• Cash flow issues are common and need to be monitored closely.
• Preparing for business valuation requires clean financial records.
• Discounts and promotions should be approached strategically.
• Hiring a financial expert can provide significant ROI.

Unlock the Secrets to Success in Medical Aesthetics & Wellness with "Medical Millionaire"

Welcome to "Medical Millionaire," the essential podcast for owners and entrepreneurs in
Medspas, Plastic Surgery, Dermatology, Cosmetic Dental, and Elective Wellness Practices! Dive deep into marketing strategies, scaling your medical practice, attracting high-end clients, and staying ahead with the latest industry trends. Our episodes are packed with insights from industry leaders to boost revenue, enhance patient satisfaction, and master marketing techniques.

Our Host, Cameron Hemphill, has been in Aesthetics for over 10 years and has supported over 1,000 Practices, including 2,300 providers. He has worked with some of the industry's most well-recognized brands, practice owners, and key opinion leaders.

Tune in every week to transform your practice into a thriving, profitable venture with expert guidance on the following categories...

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-Workflow Automation
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Learn how to take your Medical Aesthetics Practice from the following stages....
-Startup
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-Exit 

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Episode Transcript

Speaker 1 (00:03):
You're listening to Medical Millionaire, your podcast for medspot owners,
medical aesthetics, cosmetics and elective wellness entrepreneurs. Each week, we
dive deep into powerful marketing strategies, proven scaling tactics, and
the secrets to attracting high end clients, all while staying
ahead of the latest industry trends. Join us as we

(00:25):
uncover insights from top industry leaders to help you boost revenue,
enhance patient satisfaction, and master the art of marketing your practice.
Hosted by Cameron Hemppill. With over a decade of experience
in the aesthetics industry, Cameron has supported thousands of practices
and providers, working with some of the biggest names, most
well respected brands, and elite industry thought leaders in the field.

(00:46):
If you're ready to level up your practice and become
a true medical millionaire, this is your podcast. Here's your host,
Cameron Handpill.

Speaker 2 (00:57):
Hey, what's up everybody? Cam Hempill here your host for
Medical Millionaire. Thank you so much for taking the time
to tune into the podcast. My goal is to give
incredible value and insight for practice owners. I have an
incredible guest on today. Guys. We're constantly talking about numbers.
We're constantly saying, you know what, if you're a practice owner,

(01:17):
you need to know your numbers. But what does that
truly mean? What does that truly mean? And today we're
going to get into it, right because as you continue
to grow your practice, as you continue to become the
CEO of your esthetics journey, you have to understand your numbers.
You have to become a financier. You hear me talking
about it all the time. So I decided, you know what,
I'm going to bring an expert on and the gal

(01:40):
that I have with me today, guys, it's Stephanie Simkins.
She owns Harper and Fay Financial. She's been in finance
for years and she understands esthetics. She understands how to
talk about a P and L, a balance sheet, cost
of goods sold. And really, what we're going to try
to talk about today is let's make numbers sexy, right
Because I talked to a lot of practice owners and

(02:01):
I constantly hear I'm not sure what my numbers are.
I don't know, and I get the sense that some
people are afraid to talk about it, they don't want
to open up about it. And maybe it's because you're
too busy, or it's kind of a vulnerable subject, or
it's boring. But today we're going to make it sexy.
So I want to welcome Stephanie Simpkins of the show.
Thank you so much for joining me.

Speaker 3 (02:22):
Thank you, Cam. I'm so honored to be on the
show today. It's a big listener and I've been listening
for years and so I'm excited to finally be on
and talk numbers.

Speaker 2 (02:34):
Well, let's jump in. I really appreciate it. I know
that you tuned in and guys, we met through social
so she listened to an episode that I had, and
she dropped me out on Instagram and we started collaborating
and talking. I said, you know, I haven't had anybody
on the show yet that can really dissect this, and
if I have it, it's been a while, right, And

(02:55):
so where we are coming into today's July first that
we're recording, right, So we're we're officially halfway through the year.
And as you guys look at putting yourself in a
position to increase your EBADA, to know your profitability, to
know your numbers, to know your cost of goods, I
think now is an absolute perfect time. So let's jump in, right,

(03:18):
and aesthetics. We obsess over beauty, but behind every beautiful
business is a powerful set of numbers. And so Stephanie,
you say that bookkeeping is sexy. I agree. I'm a financier.
I've been setting finance for cheese fifteen twenty years, investing
real estate, running businesses, selling businesses. Shit. I actually manage

(03:38):
my own books. I'm a quick books expert. I don't
know if I told you that offline. Now, I'm not
nearly as good as you, but I've had quite a
bit of experience because i was forced to learn it. Right. So,
as an entrepreneur, you have this idea and you bring
this product to market, or if it's an aesthetics practice,
you have location or whatever. But at some point you

(03:58):
really have to understan now what that means, and so
talk to us about that. Let's start there, like, what
makes the back end of business just as critical as
the front end?

Speaker 3 (04:10):
Yeah? So I tell people all the time, your books
are kind of the backbone of your business. They're going
to give you a true representation of like what's going
on in your business. And you can have all the
flashy marketing you want, but if you don't understand your
numbers or have them accurate organized, You're not gonna you're

(04:33):
you're basically flying blind, and so making sure that you
are looking at your numbers and you're understanding them. We
heard all the time you just mentioned it, know your numbers.
What the heck does that mean? I don't. I don't know.
You weren't taught this in school. And a lot of
these METS owners, they're highly educated. I couldn't do what

(04:54):
they do like that is no goes right over my head.
But they start the businesses and then they don't realize
the importance of bookkeeping because you're going to see what's working,
what's not. Are you overspending in certain areas, Maybe you're
not spending enough in certain areas. And I think that's

(05:16):
where a lot of the confusion comes. And it's scary.
People are scared to talk about their finances and their
numbers and admit that they need help because it is
something that they just don't understand. And that's kind of
what I'm here for. It's like, I don't want you

(05:36):
to be scared. I grew up in a family of entrepreneurs,
and so talking about money is just like second nature.
To me, and it's something that I'm very comfortable with
and I want all business owners to be that way.
I want you to be confident and understand what is
going on inside your business.

Speaker 2 (05:55):
I'm glad you say that because for me, talking about
money and finance is it's one of my favorite topics.
I absolutely love it. I love to learn about investing,
compounding interests, like I'm not going to go to the
finance world here, guys, but yeah, I love to talk
about passive income. I love to talk about like, okay,
what are margins and what are healthy margins? What are

(06:17):
non healthy margins? How much should I pay my injectors
in this use case right? Like should I pay them
a commission plan? Am I overpaying and my underpaying? And
it's absolutely critical. So that brings me to my question
is is what I know you come from a strong
numbers background. Entrepreneur family talked about money. Shoot, you've probably

(06:37):
been invested in a four to one K and ira
and stuff since you were little. So I get that sense,
which is awesome and I've been there as well. But
when it talks about aesthetics, like why are you so
passionate when it comes to helping medspot owners understand their finances.

Speaker 3 (06:53):
Yeah, I think it goes back to you. I kind
of just like accidentally got into this and it's I'm
so passionate about money. I'll be honest, I'm passionate about
money in finance, and goes back to these business owners.
They start these medspas, they're super educated, but they don't

(07:15):
understand the finance side of business. And I just saw
this need where they they're wearing forty seven different hats.
You know, you're probably a provider, you're having to be hr,
you're you know, the marketing, you're doing it all. But

(07:37):
then the bookkeeping and the finance side gets pushed to
the back burner because a lot of times people think
that bookkeeping is only for tax purposes, and it's not,
and you should be looking at your numbers monthly, if
not more. And so I saw this need for these

(07:58):
business owners because they would just come to you know,
come tax time, which more than likely they're looking at
their books in February March of the next year. So
they're looking you know, a year later, it's stuff that
they did and they don't know what's going on. So
they're frantically trying to piece together. Where did what did

(08:22):
I spend you know at Target?

Speaker 2 (08:23):
What was that?

Speaker 3 (08:24):
Was that? Business? Personal? I don't even know, let's just
categorize it. So I saw this need because they have
so much going on, but they didn't have the time
or energy to put forth the effort that their financials deserves.
You should be looking at your books on a regular basis.
They should be up to date and accurate, because again

(08:45):
it goes to your driving your car, but you're driving
it blind. You don't know if you should turn left
or right, do you need to stop, do you need
to speed up? All of that type of stuff. So
that's kind of where I got into this world of
aesthetics is it's so fascinating, it's competitive, and you have
to be ready to change at the drop of a hat.

(09:07):
And so if you don't know where you know, maybe
you're bleeding. You don't know where to you don't know
where to turn. And so this is kind of like
why I got into it is I just saw these
business owners who do very well, but when you ask
them anything about their finances, they had no idea what
was going on? And how can you lead a successful

(09:29):
business if you don't know the data? That's driving the business.

Speaker 2 (09:36):
One hundred percent agree. I don't think like from a
visual standpoint talking about the car, right, I think that
that's a really good visual component. You're driving down the road, guys,
Like if you're going to go left, you probably going
to use your signal. Maybe not all of you, but
in some cases exactly right, Like you get your tail
light's work, You got to flip on the winshield wipers
every once a while, you gotta put oil on the thing,
gas and the thing. Like, there's signals, there's a dashboard component.

(09:59):
So I love that visual component because the audience that's
tuning in privately at they're artists, right, these these individuals, nps,
these practice owners, these providers, injectors, they're artists, and they
are extremely talented. They could run circles around me at
their craft. And you know, I have a tremendous amount
of respect for you, guys, because the amount of schooling

(10:20):
you go through on the clinical side, and then you
get into this world of business by default, be opening
up a practice or even working in a practice or
managing a practice, guys, and now you're almost like expected
to learn business marketing, HR shoot lease agreements, real estate stuff, right,

(10:40):
and it's a lot. It's a lot to take in in.
The good news is there's experts in the industry that
can help you understand it, make it easy, and make
it flexible. And to build on what you were saying, Stephanie,
if you wait right, like let's say you have your
bank account set up, your credit cards setup and maybe
you've connect I did it to quick books online, you know,

(11:02):
and then you wait till the next year or January
February March to actually match everything up from the previous year,
there's no way you're going to remember what's what. And
if you hire a bookkeeper, then you could speak on
this too. I've actually done this, guys. I have a
lot of passion for what you're saying because I've been there.
I've actually been there before many many years ago. Where

(11:23):
I waited, I thought it was during tax time and
you know, I didn't know how to match things up.
I had no idea. And you know, you expect a
bookkeeper to come in and match all of these transactions
up in a short period of time and they know
where to match them. They're just going to have tremendous
amount of questions for you and it becomes this task
that almost makes it unsexy. Right, So businesses have meetings

(11:48):
around finance, like whether it's weekly, whether it's monthly, there's
a meeting around finance, like let's look at the books.
How are our numbers, what's the profit, what's the loss,
what's the cost of goods? Where are we? Yeah? One
cool thing I saw this morning because I was I
look at my numbers every single day and quick books,

(12:08):
and they have rolled out this new AI stuff I've
seen that.

Speaker 3 (12:11):
Yes, I'm brand new.

Speaker 2 (12:13):
Like, wow, this is cool. I'm clicking in. It's like highlighting, Hey,
you are above here this month, you're below here this month.
It's a brand new feature from what I can tell.
But that's kind of cool too. So like to build
off what you were saying is you have to have
your bookkeeping correct, consistent and updated so you can drive

(12:35):
your vehicles straight down the road without crashing. So I
absolutely agree with you.

Speaker 3 (12:41):
Yeah, no, it's it's one of the most crucial pieces
of business that kind of gets put on the back burner.
To tie back to aesthetics, it's kind of like only
like people are like, oh, I only need to wear
sunscreen when it's Sonny out or in the summertime. No,
you need to wear sunscreen all year round. It's the

(13:02):
same thing for your bookkeeping. You need to be doing
your bookkeeping all year round because the damage that you're
doing by not staying on top of it is going
to hurt you so much later that you know, then
you're paying hundreds thousands of dollars to have it corrected.
Same thing goes for we're in your SPF. You know,

(13:26):
it's very simple.

Speaker 2 (13:28):
I could do better at that.

Speaker 3 (13:31):
Yeah, we all can do better. I have to say
I try to wear it every single day, but it's
the same thing. You know, staying consistent is going to
help you. And I think that's where business owners again,
it goes back to you're wearing so many hats that
it's hard to I, as a businessmaner myself, I have
to outsource. I outsource the stuff that other people have

(13:53):
a zone of genius for marketing. It's not my cup
of tea. I'm not good at it. I don't enjoy it,
and when I do try to do it, I just
stress out. I find that I'm I could be spending
my time doing something else more beneficial for my business.
Instead I'm spending hours trying to put together a real

(14:14):
and you know, I just don't have to.

Speaker 2 (14:17):
Yeah, delegate tasks and activities to the experts. You know,
I mean as the CEO of the company, you have
to continue to fire yourself in certain roles, right, And yeah,
what happens a lot of times as a practice owner
and entrepreneur. You have this great idea, it gets some momentum,
it gets going, and you fall in this trap of
doing administrative activities instead of focusing on your craft. And

(14:41):
imagine if all you did was focus on your craft,
focus on your craft, and continue to fire yourself from
administrative activities. And let's take bookkeeping as an example. Maybe
in the early days, you you know, watch a YouTube video,
you you know, take a class on quick books. You
learn some stuff which I would encourage you to do.
It's important to understand it, right, But so point you
bring in an expert, At some point you hire a

(15:05):
head of finance, depending on the size, depending on where
the practice is. Right. But you know, there's a there's
a call out here that I want to say that
it's it's financial clarity is a growth accelerator. It's it's
not a tax time necessity. It's truly a growth accelerator
to know where you're at. Guys, it's a non negotiable.
So pivoting for a second, let's get into some like

(15:27):
P and L. Like, let's talk P and L. Why
is knowing this report? P and L. Walk us through
it from the basics to knowing it. It's not just
an annual. Why it's so critical? Dive into that if
you could.

Speaker 3 (15:41):
Yeah, so the p andal is really going to give
you a ton of insight into your business and how
it's running. So we'll just start from the basics. Your
chart of accounts. Every you know, when you sign up
for quick books, they're going to give you a basic
chart of accounts. Cool, it's not made for the esthetics industry.

(16:05):
Let's say you want to have something that's going to
be custom to your business. So where you have income,
don't lump your income into all into you know, just
one services sales that means nothing. You need to break
it out. Okay, you have retail sales, you have injections,
you have estheticians, you have memberships. How much do you

(16:30):
generate from memberships? You know, breaking it out, because then
it's going to show you, Oh, Okay, here is what
I'm bringing in and then here's what's going out. You
know a lot of times people you sign up for
a subscription or some sort of like reoccurring charge that

(16:50):
adds up. Let's say you don't even need it. And
so looking at all of those numbers is going to
give you insight as to where your money's coming in,
where your money is going, is it working for you?
And you know, it goes back to again setting up
a custom chart of accounts where you essentially want to

(17:10):
have kind of three areas. So your income. Your income
is going to be broken out into kind of the
services that you provide, and then you have your cost
of goods sold, which I like to think of it
more of like variable expenses, So those expenses that are
going to like fluctuate depending on what you have going on.

(17:31):
So you're costing goods sold, you know, your supplies, but
I also like to include your providers those payroll expenses
in there as well, because that's going to fluctuate depending
on your income. And then lastly it's going to be
your merchant fees, which that's just very basic, but you know,

(17:55):
breaking out and then you have your fixed income. Those
expenses that aren't going to fluctuate much so your rent, software, insurance,
stuff like that.

Speaker 2 (18:07):
So if I'm hearing you right, what you're saying is
you can go set up quick Books. Right, that's a
monthly subscription that got different versions. And this isn't no
you know, commercial for QuickBooks. Definitely not getting compensated on that.
But it's it's a powerful tool. It's been around, it's
owned by into It, you know, pupply traded company. It's
a it's a it's a great tool. It's very common
for US businesses to use. But if you just go

(18:28):
get QuickBooks and you just start, you set up all
your bank accounts, your feeds that come in, and you
just have this generic template that they that they give you, you're
already set up for failures. Is that what I'm is
that what I'm hearing you have to set it up
like a templated version for the aesthetics owner. Is that right? Yeah?

Speaker 3 (18:47):
You want to have it because you want to be
able to pull that P and L at any moment,
and it should be able to tell you what's working,
what's not working, where your bleach. So you want to
have it structured in a way that's easy for you
to read. If you have everything lumped together is oh,
here's all my income. That tells me nothing. What is

(19:13):
the income made up of? Oh, here's all of your payroll.
What does that payroll include? It probably includes providers, you know,
maybe you have an esthetician, you have admin? Is that
including owners compensation? You know? Breaking those out into categories
is going to be so beneficial. And then it goes

(19:33):
into your cost of gets sold as well, which are
like direct links to the services that you're providing. How
much are you spending on that? And if you don't
have it set up in a way and it's all
lumped together in one way, then what good is it
to eat? You might as well just give do it

(19:54):
in March of the following year. Because your books aren't
going to be they're not going to tell you a story,
they're not going to be helpful. So setting them up
from the very beginning is crucial.

Speaker 2 (20:08):
Okay, Yes, it's critical, right, it's absolutely critical. And I
know that there's a tremendous amount of practice owners that
would go in set it up and just group it
into profit and loss. Here's income coming in, here's expenses
going out. What you're saying, is how specific categories? Right,
have subcategories and know exactly where everything is flown. And

(20:31):
so talking about payroll right, because I know inside of
this program there's great reporting on payroll. There's ways to
set up the payroll per provider so you know exactly
what they're making and how much they're making on commission.
You can break that out, right, you can break down
the hourly or if it's a salary or whatever. Therefore,

(20:52):
you can have these great conversations with these providers and say, hey,
like what is our goal for next quarter next year? Right,
yourself in a position say hey, look here's where you're at,
here's how much money you've made. What are you looking
to bring in for the business for yourself as you
go forward to kind of map this plan out. But
if you don't have this, there's no way you can
map it out. So understanding payroll, and this is a

(21:15):
common question I hear all the time. What's the ideal
percentage range for payroll as a percentage of revenue. So
you got revenue, guys, that's the top line. What is
the percentage of payroll that you Is there a sweet spot?

Speaker 3 (21:28):
Typically it's going to be between twenty five to thirty
five percent. Okay, So it's going to and every you know,
practice is going to be a little different, you know,
depending on the services that you provide, but typically that's
usually where you want to stay in order to keep

(21:49):
your profit margins as high as possible. Because what a
lot of times people don't realize is you need to
be including those payroll expenses into your pricing as well,
because I like to think of your providers, they're part
of your cost to get sold because they're a direct

(22:10):
expense to the services that you're providing. And so you know,
making sure that you understand that and okay, are we
a compensating our employees, you know, accordingly and then b
are our prices, you know, matching kind of factoring their

(22:31):
price into it as well. At the end of the day,
everybody has an hourly rate. I have an hourly rate,
your injectors, everybody does, okay, so you need to be
able to factor that into your pricing as well. And
so breaking that out is really going to help you
to say, oh my gosh, like we need to increase

(22:52):
prices because our payroll is astronomical and payroll is always
going to be everybody's highest expenses minus probably you know,
your supplies and stuff, but payroll is probably top expense
that every proctice has. But that's the cost of doing business.

(23:13):
And but you again making sure that you're set up correctly,
your price accordingly, it shouldn't be an issue.

Speaker 2 (23:22):
Yeah, it's it's you know, head counts expensive, right. You know,
the higher the headcount, the better the provider. You know,
front desk. You know, your your payroll is going to
continue to go up, and that should go up based
upon revenue growth. Right, So take her role with thumb there, guys.
You know, twenty five to thirty five percent for people
say twenty percent to just kind of depends on how
lean you are and what kind of growth phase you're in,

(23:44):
but it's definitely going to be your most expensive line item.
There is a really cool report and quick books that
I like to run for me, and it's you can
go in there, you can run P and L and
then you could break it down by percentage of income, right,
and it will show you your like your EBADA basically
your your net net income on a percentage basis. Right,

(24:07):
So if you have like a million dollars coming in
for the year and you netted three hundred thousand, and
broken down by all different categories, you can actually see
where you have the highest expense of income versus like that,
the revenue versus the net income. That's always been a
really valuable report for me to look at. You can
break down software expenses, right, you can break down you know, meals, travel,

(24:30):
you know those types of things. And I always look
at that as a flag of saying, Okay, are we
overspending somewhere versus where we were last quarter? Where should
we be? And so I always found that that report
very very powerful. Okay, So I want to talk about
cost of goods, right, This is thrown around a lot
as well. Cost of goods, and in some businesses, I

(24:54):
think it's less critical than aesthetics. This is a let's
call it retail medicine. This is what it is. This
is a brick and mortar location. Yes, very critical for
an inventory business for cost of goods. Can you dive
in on that for a second, because it's very different
than like a software company.

Speaker 3 (25:15):
Yeah. So typically, like I said, payroll's probably top and
the next is going to be costing goods. So we
see it all the time. Is people just you know,
lump it all together. But what they don't realize is
that to get an accurate profit margin, to see where
you need to be, to have accurate pricing, you need

(25:36):
to have those again broken out and making sure that
you're tracking them correctly so you know. Again, this goes
back to being really diligent about your bookkeeping or hiring
somebody who knows what they're doing. Because let's say you're,
you know, purchasing multiple supplies. Well, some is for injections,

(25:59):
some is for illness. You want to make sure that
those are getting categorized correctly. They might be on the
same invoice, so you need to split that invoice, and
people are like, whatever, I don't have the time, it's
going to lump it all into one. So there's such
a huge importance of like making sure that everything is
categorized correctly because at the end of the day, you know,

(26:21):
if your cost of I like to look at it
this way, if your cost of goods are going up,
your revenue should be increasing as well, because they have
a direct correlation. If your cost of goods are going
up and your income is staying the same or going down,
something's going on and in the world of that we
live in today. Inflation is a beautiful thing and everything

(26:44):
is getting more expensive. So making sure that your prices
are matching what you're pain And I see it all
the time where people they're scared to raise their prices.
They're like because Stacy down the street, you know, she
only charges nine dollars in a unit for a botox
and so you know, but then I'm still having, like

(27:08):
my price that I'm paying keeps increasing, but I'm scared
to increase my price. Well guess what, I'm sorry, but
that's just not sustainable. So making sure that it's just
it's so crucial, and it's one of those aspects that
it's you have to keep charge of it and keep

(27:30):
a handle on it because it could be a make
or break for some of the businesses.

Speaker 2 (27:35):
Yeah, and if you don't catch you early, it's you're
too late. Right. So if yeah, costs of goods is
outpacing revenue, we have a problem. We have a serious problem.
That's something you want to catch early. You know, you
probably have too much inventory on your shelf, for one,
in your discount exactly would you say those those are
the call outs, like red flag would be you have

(27:56):
too much inventory and you're discounting, and this is a
recipe for disaster unless you're doing a ton of volume,
which then leads to burnout and overwork and all that
other stuff.

Speaker 3 (28:06):
So exactly, and it's being strategic about Okay, you know,
you have these suppliers come in and they're like, oh,
if you buy you know X amount, we'll give you
a discount. Well, okay, now you're pain you know, twice
as much. Then you you have inventory issues, you have
too much. It goes in the discounting. You know this,

(28:28):
Just go with what you needed Forget the discount because
at the end of the day you're going to end
up discounting it for even more. So it's just like
this revolving circle of people. They see these deals and
they're like, oh, I got to jump on it. No,
don't jump on it. You know, it goes back to
like purchasing a new laser. Oh well they said they'd

(28:50):
give me a good deal on it, and I got
to get it now. No, wait, like, let's take a look,
let's run numbers, Let's see if this is feasible. You know,
time and time again, people they want that new It's
like the new shiny syndrome, object syndrome, however you want
to say it, or they have to have the latest
and greatest, and oh I have to have all this. Now,

(29:12):
you don't lead and mean that's.

Speaker 2 (29:14):
The best lead and mean it's it's not a you know,
entrepreneurship is it's the last woman or a man standing.
That's that's what it is. Because people just get knocked off.
It's hard. It's very very hard. It takes a tremendous
amount of discipline and accountability and showing up time and
time again.

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Speaker 2 (31:04):
If you scroll on Instagram or social media, you know
aesthetics is sexy, The industry is sexy. It's growing, it's appealing.
It's it's beauty, it's wellness, it's feeling good, looking good,
building confiden it's all these great things. But you can
also give this misconception that it's this path of a
quick book, and it's truly not, guys. It's it's the

(31:26):
path of running your aesthetics practice like a CEO, like
a boss, and knowing what works what doesn't work, being lean,
just like with your like with your personal bank account. Right,
if if you live within your means and you have
that discipline and accountability, you need to apply it to
your business life. Right. You need to hear the book

(31:48):
pay Yourself First or Profit First. It's great books. Have
you read those, Stephanie?

Speaker 3 (31:53):
I have.

Speaker 2 (31:54):
Yeah, Oh my gosh. It's such a life changing books.
You know it also help and you know, I think
we can get caught up in this shiny object, like
you said of the deal for this bulk order of neurotoxins,
or this we go to conference, there's this great deal
on this laser and miss at some point, yes, of

(32:17):
course it makes sense. But before you make that financial decision,
know what you're working with. And you made a comment
yesterday Stephanie, and we were talking offline that a lot
of people you work with actually look at their bank
account to see if they have money. Will you talk
about that for a second, because I think it's really important.
Some people manage their finances by Hey, how much money

(32:37):
do I got in my bank?

Speaker 1 (32:38):
Oh?

Speaker 2 (32:38):
Cool, I can purchase it, right.

Speaker 3 (32:40):
I couldn't tell you the amount of people that I
speak with that say, I just look at my bank
account every single morning, and if there's money in it,
then it's a good day. Sure, yeah, it's a good day,
but you also haven't factored in. Okay, it's Monday, I

(33:01):
have thirty thousand dollars in there. Friday is a payroll day.
Maybe your payroll runs you thirty thousand dollars because some
places it does. And so I think that's where people
get in this, like I don't know, it's like this
false sense of security by looking at their bank to see,

(33:23):
oh my gosh, I have money. I'm okay, but they're
not looking at their finances to say, oh, I have
a loan payment to make, I have a credit card
payment to make, I have payroll, like all of that
type of stuff is you know, needs to be factored in.
And again it's going back to looking at your finances

(33:45):
and your cash flow. I'll be the first submit. Probably
every aesthetic practice has some sort of cash flow issue,
like yes, you have money coming in, but you have
a lot of money going out. And this is where
people kind of get confused too, is oh, I have
these loan payments, I have these credit cards. Okay, Like

(34:07):
those aren't going to hit your P and L. So yeah,
maybe you're showing that you're positive, but that stuff's hitting
your balance sheet, and that's where people need to you know.
I feel like the balance sheet just never gets a
shout out. It's kind of like low of a totem pull.
Most people don't even know what it is. But it's

(34:27):
so important to be able to know that because that's
going to show you what's going in, what's coming out,
and give you a true representation of like, Okay, do
I have money to pay my bills? Do I not
have money? And yeah, just I tell people, I'm like, honestly,
just like your bank account, like once a month, to

(34:48):
be totally honest, like half the time, I mean, I
do it. I'm like I look at it when I
have to reconcile my books at the end of the month,
just because I have to pull my statements. But yeah,
I've really just tried not to when I look at
my finance, like my accounting software to help me to
make those critical decisions in my business so that I'm

(35:10):
not you know, stressed out all the time. And that's
a lot of the time. That's where people they they
come to me and they're like, I don't I can't
sleep at night. I'm so stressed out, like how am
I going to pay these bills? How am I going
to do this? How am I going to do that?
And it's like, okay, let's let's sit down, let's look
at your numbers. Let's see what's going on, so that

(35:31):
you can sleep better at night. I want you, I
don't want you to be stressed out. And I think
this is again it goes back to people are so
scared of money and numbers and finance because they just
don't know what to do. And if I can help
you to like read your financial statements, me sending them
to you and not explain it means nothing, I might

(35:52):
as well I even send it to you.

Speaker 2 (35:54):
Like, yes, I'm so glad. I said that. I've been
there too many years ago where I had I had
the bookkeeper, I had the CPA, and then they would
send me the statements with no explanation, and yeah, you
have to you have to figure it out. I'm sure
there's somebody in the audience that's like, well, I got
this bookkeeper, hang up the CPA, the some of my
financial statements. You have to know what they mean, right, Yeah.

(36:18):
So the bank account thing. I look at my bank
account every day I look at my broker's account every day.
I look at my bank account every day. My credit
cards all sync up to quick Books, so I kind
of got an idea what that is, and I know
my monthly spend is and so it's pretty pretty predictable,
uh for me. The there's a reason why I like

(36:39):
to look at my bank brokeer's account on a daily
basis not that it builds a self this like confidence
or this misconception of confidence if you will it. It
helps put me in a position to know is my
money making money? And I don't want to turn this
conversation into the whole finance.

Speaker 3 (37:02):
The investments piece of finance.

Speaker 2 (37:05):
Yeah, but I do see a lot of entrepreneurs practice
owners that they'll have all their profit come into the
bank account, okay, and and the bank account is paying
bills or the credit cards paying bills, and then they
have the automatic payment from the bank account to the
credit card. And if I was to give a tip,

(37:28):
you know, look, interest rates have come down a little
bit on like money market accounts and stuff like that.
And guys, this is not financial advice. I'm just I've
just this is what I do, and it works. Is
I store my cash, my cash reserves in an account
that actually pays me money. And if you have material

(37:49):
cash in there, you know, it can be substantial income.
And you know, I can obviously invest it in stocks
and all that stuff, whatever you guys want to do.
But if if you know, if there's one little nugget
that I could give, it's you know, don't let your
cash just pile up in some checking account or some
savings account at Bank of America or Wells Fargo. How

(38:14):
is it in a in a high yield, a minimum
like you know, just a money market account where you
can actually make money on your money. It could be
enough money to make your laser payment and you don't
even know about it. And we could have an entire
other episode on that conversation, right, But it comes down
to what you're saying is looking at your bank account,
your cash flows. And I think for an aesthetics practice,

(38:38):
you know, pivoting for the cash flow conversation for a
sec when you're when you're looking at your your monthly business. Okay,
if you have like let's call it July one to
July thirty. First, there's an entire month of revenue and
expenses and at what part of the month do you
start making a profit. And I think that that's important

(38:59):
to understand too, right because month one is today, you're
probably doing injections and you know whatever, laser treatments, micro needling,
wellness revenues coming in, expenses are going out. But there's
this point, and I want you to build on this
with me, Stephanie. There's this point within if things are
running well and profitably, to where the rest of the

(39:19):
month the actually that the profit starts to roll in,
even with the expenses continuing to accumulate.

Speaker 3 (39:25):
Yes, so yeah, I could go on a pal cash flow.

Speaker 2 (39:33):
Dates I open up there. Yeah.

Speaker 3 (39:37):
No, Like I said, it's the biggest issue that most
business owners have. And it's not just in the aesthetics
I see it, you know, in construction.

Speaker 2 (39:45):
In this.

Speaker 3 (39:47):
Too, you have to think about it is it's kind
of a seasonal business in a sense aesthetics. You know,
you have probably January or not January, November, December, those
are going to be huge months for you, So you
need to be planning accordingly and making sure summertime kind

(40:09):
of dies off. You know, people are traveling, they're not
really you know, they're gone, they're away they're not keeping
up on their treatments. You know, they forget about life.
Let's just be honest and so you know, making sure
that you're tracking to see too, that helps you plan

(40:31):
for for me, for instance, like I'm looking at you know, okay,
when is the bulk of your income coming in? And
then let's plan your bills. Let's paying your bills according
to that, so that you don't have that like stressful.
Oh my god, I don't have any money. How am
I going to pay this, you know, laser payment? How

(40:52):
am I going to make payroll? Okay, let's be strategic
strategic about this. Yes, payroll can't really fluctuate with that.
You probably run out on a bi weekly basis. That's
what nine times, nine times out of ten most everybody does.
But you know, being strategic about you know, your payments.

(41:12):
And two, I like to look at it this way,
like maybe you make an extra payment some months and
that's what a lot of people are like, oh, I
can't do that, No, you can. You have the income.
Let's do it now. And instead of just like you know,
sitting in the bank, let's you know, put it towards
principle so that you're going to have a lower payment

(41:35):
at the end of the day, like your laser should
be paying for itself, but you know sometimes it doesn't.
So yeah, it's just really tracking to see those trends
of like when money is coming in the most, because
then it helps you to plan to Okay, what should
we do the same thing, what have we been doing
to increase this? Let's try it next month and the

(41:57):
month after, and then you just kind of get in
like flow of here's when the bulk of my money
comes in the beginning of the month, and then I
can just kind of not be stressed. Stressed, but life's
a little bit easier.

Speaker 2 (42:12):
Yeah, you can kind of you can drive, right, you
have an understanding what's happening. Yes, it's definitely very much
a seasonal business, and it's important for people to prepare
whether those storms, if you will, right, because you want
to be again, this is the this is a last
person standing game in the world of entrepreneurship, and you know,
I just want to stress on that. But let's talk

(42:33):
about valuations exiting because at some point, you know, everything
has an expiration date. And I've said it a few
times on my podcast before Guys and other episodes but
there's an expiration date. Maybe it's in fifteen years, maybe
it's in two years, maybe it's you know, twenty years.
I don't know. You're either going to sell to a

(42:54):
strategic or private equity or public you know, offering. I've
seen some things happening there in the market. You're going
to sell it to a provider, you're going to pass
it down to your kids, or you're going to close
your doors. Like that's another real Like that's a thing
that absolutely does happen. So if it's me, if I'm

(43:14):
going to trade time for money as a family man,
and it's I want to make sure this ip that
I build, this intellectual property that I build. We're talking
to Medspot here, guys. I want to make sure I
can make it as valuable as I can. And I
just think that's the ethical thing to do, is if

(43:35):
you're going to trade time for money, make it operate correctly, right,
and so when you come to sell, because it's you know,
these conversations are happening. In fact, I've had several conversations
recently with the practice owners. But you have to have
clean books, and if you don't like it's it's hard

(43:56):
to get somebody to acquire it, and I want you
to talk about that from your from your expert opinion.

Speaker 3 (44:01):
Yeah, So when you have somebody coming in who potentially
wants to purchase your business, Yes, they're probably buying you know,
maybe your brand, your vibe, all that kind of stuff.
But the end of the day, they're buying your financials
and they are going to go through it with a
fine tune, fine tooth comb and look at every single

(44:24):
transaction that has run through your account. They want to
know everything that's coming in and everything that's going out,
and they are going to question you on a lot
of those transactions. And this kind of goes This is
like a little bit off the subject, but it goes
back to these business owners. I see it all the time,
the coming lean of funds. Please, if there's anything, stop

(44:49):
using your business account like a personal piggybank. Stop that
because you know they're going to question why you know
you have this, but like you know, is that necessary
for the business.

Speaker 1 (45:05):
No.

Speaker 3 (45:06):
So they're going to go through your your financials and
they're going to look at, Okay, what are some discretionary expenses,
what are non essentials, and then what are those like
owner preferences, which we all know what those are owner's
expenses just you just using like again like a personal piggybang.

(45:28):
So you know, having those accurate, clean up to date
books is so crucial because again, you don't want to
be going through and as a business owner, you don't
look stupid because you don't know what this is for
or what that is. It just makes you not it

(45:49):
makes your your business not look healthy in a sense
that it would be enticing for somebody to purchase when
you have all these questionable expenses that like what like
what is this? What is that? You know, Oh, you're
the sole provider, so we're basically like once you're gone,

(46:10):
there's all our income, like you know, things like that
that In these big private equity firms, they have teams
who this is all they do is they just go
through business financials line by line. And if you don't
have somebody on your team who's going to help you

(46:30):
to decipher through those transactions, you're kind of setting yourself
up for, you know, a low ball offer in my opinion,
And so you know, taking what I like to ask
people is what is your goal by owning this? You know,
do you want to walk away and then be done

(46:52):
or do you plan on Maybe you love what you do,
but you just don't want the business side, so you
want to stay on. Okay, how are we going to
be strategy about this and having your financials line up
with what your goals are at the end of the day.
Just because you sell doesn't mean you need to retire.
Like you know, a lot of these people who are selling,

(47:13):
they're young, they don't They're going to go on to
their next adventure. They're not retiring. So what do you
what is your end goal from this business sale? Okay,
let's make sure your finance your finances line up with that,
because when you are ready, you're going to have everything
in line. Nothing is going to be questioned. You're ready
to go.

Speaker 2 (47:34):
Yeah, well said, I mean the you know, the point
you made there on the commingling is very very real,
you know, using the businesses the personal bank account and
kind of running you know, personal expenses through there. I
think everybody is somewhat guilty of that, right, Oh, I
mean I do it.

Speaker 3 (47:51):
I included the other day use my business credit card
and Bob groceries. I didn't even think about it.

Speaker 2 (47:57):
I just hit yeah, here we go.

Speaker 3 (47:59):
And I was like, oops, I mean, it happens.

Speaker 2 (48:01):
But it happens, be smart about it. I totally agree.
And you made a really good point of you're setting
yourself up for a low ball offer because you don't
have the P and L set up correctly, you don't
have the balance sheet set up correctly. You're not paying
yourself correctly. You're just kind of dipping in and taking

(48:22):
cash from the business here and there. And you know,
whatever you're spending the money on. You know, I don't know,
and that's obviously up to you guys. But you made
a really good point there, because if you set it
up and you structure it correctly, and the business is
producing revenues, the revenue is coming in the P and
L set up correctly, the balance sheet set up correctly,

(48:44):
you are and I don't want to get off too
much topic, but you're maybe you set up as an
ES corp, or you own part of your you own
part of your business as an S corp, and you
pay yourself a w T two salary within that S
corp from the LLC. Well, now that expenses can actually
go on the balance sheet right versus the P and L.

(49:05):
And I want you to talk a little bit about that,
because that's really important. When these practices trade on EBADA,
they trade on net income, right, and I think that's
important to understand too.

Speaker 3 (49:16):
Yeah, so you know with EBAA, you know there's going
to be add backs, and so one of the top
ones that's going to be added back is owner's compensation,
and a lot of people don't realize that that gets
added back. Or if you have like a lot of
people have their spouse on payroll, you know, or a

(49:41):
close family member, stuff like that is going to be
added back in. Or those one time expenses you know,
you have a remodel or a certain repair, you know,
those one off type things, they're getting added back. And
I think that a lot of people, if you're strategic
enough about it, you are are planning for that and

(50:02):
you know that those are going to be added back.
So that Okay, I'm trying to get top dollar for
my business, because at the end of the day, the end
of the day, who isn't you know, you don't You've
worked so hard for this, and yeah, maybe you're not
going to get exactly what you're hoping for, but you

(50:23):
can get as close as possible. And so just understanding
how it all works is huge. And the funny thing
is when you're going to sell versus when you are
actually running the business. I heard this recently. It was
you know, you run your business now because you're trying
to save on taxes and you're trying to save money.

(50:45):
But when you're going to sell, you want to not
save money. You want to try to make as much
money as possible. And so it's like this like crossroad.
You're like, what do I do? And so just being
strategic and having somebody on your team to understand and
that at the end of the day when you do
go to sell is going to be so beneficial.

Speaker 2 (51:05):
Yeah, that's a good point. We talked to us about
add backs really quick, just leaning on that forer SEC
because it's really important for them to understand.

Speaker 3 (51:12):
Yeah, So addbacks are essentially going to be stuff that's
kind of added back to your net profit. So I
talked about your owner's compensation, those one off expenses that Okay,
maybe you had to pay an attorney a large amount
of money to write up some contracts, that type of stuff,

(51:35):
you did a big improvement on your building, stuff like that,
it's going to be added back. So that at the
end of the day the value is actually higher so
that you're making more. But it goes back to you
need to make sure that you are tracking that correctly
and you have documentation to prove that that should be

(51:58):
added back because you can't be like, oh, yeah, you know,
I put twenty thousand dollars worth of you know, improvements
into my building and you're buying it. Well, where is
that twenty Like what is that twenty thousand dollars meetup
of where is it? So it goes back to documentation.
Do you have a documented all of that type of stuff?

(52:18):
So again it's these expenses I like to say that
are going to be added back to your non profit
to increase the value of your business.

Speaker 2 (52:32):
Okay, I like it, and I want to I want
to give some math behind it, Okay, to help the
audience understand how material this can be on an exit.
So let's look at this as an example. Let's take
a million dollar abit a practice and you're going through
an acquisition and there happens to be ten percent of

(52:53):
that as advacs, So you know you got one hundred
thousand dollars of advas Let's say for example, and let's
say that this in this scenario, this particular medical asthetics
practice trades at five x even to libit is doing
a million, and you got one hundred thousand dollars that
ends up coming back in ad backs. How much money

(53:15):
is that at the end of the day. Oh gosh,
we putt But let's just say you get the hundred
thous you get the million dollar even of practice, it
trades a five x. You got you got a five
million dollar exit right here. Ten percent of that is
one hundred thousand, So you got a one hundred thousand that's
now add backs, so that times the five it's five

(53:38):
hundred grand on the multiple. Yeah, that's what I'm talking about, guys. Yeah,
so five point five million and a five hundred thousand
dollars check. Like when you when you talk five million
versus five point five it may not sound you're like
five million five who cares at this point, but no,
it's a half million dollars.

Speaker 3 (53:57):
Yeah, it's a lot of money.

Speaker 2 (54:00):
It's a ton of money. And to your point of
having it documented correctly and being prepared and well positioned
can get you, guys, the most amount of money for
your practice. And that's what you deserve, and so like again,
having a conversation with the professional, having a professional look
at your books, educating yourself on finance. Guys, this is

(54:24):
a really material conversation because you may look and say,
you know what, I'm not going to hire a bookkeeper.
I'm not going to know what. I don't need any
more expenses. But the investment is worth It's not even
it's a non negotiable, it's it's it's an investment in
the business that's absolutely required. And if you get the
right firm and right group with you, the ROI on

(54:45):
it is enormous. And so that's that's something I got
what you guys to absolutely know is how critical that is,
because that's getting a pretty MEETI when it comes to
financial success, like when it comes to legacy and come right.
That that's really really important to understand. And like what
Stephanie said earlier, you know these these private equity groups,

(55:07):
these financiers, if you will, they're all ivy league school guys.
I've had many conversations with them. All they study is finance,
Like they run circles around p and ls and balance
sheets and valuations, and their entire job is to make
acquisitions and get the best deal possible for their group.

(55:30):
They're going to try to beat you up like that's
what they do. They want the best deal. It's like
selling a house. If I'm a it's the same thing, right,
Like you're going to sell it, you want the most value.
If you're gonna buy it, you probably want to get
the best value. It's the same thing. So you got
to have common ground somewhere and you know, have the
agreements and finances in order to make it happen.

Speaker 3 (55:49):
No, I couldn't agree more. Yeah, I'm going back to
the house. It's like if you want top dollar, you're
going to clean your house, and you know you're going
to make sure that it is organized and accurate and
you know everything is in line, because if it's not,
then I'm going to come in with a low ball
offer because why would I buy this thing that really

(56:09):
I don't know is it a good BUYE? Is it
not a good BUYE? I have no idea. So you know, yes,
I couldn't agree more. And yeah, these you know, private
equity firms, this is what they do twenty four to seven.
This is all they do. And so and you don't
and so having somebody on your team to help you
is just going to benefit you so much, and the

(56:33):
ROI will just.

Speaker 2 (56:36):
Yeah, well, Steph, I know you're super busy, and I
really appreciate you joining and giving the audience so much
intel and education. And again, that's the entire purpose of
all these episodes, guys, is to continue to educate you
from a business lens. Right whether we're talking about marketing,
we're talking about finance, we're talking about systems, processes, sales, training, consulting,

(56:56):
all this stuff, it's super super important. And so before
you go, Steph, if you could just give us, like
one final thought, if a medspot owner, medical aesthetics practice
owner take if they could take one step right like
this week, to become more financially clear, what would that be.

Speaker 3 (57:17):
It's simple, just look at your P and L, because
I can. So many people don't. They're scared of it.
They're scared to see what their business is doing. And
it's one simple step to look at it, and then
you build from there and then maybe you you know,

(57:39):
work on creating a custom chart of accounts and then
you start to really break down, Okay, where am I spending?
Where's my money coming in? But if you don't start
with the basics of just looking at your financial statements
and if you don't know how to read them, ask
for help like Google, reach out to me.

Speaker 2 (58:02):
I will.

Speaker 3 (58:02):
I would gladly explain it to you. But it's just simple,
is that. Just look? Because if you don't look, you
don't know where you're going.

Speaker 2 (58:14):
Yeah, it's like, you know, if I want to, if
I want to build confidence within myself and you know,
anti age, I'm probably going to go hire you know,
an aesthetics practice owner or provider. And if you guys
want to, you know, get familiar with your numbers and
understand how to drive the car and how to drive
the medical aesthetics practice to get the most value possible,

(58:34):
you're probably going to hire a financier, right, And so
I think it just makes sense. And so Steph, I
thank you so much for your time. If people want
to find you, if they want to connect with you,
if they want to where where, where's the best place
for them to go?

Speaker 3 (58:48):
Yeah, so I they can go to heartburn fayfinancial dot
com and they can like book a call. If not,
I'm on social on Instagram and Facebook, heartburnfaifinancial dot com
or Harper FAE Financial excuse me, and yeah, they can
reach me there and I would love to connect and
help to answer any questions and make you know, finances

(59:10):
not scary because it shouldn't be. It should be not fun,
but uh, you know it's it's a necessary part of
business that shouldn't not be like dismissed.

Speaker 2 (59:23):
Make your book sexy. I'll live it at that. Make
your book sexy and make them you know where you're
confident in showing them. You know, I've gone through transaction myself,
and when the group was wanted to see financials, it
was like so easy to send them over and like
the fast you send them over and they look great.
They're like, okay, these guys have their shit together right

(59:45):
and you could lead with confidence. So make it sexy, guys, like,
you know, I can't you know, I can't agree with
her more so Stephanie Simpkins Harper and Faith Financial. Guys,
she's an expert, she's awesome. We had a wonderful call
yesterday offline preparing for this, so thank you so much
for joining there. You have you guys. I'll leave it
at that, have a wonderful week. Until next time. Happy injecting.

Speaker 1 (01:00:10):
Thanks for tuning in to Medical Millionaire Every week. We're
here to help you transform your practice into a thriving,
profitable venture, covering everything from marketing and patient bookings to mindset, workflow, automation,
and beyond. Whether you're just starting out, scaling up, optimizing operations,
or planning your exit strategy, this podcast is your go

(01:00:33):
to resource for success in the medical esthetics industry. It's
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(01:00:56):
to tune into the next episode of Medical Millionaire

Speaker 2 (01:01:00):
But doing Talking