Before we dive into the three main phases of launching a medspa, you need to know the Five Cs of Financing.
First, you need the capital for your business. This is typically a combination of 20% equity and 80% bank financing. The following are the five Cs of financing that banks will look for when choosing whether or not to approve a business loan.
1. Cash. This is your equity portion of the investment. You will need the money to put down against the bank loan. Again, typically 20%. Any funds you spend on the project prior to the loan being finalized will be considered as part of your total investment by the bank and typically approved as equity into the project.
2. Concept. Determine what will be offered at your medspa.
3. Credibility. This is often where Acara Partners comes in. With 25+ years of experience consulting and operating businesses in the aesthetic medical industry, our team provides clients with the invaluable insight and knowledge needed to launch.
4. Credit. You should have an average credit score of at least 700 with the three credit bureaus.
5. Collateral. When financing, use a Small Business Association-preferred bank. The SBA will guarantee up to 80% of the loan provided by the bank and you will need collateral to cover the remaining amount. Collateral could be in the form of securities, your 401k, or equity in your home. You must have the financial wherewithal to collateralize the business.