The Profitable Exit Strategy Most Beauty Owners Miss

In this episode, we begin with a roundtable discussion exploring the critical importance of exit strategy planning for owners across the beauty and wellness space. From there, we dive into a conversation with Cameron Hemphill, founder of Growth 99 and the Medical Millionaire podcast, who unpacks why running your business like a private equity company can increase your value.

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Content Strategy & Direction: Shanalie Wijesinghe 
Creative Producer: Emily Badgley
Creative Direction & Copy: Jake Broselle
Edited: Stefanie Maegan
Sound & Music: Tristan Callaway and Servando "MAXXX" Moquette
S1 Sound & Music: Eric "Ric" Flores and Servando "MAXXX" Moquette
Camera Operator: Deborah Kim
Gaffer: Colin Shepard
S1 Pick Up Gaffer: Micah Goldfarb
Hair & Make Up: Z'dra Jaye
Hair & Make Up Assistant: Rhodela Castillo
Production Assistant: Alex Wiggins and Bence Talor
S1 Production Assistant: Drea Rodriguez

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Transcript

SPEAKER_03 0:01

Okay, I'm so excited for this episode because I feel like this is such a big trend, especially for med spaws, is the private equity and people prepping to sell their business or potentially franchise or go more corporate. So I'm really excited to chat with Cameron. He has a wealth of knowledge just in kind of setting up those exit strategies and like what KPIs and numbers you need to get really solid and be able to show for when you are getting ready to sell. So I think there's gonna be a ton of good info on that.

SPEAKER_02 0:37

Yeah, I feel like there's gonna be a wealth of knowledge because one thing that we've talked about kind of in different conversations is the lack of business acumen that a lot of business owners have. So I feel like for business owners who are looking to have that exit strategy in place as they're kind of preparing to launch their business, this is gonna be a critical one for them to listen to to gain that insight.

SPEAKER_01 0:59

Yeah, we did some great content last season too with Randy, more on the hair salon side of like what's your end game, right? Like, how are you getting out of this one day? So I think folks get really looped in on launching, sustaining, growing, those are all very important. But how are you bringing this to a close? Like, is someone gonna take over your business? Do you have someone that you want to give this to when you're ready to retire? But what does that look like? Right. So I think this is a really cool one. Like, and especially if you want to scale, like, do you go the PE route? How does that work? I think this is gonna be a good one.

SPEAKER_00 1:34

Well, I feel like the majority of our conversations when we're speaking with owners of different businesses, that is part of the conversation. Like, what is my exit strategy? Am I going to start franchising? What does it look like, you know, to know that I'm ready to even franchise or go to a second or third location? So I am excited about this, and it's something we're definitely gonna be able to like learn from ourselves and then have that, you know, content go to who we're speaking with when we're within our boulevard roles.

SPEAKER_03 2:02

Yeah, and I think it's really exciting even for our other industries. Like Shanali said, whether you're a salon, spa, med spa, barbershop, you're not gonna be doing it forever. You're gonna get to the point where, you know, it's a physical job if you're a provider, it's a stressful job if you're an owner, manager. So I think regardless of what role or kind of vertical you're in, it really is applicable to all of the different facets that we work with. So really excited to dive in.

SPEAKER_01 2:31

We work in the beauty industry, so clunky software is just not the vibe. Boulevard is sleek, made for beauty pros, and gets you compliments, not complaints, from clients. Podcast listeners get 10% off plus free guided setup. So head over to join blvd.com slash podcast to claim the special offer.

SPEAKER_03 2:52

Today's guest is a visionary entrepreneur and leader in the medspaw and healthcare space, empowering businesses and providers to achieve success through technology. He is the founder of Growth99 and the Medical Millionaire Podcast. I'm grateful to be catching up with Cameron Hempill.

SPEAKER_04 3:10

In the next five years, I think that five, 10%, even 15% could be owned by PE because they're attracted that frequency. But there's a there's a couple of numbers that the practice owner needs to understand if you guys want to sell. Most people want to sell when they're at the million to a million five range. That's the average practice revenue today in in the nation. So they're not ready yet.

SPEAKER_03 3:30

Yeah.

SPEAKER_04 3:31

Right? They're operating at 25, 30 percent, hopefully, some of them not even making any money. And they're buying EBITDA. They're not buying the revenue, they're buying the EBITDA. And so it's so important to understand profits, right? And so, and when they trade, they're trading at a certain multiple of the EBITDA, not the top line revenue. Practice owners need to understand is as these guys come in, some of them I think are trying to sell too early and they're leaving chips on the table. I agree. Utilization rate is 50% on average, five zero. It's like, and then they want to go open up location number two. So that's like capacity for the for the listeners, right? So it's like, okay, if I have this practice and I have like six rooms, for example, and only three of them are filled and the other ones are empty, and then you're gonna go open up practice number two. This is weird, right? Like you should you gotta be get at full capacity first because don't let a private equity firm come in and buy you at 50% utilization, you have okay retention, you're like right below the threshold. Like that's where you're attractive to them. They come in, they just put the sprinkle dust on, they align the marketing correctly, the tech stack correctly, get your utilization rate up to 80, 90 percent, and then flip out and make more money than you did from your grinding hard work.

SPEAKER_03 4:37

Yeah, they come in and get that exponential return just by tweaking a couple things, investing in small things, whether it be tech or staffing, whatever it may be, and then they see that utilization pop up to 80, 85 percent.

SPEAKER_04 4:52

And then trade out there. And I think that money should go back to the practice owner. So for for the listeners out there, I think if you guys are looking to sell at some point, hey, look, there's always an expiration date. You're gonna sell to private equity strategic, you're gonna close your doors, or you're gonna pass it down, or whatever is that like.

SPEAKER_03 5:06

There's a there's an end point.

SPEAKER_04 5:07

There's an endpoint, and I'm a firm believer that if you're gonna put your hard work, you wake up every day, you grind your ass off, and you have cried as an entrepreneur. Like you have experienced like moments in your life of like a very dark environment. I've been there. I know what entrepreneurship's like. This is not easy. There's a reason why you make a sports car with two seats, it's because it's lonely at the top. It's lonely. And uh I hate to see practice owners sell too early and leave chips on the table, and then a very, you know, good finance person come in and acquire it and make more money than you. When you sell your practice, you should run it how a private equity would run it. Yep. Makes you run it more efficiently, and then when you sell it, they'll actually buy it for for more than you think. You know, I just want you guys to make more money at the end of the day. And I think there's opportunity for everybody and private equity.

SPEAKER_03 5:54

I agree. I think it's very hard for an entrepreneur who owns their own business to transition to that private equity mindset, but it's important if that's your plan. If you're gonna sell, like you've got to buckle up for that. I would say even like years in advance of planning to sell because you're right, there has to be an end game. Like, you can't, no one wants to be doing that forever. We eventually all want to retire, go play golf every day in Florida. Like, that's the goal, right?

SPEAKER_04 6:20

Try to.

SPEAKER_03 6:21

Yeah, that's the goal. So I think that's that's something really important for businesses that that is their end goal to be thinking about. Anything else? Any other exciting? I know you talked to me a little bit about perk. That was something I haven't heard of, which is not usually I feel like I know all the happenings, so I'm excited to hear about it.

SPEAKER_04 6:39

When I left day-to-day operations at Growth Any, and this is quite recent, it's an interesting world to live in. Um, because you you worked on your baby. I worked on this for 10 years. And when I left, it almost like I was like, dude, where's my identity? I kind of lost it for a minute. And and that'll you practice owners and other people listening in and that have sold a business or a practice, you'll go through that. You think of there's this light at the end of the tunnel, which which there is from a financial standpoint, but this baby of yours, whether it's XYZ Med Spa or XYZ Tech Platform, you know, there's a big identity behind it. And so you got to be prepared for that. And when I was leaving, I just was like doing research in the industry. I'm always curious. I'm a curious person. Like I was pretty in school because I was always like, well, I was terrible. Does it work this way? Well, I would question things.

SPEAKER_03 7:20

Yep. This was just a taste of everything covered in our full episode. Keep the conversation going on last client of the day. Now streaming wherever you get your podcasts.