Listen to our interview with Matt Brinton of Elase Medical Spa
This week’s podcast features a case study with Matt Brinton of Elase Medical Spa and how they took an unorthodox approach to how they serviced their customers to keep their high-end medical spa thriving in the midst of the Great Recession. By looking at other industries and incorporating some lessons they learned along the way they were able to keep things thriving and growing.
We also talked about how they financed their business and the importance of building great relationships. This is a podcast you won’t want to miss.
Information you need, the podcasts you trust, this is the PatrickWiscombe.com podcast network. Bringing you interviews with top business professionals and business financing tips to fuel your American dream. This is the Business Fuel Podcast heard exclusively on Lendio.com. And now, here are your hosts, Ty Kiisel and Patrick Wiscombe.
Sponsorship: This podcast is sponsored by Lendio.com. The online source you need to find the right business financing to grow your company. Check them out for free at Lendio.com to get your business growing right now.
Patrick Wiscombe: Serving over 360,000 people, this is the Business Fuel Podcast. Good morning, I’m Patrick Wiscombe. Thank you as always for tuning us in and taking us along wherever and however you’re accessing the podcast. Coming up on today’s edition of the Business Fuel Podcast, we’re going to be speaking with a gentleman by the name of Matt Brinton who is the owner and co-founder of Elase Spa here in Utah. We’ll bring him in here in just a second. But I also know he has a fairly extensive background in corporate law and business management. He also has a laser clinic operating in 15 locations in the western United States. I didn’t know it was that many Matt.
Matt Brinton: Yes. We have some locations throughout the Intermountain West under a different brand. And then Elase Medical Spas here in Utah.
Patrick Wiscombe: Let’s bring in the producer and co-host of the podcast, Ty Kiisel. How are you?
Ty Kiisel: I’m doing really good, how are you?
Patrick: I’m doing good. You managed another successful road trip over the weekend. I was following your adventures in your Facebook posts.
Ty Kiisel: It was awesome. We went down to Arizona in search of the sun. It was incredible. Sometimes it’s nice to get away for a couple of days and do something fun. It kind of re energizes you for when you get back.
Patrick: I know you have just written a new blog post for Forbes.com. Just do a search for Ty Kiisel. It’s entitled, Your Brand Isn’t What You Think It Is. Give people a little bit of a preview.
Ty: Years ago I had a really good mentor who said, “Your brand isn’t your colors. It’s not your logo. It’s not what you say you are. It’s your values and how you act on those values at every point of contact with your customers and with your employees.” And that’s the discussion in Forbes.
Patrick: Alright, check out that article, Your Brand Isn’t What You Think It Is. Just do a search for Ty Kiisel. Let’s bring in Matt now. Ty, you did an article on Lendio.com about Matt and his wife Carrie about how they opened Elase Medical Spa. The title of that article is, Unorthodox Approach to Challenges Fosters Growth Through a Great Recession. That was the title of the article, but I know you have some questions that you want to ask right at the top.
Ty: Matt, it’s good to have you on the podcast and be able to talk to you again. I really love the story of your business and look forward to sharing that with our podcast audience.
Matt: Thank you Ty and Patrick. It’s really good to be here this morning.
Ty: Maybe we ought to start by describing what your business is and what it does before we jump into questions. So tell us a little about Elase Spa and maybe a little bit about what you’re doing more recently.
Matt: Elase Spa is a medical spa. And a lot of people might not know what that means. It essentially means it’s the collision of two worlds. The traditional pampering spa with pedicures and facials and waxing, colliding with the medical world of laser technology and injections. And where those two worlds collide, we’ve developed a retail business model where we have nice, high-end retail medical spa facilities that offer medical grade services. Services like laser hair removal to laser skin resurfacing and laser skin rejuvenation. We offer dermal injections like Botox, fillers, and all kinds of different treatments that require prescription medical devices and products and require medical supervision. Yet we’re in a retail facility that people can easily find and easily access. Come in and quickly get the treatments done that are safe and effective in a nice spa setting versus going into a hospital or a doctor’s office. It’s been a great business model for us, our customer’s love it. We have high volume on all our services and products and we’ve been able to grow through this wild economy. It’s something I’m really excited to talk to you about today.
Ty: You started the spa in 2004. Things were going great, you started to expand and then I think everybody knows what happened to the economy, generally, in 2008. What happened to your business?
Matt: 2004-2006 were phenomenal years for everyone. Probably a lot of smiles out there. Seemed like a great time. The housing market was booming, people seemed to have a lot of discretionary income. In our world, it meant we were able to charge upfront for all different kinds of procedures that generally require a series of treatments. So the business model at the time for most of the procedures we provide was people would come in, they would opt for laser hair removal for example, so we would have them pay upfront for 6-8 treatments. People were writing checks to us and using credit cards to pay for these or they were able to easily find financing through a company, a division of GE Capital, called Care Credit. It was a simple process and things were going really well. We grew quickly. 2004 was our first location. It was a small location in South Jordan and we quickly outgrew that and built another location in Sugarhouse, Salt Lake City. Then in 2007 we built in Draper, just south of Salt Lake City. Things were good, then along came 2008. My wife and I were actually on a cruise at the time, October 2008. I remember distinctly there were all kinds of business people in our group and I remember people looking at their phones, and PDA’s just watching the stock market. That was the first time for me that I really sensed there was a lot changing in the market. Soon after we got back from that, we got a letter from GE Capital saying that we’re closing down this financing option for you in a matter of days. That was an important part of our business model. So we realized this game is over with easy financing. That’s when we were forced to innovate with our membership program.
Ty: One of the things that I think is good about your story is that it illustrates in a real way what happened back then. We were watching on TV and reading in newspapers about “credit crunch.” It was impacting small business’ ability to do business. So much of what was going on was relying on the ability to function with credit. This really impacted your customers because procedures that they were able to put on a credit card or finance with GE, they were now not able to do. You had to really start thinking about, “What are we going to do. Are we going to continue to expand? Are we going to contract? How are we going to solve this problem?” And in looking for a solution, you found yourself in a spa in Las Vegas one day. Talk about what you learned there.
Matt: This whole credit crunch really started in 2007, if I remember right, and it really impacted the housing market first. I always felt like that was something that would just affect housing. But it bled over into every part of the lending world. We suddenly found GE Capital shut that door for us. We also found it more difficult working with traditional lenders, banks and credit unions, to finance very expensive laser equipment. At the time we were using various equipment leasing companies to finance this equipment that can sometimes cost $100,000 per device. It was very easy to find access to this capital, a simple phone call and you’d have this $60,000-$100,00 peice of equipment sent to you that week. It was alarmingly simple. We know what happened and things have changed since then. But it really impacted every aspect of our business from financing equipment even down to financing consumers. At the time we were fortunate enough to have a really good friend of ours trying to work with us to figure out a way to franchise our medical spa model. He was trying to analyze our business and figure out whether he could franchise the entire business, or at least a part of it. He had a contact that owned the Las Vegas Athletic Clubs. Our friend, Kenny, said that the model in Las Vegas is delivering the highest quality services at an affordable to medium price range. If a customer walks in and sees how nice this gym is, with all the services and products offered, when they see the price, they won’t want to go anywhere else because there is so much value. The phrase that was used was, “An A product at a C price.” So that resonated with us. We went down and visited these Las Vegas Athletic Clubs. They’re beautiful gyms and they’re busy. They have a lot of nice equipment and services. And when you hear the price, it’s something that customers are saying that it’s such a great value, why not do it? So that’s what we wanted for our business. It wasn’t easy because we were used to getting these upfront payments. It was sort of hold your breath and hope we come out the other end ok. We completely revamped everything; our look, our sales pitches, our marketing. Everything was revamped to explain to the customer what this membership program would mean. We couldn’t find anyone else in the medical spa industry doing anything like this. It really was a novel concept. We took the value of our services and divided it out over 12-24 months depending on what we’re talking about. We would take these small monthly payments and allow the customers access to the treatments. It worked well because, for example, hair removal takes multiple treatments. The concept was received well and resonated with customers, but we weren’t sure how it would impact our cash flow. We decided on a launch date after spending months trying to put this all together. But we weren’t really sure if it would work; we had risked a lot. We had every asset on the line. Our house had two mortgages and I even turned over the title on our cars. This was a make it or break it moment for us. It wasn’t easy, but we thought we had a really good concept and we thought consumers would like it. So we picked a day in March 2009 when we suddenly shut down the upfront payment piece and started the membership model. We were blown away by the consumer reaction to it, customers loved it. That was in the teeth of a pretty nasty economic downturn.
Ty: When I first heard this story, I was really impressed because you’re in a high end business that you would not expect to do well over the years following the start of the recession. But you were able to step back and look at your business with a different paradigm. It’s a legitimate strategy to look at other businesses and incorporate that into your small business. Having been through that, what advice would you have for other small business owners in whatever type of business?
Matt: Put yourself in the shoes of the consumer. Consumers want value, that’s the bottom line. Even in an economic downturn, you need to provide value to the consumer. Show them the value, and value doesn’t always mean price. In our context of the membership model, yes the price was an important part of it. We had to make sure the customer understood that we are partnering with you to get this fantastic result you want. We’re willing to finance this, no interest, no credit checks, good faith, we’re committing to finance this with you. But we need a commitment back from the consumer. And they were willing to commit because we were shouldering this financing in house. At the same time, we didn’t skimp on the equipment we were using. We were still using high quality, top of the line, high end laser equipment to give the best results. Our consumers still found this to be great value even though a lot of our customers weren’t making the same money they used to, their homes weren’t worth what they were, they still wanted our services. We made sure we weren’t cutting corners anywhere else to accommodate this change in our model and the lower prices we were charging. We wanted to maintain just as clean, well decorated, well lit, well trained staff, every aspect of our client experience, we had to maintain a high level so our customers could still find value. We ended up making lower profit with higher volume. So the value continued to resonated with our customers.
Ty: You just touched on my next point. Let’s pretend 2008 never happened and you continued on the same model you were on pre-recession. Do you feel you’ve done better? Not quite as well? As you look back with hindsight, do you feel you were forced into a situation that actually improved the viability of your business over the long haul? What are your thoughts?
Matt: Good question, I’ve thought a lot about this. The end of 2008 was rough for us. We saw dramatic drops across the board in all of our services. I’m sure some of it was just fear of what was happening. So moving to this model in early 2009, we saw very slight drop in revenue. But as more and more people heard about what we were doing, we built up our membership base. We ended up having, at the end of the year, the best two quarters we’d ever had for laser hair removal service. It shocked us. We thought we’d see a lot more attrition. But the actual attrition rate was alarmingly low. We built in 10% we felt would drop off. We didn’t have any kind of model to look at. But it’s never been more than a few fractions of a percent, that attrition rate for our members. We were surprised at how successful it was and we were surprised how many people signed up. A lot of people would start then come back and add on additional body areas and procedures. And we were also shocked at the average membership price. Pretty much everything surprised us in a good way for the last half of the year. The economy has improved and we still have the same membership model. And we have the same prices, some have changed slightly, but only very slight price increases. I think it’s still something that resonates with the consumers. We’ve expanded the membership concept into almost every service we provide. It started with the laser hair removal, but now we have membership packages for almost every service we provide. Maybe 2009 our gross revenues dipped a little bit, because of the first quarter, but we have continued to grow our business. Every year has been better than the last.
Ty: Do you feel like this has created loyal customers who come back again and again more so than the previous model would have? What has this done to the relationship you have with your customers?
Matt: We hope our customers feel like we are partnering with them in this endeavor to help them look better and feel better. This membership model lends itself to that. We’ve really tried to make these services and products we offer as affordable as possible. We’re interested in a long term relationship with our customers and across multiple services. If they come to us for laser hair removal, we can also offer other services they may not know about. We can do laser skin tightening, we can remove age spots and sun spots, we do all kinds of anti-aging procedures, and a lot of those go hand in hand helping people feel better about themselves. With this membership model, I hope we have invested in a long term relationship with our customers where they will trust us not only with what they came to initially receive, but they’ll also trust us with all the other amazing products and services as well.
Ty: Your story is a great story for two reasons. One, I really like the way you adapted to the economic downturn. Having been through this, it would have been easy to crawl under a rock and wait this one out. You didn’t do that. You came up with a way to make this work for your customers. But you also mentioned that purchasing the equipment was challenging and you had to work to finance the business growth of your company. Talk a little bit about what you had to do to make sure you had the money to grow and operate. Finding capital is probably one of the biggest challenges small business owners face.
Matt: Definitely a huge challenge. I wish I’d found the Lendio website back when I was trying to do this, it’s a phenomenal concept. We did it the hard way. In the early days of 2004-2006, we started with a $50,000 SBA loan. It seemed pretty easy to get. I don’t recall many problems. We had to personally guarantee it, but I remember it being an easy process. Mountain America Credit Union was great to work with. Getting laser equipment involved nothing more than some phone calls to the laser companies who connected us to equipment finance companies. We swapped some financial information. But it came to the point that it was simple phone calls and we’d have these very expensive pieces of equipment show up. Things were good and those were great days. Things changed in 2007-2009 and it became a very difficult process. But for the better in a lot of different ways. Getting credit was too easy at the time we started. These laser lending companies went away, and we were forced to look to local banks and credit unions to help us finance our equipment. Because I had been involved since 2004, I had a real sense of how things changed. I was involved with different lenders, and the process was a massive change. Suddenly a lot more documents were needed, a lot more collateral was needed, personal meetings, and successive rounds of meetings. Sometimes months would go by and the information would be old and needed to be updated. We knew times had changed and the banks were trying to be careful, so we did it. We played the game and submitted additional information. I saved these 2 inch binders full of documents we were submitting. We also had to be careful with our business plans. One piece of advice I would give anyone who is looking for capital is do a really good job writing up a business plan. That was helpful for us to explain who we are and this is what we’re going to do with the money. But it was tough. We didn’t always get the capital we wanted. Banks wanted to be over careful, so we had to scrap. A lot of times it would take multiple lines of credit to get the equipment financed. But we’ve paid it back, so no worries. We’ve been fortunate that we’ve never missed payments or defaulted on anything. I’m very grateful for a number of local banks and credit unions that continue to believe in what we’re doing. And it really comes down to personal relationships that we were able to develop with our lenders.
Patrick: Ty and I have been talking for weeks that sometimes it really just does boil down to relationships.
Matt: Absolutely. We always try to be very conscious of that and be as accommodating and responsible as possible. We try to do as professional a job as possible in supplying the information. I try to put the documents in a nice, three ring binder with tabs and hand deliver it as much as possible. I feel like we have to have these people on our side helping us through the process.
Ty: It’s a lot easier to say no to Elase Medical Spa that it is to Matt.
Matt: It might be the inverse with me. I think our spas are a lot better looking than me.
Ty: I think relationships are important. But I get a lot of people saying that it’s all about the numbers. If the numbers don’t match up, then the answer is no. I think you demonstrate that if you have two borrowers with essentially the same numbers, the thing that pushes your loan to the head of the line is whether or not you’ve been able to make a successful relationship with the lender. Would you say that’s true?
Matt: I totally agree. I don’t fully understand the underwriting process, but again, it’s people. When they know they’re dealing with someone who has passion for their business, and has a good business model and drive, that doesn’t show up in the numbers necessarily. I tried as much as possible to have meetings at our facilities as well so they could actually see what we were doing. I think that impressed them to know we do high quality procedures. So when there’s a toss up, hopefully you’ve established the right kind of relationship and they believe in what you’re doing.
Ty: If you were to give advice to any small business owners who are looking for capital, what would that advice be?
Matt: I think it’s important to establish as many relationships as possible with as many different lenders as possible: banks, credit unions, private individuals. For Elase Medical Spas, borrowing money and establishing these relationships was good for us. It forced us to run a lean operation, we were accountable to these lenders. We had to perform, we had to personally guarantee the money. I think it forces borrowers to be really careful. Sometimes I think with equity investment, there can sometimes be not quite the attention to detail. Whereas borrowed money really forces a business to be better I feel, at least in our circumstances. Don’t be afraid to borrow the money. If I was smart enough to go to Lendio, they would have helped me with this process. But I did it the manual way. A lot of different institutions stepped up to help us. And treating the lender the way I would want to be treated if I was in their shoes.
Ty: I think that’s great advice. Thank you very much. It’s been a pleasure to talk to you again. Like I say, it’s not the typical business you’d expect to thrive during the economic times we’ve had recently, but boy you’ve done it. It’s incredible. I hope you look back and are darn happy about what you did.
Matt: We’ve been fortunate to cross paths with great people. Kenny, who helped us with the membership model. And my wife Carrie is amazing. She’s the one that really deserves all the credit. She handles all the marketing and branding and training of our employees. I think the greatest asset any company has is it’s employees. And we have been so fortunate to have the people who work for us that work so hard and treat our customers right. That’s more of our success than anything. It’s been a fun ride and we’re looking to a lot of good years ahead.
Patrick: We’ll go ahead and wrap up this weeks edition of the Business Fuel Podcast. Our guest has been Matt Brinton. You can see what he does and experience what he does, just go to Elase.com. Matt, thank you for carving out a few minutes for us.
Matt: Thank you Patrick and thank you Ty. It’s been a lot of fun.
Patrick: Before we take off Ty, I just want to remind people about the article that you did about Matt and Carrie and the Elase Medical Spa. You can find it on Forbes.com. Just do a search on Ty Kiisel. Pretty inspiring actually that Matt’s business has been able to thrive in honestly horrible times.
Ty: It’s a great story.
Patrick: You’re also publishing some additional content for Lendio. Go to Lendio.com/blog and you can pick up the podcast every Tuesday. You can also do a search on iTunes, just do a search on Lendio. Also, do yourself a favor, pick up Ty’s book, Getting A Business Loan Financing Your Main Street Business. The way you’ve written it is definitely not dry. Your content is basically blog posts. It’s easily digestible.
Ty: I pretty much spill my guts. You see all my warts from my exploits into small business to the challenges of finding money. If you think the only place to go for money is banks, it will open your eyes.
Patrick: Agreed. Pick this one up on Amazon. Just do a search on Ty Kiisel. The book is, Getting A Business Loan Financing Your Main Street Business. So for Matt Brinton, Ty Kiisel, I’m Patrick Wiscombe. Thank you for listening, we’ll talk to you next Tuesday.
Bringing you interviews with top business professionals and business financing tips to help fuel your American dream. This has been the Business Fuel podcast, with your hosts, Ty Kiisel and Patrick Wiscombe, heard exclusively on Lendio.com