Byline: Samantha Barakat Light, founder of Body Catalyst, the largest body contouring and sculpting clinic, Body Catalyst.
When I looked into opening my first clinic, I was immediately met with the difficulty of funding a small business and the only way I could start the business was to buy the machinery outright.
When first starting out and testing the concept, I didn’t want to take investment and have someone else own a percentage of my business or debt funding, which is risky in an unproven product. From working in the commercial world, I had been able to save money and buy a house. In order to fund my first machine I had the opportunity to draw down on my mortgage; this was a saving grace in having the capital to start my business.
Body Catalyst started small – one clinic room and one machine but I knew that in order to grow I would need to invest further in machinery and locations. A year into the first clinic, in order to expand and not take on any debt funding, I was able to draw down further on my mortgage and sell my share portfolio to purchase an additional two machines and open two new clinic spaces.
Within the first 4 years, Body Catalyst went from 1 clinic to 5 clinics across Sydney and Melbourne and within an additional 12 months I opened 4 new clinics. 2019 is yet another year of expansion for Body Catalyst and to really scale, we are now seeking funding.
From self-funding to scaling your business and holding on to it 100%, these are my tips to success:
- Start small
The majority of new business ideas start off as a side hustle. Find a low cost model to test the market before making the leap into a full scale business. For the first few years, we didn’t own any of our own premises but rather rented a single room in an existing clinic, which meant we had a very low cost model and the business became profitable quickly, and I could reinvest all the money into expanding. This is a great way to test the concept before investing a lot of capital into your business.
- If you believe in your idea, invest in it
To fund Body Catalyst, I was able to do so by self-funding the business. For the first two years of running Body Catalyst, I did not draw a salary but rather invested all the profits of the business back in the business. Be prepared to make personal short term sacrifices for the bigger picture.
- Expert advice around business structure and funding is essential
Options to fund your small business and expansion are typically through the bank, obtaining a loan, franchising or investment. Body Catalyst has always owned 100% of the company but I realised that in order to scale as quickly as we would like to, we will need to obtain further funding as capital dries up. As a small business, it is becoming difficult to obtain debt funding through a bank. As we are growing, our business structure has become more complicated. We are now structured as a company and banks are extremely risk adverse when it comes to providing debt funding to a business that has been trading for less than two years.
In order to work with the banks, we have now enlisted the assistance of a broker who has a stronger relationship with banking institutions to broker a debt funding deal. Raising capital for a small business is hard work – the investment ecosystem is Australia is still largely behind other countries and for anyone who earns under $5m a year, investors are less likely to take the risk.
For Body Catalyst, debt funding through a bank is our preference in order to scale, and that way we can keep 100% ownership of the company.
Be clear on your business goals and have a plan to scale.
This year, Body Catalyst will be opening a further 4 clinics in Sydney, Melbourne and Newcastle.