What drives a weight loss clinic’s profit?

A weight loss clinic can look busy and still earn little, or look quiet and earn steadily. The difference usually sits in a handful of levers. Treat what follows as a list of things to check, not a verdict. Your accountant can help you read the statements.

Program revenue versus product revenue

Ask the seller to split revenue into the program, meaning coaching and visits, and products such as supplements or meals. Program revenue tends to repeat if clients stay. Product revenue depends on stock, suppliers and the cost of what is sold. Check that the cost of goods lines up with the stock records, as in checking whether a health food store is profitable.

Why clients stay or leave

Retention is the quiet driver. Ask how many clients finish a program, how many renew and how many stop early. A client list with start and end dates will show this better than any summary. If most clients arrive through one coach, ask what happens to that pattern when the coach leaves.

What it costs to win a client

Look at advertising, referral fees, promotions and free consultations. Then ask how many enquiries became paying clients. A clinic that spends heavily to fill every program has a different profit picture from one fed by referrals and word of mouth.

Staff and coach pay

Find out whether coaches are employees, contractors or paid commission, and whether the owner’s own pay is in the books. Ask whether the owner’s own pay is in the books; your accountant can advise on any adjustment. Your lawyer can advise whether any worker is classified correctly.

• Request monthly revenue by program and by product.
• Match client start and end dates to the payments received.
• Compare marketing spend with new clients signed.