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Why Every Med Spa Needs a 90-Day Cash Reserve: Your Safety Net and Growth Engine
Emergency Cushion Against Revenue Disruption
Med spas are inherently seasonal and vulnerable to unexpected disruptions. Whether it’s due to external forces or internal issues, cash flow fluctuations are inevitable. Having 90 days of cash ensures you can maintain operations even during a sudden revenue dip.
Common disruptions include
Slower summer or post-holiday months
Provider vacations or staff turnover
Equipment breakdowns or IT outages
Economic downturns or public health events
Without a cushion, a single slow month could spiral into bigger problems—missed payroll, vendor defaults, or loan delinquencies.
Gives You Time to React Strategically
A strong reserve buys you decision-making space. If something goes wrong, you’re not forced into a reactive or desperate choice. Instead, you can:
- Rework your marketing strategies or limited-time offers
- Trim underperforming services
- Renegotiate contracts or leases
- Restructure your debt
The key is avoiding panic. When you’re not in crisis mode, you make smarter, more profitable decisions.
How Much Is 90 Days of Cash Flow?
To calculate your target reserve:
1. Total your average monthly operating expenses, including:
- Payroll
- Rent and utilities
- Software subscriptions
- Marketing budget
- Vendor payments
- Equipment loans and financing
2. Multiply by 3.
Example:
If your monthly expenses = $85,000 → Your 90-day reserve = $255,000
How to Build the Reserve
If this number feels out of reach—don’t panic. Build it in stages:
- Start with 30 days, then aim for 60, then 90.
- Set aside a % of net income monthly (automate it!)
- Open a separate high-yield business savings account—out of sight, out of mind.
- Use strong revenue months to boost the reserve, not just expand spending.
What Not to Do
- Don’t keep reserves in your operating account. It’s too easy to dip into.
- Don’t use it for day-to-day spending unless it’s a true emergency.
- Don’t treat it like a profit surplus. This is your business insurance.
How This Helps Fund Expansion
Your 90-day reserve isn’t just for protection—it’s also your growth engine. With strong reserves, you can:
- Hire new injectors or aestheticians with confidence
- Expand hours or open a second location
- Launch new services or marketing campaigns
- Buy equipment or build out rooms without high-interest loans
This is how smart med spas grow from retained earnings rather than debt.
Expansion at the Right Time
With capital in reserve, you can wait for the right opportunity instead of jumping at the wrong one out of urgency:
- A new space opens in a prime location
- A competitor exits and sells equipment at a discount
- A top injector becomes available for hire
- A bulk vendor deal appears for your best-selling products
Cash on hand means you can say yes immediately, without destabilizing your business.
Easier Financing and Stronger Credit Position
If you ever need a loan, your reserve will dramatically improve your:
- DSCR (Debt Service Coverage Ratio)
- Loan-to-Revenue Ratio
- Current Ratio (Assets vs Liabilities)
Banks love well-managed businesses with cash. You’ll get:
- Better interest rates
- Higher approval chances
- Less personal collateral required
Hire and Train Without Pressure
Most new team members take 60–90 days to become revenue positive. Reserves allow you to:
- Hire confidently
- Cover onboarding and training
- Absorb early payroll costs before ROI kicks in
Without reserves, hiring is a gamble. With reserves, it’s a strategy.
Avoid Growth-Related Cash Flow Crunches
Growth requires upfront investment:
- New services = training, supplies, launch campaigns
- New space = deposits, buildouts, utilities
- New hires = recruiting, salaries, benefits
Your reserve ensures you can handle these expenses before revenue catches up.
Final Takeaway
A 90-day cash reserve isn’t a luxury—it’s your operational insurance policy and your growth platform.
It protects your med spa’s:
- Payroll and team
- Vendor and lender relationships
- Credit profile and brand reputation
- Ability to expand strategically and profitably
Set the target. Track your savings. Prioritize reserve-building as part of your monthly financial strategy.
Cash isn’t just a safety net—it’s a strategic asset.
If you need help building a forecast model or developing a personalized reserve plan, we can help.
Refer our other article about The Compliance Checklist: Keeping Licenses, Credentials, and Safety in Check