How I lost $100 Million: Lessons from The Cosmetic Institute

David Segal, former managing director of The Cosmetic Institute (TCI) and Inside Aesthetics podcast co-host, shares an unfiltered account of success and failure in the aesthetics industry, offering valuable takeaways for practitioners and entrepreneurs alike.

As co-host of the Inside Aesthetics podcast, business mentor, and former LCA franchisee from 2010 to 2022, my career has been marked by notable successes and significant failures. One of the most pivotal experiences was my time as Managing Director of TCI. This chapter in my life provided invaluable lessons in business, leadership and resilience.

The rise of The Cosmetic Institute

Founded in 2012, The Cosmetic Institute was a disruptive force in the aesthetics industry, with a vision to make cosmetic surgery affordable and accessible to a broader audience. By offering high-volume, cost-efficient services, TCI rapidly captured 50% of the breast augmentation market in Australia within just three years.

Performing 100 procedures per week and achieving a $40 million annual turnover, TCI quickly became a formidable presence in the industry. Our two ISO-accredited facilities, led by a plastic surgeon as the medical director and supported by a team of consultant anaesthetists, contributed to our rapid rise and redefined the landscape of accessible cosmetic surgery.

What went wrong?

Despite our initial success, behind the scenes of TCI’s rapid rise lay vulnerabilities that would ultimately lead to its downfall. These were a combination of strategic missteps, complacency and external pressures that we failed to address in time.

Patient complications and practitioner selection

One of the most critical mistakes was relying on non-plastic surgeons to perform procedures in order to maintain low costs. While this model initially enabled profitability, it compromised patient safety, raised concerns and damaged our reputation. Complications during surgeries underscored gaps in patient safety protocols.

Regulatory and licensing challenges

Our facilities encountered regulatory challenges, particularly concerning licensing and anaesthesia practices. This brought scrutiny from competitors and negative media attention, leading to stricter regulatory interventions that further destabilised the business. Oversights and poor patient selection further eroded trust in our operations.

Complacency and internal management

Rapid growth bred a dangerous level of complacency within the organisation. Leadership, including myself, became blind to warning signs and looming risks as we expanded. HR management, hiring and financial oversight became pressing issues as we scaled. Financial mismanagement and operational waste weakened our stability and eroded the business from within.

The personal impact

The collapse of TCI came with severe personal and professional consequences. The business, once valued at $100 million, fell apart, resulting in a personal financial loss of $25 million for me. Beyond the financial toll, I faced public embarrassment, a loss of professional credibility and a severe blow to my confidence. This period was marked by PTSD, an experience that was humbling yet formative.

Lessons learned

Reflecting on TCI’s rise and fall, I gained key lessons that have since become the foundation of my work as a business mentor:

• Complacency and arrogance are dangerous: Success can breed overconfidence, which blinds leaders to potential risks. Staying humble and vigilant is essential.
• Address weaknesses early: Ignoring small problems can lead to catastrophic consequences. Tackling issues proactively is vital for long-term sustainability.
• Plan for worst-case scenarios: Always have contingency plans to face unexpected challenges.
• Hire slowly, fire quickly: Building a strong team requires careful hiring and swift action to address issues.
• Ensure compliance: Adhering to regulations is non-negotiable, as lapses can jeopardise the entire business.
• Monitor finances closely: Poor financial management can undermine even the most successful business.

Why businesses fail

From my experience and observations, business failures often stem from a combination of internal and external factors.

Internally, shortcomings such as a lack of necessary skills, insufficient effort, complacency and poor decision-making within leadership teams can create vulnerabilities that weaken the foundation of a business. When leaders fail to address these issues proactively, they risk compromising the long-term viability of their operations.

Externally, businesses face challenges from shifting economic landscapes, heightened competition and evolving consumer trends.

Together, these internal and external dynamics can derail even well-established businesses that fail to anticipate and address them effectively.

Current industry challenges and trends

The aesthetics industry continues to evolve rapidly, presenting both challenges and opportunities for practitioners and business owners:

• Market maturation: Increasing competition has made patient recruitment and retention more challenging.
• Economic pressures: Rising inflation, interest rates and global economic uncertainty are affecting consumer confidence.
• Shift in demand: Patients are moving away from fillers, with a stronger focus on skin health, collagen stimulation and body treatments.
• Growth in regenerative health: There is growing interest in regenerative procedures and therapies.
• Aesthetic entrepreneurs: More professionals are diversifying their business models.

Building a strong support team

Behind every successful business is a reliable support system. Seek out:

• Accountants: Choose professionals with industry- specific knowledge to streamline financial processes.
• Lawyers: Work with specialists in medico-legal, compliance and contract reviews.
• Mentors: Find experienced leaders and prioritise ongoing business education.

The rise and fall of The Cosmetic Institute taught me lessons that no textbook or seminar could ever deliver. While the personal and professional costs were immense, these experiences shaped my philosophy on leadership and resilience. Today, I use these insights to mentor others, helping them avoid the pitfalls I encountered and chart a path to sustainable success.

For more resources, including a free video on calculating gross margins and breakeven points, visit Inside Aesthetics on Patreon. AMP

For more about the Inside Aesthetics podcast or David Segal’s business mentoring services, email: david@insideaesthetics.com or Instagram: @david_insideaesthetics