Today's Veterinary Business

DEC 2018

Today’s Veterinary Business provides information and resources designed to help veterinarians and office management improve the financial performance of their practices, allowing them to increase the level of patient care and client service.

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28 Today's Veterinary Business Business I have noticed a surge in the number of associate veterinarians interested in starting a practice. Whether this interest is the result of skyrocketing sales prices for existing practices, the desire to create something of one's own or other factors, I am seeing new privately owned startups, even in areas with many competitors. By Leslie A. Mamalis, MBA, MSIT, CVA Of the numerous benefits as- sociated with being a practice own- er, one of the biggest is control. You control your compensation, your work schedule, the practice's philosophy and style, the mission, and core values. Being an owner gives you the right to operate the practice as you see fit. You set the goals, hire based on criteria you set (assuming those meet legal requirements) and determine the standard of care. In addition, you have control over your job security. Practice owners stand to benefit financially from operating high-quality, efficient practices. As an owner, you earn profit from not only your work but from the services your doctors and staff pro- vide. To the extent you increase the revenue and control expenses, the difference falls to the bottom line. One of the biggest rewards of ownership is the opportunity to build a legacy that is a reflection of your values. Most owners enjoy the process of mentoring new doctors and staff. Finding the best peo- ple, bringing them on board, and watching them grow both techni- cally and in their interactions with your clients and community will give your practice the continuity you hope it would have. Risks and Responsibilities Business ownership isn't for the faint of heart. Practice owners have a significant amount of responsibili- ty over and above those of an asso- ciate veterinarian. As a veterinarian, you learn about the body systems of a variety of species and you need to be competent in all of them. As a practice owner, you are asked to learn about a wide variety of business systems, including finance, marketing, human resources, cus- tomer service and so on. In order to be a successful business owner, you need to develop at least a baseline level of competency in each area. Unless you are independently wealthy or a scrupulous saver, the money to start a practice comes from a third-party lender or an investor. Excellent veterinary-spe- cific lenders, both conventional and those that specialize in Small Business Administration loans, work with startup practices. You also might find a local lender to work with you. Veterinary lenders do not expect you to have paid off your student debt prior to starting a practice, so educational debt is not always a deterrent to loan approv- al. To repay the debt related to the startup, the practice needs to generate profits and be able to dis- tribute those profits to you as the owner. Many lenders offer graduat- ed loan payments, with lower pay- ments due in the first few months or years and larger payments later. This structure is designed to ease the cash flow so you have time to build the business before full pay- ments are due. Business MONEY MATTERS Paying Yourself What you have read about hospital owners making more money than associate veterinarians is true. One of the best ways to pay off educa- tional debt is to own a profitable veterinary practice. Startup prac- tices typically are not profitable for at least six months, often much longer. Overhead expenses, such as the lease, utilities and office sup- plies, consume a large portion of total practice fees simply because those gross fees are at low levels. As the practice grows, more money will be available to take as owner salary or draw, but until that time, cash may be tight. There is a big difference be- tween buying an existing practice and starting one. When you buy a practice, you acquire a business that already has clients, patients and appointments. When you start a practice, you have none of these, and even if your clinic is in the best location and has the perfect marketing plan, the appoint- ment schedule might not fill up for months. During this time, the money generated will go to your A place to call your own Becoming an independent practice owner carries many risks, but the rewards can be hefty if you have a knack for business and are willing to sacrifice sizable paychecks for a while.

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