A lot has been written about starting veterinary practices. However, in the changing veterinary business climate, with emerging issues like the high cost of construction materials, a highly competitive job market, advancements in IT and AI, and the growing cost of both medical and office supplies, the idea of starting a veterinary practice can quickly becoming a daunting venture. But, daunting does not mean insurmountable; in fact, it can create opportunity. Here are some important areas to consider if you’re planning to open a practice in today’s veterinary landscape:
Create an authentic business model and plan
If starting a business is like a journey, the business model is the route on a map and the business plan is the step-by-step directions on how we get there. A veterinary practice’s business model focuses on the basic mechanics of who the practice will serve, what services will be offered, and what key resources and activities are needed to bring their unique value proposition to life.
The business plan generally includes an executive summary, company description, market analysis, organizational structure (staff and management), details on the services being offered, planned marketing, funding requirements and financial projections. Within these sections, there are important nuances in how the business model actually comes together that allows you to explain the viability of your business to potential lenders and investors.
For instance, when doing a market analysis, you may find that certain services or specialties are lacking in the area. Providing these much-needed services can help a practice stand apart, create a niche clientele and eventually become recognized as a go-to resource in the region. This impacts the services offered in your business model and thus drives funding, talent, equipment and marketing needs.
As we know, there is a shortage of veterinarians and clinics to meet the demand from the growing number of pet owners. This is a nationwide issue and encompasses general practitioners and specialists alike. The key here is to understand what’s missing in the community and build a business model that can fill the void with services that make the needed impact on pet and human lives.
Location, location, location
Determining an ideal location starts with having the intel and data that will enable you to make the best possible decisions. You want to find an area where your services are most desired. This means looking at areas where pets and their humans reside, where the nearest veterinary provider is located and how many competitors there are in close proximity. There are several location-based marketing strategies that are also important to review which will help sustain a practice’s fiscal wellbeing well into the future.
First look at demographic shifts in the community (i.e., who is moving into the area and leaving, and whether those moving in will be likely to need our services five and 10 years down the line). It also requires looking at what complementary businesses are in the area to generate referrals, if and when needed. These might include realtors, pet daycare and boarding facilities (if you’re not offering this), dog trainers, groomers and other possible referral exchange sources.
Once the area has been narrowed down, the next step is finding the physical location that meets your needs. Leasing and buying both have their pros and cons. In a start-up situation—especially with higher construction costs—the amount of square footage you take on in the project can dramatically affect the finances, both from up-front build-out costs and ongoing cash flow for utilities or rent. You need a location that is going to be affordable enough to get you through the early ramp-up years as your business grows, but then will still meet your needs for the next 5-10 years as your business matures and can continue to grow comfortably.
Other considerations such as zoning, signage, parking, access, privacy, etc. can quickly make or break a location’s viability as well. Generally, parking for clients and team members is crucial unless you are in a very high-density pedestrian community. Finding easy-access, highly visible locations that also have safe traffic patterns in front of the clinic for pets can be a challenge. Another consideration is access for deliveries of pet food and supplies. And don’t forget about finding neighbors who are amenable to having a veterinary clinic next door.
Fund it right
Securing the proper funding—both the terms and dollar amounts to meet your needs—is key. However, that is much easier said than done with today’s rising costs…from construction and talent to supplies. The numbers can be much scarier than start-up budgets from just a few years ago.
Capital requirements not only include the cost of the buildout, but also operational costs during the ramp-up period to sustain your operational needs before, during and after opening. The structure of the terms can delay or accelerate profitability, so securing the best partner, bank or investor is critical. The question I asked myself was, “Does this group really want me to succeed, and do we all have skin in the game?”
In this and many other key areas, I knew I had to get it right from the start. I looked at various funding options and partners, which I learned can mitigate risk while providing resources to maintain, manage and grow the business.
Build your practice and your team
Of course, when we think about “building a practice,” building the physical space out is top of mind. But in reality, the practice is more than the space; building the practice also means building the team of people who bring it to life. This means creating everything—a team, benchmarks and goals, a marketing program and a positive culture. Of these, our team members top the list. Without them, our patients will not be taken care of. Thus, creating a great culture is paramount.
When it comes to developing our team, the most important lesson I’ve learned is to have humility and work at understanding and acknowledging everyone’s weaknesses, strengths, challenges and potential. This is vital in the new veterinary practice reality where people are wearing more and more hats and are spread thin.
Our culture has helped us support one another, facilitate learning and help the practice grow. And this is not just for our staff and managers…it starts with me. If I cannot admit where I fall short, it is a domino effect, impacting patients, team members and the practice as a whole. If I’m not forthright, others, too, will find it difficult to admit when they’re wrong, where they made an error or what they may not yet know.
On the contrary, when I can admit my shortcomings, it opens the door for people to do the same and support one another. We also need to establish clear and open lines of communication, dealing with each staff member transparently and authentically. We believe in equality and belonging, and that every team member is critical to our success. We encourage ingenuity and creativity. We don’t make each other wrong for our weaknesses. We help people develop or we fill the gaps with other team members who may be better suited for particular tasks.
From veterinarian to small business owner
When I went to veterinary school, we had only one course available for learning the business of veterinary medicine. With this being the case in most veterinary schools, for those of us who want to be owners, how do we learn finance, marketing, payroll, accounts payable and receivable, reporting, human resources and all other operational essentials? If you do not have a partner or team to help you setup all your systems and processes and continue to provide support, I recommend getting mentors in each of the areas I mentioned, taking online classes, and building a team around you that can fill the gaps and make you stronger.
Owning my own practice was always my dream. One national survey found that a significant percentage of veterinarians will likely retire within the next 15 years,1 meaning that there will be many more opportunities in the marketplace for the next generation of veterinary owners to start a practice to serve pet owners.
In my experience, ownership is possible and worth the investment in time and sweat. The good news is that there are people and resources available to help you achieve your dream. +
References:
1. Census Of Veterinarians Finds Trends With Shortages, Practice Ownership. (2019, June, 26). AVMA. https://www.avma.org/javma-news/2019-07-15/census-veterinarians-finds-trends-shortages-practice-ownership
