Acquiring and starting your own veterinary practice can be overwhelming. You might be thinking, “Where do I start?” “How do I handle financing, payroll, patients?”! This article is the first of several articles that guides you step-by-step toward owning your own veterinary practice.
The idea of owning your own practice can be daunting. There are so many thoughts that can cause anxiety and concern:
• How can I acquire lending for a practice if I have mortgage and student loan debt?
• How can I afford to buy a practice if I have other debt to pay?
• What do I need to know to own my own business and have a steady income?
These are all valid concerns, but we have to start at the very beginning with what kind of practice do you want to buy?
Often the first place we look is to what is right in front of us. In this case, you could be working for a practice that you want to consider owning. However, it’s important to gain perspective of the current veterinary market and what practices are available in your local area. Owning your first practice is a BIG step and you want to make sure that the practice you ultimately buy is one that fits you perfectly. Here are a few tips that can assist you with gaining perspective as a buyer so that you can start your acquisition planning with a good base of information.
1. Ask Around
Be active in your state and professional associations and make professional relationships with other veterinarians. As you get to know your peers and they get to know you, you can learn best practices from other veterinarians and have a place to ask questions. As your relationships and trust builds, you can let it be known that you are interested in owning your own practice. This is a long-term approach, but it’s a great way to find practices to own that are quality practices and that you know. What’s equally important is that it’s also a great way to learn about what practices you wouldn’t want to own, such as a practice that is ultimately, unprofitable, or one that has poor employee culture. Through your professional relationships, you can learn about practices that might not even be on the market yet but could offer a great practice purchase opportunity.
2. What will YOUR practice look like?
Before you decided that you want to own your own practice, you might not have paid attention to the nuances of different practices and what you like and dislike. Now is a great time to think about what you want YOUR practice to look like. You don’t need to have all of the answers immediately, but if you can start answering these questions, it will assist you in narrowing down the practice that fits you.
• Location – Do you want to operate in the city, the suburbs or have a rural practice? Depending on the location and demographics, there can be significant differences in the prices you can charge and the money you can make. Therefore, it will be helpful to think about how much money you want and need to make as well.
• Services – Are you going to focus on small animals, large animals or both? Are you going to offer boarding and grooming at your practice? Take time to consider the quality of medicine you will offer and the specialties you will provide in your practice.
• Facility – Are you going to lease your practice space, buy your space or build a new building? Knowing what type of services your practice will provide will assist you in exploring these options.
• Sole Owner or Partnership – A partner can be there to share the workload and the financial welfare of the practice. He or she could also assist with animal diagnosis and treatment. Entering a partnership is in ways similar to getting married, your interests must be fully aligned for the partnership to work. Exploring the benefits and drawbacks of adding a partner should be carefully considered.
3. Developing your advisory team
Having a quality team of advisors in place is essential in completing your practice purchase objectives. An initial meeting with your advisors can help you answer questions that you have about a practice start-up or purchase. Here is a list of advisors that you might want to meet with first and share your ideas:
CPA – A CPA that has experience with veterinarians can assist you by discussing the process by which you will account for your practice. It’s important to setup your practice accounting right from the start so that you both can monitor your business income, expenses and cash flows in comparison to your business forecast to make sure you are on target in the early stages of your practice. A CPA can also help you with registering your business taxes and how you will perform payroll for your employees. A CPA familiar with veterinary practices can also walk you through a business purchase and even assist you with valuating a current veterinary practice. Once the business is setup, your CPA can plan and prepare tax filings and be there to answer questions as they come up.
Attorney – An attorney can help you form the proper business entity to protect you from legal liability, review lease agreements, purchase agreements and be there to answer questions as legal issues come up.
Additional advisors you will want to meet with:
Business banker – To setup your business banking options
Commercial banker – To discuss financing options for your practice acquisition
Commercial insurance representative – To setup and price professional liability, lease or building insurance for your practice
Payroll representative – To setup employees to be paid and register the business for payroll taxes
A good CPA or attorney that works heavily in the veterinary industry can help you with these introductions.
Our next blog will discuss taking this information and forming a business plan to get your dreams of owning a business into motion!