Business Consulting, also known as Management Consulting, is a highly skilled profession and an integral part of most industries. The veterinary industry is one the last professional services to make consulting the norm and as such, much of the industry’s professionals are still a little hazy on what veterinary business consultants do. In this article, we will look at the types of jobs a veterinary business consultant might do, the various levels of consultant that exist, and how much they might charge.
What does a veterinary business consultant do?
Although they take many forms, the purpose of a veterinary business consultant is to bring about positive change in veterinary organisations in relation to strategy, structure, processes, or people. The UK Institute of Consulting defines consulting as “the provision to businesses of objective advice and assistance relating to the strategy, structure, management and operations of an organisation in pursuit of its long-term purposes and objectives. Such assistance may include the identification of options with recommendations; the provision of additional resources; and/or the implementation of solutions.” So, in essence, veterinary business consultants provide either the expert advice, capabilities or capacity needed to help veterinary organisations achieve their goals.
Types of veterinary business consultant
The role of veterinary business consultant can take many forms, but it is usually undertaken by someone with prior experience of running a veterinary practice, either in part or entirely. Veterinary business consultants can be former vets, former practice managers, or in some cases work for the business development or support arm of an organisation in the veterinary industry, such as a wholesaler or a pharmaceutical company. They will likely all have a background in veterinary or animal health, and some will have particular skills or qualifications to add to their experience, such as in marketing, or leadership, or business studies.
Then there are management consultants that operate within the industry. The profession of Management Consulting requires years of study and knowledge of strategic, organisational, and cultural methodologies, as well as expertise in leadership and innovation. So, albeit veterinary business consultants are becoming commonplace in the industry, in terms of the veterinary profession embracing management consulting, this is still very much in its early stages. Veterinary management consultants will likely have senior veterinary experience (as owner or director of a veterinary organisation) and a business degree. A few will have an MBA, and even fewer will have an MBA in Management Consulting.
It’s important at this stage to differentiate between business growth offerings and consultancy. They are not the same, although they are often put in the same bracket. A consultant tends to be engaged by an organisation to resolve or diagnose an issue such as poor performance or high staff turnover, or to help define and achieve a strategic direction. At the achievement of this, the consultant will exit the organisation until the next appropriate time.
A business growth offering tends to be of a more ongoing operational nature, helping practice owners and managers with KPI monitoring, mentoring, marketing advice, etc. This type of service normally requires less expertise and seeks to form an ongoing relationship for many years. As such, it is important to compare like for like when looking at the pricing models of business support companies and consulting firms.
Ultimately you must choose the one that you feel meets your needs and budget. For example, if you’re a single site clinic looking to grow turnover or cut costs, then a business support executive from one of your suppliers may be sufficient. If perhaps you’re a large group of practices, a referral hospital or a multinational veterinary corporate, and your strategic decision making has significant consequences – then it’s best to go to the top of the tree.
How much do they cost?
Finding good information on the cost of any professional service is a challenge. In approaching consultants, you may find there are many conversations that need to be had before you can finally get to the question you want to ask, and in many cases, you don’t want to go that far before seeing if the help on offer falls within your budget!
As we’ve seen from the different types of roles and qualifications that they have, there are levels of consultant. And this will of course impact on the fees they charge. Just like the specialist veterinary surgeon will be more expensive than the GP. However, this doesn’t necessarily mean that the independent consultant with practice management experience is less qualified than the veterinary strategy expert – it depends on the nature of your problem. For example, if you’re a small independent clinic looking to grow your business, then it’s likely that someone with experience in practice management, with a good grasp of management accounts, knowledge of which KPIs to monitor, and some previous success in marketing a practice is going to be a good fit. Employing a consultant with experience of working with large corporate groups, dealing with mergers and acquisitions, and creating detailed strategic plans is probably not going to be fit for purpose! And what’s more, the cost of that consultant will likely outweigh the benefit that they can bring in growing a small organisation, unless “growing the business” meant doubling in size or looking to acquire more practices.
In the main, there are three ranges of consulting offering:
- Free – this usually is as part of a relationship with an existing supplier as an added value offering. Much of it includes use of or commitment to a particular spend or product usage, so you won’t explicitly be paying for the consulting you receive although it will be factored in by the supplier.
- Annual sign up / retainer based – this is usually done to grow small independent clinics or to hold individuals within the business accountable to a target. These types of offerings can include regular monthly KPI phone calls, quarterly workshops or events and other admin support. You are normally signed up for a year for a nominal monthly fee, which can be between £350 and £1200 per month, depending on the level of support you sign up for.
- Project based – this tends to be the realm of the qualified management consultant. Projects tend to be specific to an organisational objective or to leverage consultant expertise in diagnosing organisational issues or setting strategies. This tends to be for medium sized organisations (50 employees and above) all the way up to large corporate organisations. The cost is calculated in a proposal, and payment is made upon completion of agreed upon deliverables (e.g., 50% deposit, 25% at phase 1 completion, 25% at project end). The consultant normally works in collaboration with the consultant on site, virtually or both, to ensure successful implementation of the plan before the consultant exits. Costs for these types of projects vary but can be anything between £5,000 and £50,000 depending on the duration of the project and level of consultant intervention.
As we know well in the veterinary industry, in many cases there are too many variables to be able to quote for a particular issue without doing some diagnostic work first.
How do they price things out?
Most pricing in professional services is done using either hourly rates or “value pricing”: establishing a price that is commensurate with the circumstances or situation at hand. To explain: we’re familiar with both of these models in the vet industry – hourly rates (or in some cases per minute rates) can help to determine consult or hospital fees. However, if an emergency Pyometra came into the practice and you charged it out at an hourly rate, it would seem grossly undercharged due to the urgency of the procedure and the expertise required. So, both methods have their place.
From a business consulting perspective, the same applies. Hourly rates help act as a guide to pricing, but dependent upon the scale of the problem or the benefit to the organisation of resolving an issue, and the level of expertise required, then value pricing might apply. For example, £180 an hour is a reasonable starting point – the equivalent of a £30, 10-minute consult fee. In most cases, if a project was familiar, such as a culture diagnosis exercise, then the consultant knows the likely time it will take to gather the requisite information, collate it, and present solutions, both in a basic and comprehensive fashion.
If there are a lot of unknowns, a lot of research and investigation to be done, a lot of sense making and organisation required, or a degree of time sensitivity, then pricing might be done in accordance with how much the client stands to benefit from the work or lose if the work is not done. Perhaps a percentage of the increased revenue assigned to a particular service if objectives are met. Although to be honest, these occasions are rare, and normally a consultant will know to a decent extent both the time required for a project and its typical corresponding value. Ultimately for any project to proceed, both parties have to feel that there is a fair exchange of money for expertise.
What’s your budget?
In consulting, as in veterinary practice, there are degrees of “treatment” depending on budget. And as in veterinary practice, it’s always best to suggest the optimum course of action before going down the levels of affordability. So, when a consultant asks, “what’s your budget?”, it’s not (or at least it certainly shouldn’t be) so they can charge the exact amount of money you stated, it’s so they can know where the client sits on the spectrum between optimum solution and skeleton solution. And again, as in veterinary practice, there will be differing results dependent upon the avenue taken – “you get what you pay for” is an appropriate adage in all industries. So don’t be afraid to discuss budget. You’re not giving the consultant a blank cheque; you’re telling them in what ballpark they’ll need to operate. But also, don’t be afraid to discuss different pricing options and solutions. Again, neither party wants to proceed without feeling confident that they are getting or bringing value. Neither does anyone, consultant, or client, want to feel like they’re playing poker when it comes to price! So, embrace the dialogue! Clarity is a great outcome to a pricing conversation.
Consulting can take many forms and can operate within many different sizes of organisation. Even in the veterinary industry, a consulting project might take place within a single site independent clinic, or across an entire corporate organisation. It might be strategy related, or people related (although people are integral to any strategy). It might take a few weeks; it might take 6 months. It might cost a few thousand pounds, or hundreds of thousands. The real answer to how much does a veterinary business consultant cost is “it depends on the task at hand, and the level of expertise of the consultant” (think GP vs Specialist), but we can give some examples of familiar issues faced, what a potential approach would be, and what that would cost. (N.B these pricing examples are based on IntrinsiaVet rates – you may find that some organisations price higher or lower depending on their level of expertise).
Organisation A is a multi-site group of small animal practices, struggling with low morale and high staff turnover. They want a comprehensive culture change solution.
From a consultant’s point of view (following initial dialogue with the key stakeholders), as a first phase, a culture diagnostic requires preparation, interviews and surveys, use of analytical tools, observation, a workshop, psychometric profiling, collating data, reporting on the findings, and making suggestions for shifting the culture. For 1 consultant (or the equivalent of 1 consultant – say 2 consultants taking half the time), this might look like a day and a half’s preparation (buying the relevant psychometric and cultural assessment tests, preparing interview and survey questions, writing or refining workshop PowerPoints, preparing handouts, reading latest research papers on the topic, etc.), a day and a half’s interviewing and observation, half a day’s workshop with the senior team, a day and a half analysing and codifying the psychometric, cultural assessment, interview, and survey data, a day and a half preparing the report and recommendations, and half a day presenting the solutions. That’s 7 days spent assessing the cultural landscape, getting to the root cause of the problem, and presenting one or a number of solutions and ways forward. It’s unlikely these 7 days would be consecutive – in most cases, depending on workload, this work would be accomplished within 3-6 weeks. So, what does that look like from a pricing perspective?
£180/hour x 8 hours = £1,440 per day.
£1440 x 7 days = £10,080, plus the cost of the psychometric profiles for the senior team,
7 tests at £100, = £700, and a cultural assessment profile for the whole organisation = £750
That brings our total to £11,530. Account for some travel, accommodation, and other small expenses and we have a grand total for phase 1 of £12,000 +VAT.
Having decided on the way forward, then another phase would be undertaken, which may or may not involve the consultant to the same degree, as particularly in culture change initiatives, it has to authentically come from the leaders in the organisation. So perhaps phase 2 might look like another workshop, this time with the whole practice team, to facilitate the creation of new cultural behaviours and commitments, a follow up survey, and some executive coaching of a couple of key stakeholders in the change project. 2 days spent delivering the workshop and collating surveys, another half day’s follow up with the senior team, and 2 employees having 6 coaching sessions each over the next 6 months. So, £1,440 x 2.5 days = £3,600, plus £2,000 per course of 6 coaching sessions x 2 = £4,000. Total £7,600, which again with some other travel expenditure, etc., gets us to around £8000 +VAT.
So, is that £20,000 worth it to the client? Well obviously, it’s up to the consultant to evidence the value. But in initial conversations, a consultant will ascertain what the current staff turnover rate it, what the cost of recruitment is, what the additional cost and correlating revenue shortfall of locums might be (if vets are leaving), how many sick days are taken, what the morale of the practice is, etc. This enables a consultant to show that yes, you’re spending close to £20k – but it’s costing you twice that in recruitment fees, branch closures, locum costs, sick days, and reputational damage each year, and no one seems to be enjoying coming into work. And the benefits of fixing the culture will be long lasting and make a real difference financially the following year.
That initial conversation then is crucial, as it will help all parties see the value of the change initiative, and the scale of the intervention required. For example, if Organisation A wanted a full culture change solution, and it was established in the first conversation that actually, the staff turnover was due to legitimate personal reasons in each case (such as relocation), then maybe a lighter intervention would be more appropriate, and therefore a less expensive one – an engagement survey and training of the senior team perhaps – £3k – £5k worth of work. It is important in each case that the solution evidence appropriate value, whilst recognising expertise, as we’d all like to see in clinical practice.
As a side note, any good veterinary business or management consultant should care deeply about delivering value for their client and establishing an excellent working relationship. Personally, if I didn’t think I could deliver a large amount of value for a client, I wouldn’t take the job on.
In another example, Practice B wants to increase its bottom line by £200k within 1-2 years before sale, which even at 5 times EBITDA valuation (which is one of several ways to value a business) would equate to a benefit to the practice owner of a million pounds. However, this is not just a case of stripping out the P&L, as buyers are very aware of this practice and won’t be fooled.
This would require an initial independent valuation, a strategic plan for growth (which I would recommend be executed over 3 years to ensure evidence of revenue and profit continuity) to include growth objectives for services offered, market positioning, pricing, potential new revenue streams, evidencing a robust system of stock control, ensuring staff retention, undertaking a full local market analysis, establishing the strategic importance of the practice to potential buyers, and assessing the strategic fit of the practice to potential buyers, in order to ensure that it is an attractive offering. All this, whilst reducing the reliance on the practice owner so an immediate revenue drop is not experienced post sale. Not to mention actually executing the plan!
This is obviously a lot of work and a long-term project, requiring significant expertise and regular involvement from the consultant. Understandably, the price to make the desired goal a reality might be daunting! But there is also a huge benefit to be had for the client, which is unlikely to be achieved without external expertise. And the consultant may feel that even charging by the hour might not reflect the expertise delivered, much like the example of the emergency Pyometra. So, in this case, agreeing a percentage of the uplift in valuation might be the best course of action. For example, 10% of a £1,000,000 uplift in practice value gives the consultant £100,000 upon sale of the practice for the strategic expertise brought in achieving the goal over those 2-3 years, which otherwise would not have been realised. But given the length of the project, it’s more likely that the client and consultant might agree on a nominal fee or retainer whilst the project is in progress, and an additional, smaller percentage of revenue uplift upon achievement of objectives. This is just a conveniently round numbered example, but it highlights the importance of agreeing on a fair exchange of money for expertise.
Independent Practice C wants to “grow the business” – the owner is an excellent vet but recognises that he doesn’t have the business acumen or the time to get the practice where he wants it to be, let alone being able to buy the equipment that he and his associate vet would like. He has a small team and is time and resource poor.
These are the tricky cases for qualified management consultants and makes the “what’s your budget” conversation really important. The consultant will know that a little involvement could make a big difference to the practice but must be wary of the fact that the project may be too small. Management consultants usually have a minimum project fee that they will undertake, as often, preparation for a project, regardless of the size, can take a couple of days. So, to use the hourly rate example from before, if a practice had a budget of £1000 for a project, then a day’s preparation would have used that up. Most firms will undertake projects of around £5000 and above, however independent consultants may well have a lower threshold.
How to price this? Growing the business can take many forms. Using the optimum solution, this would most likely involve an analysis of the organisation – vision & mission, values, current strategy (if any), structure, business model, financials, KPI’s, staffing, systems & SOP’s, efficiency, stock control, partnerships, potential strategic alliances, marketing, etc., and an analysis of the external environment – the competition, the client base (and potential client base), reputation of the practice, expansion opportunities, review of relevant industry trends, etc. This would enable creation of a growth strategy and implementation plan.
This might look like £180/hr x 8 hours = £1440 per day
2 days internal business analysis
2 days external business analysis
1.5 days preparation and presentation of strategic priorities & potential directions
Basic travel and subsistence expenses
Total = £8,000
Such analysis could be significantly more comprehensive, but we must remember the size of the organisation and the likely budget. Then there would be costs for implementation, for example use (and consultant oversight) of project management software to keep on track of all deliverables, regular review meetings, executive coaching, etc. For example, a quarterly team review, monthly project management meetings and 4 leadership coaching sessions would equate to a cost of about £6000.
Indeed, further conversation might reveal that this level of intervention is not required or intended, and a moderate increase in profit would be a more than satisfactory result for this practice owner. If this were the case, it might be worth considering a business support offering from a supplier or other provider. However, monthly fees can add up (a higher end business support will cost up to £15,000 per year) and the owner may determine that the bespoke, hands-on approach may be worth it vs the higher end of the business growth support offering. This again highlights the difference between a consulting intervention and a business support provision.
We’ve seen in this article that business consulting in the veterinary industry is on the rise, but not yet at the level of other professional services. It also takes many forms and users of consultants or consulting firms must be aware of the different levels of consultant and the different skills they bring to the table. Businesses should not be afraid to discuss budget and work with consultants to achieve a fair exchange of money for expertise, as per the familiar consult room conversation that we know well in the veterinary industry. Pricing can vary, from added value offerings to monthly support fees and intensive project fees.
Ultimately, if you’re looking for objective expertise from a veterinary business consultant or management consultant, you need to choose someone that you trust and that you feel can develop a solution that meets the needs of your business. Hopefully now you can be a little more familiar with their methods, pricing, and levels of expertise.