If you’ve been a vet in employment for any decent amount of time, the chances are that running things yourself has entered your mind. Be it because of rota patterns, pay, relationship with colleagues or bosses, time off, clinical decision making, there will likely have been a time when starting your own practice has crossed your mind. This article is for you. If the thought of going out on your own as a practice owner has ever been a future dream, then read on. But before you start frantically googling questions, there is one critical question that you need to ask yourself.
Q1. What is my motivation for starting my own practice?
The key to starting your own practice and making it a success is ensuring you’re getting into practice ownership for the right reasons. If you’re passionate about making your own clinical decisions, but not too worried about leadership, or business planning, or profit and loss, or admin, then stop here. Running your own practice is far more than running things from an operational perspective. It is full-on business ownership – that historically, many vets have been grossly under prepared for. Your desire for business ownership – which means continual learning, financial responsibility for all decisions, making mistakes, gaining new skills, managing people, understanding financials, growing an organisation, working towards a vision, and taking admin seriously must run deep! Now, assuming you’re happy with this and wish to proceed, here are four other questions that it is important to ask yourself.
Q2. How much does it cost to set up on my own?
Fundamentally, there are eight things you need to consider before opening your practice: Building, fit out, equipment, staff, stock, marketing, overheads, and working capital (aka money to pay the bills in the early months of trading). Aside from the fit out of the building, which will likely have to be paid in one or two large payments, the rest can be paid over a longer period. If you can calculate the monthly cost of rent, a potential equipment deal (e.g., on a 5-year finance option), staff salaries, wholesaler bill, and average cost of commercial utilities in your area, then, in addition to fit out and day 1 drugs, you will be able to create a detailed cash flow that will tell you when you’ll start becoming cash positive, and therefore how much money you’ll need. Getting this right is critical, so it is important to seek advice from a financial professional with experience in the veterinary sector. It also helps to be able to secure things such as rent holidays (whilst fit out is occurring), buying group membership, or deferred payment on the initial wholesaler bill, to help keep things as lean as possible.
Q3. How many clients will I need to make things sustainable?
There are numerous ways of looking at this. You can look at average annual spend per client, or average consult value plus average procedure value, multiplied by the number of clients/patients you anticipate per week or per month. You can also refer to industry benchmarks (although these are not necessarily based on a huge amount of data) relating to average turnover per vet and average number of clients per vet for established practices, knowing that it will take you a year or so to reach an acceptable capacity. The more data you can gather on what normal looks like, the better. However, don’t be afraid to use your own experience of the cases you see, and the loyal clients you have. Be conservative – they will not all flock to you on day one. but in time, you should be able to predict what your normal case load is and how many clients you’ll see per day. Anecdotally, in order to run a one vet practice, you’ll need around 800 – 1200 clients, depending on your pricing. This equates to as little as 15-20 clients per week over your first year to get up to speed.
Q4. What business skills will I need to run my own practice?
Although you are most useful from an earning perspective in the consult room, you nevertheless will need some fundamental business training. Granted, there are things that you will be able to (and should) outsource, such as accountancy and bookkeeping. But at the very least, you need to be able to read a basic profit and loss and cash flow, and to understand key performance indicators (KPIs) from your practice management software. The other critical skill which can determine your level of success is your degree of business planning and strategic awareness. If you know your market, your competition, and what your clients and employees value, then you will be able to clearly identify where your competitive advantage lies and narrate the benefits of choosing your practice over others. The amount of upskilling you choose to do is up to you, but the true answer to the question is – how successful do you want to be? There is a higher likelihood of success the more business training you do.
Q5. How much money can I make being a practice owner?
Funnily enough, the answer to this question depends on your approach to the previous question! In basic terms, you will only be taking home your pre tax allowance in terms of salary. The rest of your income will come from dividends, which can only be taken from the profits that the practice generates. In years past, most independent practice owners were also the owners of the premises, so rental payments mitigated against any issues from a profitability perspective. But that is rarely the case now. New practice owners have to be more savvy and commercially aware. Hence, how seriously you take the profit and loss will have a significant impact on how much money you take home. For example, one of the few costs that you can directly control within a veterinary practice is the drug bill. Other than staff, this is by far your biggest expenditure, so ensuring that you are being sensible, streamlined, and cognisant of discounts can yield significant savings, and better profits.
Moreover, being a practice owner will not bring financial rewards quickly. It can take a few years to generate the income that you desire, and there will of course be unexpected obstacles along the way, which might push that out even further. This again highlights the importance of your motivations for owning your own practice. There is no get rich quick in veterinary! Ultimately, assuming you achieve benchmark turnover for your region and your KPIs fall within normal parameters, you should be able to achieve a 10-20% net profit on your turnover. If therefore, you’re planning to keep things small, then your turnover might not be too much more than you were earning originally (although you will have freedom and control). If you want to grow into a multi vet or multi premises organisation however, then your earning potential is significantly higher (but so is the potential for additional headaches and unexpected issues).
Conclusion
Setting up and running a successful vet practice is a huge undertaking, but one that is absolutely achievable. The first month of trading with only a few consults per day can be scary but rest assured: clients WILL come. An independent offering is always attractive and in a first opinion market where strong, long-lasting vet-client relationships are scarce, a new vet in the area that is here to stay will always be worth exploring for clients. Remember also, many practices are turning clients away in the post-pandemic era due to staff shortages or being at capacity. This is a good sign for potential new practice owners! There will always be a need for vets and clients will always look for a vet with a good reputation that they can trust and build a relationship with. If you’re passionate about running your own business, and have the right motivation to go it alone, then with the right support, success could emphatically be within your grasp.
