first published by Malcolm Wright BVMS.MRCVS. on Aug 18, 2015 Client compliance During a busy surgery, it can be easy to fail to get your clients to ensure compliance with your recommendations. A routine dentistry, an overdue booster, a 6 monthly health check or an Intra dermal Allergy test, the worst is to not let the client even know of the services that are available to their pets, that way will result in 100% compliance failure. The result can be both future problems for the pet, and a marked shortfall in practice income. Say a SA practice turning over £500,000 per annum, with dentals accounting for say 5% of the practices income (£25,000) If the practice only obtains a 60% compliance rate this would result in a loss of £10,000 per annum. The classical situation is a suggestion that Fred the Poodle’s teeth require some dental treatment in the near future. Really he needs the treatment now, but for some reason the veterinary surgeon leaves it to the owner to book Fred in at their convenience, which in 30-40% of cases may not happen. The failure of the client to comply with the vets opinion is based upon the owner not be convinced that there is a need to do it now, and therefore it is not urgent. The basic belief must be that as the vet we must believe in what we are saying for it to be effective. So why do people comply? , Well you don’t have to be a psychologist to understand the reasons and improve the compliance of your clients when you recommend a procedure or products in the consulting room but to help with this we can we can look at some work by Robert B. Cialdini a social psychologist who wrote in his book “The Psychology of Persuasion” that there are 6 principles of persuasion. Reciprocity - this is based upon people if given something, will give something back. The rational behind free samples in marketing. A treat for the pet in the waiting room, free coffee, a free dental check – Offering a discount plan for regular clients - this often results in the client agreeing to a suggestion. Commitment and Consistency – once we've committed to something, we're then more inclined to go through with it. People who commit orally or in writing to something that is suggested are more likely to honour that commitment. Remember people only retain 10% of what they hear, and it is essential for people to comply that they understand exactly what you are talking about. You must be committed to the advised route and you should re emphasise the key points, This could be a form that the owner signs to show they understand what you are suggesting and ask them to take it to reception to book their pet in.Consistency is essential, if different staff members offer different views on the need for the same procedure you will almost be certain of zero compliance Social Proof - If people see other people doing something they will often follow, if there are people looking at a car stopped by the police, nearly everybody else looks to see what is happening. The majority of clients never want to be the first to do anything - Informing your clients that (a) “90% of teeth with periodontal disease will have to be extracted” (b) “Most Poodles over 7 have sever periodontal disease”, (c) “80% of entire females will develop life a threatening Pyometra” (d) “25% of cases that we test for skin allergies can avoid continuous drug treatment”All of these will give social proof. Similarly showing before and after pictures of certain conditions from other client’s pets can also confirm that proof. Liking - Cialdini says that we're more likely to be influenced by people we like or feel comfortable with - clients are more easily persuaded by people that they like, and feel comfortable with, practices who present with a smart tidy waiting area, staff with smart clean uniforms all these will give confidence, personal hygiene also gives confidence. Body piercing-and tattoos will result in less compliance – especially with people over 35, the majority of your clients. But remember your perception of what people like may be based upon your likes- this may not always be best! Get a second opinion. Authority -People will tend to obey authority figures; authority figures usually wear a uniform, i.e. vets coat. Clients want to spend time with a person who will deal positively with their pet’s problem. 75% of people will follow a recommendation if the vet is positive and shows leadership to direct them what is best for their pet. The client often wants the vet to make the decision for them; if they feel confident in the vet - Euthanasia is the best example of this where the vet often has to make the decision that the client knows is right but can’t say. Scarcity - This principle says that things are more attractive if availability is limited, or if we could lose an opportunity for something. Perceived scarcity generates demand Examples are, special offers for dental work, neutering, spays etc. with a "limited time only period" encourages sales. Sample of Booster Compliance Effect. Remember, loss through failure to comply will not just be dental work, but treatments, return visits, other procedures, all of these will have a direct effect on practice income
by Malcolm Wright BVMS.MRCVS. on Jun 18, 2017 No, this is not about Donald Trump, but about selling your practice. This sale will probably be the largest financial transaction that you will ever undertake and the purpose of this short article is to inform you how to maximise the price you will receive on completion. Continue reading → Over the last few years, since the development of the corporates I have acted for practices that have sold for more than double the initial offer, similarly, I have heard of practices failing to achieve the right price because of poor presentation or poor negotiation The jungle drums may tell you that a neighbour got £1m for his practice, but http://thevba.com/subrion/admin/that doesn’t mean you will get the same. Every deal is different and needs to be handled on an individual basis. To get the best price you will need to have - 1. A Profitable practice, as the price will relate to true profitability. 2. A practice that has a particular or special attraction for a purchaser. 3. A realistic expectation of price 4. A practice that is presented in the most favourable light. 5. A comprehensive and informative sales memorandum which includes local demographics, competitor analysis,financial performances and full practice management system analysis professionaly produced. 5. Negotiations handled by an experienced person and in a professional manner Understanding the corporates Corporates Veterinary businesses are either funded by- 1. Public and private investors – raising money on the stock Exchange when required e.g. CVS UK (AIM) and Pets at Home (Vets4Pets & Companion Care) (LSE) 2. Equity groups such as Summit Partners, August Equity and EQT Partners. These equity groups invest funds into corporate ventures such as IVC, Vetpartners and hold the vast majority of the shares in the Veterinary corporate business. They will get their return either by selling on the business to another Equity group or by floatation on the stock market. 3. Smaller corporates are usually funded by Private fund, Bank or Equity Funding or a mixture of these. Outside the corporates there are the Independent Private practices, whether these are incorporated or not they are usually owned by veterinary surgeons, their purpose is to produce profits to allow a lifestyle, both vocational and private Corporates Buying Rationale- When they undertake an offer it will be based upon the true profit of a practice and will use something you may have heard of called EBITDA (Earnings Before Interest Depreciation Amortization) as the basis of calculating the value of your practice (Where Earnings are equivalent to Profit after the normal practice running costs have been deducted) The major corporates want the means to increase the true profit that is produced over a 2-year period by • Improved purchasing power for supplies and services • Increased fees • Additional marketing • Additional referrals income to their own clinics This improved profitability will increase the value of the corporate either 1. On the stock market by improving the share price. 2. To another Equity group who may wish to buy out the present investing group Selling With ownership of over 1,500 sites the major corporate groups have the experience and knowledge to know what a practice is worth to them and how to approach a purchase to get the best possible deal. No matter how friendly their approach they are not there to fund your future lifestyle and it is up to the sellet to get the best possible price. What do you need to do as a seller - 1. Get the base price right – know what is achievable from experience of previous sales. 2. Prepare for the sale – ensure that you present everything that a potential buyer will require is there. 3. Find the right potential buyers, usually not the first one who has approached you and made an offer. 4. Ensure dealing with the potential buyers is professionally done - there are plenty of practices willing to sell, so the corporate groups will want the best practices at the best price. I know of owners who have turned down a good offers because they were convinced they would get more, only for the corporate not to bother coming back. Preparing for the sale In practice, you should have a professional sales memorandum that covers the information that every buyer will want to know this is something that comes with the experience of dealing with corporate buyers. Negotiating the deal Have you played poker with a professional? And won? Behind the Corporate team that you see there will be a financial team who are used to dealing with practice purchases and will have calcu;ated the maxium they will go to before any offer is made. Having dealt with and advised some of the financial houses that are looking to invest in the veterinary industry, so that they undertstand the veterinary market,these groups are dealing infunds of £90 million plus. A potential buyer may guess, or assume, but should never know, who else is interested in purchasing the practice. If you have more than one potential buyer, an experienced negotiator will know how to manage the situation to obtain the best price. Potential bidders should never know what another bidder is offering, it will not necessarily lead to your obtaining the best price. Corporate businesses prefer to have a structured approach to buying, rather than an auction. Play Poker 1. Once they have decided they want your practice they will know how much they are prepared to pay. 2. They will not know what price you will accept. 3. They will assume other parties are interested – let them assume 4. They will not know what any other parties have offered – let them guestimate 5. It is a question of getting their maximum to your acceptable level. It can sound easy when you start talking in telephone numbers, but think rationally when you are offered £1,500,000 and another offers £1,555,000, you can do a lot with £55,000 taxed at only 10% so think! You will need an experienced lawyer, to give you legal protection and accountant to ensure you only pay the tax you need pay. Many deals structure the price on the future earnings of the practice, which you should not accept as the practice will no longer be under your control. All final negotiations when dealing with the preferred bidder should take place before any offer is accepted. Remember, know what is achievable and what is acceptable to you by making sure you take the right advice at the outset. Find out more.......... GOOD LUCK
Thinking of selling your practice? Minimise making avoidable mistakes and financial losses by considering the following, in order of importance First published by Malcolm Wright BVMS.MRCVS. on Aug 3, 2015 Thinking of selling your practice? Minimise making avoidable mistakes and financial losses by considering the following, in order of importance. Getting too close to potential purchasers about your practices value. Responding to unsolicited buyers before knowing your practices market value. Setting too high a price/underpricing your practice. Making yourself indispensable. Failing to assemble a professional selling team before putting it up for sale . Failing to negotiate the best deal. Insisting on including property as part of the deal. Failing to produce management accounts on time & not producing transparent financial reports. Failing to allow enough time to both prepare and undertake the sale. Failure to have a Plan B. Trust is vital in any negotiations- Not being completely transparent in the practices finances and functions, with holding secret work, under the counter deals, industrial tribunal activity -If any of this comes out during the Buyers Due Diligence, trust will be lost and the deal could be finished. Talking to potential buyers without knowing what your practice could fetch on the open market can be disastrous Similarly discussing matters with local colleagues can often leave you in a disadvantageous position. Would you think about selling your house without finding out from the local estate agents, or local papers what other similar properties are selling for? Unfortunately it is not as easy to get comparable information about veterinary practices, but certainly you should at least take advice from someone who has that knowledge.TIP Always keep things close to your chest- at this stage you need to find out information not give it away. Responding to unsolicited buyers- on receiving an unsolicited offer, can result in a failure to maximize the practices true value. The purchase market at the moment is dominated by the corporates; they have the funds available, the knowledge to make a commercial offer and the skill to complete a purchase quickly.However, you must remember that that there 3 main buying major corporates, and several up and coming smaller national groups. Each operating in a different manner with different needs. Having knowledge of the maximum potential price can ensure you speak to the best corporates for your practice sale. If you think your practice is worth say £500k, but getting an offer of £700k can result in a knee jerk response, when the practice/company could actually be worth £900k to another buyer –Remember no one will offer the top price as an opening offer. TIP Listen to the offer, and get professional advice on whether it is viable for you to consider accepting before considering responding. Remember you will only sell once so get it right and take your time. Setting too high a price/underpricing your practice – Overpricing is not the same as maximum pricing, there are many practices that will sell for 20-70% more that the assumed value due to a mix of circumstances and buyer desire The market however can be divided into two groups, corporate purchasers and private purchasers. Both types need to be able to show the practice has maintainable profits, for the corporates – because profit is what they are buying, and for the non-corporates to allow them to fund the purchase through loans that are supported by those profits. Obviously some practice/individuals will not require external funding but they are unlikely to want to buy a loss making business, and if they do show interest the price offered will probably reflect that.Many practices sellers underestimate or overestimate the value of practices, and what they are selling for. Every practice is different but the 5 key factors that will determine this value are on a sliding scale are.1.Location 2. Turnover 3.Profitability 4.Manageability 5.Clarity of FinancesOverpricing is easily done and is often based upon the historic traumas that went into developing the practice. The buyer will not be interested in the history, only the present and future of the practice. If overpriced, the practice will stick, and the longer it is on the market the more difficult it will be to sellUnderpriced – what the seller thinks is a fantastic offer price may in fact be well below the true achievable value market - a figure you may never find out.TIP Consider how many surgical procedures you have undertaken in your career, and the skill that has come with experience. Then consider how many practices you have sold over that same period. Then decide whether to do it yourself or take advice from someone with that experience Making yourself indispensable - Running a veterinary practice is hard work, especially if you are the sole owner. The total commitment put in by many principals removes the delegation that would normally take place in other industries. The result can be that you can become indispensible to the long-term success of the practice. A corporate buyer prefers to purchase a ready made structure that is not reliant on one particular person, and as such will normally only be interested if the principal stays on for a period of time to maintain the continuity and allow a more delegated structure to be developed.TIP Its not just about the sales value of a practice, but delegation and developing a structure of responsibility will also increase the long term profits and pleasure in running your practice. The ideal practice for a corporate structure has everything in place that they require to allow it to bolt onto their model. So anyone who shows potential or the desire for advancement within the practice should be encouraged and trained to improve your management team.5. Failing to assemble a professional selling team before putting it up for sale – selling larger high value practices requires a professional team to deal with the buyers to both maximise the price, but also to look at the tax and legal issues of the sale.(a) Your accountancy firm must be able to produce information quickly and in a structured manner. They should be used to dealing with a commercial sales.(b) Legal Team, tax law changes all of the time, and every individual has a different taxable position, so it is essential to check out what your liability will be after selling your practice. This is especially so when you have incorporated, as there can be some complex issues that may arise that can relate to the incorporation and sale. If you are incorporated and the purchaser wishes to buy only the assets rather than the shares- this can leave you in a difficult position when it comes to accessing the funds post sale.Use solicitors with good commercial experience who have an in depth understanding of the legal issues associated with commercial and corporate sales.(c) Practice Sales Team- They should offer a professional sales services, and undertake marketing, introductions, negotiating, work with both the lawyers and accountants and help throughout the process. They should be able to achieves at least a ten to twenty per cent higher sale price for your practice that should easily cover any fees plus.TIP You need an accountancy firm that has specialist tax accountants, a legal team that is experienced in commercial sales & should be large enough to allow the process to progress at the right pace. Having a one-man band going on holiday for 3 weeks in the middle is not ideal! Your selling team should have the drive to maximise your practice value and expertise to deal with your legal and financial advisors. 6. Failure to negotiate the best deal – completing a successful deal is not just getting the price right, it also involves the add-ons that may comes with the offer- whether the property is purchased, its price, if rented the terms of the lease, any employment considerations and other factors relating to the assets. If you practice is incorporated a buyer purchasing the assets as opposed to the shares can have tax consequences for the seller. All of these factors should play a part in agreeing to an acceptable offer. Ideally when you sell it is better to have at least 2 interested parties, this will always put the seller to be in an advantageous position. Simply trying to auction the best price between two or more parties can result in failure. Similarly making excessive demands can lose a buyer. Most buyers are not happy to go into a bidding war, however negotiating skills can allow the best price/deal to be obtained from a potential buyer. Once agreed is essential to write up a Heads of Terms (HOT),(Memoranda of understanding), although not legally binding it saves problems later, your broker will normally do this as part of their service.TIP I remember buyers do not know whether there are 1,2 or 3 other interested parties. If the seller wishes to reveal this it should only be revealed when the time is right as the negotiation’s progress. Having a good and honest relationship with the buyer is essential to get the best result. Remember and keep a note of everything you discussed and agreed when the offer was accepted as this can save stress if any disagreements or different interpretation’s of the agreement come up later. 7. Insisting on including property as part of the deal - This is difficult if the practice is part of the seller’s residence. Larger practices are not interested in using their funds to invest in property; their aim is to buy businesses and the profit that business can make. Private buyers are in a different position and often want or need the property to get security for borrowing. When deciding, be flexible, if you want to sell and the buyer only wants to rent you may lose the sale. Consider if you do rent to a good tenant the property could then be sold at a later stage to a property investor to allow you to realise your capital. If you do sell and get cash what would you do with it? Rental returns could average 5-10%; Bank Saving rates offer 1-1.5% return!TIP It is always better to keep the practice property and your residence totally separate, it may save you money during your working life, but it can be a millstone when it comes to selling your practice. Often the residential part of the premises will have a value that is not supportable by the profits of the practice. My advice is to always ensure they are two separate entities early on in your business career. 8. Inability to produce management accounts on time & not producing transparent financial reports – the quality and frequency of the financial reports produced are essential for the buyer. They will monitor the management accounts from the day of the sale agreement to the purchase date. They are probably paying a lot of money for the practice and obviously do not want to see a sudden drop in sales or profit during the build up to completion. The level of financial detail sought by corporate buyers from the date of the HOT to the completion of the sale– is often beyond what the average veterinary practice produces to manage the business effectivelyTIP Try and ensure that the practice continues to improve on the previous years turnover and profits, as this is comforting for the buyer. Regarding accounts and declarations you must be totally transparent, and everything should be declared. Any HR issues past and present, tax issues and legal issues, if such things arise during the purchasers due diligence without having being informed earlier this could affect the sale.If you undertake some veterinary work, which does not show in the accounts, e.g. Ministry Inspections/kennels this should also be declared as failing to do this could result in warranties being enforced that can be very costly. 9. Failing to allow enough time to both prepare and undertake the sale - You should start to undertake the preparation for the sale of your practice at least 18 months before selling. Thinking about selling does not; mean you have to stop enjoying practicing and running your business. The longer you allow the more time you have to make changes that could affect the final sales price, an increase in net profit of £15k could produce £40-£80k extra in the Goodwill. Obviously you have to balance your circumstances when doing this and many well run practices show sufficient profitability to allow a sale to go through quite quicklyTIP Ideally the sale of the practice should be simply another stage in your practice career of Growth, Consolidation and Sale. Each stage producing differing levels of financial return. Your last consultation fee before retiring may produce £50, but you first business sales deal after selling could produce £500,000! 10. Failure to have a Plan B - if the practice fails to sell – It is important to consider alternative methods of divesting yourself of your business simply trying again is not the best way forward, Should you sell at a reduced price, change broker, take on a manager and invest in the practice, lease the practice?You will need to look at the practice, its strength’s and weakness and accommodate them in any changes you make to the way the practice functions.TIP If you have a practice in an unattractive location, unless you are making very good profits you may have to reduce the price to attract someone, investing large amounts of money may not give you a return, but minor décor and appearance changes could make a difference. Your broker should be honest enough to let you know the position regarding salability at the onset. Suggesting an unrealistic sales price simply to get the work can result in failure to sell at all. If the practice runs from your residence consider moving it to a commercial site, that way the practice value may well be increased and you will have a house to sell on the open market.Conclusions-Selling is a stressful business, and one of the main worries practioner’s have is what will happen to the practice and their clients when they have left – You are selling because in most cases you are moving on to another stage in your life. The compensation is the freedom and financial security that hopefully you will receive and it is important to leave the emotional attachments behind, of course it won’t be run as well as when you had it but that is something you will have to accept.
Comparing the requirements of a corporate and individual buyer for a generic practice First published by Malcolm Wright BVMS.MRCVS. on Sep 27, 2016 Corporate Tsunami- Well the market has changed dramatically in the last 10 years- at the moment corporates own about 33% of the veterinary market, based upon sites and probably nearer 40% based upon turnover Who do you sell to? This is dependent upon who might be interested- this can range from a corporate having real desire to pay the top price for a practice in a particular location with a high level of maintainable profits to a local practice with cash funds wishing to expand to a private investor vet looking to buy a start-up practice with limited funds. What are you selling? I’ve seen practices with similar turnovers being sold for price variations for the goodwill of 100% – why? You are selling Turnover Profit Location Management structure Quality of the premises How do you get what you want? Ensure profiability Know achievable prices Non dependent management structure (ie the owner is not required for it to function!) Pleasing appearance Quality presentation Professional negotiations Transparent How do you Fail to get what you want? Overpriced Low profitabity Poorly presented business Failure to negotiate Non Transparent Appearance Locatation & Visibility or Who do you sell to? This is dependent upon who might be interested- this can range from a corporate having real desire to pay the top price for a practice in a particular location with a high level of maintainable profits to a local practice with cash funds wishing to expand through to a private investor vet looking to buy a start-up practice with limited funds. Many practices in the wrong location, have restrictive premises and no true profit, these may not be saleable. Saleability League The following is only a indicative league of the type of practice that would be of interest to different buyers Top Practice Price Obtained (per vet employed)% Profit is after owner takes a market rate salary Top-team Turnover >£350k3-4 vet practiceNet Maintainable Profit > 18% of TO Maintain own night service with good on call hoursLocation Populated area with good incomeGood Management StructureGood premises Bottom Team Turnover <£150kSingle vet practiceNet Maintainable Profit < 7% of TO No Night service/shared availableSparsely populated areaOwner dependent management and incomePoor premises
First written Apr 16, 2015 This shows an example with a new graduate and an experience graduate, showing the associated costs and the actual productive working time Cost of employing a Vet Basis A vet works the following Non Working Weeks (A) Bank Holidays & CPD 1.5 (B) Annual Holidays 5.0 (C) Productive weeks/year 45.5 Hours Worked Average Hours per Week 40 Average Hours per Year 1,820 Financially Productive Time 70% Financially productive Hours worked 1,274 Experienced VS New Graduate (SPVS)* Salary £45,000 £25,000 NI £5,098 £2,338 CPD £1,000 £1,000 * RCVS etc £400 £400 * Car Allowance £2,542 £2,542 * Other Benefits £1,000 £1,000 * Total Cost £55,040 £32,280 Annual wagecost (Inclusive) paid per year £49,942 £29,942 Annual wage paid per hour employed £27.44 £16.45 Cost to employ per active hour £43.20 £25.34 Vet Salaries as a % of Turnover. 20% 20% Hourly earnings required to break even £43.20 £25.34 Hourly T/o per Vet Required to break Even £216 £127 Annual T/o per Vet Required to Pay Salary £275,200 £161,400
by Malcolm Wright BVMS.MRCVS. on May 2, 2015 A good job advert should attract attention, relevant interest, desire and a means of acting to get further information. Use simple easy to read headlines, and leave space around the text to allow readers to follow it, and be concise. Bullet points are very useful Do not Use over-designed graphics – distracting Use too many words Strange fonts Always - Include the location for any advert. State whether the role is full-time, permanent or a temporary. Give a reference number Mention Equal opportunities statement Give the practice website address Any advert whether for a job, service or product should be based around the sales training acronym, AIDA- Attention- Interest- Desire- Action Attention - this part is the headline that makes the first impression count Interest - this should build up information, show something of interest Desire - this should relate benefits to the reader so that they will have a desire for them. Action – All the above are no use unless you prompt the reader to action – an email or phone number. Attention Good Banner/Headlines Poor How far do you want to climb? Vet surgeon required The best of both worlds Assistant needed Exciting Career opportunity Looking for a new challenge? Interest This must include issues that the reader may think about that is of benefit NO out of hours 1 in 10 Rota Friendly 2 centre companion animal practice Experienced ambitious vet looking for an upward career move £65k pert annum 8 weeks holiday Desire This should offer job appeal E.g. the position offers training in equine medicine and surgery, including soft tissue surgery and orthopaedics etc. Other features of the job. Action Advertising that does not prompt action is a wasted opportunity so make it simple Go to - www. Thevets.com/applications Telephone - Phil on 123-123456 Email Phil@Thevetsinuk.com
Short article to explain the potential income loss from losing an average client by Malcolm Wright BVMS.MRCVS. on May 28, 2015- Rewritten Feb 2018 The loss of a client can result in extensive financial losses to a practice in the long term. Not only will the practice lose the present income from that client, but also the future income. Clients can leave the practice due to- Poor veterinary care. Poor client relations Fees appear to high The following are hypothetical figures which are used to show the potential losses Cost of losing clients & keeping Them Vets Annual Revenue per Vet £250,000 Number of Active Clients 1,000 Percentage of dissatisfied Clients 5.0% Number of dissatisfied clients 50 % likely to change 33% Number who will change 17 Average Annual Revenue per client £250.00 Revenue Lost for poor service per annum £4,250.00 If this continues every year Potential Revenue lost by year-2 £8,500 Potential Revenue lost by year-3 £12,750 Potential Revenue lost by year-4 £17,000 Potential Revenue lost by year-5 £21,250 Potential Revenue lost by year-6 £25,500 Potential Revenue lost by year-7 £29,750 Potential Revenue lost by year-8 £34,000 If no further clients are lost after year 1 - the total potential loss would be £34,000 over an 8 year period Worse still If each unhappy client who leaves Tells 10 friends 10 Total Number of additional people told year-1 170 If 10% decide to listen to their friends non recommendation and do not use the practice 17 Potential new client Lost revenue per annum at £250pa from those potential clients £4,250 This potential loss will accumulate every year Total Potential Revenue lost in year-2 £8,500 Potential Revenue lost by year-3 £12,750 Potential Revenue lost by year-4 £17,000 Potential Revenue lost by year-5 £21,250 Potential Revenue lost by year-6 £25,500 Potential Revenue lost by year-7 £29,750 Potential Revenue lost by year-8 £34,000 Total potential loss from one person over 8 years £68,000 What would the total loss be if every year the same thing happened and you lose the same number of unhappy clients with the same outcome- pretty astronomic! It is far better and cheaper to keep a client than lose one
USING MARKET RESEARCH IN PRACTICE While Demographic Surveys are an essential part of understanding the financial and social breakdown of the location, Market Research can give you an insight into actually what is happening to the animals on your prospective patch. Undertaking a Market Research survey is time consuming but will tell you nearly everything you need to know about the practices in the area and is definitely worth the time and effort if you are thinking of expanding your practice into a new area. The best combination is to have a Household Income Analysis (Demographic) combined with a local market research questionnaire to find out where and why people go to a particular practice. Surveys can be undertaken by yourself or friends and a range of simple questions relating to the health of the candidates pets and how often and why they obtain veterinary treatment can give you a wealth of information. It can be quite difficult to get enough people to answer so don't make decisions on only a few responses. You will need at least 100 respondents to get a degree of accuracy which could take 1 person 3-4 days to achieve. Usually the researcher is situated in a busy street or shopping mall central to the area where the practice or potential client may travel to. Initially ask a few questions to eliminate candidates who may not have any pets or are not relevant to the area (known as screening questions) before either thanking them or passing on to the next set of questions. At the end of it all always consider the results of the survey information you have obtained and make a rational decision based upon them. See Sample Survey The Basis for survey - it is basically to see where the client base goes to at present and why they go there. Once you have this information you can make a decision on where to pitch your market. Sample Questionnaire Do you live within 15miles of here? Yes/No - If no stop Do you have any pets? Yes/No - If no stop How many pets do you have? 1,2,3,>3 Response? What are your pets? Dogs, Cats, Other Response What Food do you feed? dry, tinned Response Where do you buy your food? Supermarket, Pet Store,Vets Response The last time you visited private vets? >12m < 12m If never- stop How many times have you visited in the last 12 months? 1,2,3,>3 Response How do you travel to the vets? By foot, car, public transport, Taxi Response What was the reason for your last visit? Vaccine, Neutering Dental, RTA, Medication, Illness, Other Response Why did you select a particular practice?Location, Price, Reputation, Recommended, Yellow Pages, other Response How would you rate the practice on the following- on a scale 1-10 where 1=Poor, 10 Excellent Cleanliness & Appearance Response Staff attitude Response Value for money Response Facilities Response Parking Response What is the name of the practice you attend Response(Can offer a list of names) "Smiths Veterinary Centre" SURVEY CONCLUSION- "95% of the pet owners asked go to Smiths Veterinary Centre because it's the cheapest, has poor facilities and also never sends any bills! - this may not be the area to open your high quality dream practice!" Malcolm Wright BVMS MRCVS runs The VBA (Veterinary Business Agency)
by Malcolm Wright BVMS.MRCVS. on Mar 11, 2015 The Past -The changes in the type of ownership of veterinary practices over the last 40 years has been fairly dramatic, going from the private partnerships through to the stock market listed corporate companies. The 50’s and 60’s saw thenormal route of progression for a veterinary surgeon in practice through a partnership, with payment for Goodwill being undertaken by a mixture of external funding and/or financial benefits being offered to the older or retiring partner, e.g. pensions, reduced hours, higher salaries etc. Whether or not that person was suited to being a business owner was irrelevant as the alternative was to remain as a paid assistant with the lower wages and lack ofprospects that resulted. The 70’s showed the arrival of a new group of veterinary surgeons who were prepared to try an alternative way of setting up their own practice by “putting up their plate”, this was due to a mixture of unwillingness to pay for Goodwill and the rapid increase in pet practice that was taking place that offered obvious openings. Small animal practice was now becoming the main interest in the majority of graduates qualifying in the 70’s, as the pet owning public was beginning to look for something different to the service offered by the mixed practices, especially those situated in the larger metropolitan areas. This period 1970-1990 saw the largest increase in set up by private individuals of individually owned privatepractices. The last twenty years has seen a continued increase in practice numbers, but this has mostly been due to larger practices, opening new branches or defensive openings to protect areas, franchises or Joint Venture practices, with very few start ups by private individuals. Why has this happened? – The Veterinary Entrepreneur? As of February 2006 in the UK there were 28.84 million people in employment, with approximately 1 in 10 self employed (10%). In veterinary practice in 2006 there were approximately 12,975 registered veterinary surgeons employed in general practice. Of these approximately 46% were self employed (including 6% locums). This is a very high level compared to the national average. Is it within the nature of veterinary graduates that they are 5 times more likely to have that special entrepreneurial character? Or do the universities pre select potential entrepreneurs? - Not really, the answer is that veterinary practice has offered very limited financial opportunities for career fulfilment unless you choose the self employed route and many were not suited to it but forced into the path by default. The Present In the last 20 years while there has been a continued increase in the number of veterinary practices (sites) there has been gradual decline in the number of startup practices set up by independent vets. Most of these new practices have been developed by established practices, or as Joint Venture practices. What is it that has changed to allow this to happen? Deregulation of the veterinary market - has affected how business operates. This has allowed the evelopment of limited companies, with the associated changes in ownership and legal responsibilities. The largest corporate groups tend to be owned by Non Veterinarians, but many practices have non veterinary qualified shareholders. Changing market forces and the variations in veterinary Demographics are creating changes that are allowing the development of a financially rewarding career outside ownership, especially within the larger practices, corporate groups and the veterinary charities. The deregulation has allowed increases in he business gene pool. If you do decide to own your own practice, deregulation has opened the market to non veterinary entrepreneurs, so you will not only have your professional colleagues as competitors, there may be some Alan Sugars, Richard Bransons or Anita Roddicks to worry about in the future. The changing demographics of the veterinary raduate - why are the present generation of vets less willing to own a share of the practice they work in? The answer to this is twofold, Imbalance of the sexes – the modern family Although not PC you have to simply look around and you will see that the vast majority of practice owners are male, and this is an ageing at risk group who are not being replaced by the succeeding female graduates in sufficient numbers. The average female vet will work for 5-7 years Full time, wit h the majority leaving after this period to have a family, returning to practice about 10-15 years later often in a Part time capacity. While the modern family allows women to remain working, it doesn’t allow them many opportunities to be involved in ownership. The 24/7 demands of practice ownership and the 24/7 demands of bringing up a family often don’t match. Generation attitudes - meet generations X & Y The Baby Boomers Born 1944-63Graduated 1967-86 Age 48-66 Generation X Born 1964-84Graduated 1987-03 Age 31-47 Generation Y Born 1985-95Graduated 2004-2011 Age 24-30 Generation Z Born After 1995 Each generation is influenced by the society that they grow up in during their developing years, the Baby Boomers, their formative years would have been influenced by the great social changes that took place such as the availability of the Pill, the Vietnam war, the death of JFK. These influences produced a different ethi c to the previous generation (the veterans). They have an optimistic view of the world A feeling they could make a difference Believe in Personal wealth and development Believe in saving for the future Working together Rebellious towards authority Inflexible to other views “We won’t get old like our parents!” Generation X as women began to take up more and more work; they became the “latch key kids”. Their influences often came through the television and the advent of home computers. They began to see the consequences of the sexual revolution with the advent of Aids and the violence of world events was brought to their door through TV. They tend to be more casual Are highly techno literate and multi tasking Have a world view on life Work tends to be just a job rather than a life Don’t want the pressures of debt Not great believers in the team Prefer flexibility in life Often retain a parental dependency much longer “Why burden yourself with loads of debt?” This group, whether male or female, would have been the replacements for the Baby Boomers as they sell up, unfortunately their attitude does not fit in with the expectations of the Baby Boomers, as a result less owners. Remember this is only a generalization and many Generation X vets have a mix of the characteristics of the previous generations The Future – Well like everything else it will change, there may be more deregulation, but the major factor will be the attitude of the next generation of vets to ownership and the attitude of the remaining Baby Boomers and Generation X vets in response, who are at present practice owners. The present generation of young vets comes from within Generation Y, they have developed through the internet revolution, and its effect on day to day life, the mobile phone, the effects of 9/11 and 7/11. The spin and promise of today’s politics and media has produced a generation that is: Totally at ease with technology Highly multitasking Believes in heroes Tends to be confident and optimistic Good team workers Diverse with a new morality Believes in street cred Is more confident Wants everything now “Life’s cool” Distrust the establishment They have developed through the boom years of the early 21st century, and now face the problems of the present economic reality, with their views on 4 and 9 changing. They will have to adapt to survive, with the responsibility of repaying large burdens of debt, especially the future graduates. So where do we go - things at the moment are developing with the Joint Ventures offering a half way house between full ownership and employment. But you have to remember that to maximize profits if someone is taking a % off the bottom line and influencing the way the practice is managed it has limitations. It is suited to those not prepared to jump, but put their toe in the water and at the moment it is in the ascendancy. The large corporate practices and charities will offer a career path for many graduates, especially if they do not want any ownership responsibilities and can often offer working conditions that are more secure than the smaller practices. The presence of corporate practices offer opportunities, as they tend to buy existing practices and maximize the profit earned from them. Their strategy is based upon increasing Fees, reduced overheads and cost of sales to maximize profitability - but they often fail to react to local issues allowing larger local practices to see opportunities. Similarly they will attract only staff who do not want a share of ownership and this may reduce the ambition of the local practices, this may be the Achilles heel of the corporate group. The future for owners of private practices will demand change if you are to stay ahead of the game, and change demands courage. The newer graduates may as a consequence of their financial responsibilities be hungrier, more pragmatic and need a full time carrier to allow them to obtain a higher income and they may produce a group who look to expand the privately owner practices again. With the presence of Out of Hours clinics, this makes the initial stages of practice development more appealing. So what about the female graduates, returning to practice and those male graduates who want a share but not total responsibility - ownership of a part of the business you work in always stimulates - just look at the success of John Lewis. The most successful practices have contented, stable staff with a pride in their practice, ownership offers this at the highest level, so the opportunity to have limited companies means that larger practices can employ managerial staff to run the non clinical side, allowing the vets to concentrate on their core skills, it also allows the opportunity for part time employees to have a shareholding and play a definite roll in the development of their practice. In a company you can’t have all Chiefs and no Indians, so the management of the practice must be undertaken by a Board of directors; the part time staff shareholders may have a director who represents their views on the management board, with a representative vote. Additionally it may be that practices consider buying in experience rather that employing consultants by taking on Non Executive Veterinary Directors, or Non Executive Marketing Directors (paid Directors who have no Shareholding), who could offer their skills and experience to the practice say on 12-48 days per year. Why learn the hard way when you can save years utilizing others experience? Generation Z, born after 1995, have not yet even started university may be the generation that produces the most radical changes since the Baby boomers, they have never known a life without the internet, computers and mobile phones, and communicate via online communities and social media like Google, MySpace, Twitter and Face Book. However they will be the most indebted generation which may determine how their career develops- we will have to watch this space. Failure to evolve means extinction, so the future is in the hands of both the present owners and the future generations to make the jump to allow practice ownership to evolve in the next part of the 21st century.
by Malcolm Wright BVMS.MRCVS. on Jan 19, 2015 No, well try and minimise the problems that an HMRC investigation will bring. Small businesses are far more likely to make errors than the larger corporations, mainly as a result of failing to understand what exactly is tax allowable. You will all realise that buying a football or an electric carving knife, are not accepted as VAT deductible items, even if the staff play footie during their lunch breaks and you use the knife to cut the Free bread you give them!! Check out your locums are accepted as Self employed. VAT and PAYE have always been scrutinised on a regular basis, but the HMRC are now looking into areas such as corporate entertainment, company cars & private healthcare. And random inquiries are often triggered by late payments Investigations can cause massive stress and loss of earnings to practices, so to minimize matters try and follow these guides- Use experienced accountants. Always file your accounts on time. Keep clear financial records. Make sure your financial records are easily accessible (6years). Don’t get involved in Tax avoidance schemes. Take out tax enquiry insurance