Adaption to the client base’s Income Level Often when looking at areas you will see a much high concentration of practices in the better off areas than the poorer ones. This seems obvious, but often the poorer areas offer an opportunity to develop a profitable unit as long as you adapt your practice to match the expectations and financial ability of the potential clients. As a rule of thumb in the UK, the total personal area income required to give a FT veterinary surgeon a salary of £105,000 would be £176,654,000. From this you can find out the viability of an area using demographics reports Remember also in an area where there are large numbers of flats it is more likely that there will be a higher percentage of cats kept as pets. As a rule Dogs produce an Average of 60% practice Income and Cats produce an Average of 35% Income, other Species produce 5% Income Always adapt the services you provide to the make up of the client base of the practice area- and be sure that there are enough clients of the Type you need to allow you to maintain a profitable service.
Who will lend you the Money and how can you access them? You have a few choices on where and what type of funds are to be obtained. Use your own money Private Investors - Bank of Dad & Mam, or friends Local Banks- National Major Banks Veterinary Insurance Companies Financial Brokers Business Angels & Private Investors-(are sometimes willing to lend money but usually only in limited companies where they can take shares as security. (A share of the equity (or ownership).They can offer business experience which can be worth a lot, in both cases they will usually require an exit route and good return on their shares within 5 years. Venture Capitalists- ( tends to be involved in larger established practices and are not usually be interested in a smaller start up). Government Backed Loans- (there is a scheme called the Small Firms Guarantee Scheme. This has been designed to help both small businesses start ups and established small businesses that are unable to borrow money in the normal way because they cannot offer security for a loan.) In reality 90% of people will borrow from the major banks either directly or indirectly. Local branches now are allowed very little commercial decision making and it is best to go to a Commercial banking centre directly or through a Finance or Insurance Broker, often these firms will have arrangements with the major banks which can offer very good terms. The lower bank rates of the last 12 years have minimised the number of veterinary surgeons locked into horrendous loan deals that have left them high and dry when the rate dropped, but you must still be careful- get advice. You must appreciate the Golden Rule that if you are not prepared to invest financially in your business then you cannot expect anyone else to. As a rule the bank will lend between 3 and 4 times the amount you are prepared to put in. Obviously with property they will lend a much higher percentage of their valuation as they will almost certainly take a charge as security against the loan. In todays market the lender will require a deposit of between 10-20%, depending upon the interest rate charged. Whichever way you decide you will have to convince the commercial manager that you are putting forward a viable proposition. The better case you present the more likely you are to get the money. The only way you will do this is to show you have prepared yourself well for the business and that you know exactly what you are doing.- by producing a comprehensive business plan.Having your funds ready is vital when purchasing a practice, as you may well be in comp[etition with a corporate who will have the avialble funds without resorting to borrowing.
What makes a client choose your practice? Many authors, experts and surveys state that price is never a reason why clients go to a particular practice, however thirty years of running practices in a large variety of areas in the UK has taught me something different- price does matter in relation to the client’s perception of value for money. That value may be compassion shown, individual care given, high tech facilities available or ease of use. Practice owners should remember in spite of all the marketing, the vast majority of pet owners do not have insurance. Understanding your client base. When looking at the reasons behind a client’s decision to choose your practice, it is always worthwhile obtaining an insight into the demographics of the catchment area that you rely on for approximately 80% of your clients. Trying to attract more clients in an area that is already saturated with practices may result in unending struggle, so with certain basic information you can look at the area in question and make some educated assumptions. You may have a good feel to what is out there, but demographics uses actual data to give you a more defined answer to what you are looking for and gives you a head start in understanding your market. Information can be obtained from Council web sites, professional companies such as Caci and public domain information. The basic information we need is Number of households The percentage ownerships of pets The level of pet insurance The average household income From this we can estimate the veterinary capacity of an area - see sample below. Using the type of survey used by Caci © we can obtain the following information. Catchment area postcodes X & Y National Total households 112,411(3) 27,200,000(1) Assume the lower (income) 25% of (28,900 households) do not attend private practices Total households in upper 75% of income bracket. 83,511 20,400,000 Number of these with a cat and /or a dog. 5%(3) 5%(3) *Number with 1 or more pets 36,327(3) Calculation Number of pets in area. Assume 1.2 pets/ household (estimate) 43,592 % with Pet insurance 7%(3) 3%(3) Using patients per vet – 1250(5) per annum 35 private vets Alternative Client vet spend p/a for area [£285 pa(4) x 36,327] £10,353,195 Average turnover per FT vet [£275,000] 37 private vets (1) Office of National Statistics -Families and Households: 2017 (4) Daily Mirror 2017 by Emma Elsworthy (3) Caci © (5) VBA information The above allows you to estimate the number of FT vets that could operate within the area, obviously a practice that sees more clients per vet and charges lower fees would reduce the veterinary capacity. Why do we need to increase our client base? Our clients are the same type of people who attend retail shops or obtain other services and their approach to which company they should use evolve in the same way, as the ones they make when choosing a veterinary practice. There are different definitions of success, but three consistent requirements are needed whatever definition you use. The practice must have a continuous input of new clients attending the practice on a regular basis. Its needs to rely on the clients maintain their spending on their pets. It needs the ability to keep its clients How can we get clients to choose your practice? Firstly, we must understand the client’s decision-making process. Our clients are consumers and they base their decisions on whether to use a particular business, product or service on certain factors that are common to all. Veterinary practices are no different and whether a client decides to use a particular surgery depends upon the following sequences occurring. A client may be looking for a new practice because, they have moved into the area, are not happy with their present practice or something else has made them consider changing. The instigating factors will fall in the following sequence. PROBLEM - The pet owner requires a need to solve a problem - a new puppy needs vaccination, a bitch needs spaying, a pet is unwell, or some problem has arisen that requires advice. INFORMATION SEARCH –The pet owner will appraise what is available – they may have used the practice before, visually has seen a practice, had a practice recommended, influenced by some marketing, social media or web presence. This could include on line reviews. Once a decision has been made, they will move to an enquiry. CONTACT- The pet owner will make contact with the practice to ask questions, the answers and the way they are given can allow the owner to make a decision- this may be done via the practice’s website, directly by phone or on a face to face basis. E.g. -Can they get an appointment that suits, can they get advice, can they park easily, how much does will something cost. DECISION- If they are comfortable with the responses the pet owner will go ahead and make an appointment.So all of that will allow them to get through the door. How they are dealt with from now on in the visit will determine whether they stay as clients. POST VISIT BEHAVIOUR – the client will compare their experience at the surgery with their expectations and will be either satisfied or dissatisfied with what they expected. If satisfied that the service matched their needs, they may then recommend the practice and may go on to become a bonded client if the service is repeated with the same level of satisfaction over a period of time. With the presence of social media, it is common for clients to give their feedback via the practice website or social media networks TRAINING, TRAINING, TRAINING! For this to occur it is essential that all staff are fully trained to understand the importance of handling the practice clients from their first visit onwards and treating them with respect. So how can we increase the chances of that sequence occurring and producing a successful outcome? We must match exactly what your potential client needs are with what you are able to offer- you can find this out using surveys such as those mentioned earlier and questionnaires on what they expect from the veterinary practice. The clientwhen making a decision will be looking for what are called “Use Points”- these are factors that they require when they make an approach to attend a practice The practice must offer the same factors in the form of “Supply Points” if they are to get the maximum number of clients. As a practice owner you might decide your main supply pointsare - “ We offer a personal Service” “ We give a full 24 hours service” “ We have surgical specialists working within the practice” “ We have RCVS hospital status” “ We offer 15-minute appointments “ We off competitive pricing” Your potential client pet owner may have a different use point’ssuch as “I need easy parking” “I require weekend appointments” “I want to be able to get information easily” “I want to see the same vet each time” “I would like a home visit” “I want to know that I can afford the treatment” The supply and Plus points only give the opportunity to get the client to try the practice the key times in the decision sequence are where there is contact, with the reception- the nurse and the vet. This can help you work out why clients might choose to use you rather than go to another practice- the following is a simple survey carried out in a Supermarket (With permission of the company!) by three practice staff over one day. The following gives a sample of the answers/results from the questions asked to people who currently owned a pet. When did you last visit a veterinary practice? Within the last 12 months 90.20% In the last 3 years 9.80% How many times have you visited your vet in the last 12 months? Once 19.6% Twice 17.4% Three times 15.2% More than three times 47.8% What were the reasons for visiting last time? Illness 29.5% Vaccinations 47.7% Accident 5.7% Dental care 3.2% Routine operation 12.2% Other 1.7% How do you travel to the surgery? By foot 13.92% By car 85.23% By public transport 0.42% By Taxi 0.42% Have you used a different vet in the past ten years? Yes 42.7% No 57.3% Of the 42% who had changed, we asked their reasons for changing: Dissatisfied with the service 30.0% Dissatisfied with the staff 10.0% Price 2.0% Moved house 58.0% Why did you select a particular practice? Location 60.0% Reputation 26.8% Friend Recommendation 9.3% On line web site or Social Media 3.0% Yellow Pages 0.9% How would you rate you’re the importance of the following in order of importance between on 1 to 5? Cleanliness and appearance Attitude of reception staff Attitude of veterinary staff Facilities to treat your pet Ease of parking How would you rate the practice you use [1=Poor, 5=Very good]? Cleanliness and appearance Attitude of reception staff Attitude of veterinary staff Facilities to treat your pet Ease of parking From this you can draw conclusions of the client base in the area and their rational for choosing using a particular style of practice There are certain obvious supply points that all potential clients will look at Location Appearance Ease of use Quality of Service Consistency of service Price If you supply these you are more likely to succeed in attracting and retaining new clients something that is critical to a successful practice.
When you are selling a practice and a property is owned by a third party, it is essential to get their agreement early on in the process to ensure that the sale process is not held up. It is worth considering that you pay any costs to the landlord to prevent delays, these should be minor in respect to the sale value of the practice
Fake Emails can be tricky to spot, hackers often use HMRC type addresses to get unsuspecting businesses to log onto the links they provide. From that link the scammers can hack into your internet account. To check if an Email address is from who you suspect is to hover over the ‘from’ address. The actual link the text leads to will not end in @hmrc.gov.uk (which all official emails from HMRC will). If this had been from a scammer the from would have been an address that I didn't recognise. If you’re unsure about the email, forward it to HMRC’s phishing team at firstname.lastname@example.org
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 The Future No one knows, but the market is likely to consolidate more with: Corporate practices dominating the scene – They may be share based (stock market) or have majority private equity shareholders. There are effectively 7 large corporates at the moment. Mini -corporates/ or chains - they may be localised to a large specific area. They have private equity behind them or may be self funded. Large practices employing 7-20 vets operating in a specific area. Large individual practices operating with 3-7 vets Smaller units with 1-2 vets So why do people Sell – They simply they want to retire They want the opportunity to obtain capital while it available They are unhappy with the changes and pressures of running a practice They are disillusioned with the difficulties getting and maintaining professional staff.Or They would like a career change Illness Divorce Their practice is financially unviable. So whom can you sell to? This depends upon who would be interested- this can range from – A corporate willing to pay the top price for a practice in a particular location with a high level of maintainable profits. A mini corporate looking for a practice with potential to develop A local practice with cash funds wishing to expand its area. A private investor vet looking to buy a start-up practice with limited funds. Practices in the wrong location, with restrictive premises and no true profit, may not be saleable. Saleability League Top Practice Price Obtained (per vet employed) Winners Turnover >£375k T/O per FT vet 3-5 vet practice One site Net Maintainable Profit > 18% of Turnover =[maintainable profit is after owner takes a market rate salary] Maintains its own night service with good on call hours. Good location in with Populated area with good total household income. Structured management not owner dependent. Good modern premises Losers Turnover <£150k T/O per FT vet Single vet practice > One site Net Maintainable Profit < 7% of Turnover =[maintainable profit is after owner takes a market rate salary] No Night service/shared available Sparsely populated or low income area Good location in with Populated area with good total household income. Very owner dependent. Poor premises or integrated with owners home. How much should you ask for? Well at the VBA we don’t set a price, once you have fixed a price there is only one way it will go - down What are you selling? I’ve seen practices with similar turnovers being sold for price variations for the goodwill, which is the intangible business with a variation of over 50% – why? Valuation inaccuracy Poorly marketed Lack of knowledge of potential purchasers Poor presentation Poor negotiation skills Failure to negotiate Not transparent Know achievable prices When you sell you must have an knowledge of what the achievable price your practice could sell for - this is not published and you will have to guestimate what you think your practice is worth or Accept a valuation offer from a corporate. Would you accept the offer from “We will buy your care” or the PX value of a car as being the best price you would get. To get the maximum price for your practice will almost certainly mean selling to one of the corporate practices. These firms are large, have extensive legal and accountancy support. You will need to employ professionals who are used to dealing with companies of this size, and transactions of this value in this particular field. Using a small firm that has sold a few retail businesses for £200-700k may leave you in a vulnerable position. The level of due diligence and the legal warranties the corporates will undertake will add onto to both your legal and accountancy fees as they go through the process, compared to a more “simpler” process if selling to an individual, therefore it is something you need to have under control throughout the sales process So should you use a Practice Sales Broker? and why use the VBA Ltd A broker should not be an estate agent – they should be involved from the onset of your sale through to completion. In most cases the property is a separate part of any sale and in many cases the property is leased to the purchaser, and actual terms being negotiated by the broker The major parts of any practice sale can be divided into Pre- Sales Process -Estimation of the achievable value of the practice, whether it is for the sale of the shares in an incorporated practice or the sale of the assets with a sole trade/partnership practice. This is undertaken by combining a site visit with the analysis of the practice accounts and practice structure and makeup.Preparation of the practice sales memorandum- this should give any potential purchasers enough information to make an indicative offer. Sales Process - This should involve marketing the practice to selective buyers, deciding on preferred bidders, obtaining Non Disclosure (protection) agreements for the seller, dealing with all offers, negotiation of detailed terms of the agreement and preparation of Heads of Terms (What you agree to in the negotiations) Due Diligence and completion period - Liaise with both sets of lawyers and accountants throughout. Benefits of using an experienced broker- Experience has shown that saving on costs can in the long term result in less value when sold, cheap fees do not always means savings - In life you usually get what you pay for. Self Sale Broker Will you Save on Fees? Not necessarily Self Sale - You will have legal & accounting fees e.g. For a £1m incorporated practice sale the legal fees could be between 3-5% plus VAT. The more complicated the transaction the greater the fee. Additional accountancy fees will be charged in addition as all sales will require final accounts and they will have to respond to (DD) Due Diligence The Broker should minimise both legal and accountancy fees, as they should prepare the practice for the DD and assist your legal and accountancy firm throughout the sale. What will a broker charge Either a fixed fee or a commission based success fee of 5-10% of the final sales figure. Obviously commission based fees stimulate the broker to get the bets price rather than a fixed fee The increased selling price obtained and time saving should always pay for any fees charged Will you get the best price? Maybe- but you will never know Do you know what the possible maximum achievable price for your practice could be? Do you know how to present your practice (business) to get the best price? Do you know what other practices similar to yours are going for? An experienced broker should know and deal with 1,2 &3 Do you have the best contacts to approach in the sale of your practice? ? The more potential purchasers the better the chance of obtaining the maximum sale value. An experienced broker will deal with all of the major large corporate groups on a regular basis. Have you dealt with a successful company sale before? ? Like any complex procedure experience comes with undertaking it on a regular basis. Do you had]ve the a financial and accountancy sales experience to manage the sale throughout A broker should be experienced in selling practices for between £500k and £5m Will you maintain your regular practice income while going through the sale process? ? Selling a practice business can involve 6 months additional work, which will take you away from maximising your practice income at this time A good experienced broker should release you from a lot of this, as a result of knowing the procedures and requirements of a company sale Will you get the amount you originally agreed? ? Failure to declare financial information or support stated facts could result in PRICE CHIPPING where the original price no longer appears justified. An experienced broker should handle this Will you negotiate a better price? ? A broker should know from experience what the larger corporates and groups are prepared to pay from previous sales and be able to obtain a price at least 10% more than you would have achieved yourself Selling your practice will probably be the biggest and most complex financial transactions you will undertake in your career, so get it right first time if you want to maximise the benefits of the present market.
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 Banner/Headlines 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@Thevets.com
You cannot prevent a client requesting a prescription. However the type of clients who will request these can usually be divided into the following Clients who surf the net to compare prices on everything Clients who are on long term/ or expensive medication and see it as an obvious way of saving money. Clients who feel that veterinary practices do not offer value. You must be careful and not panic and assume that everyone eventually is going to buy on the net, and attempting to to compete like for like could be economic suicide and unbalance your practice finances. However selective competition can be quite effective. One approach is to make sure your commonly dispensed drugs are not excessively priced. Compare them yourself to the Internet pharmacies and pitch these products to no more than 20-30% more than the competition. Clients will not usually start buying elsewhere with the hassle that involves unless there are substantial savings to be made. Additionally you can maintain your drug prices for the normal dispensing amounts (E.g. 14, 21, 28 units) but give a discounted price for larger amounts that are collected on prescription. Another method would be to increase your consultation fee and give a discount voucher for drugs dispensed at the time of a repeat prescription. This discount would effectively come off the drugs dispensed and would reward clients who purchase from you. Offer postage of prescription drugs or home delivery if you have the facility. I certainly don’t believe it is right to charge an extortionate prescription fee to try and remove the financial benefits the client would obtain by purchasing the products on line. This would re-in force any belief they had that the practice was taking advantage of its privileged position. Take time to show your clients that the fees and charges you make are not arbitrary but are derived from the overheads you that you have to ensure you give a quality service with support that the internet pharmacies do not.
What is a shareholder? A shareholder (or member) is the name given to anyone who owns shares of a limited company. A share is a piece of the company and is used to represent a percentage ownership in that particular company. A company can have just one or many shareholders and each shareholder is entitled to receive a share of the profits of that company. They are liable towards any company debts up to the nominal value of the shares they own. Shareholders are not involved in the running of the company unless they are a director or have a specific job in relation to that company The minimum number of shares that a company can issue is one, there is no upper limit and a company can issue as many as it wishes; What are shares worth? Shares have two values, a nominal value and a market value. The nominal value is usually a £1 is the sum the member has paid for a stake in the company. As mentioned earlier this is the maximum the shareholder will have to pay towards any company debts. The market value is what someone will pay for the shares when they are sold For example, a veterinary practice made up of 100 shares with a nominal value of £1 when sold for £1,000,000, would have a share premium of £999,900. Some companies, notably Join venture veterinary companies, or equity backed companies may have more than one type of share. The Ordinary shares give equal voting rights and equal profit rights. Alternatively, companies can issue multiple classes and values of shares to provide some shareholders or members with different voting and profit rights.