Practice ownership – should I take the plunge?
In this blog for Vetsnet, Alison Lambert of Onswitch discusses the important considerations if you’re thinking of moving from employee to employer, financial and otherwise.
I WANT TO BUY A PRACTICE… I THINK!
by Alison Lambert, Onswitch
As with most areas of life, when it comes to a veterinary career it’s just not possible to have it all. Healthy incomes invariably involve long hours and hard work, whilst being home to put the kids to bed every evening almost always requires career concessions.
I’m often asked for my thoughts and advice by vets considering buying a practice; and whilst every person and every scenario is different, my response is always the same – what are your plans for your retirement? Buying a practice, or not, requires active choice. It requires consideration of where you want to be financially at the age of 60 and beyond. It’s not for everyone and it’s certainly not for the faint hearted. So, is it for you?
If you’re thinking about buying a practice, you’re probably looking for more control over your professional and financial future. But whilst independent practice ownership still makes up the largest share of the UK veterinary market (although maybe not for long), it’s not an inevitable consequence of being a vet. You don’t have to buy into a practice, so my first bit of advice would be to ask yourself a number of questions about your career and life goals.
- Owner or employee? Do you have strongly-held values about what great veterinary and customer care looks like, that aren’t being met by your current practice? Or perhaps you simply hanker after being your own boss (of course you’d also have to employ others, with all the HR and legal responsibilities this brings).
- Risk or routine? Do you need a reliable monthly income or could you support yourself financially for a while? Are you comfortable with taking big decisions that may generate money, but equally may cost you dear if they go wrong?
- Long term rewards or short term reassurance? Do you want to have a lavish retirement when the time comes, or are your content to make do with a modest pension? Do you cope well with stress or prefer someone else to make all the non-clinical decisions?
If it sounds like I’m trying to put you off, perhaps I am! Owning a practice is not to be taken on lightly, but if you can acknowledge the challenges it brings and are ready to roll up your sleeves and graft, the opportunities can be significant. Importantly, owning a practice allows you to build up an asset that has long-term financial value – either by selling the business in future and / or by using as a pension contribution vehicle. Veterinary accountancy specialists will be able to advise you on legitimate schemes that allow the business’ rent to be paid into a pension pot that could ultimately generate a much greater monthly pension than you could ever hope to build up on the average vet’s salary of £35,000 a year. And with an increasing proportion of female vets in our profession, many of you will take time away from the stethoscope to raise families and possibly work part-time, which of course will impact on your pension contributions.
So owning a practice can be an excellent way to achieve your long-term plans, but it can also involve a lengthy period of stress. Detailed planning and tight control over four key areas of the business (clients, team, finance and operational effectiveness) will help identify any issues in advance and smooth the path through the inevitable tougher times. Few of us have all the skills required to run a successful business, so it’s essential to ask for help where others are more qualified – appoint a veterinary accountant, out-source your client communication programme to a marketing agency and find a competent practice manager. It certainly helps to have a decent grasp of your personal finances, with a good understanding of concepts such as cash flow, fixed outgoings and sources of income. Long term practice loans and mortgages on premises are legitimate business expenses in a way that cannot be said of other ‘bad’ forms of debt – overstretching yourself to buy equipment, failing to chase up unpaid invoices etc. Get your head around the basic ABC principles of finance, and please don’t even think about buying a practice if you can’t effectively manage your personal finances!
Only you can decide whether you want to be an owner or an employee. Neither is wrong, but your chosen route should feel right for you. And that choice is key – set an end goal and pick the route that gets you there, owner or employee.
Make clear plans, get help, and if you don’t know something, find out.
Get informed, assess the risk and make a considered, clear choice.
Active choices give you control, drifting into things is stressful.
Owning a practice is not for everyone and it’s certainly not for the faint hearted. So, is it for you?
Finally, I should stress that I’m not a financial advisor (although I do own my own business), so clearly all my words need to be taken simply as the well-meaning common sense advice they are. If you are halfway serious about buying a practice, Onswitch hold monthly workshops at our Grantham office covering all the practical aspects of advance planning – identifying your target market, writing a business plan, setting SMART objectives and understanding which Key Performance Indicators you’ll need to measure ongoing.