Business plans for vetsPublished on 28th November 2019 2019-11-28T17:07:21+00:00 - Last update on 11th December 2019 2019-12-11T12:46:13+00:00
Britain may still have more animals than people. Companion animals, working animals and farm animals represent a huge potential patient base for vets - especially as the description of the British as a nation of animal lovers has some truth to it.
If you are a vet, that can mean some very attractive opportunities. Setting up a new veterinary practice can be lucrative if you have the necessary qualifications and determination.
Starting your own practice is not the easy option – it takes commitment and hard work. However, if you’re willing to put in the effort and deal with the challenges it could be a very worthwhile way to use your qualifications.
Creating a business plan is the first step towards creating a healthy veterinary business.
Creating a vets business plan
A business plan needs to have clear objectives and actions. What do you want to do? Do you want to run as a single practitioner, or as a partnership with other practitioners? What animals will you treat - equines, companion animals, farm stock?
Will you offer basic care or surgery?
Your plan will let you provide a focus for your business plans, and just as important it will help you see the funding you will need and let you present your thinking to lenders. The more detailed your plan, and the more professional your presentation of it the better your chances of securing the funding that you need.
As experts on helping businesses raise finance at Rangewell we have developed a guide to developing your business plan if you are considering setting up your own veterinary practice.
Setting up as a vet: the challenges, costs and the profits
The UK may have many animals and many animal lovers, but it is also well provided with vets. You might want to set up your practice in your local area, but if there is already a lot of competition for clients, you might have to look at setting up elsewhere.
You need to look at the demographics of the areas you are considering. Are they made up of affluent pet owners, or farmers? Is there room for your practice in the community, or is it already well provided with other veterinary practices? You might need to visit the local practices to find out these answers for yourself
You will also need a team of professional advisors, including your solicitor, accountant, a builder, and veterinary business consultant to help you build the practice you want.
You should also consult the RCVS Practice Standards Scheme, a voluntary accreditation scheme that provides quality assurance for practices and their facilities. Although the scheme is voluntary it is a requirement of the RCVS Code of Professional Conduct for Veterinary Surgeons that practices must at least meet its core standards, which signify compliance with legal and health and safety requirements.
You will need to decide on the One critical step in the startup phase will revolve around the structure of the practice – will you be a sole trader, form a partnership or create or buy a company? Each has different positives and negatives and advice from a good accountant or solicitor will be helpful.
A sole trader practice is simple to set up and can offer lower costs to run. However, as a sole trader you will be liable for all business debts and may find it harder to access finance.
A partnership offers a structure for two or more people to share their expertise and the workload. Like a sole trader, the partners will be liable for the business debts.
Another option is to form a company, which will be a separate legal entity from you as an owner, which means that your personal assets are secure. A variation is a limited liability partnership, where the partners have a liability like that of a company, but the flexibility of a partnership. Companies and limited liability partnerships have to be registered at Companies House.
Your income sources
As a newly-qualified vet, your average starting salary will be around £30,000 - which could rise to £45,000 with experience. As a practice owner, you will set the limits on your earnings, and a successful practice, with juniors and branches, could easily see you earning a six-figure income.
However, although the rewards for running a successful practice can be gratifyingly high the costs of setting up a business will also be substantial.
Premises - location is key
Choosing the location for your business is one of the most important decisions you’ll make, and it may well shape the future of your business. A small veterinary clinic on a busy high street may well be ideal if your chosen speciality is small companion animals - but it might be entirely unsuitable if your target market is equines and farm stock.
Renting might be the sensible choice initially if you are starting up. But don’t forget that you will need parking and probably public transport nearby - especially if your focus is pets.
How much space do you need? This will depend on your speciality, and if you are working with cats you will obviously need much less space than you would with racehorses. As a minimum you should have about 1,000 sq ft to 1,500 sq ft per full-time vet in your practice - they will need a consulting room each, as well as a waiting area and a reception, and this isn’t even taking into account whether you will need a theatre, prep, lab space and kennels.
A branch surgery may well get away with offering consultations only, but if this is your main practice site, clients will expect both medical and surgical provisions.
The actual cost will depend on your location and the floorspace you choose, but you could easily spend £20,000 a year to lease suitable property. Getting the most competitive funding for your premises is vital for the profitability of the practice.
Don’t forget running costs. A warm interior will be essential for the welfare of your patients, and you will have a variety of machines to run, from incubators to x-ray devices. You may be able to contact energy suppliers who may be able to give you an idea of likely consumption, based on the nature of your business, the area of your premises and the type of equipment that you will be using.
There will be business rates as well as these utility bills to cover.
Dealing with the cost of property
Leasing premises may be a short term solution, but buying might be a more cost-effective alternative.
Your practice is likely to be a long term proposition, and buying with a Commercial Mortgage will give you greater security than renting and let you build up a valuable asset for the future. Buying may also provide additional income; letting out a flat above the surgery could be rewarding if you buy the freehold of your building.
Funding for your equipment
All medical equipment is costly, and you cannot afford anything substandard which could jeopardise the quality of car you offer. Your basic equipment is likely to be long, and as well as the basic stethoscope, thermometer and hand surgical tools is likely to include a microscope, dental machine and everything from autoclaves to a digital x-ray. Nowadays most veterinary clinics have in-house blood analyzers, and most clients, in reality, expect to get all of their services in one place.
Your veterinary practice will need business equipment too - computers and related IT - as well as access to a vehicle for home visits, especially in rural areas when you’re servicing farm animals and equines. Asset Finance covers a range of funding solutions designed to let you spread the cost of equipment - whatever equipment that may be!
That being said, you will probably need a minimum of £80,000 worth of equipment to equip a basic surgery, and more if you decide that you need a full range of surgical or specialist equipment. And don’t forget practice management software. This can offer much more than scheduling and billing - the latest software will allow you to integrate inventory, boarding, pharmacy, digital imaging and every other activity in your practice, cutting the costs of admin and making you more efficient - but at a cost that could be around £5,000 in your first year alone.
Suppliers may offer finance, but it may prove expensive. The solution may be to spread the cost of equipment with Asset Finance. Basic equipment that will go on giving service for years can be financed with Hire Purchase to spread the cost. If your priority is your need to avoid upfront costs, leasing will give you the freedom and flexibility you need.
When you are starting up, it can be tempting to think that you can do it all yourself. This is not a sound foundation for your business, because you can’t answer the phone while you are handling a diagnosis, or make a booking while you taking care of the paperwork. Most vet practices have a receptionist, and a qualified veterinary nurse.
Experts reckon that the employment costs of a vet practice will be around 40% of revenue. Your practice will stand or fall by the quality of the veterinary care you deliver - but you cannot deliver it without the support of a team taking care of customer services, nursing and administration.
You will need staff to operate your practice. Even if you are determined to work as a sole practitioner you cannot be answering the phones while you are in your consulting room with a patient.
At bare minimum a receptionist and a nurse will be required. Expect to pay at least £20,000 for an experienced assistant, and perhaps £18,000 for a receptionist. A
Don’t forget that there will be additional costs for employer's National Insurance Contributions (NICs) and you will have to operate PAYE. You will have to make employers' contributions to an auto-enrolment pension scheme too.
When you are making financial forecasts, don’t forget to allow for the money which you take from the business to cover your own personal living expenses - or that as the business grows, you’ll need more people - especially if you want to provide a 24-hour emergency callout.
Businesses owners) need to tell HM Revenue and Customs (HMRC) about a new enterprise. Individuals will need to start filling out self-assessment returns and will be responsible for paying their own national insurance. If the business is incorporated it’ll need to register to pay corporation tax.
Your business turnover is going to exceed £81,000 per year so you will need to register for VAT. VAT schemes such as Annual Accounting and Cash Accounting for practices with a turnover below £1.6m may help alleviate the administrative headaches – an accountant can advise further.
Your drugs, medical stock and the animals you care for are all valuable and need to be protected by suitable insurance. it’s important to calculate the right levels of cover.
Employers liability – a legal requirement for any business with employees. It provides cover employees are injured or becomes ill as a result of working for you.
Public liability – this will cover if a patient or member of the public is injured whilst in your premises. I
Building – Covers the cost of repairing damage or rebuilding your premises if you own them
Contents – this will cover your valuable equipment against theft or damage. Your contents can be covered both within and away from the practice, for example if scanning machines are taken off site.
Medical malpractice – insures your practice against civil claims alleging negligence. It can also provide support and representation for vets and nurses throughout RCVS/VCI investigations, with criminal and disciplinary cover included in the policy
A comprehensive insurance cover may be provided by a single insurance package. This may offer a full range of cover, but may be a high cost. A short term loan may be the most cost-effective way to fund it, and is designed to be paid off when your business starts to operate and generate revenue.
Establishing your patient list will require marketing. These days traditional marketing, such as telephone directories, radio, local flyers or newspaper advertising, may not be very effective - although you may still need it as a way of announcing the presence of your practice to older animal owners. These days, a website, social media and even a regular e-newsletter or blog, or hosting an open house, may be more effective for bringing in (and keeping) new clients.
Expect to pay a minimum of £5,000 for your website, and some expert social marketing.
Creating your business plan.
With all these factors to consider, you may be ready to create your business plan. Start with providing figures for all the listed – and all the other incidental expenses, such as utility costs and business taxes. Balance this with the income you believe you can make – but be realistic. You will need to show contingencies, such as the level of income you will make if customer numbers are lower than you would wish.
These may be the core of any business plan, but it needs to be supported by a detailed analysis of your business prospects.
Start with your mission statement – what kind of veterinary practice are you seeking to create? How big will it be and how large will it grow? Can you deliver it, and how will you do so?
Do a PEST analysis – PEST stands for political, economic, social and technological. PEST will help you identify the opportunities and threats to your business. For example, under the technlogy heading you can look at the impact of new equipment such as ultrasound on traditional clinical practices.
Do a SWOT analysis - the Strengths, Weaknesses, Opportunities and Threats which will affect your practice
- What are your Strengths? What gives your practice an advantage over the competition? It could be your own skills and expertise, but you need to be realistic about what you can offer that others cannot.
- What are your Weaknesses? What places your practice at a disadvantage compared to the competition? One will certainly be that they are established with patients lists when you are not.
- What are the main opportunities available to your practice? What people, elements, assets or connections can your business use to its advantage? Your location could give you an advantage if your practice is easier to get to than other vets in the area.
- What are the Threats to your practice? What elements of your environment or competition can cause your business trouble?
Develop a budget – A budget gives you a forecast and financial plan for the foreseeable future. It gives you a quantified way to measure how well the business is doing r.
State your business objectives – set concrete objectives for the next one to two years and while further horizons may seem harder to plan for, consider what the five-year view might look like.
Write an action plan – Each of your business objectives needs to be broken down into actions that make it them possible to achieve. You also need performance measures so that everyone understands what they need to do.
Write an executive summary – No more than one page that summarises where you’re going and how you’re going to get there.
Finalise and share the plan – Get your stakeholders to review and comment on the plan. A second and third pair of eyes will help ensure it’s free from mistakes
Your business plan could be the key to your future - and to unlock the funds you need to deliver it.
Getting the answers that are right for your practice startup plans
It should be relatively easy to borrow the funds you need to set up in your own practice, especially if you have first armed yourself with an effective business plan.
However, your practice will still be a start-up. Lenders may be positive towards medical professionals, but they are only keen on lending to established businesses with years of audited accounts.
At Rangewell, we know that there are solutions - ways to raise the funding you need, and lenders who can be sympathetic Our team of business finance experts work with you to get to know your business and understand the kind of arrangement and features you need. To find out more call us at Rangewell on 020 3637 4150 - or email [email protected] Our service is free.
Download Rangewell’s free guide to creating a medical Business plan
What types of finance are there - which do you need?
Why not all providers are equal - finding the one that’s right for you
The downsides to finance - and how to avoid them
How to arrange finance - what paperwork do you need?
Key terms explained
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