5 Things to Consider When Purchasing a Practice
Congratulations! You’ve finished 2018, another year as a veterinarian. You’ve gained more experience as both a veterinarian with clinical skills as well as observing a practice in operation. We hear general rules of thumb about how many years you should have under your belt before you own a practice. Typically, the number is five years. We’ve seen in practice that the number really depends on the doctor. We’ve had doctors who were able to purchase a practice after three years and do quite well. A lot depends on your comfort level, skill set, and experience. Here are some things to consider for you to buy a practice in the coming year:
- Are you comfortable with your clinical skills? If you have been out of veterinary school 3 to 5 years, you should have a feel for where you are with your skills. A lot depends on the clinic(s) or hospital(s) you’ve been working. Some may limit what you’re doing and others just may not be busy. If you’re in a location that’s given you a variety and volume of experience, you should be getting a good amount of experience.
- Have you seen a good practice in operation? Sure, you’ve been working in one or more clinics, but are they well-run? Or, if they’re not, you know the difference? If you are in a well-run practice, you should be observing how the doctor and/or office manager treat the staff. Whether a veterinary assistant, office manager, or veterinary technician, they should all be treated well. How about the patients and clients? They should be given good, Nordstrom-like treatment. They pay your rent and you want them coming back.
- Do you know how to read financial statements? Most veterinarians in the early stages of their career don’t know what a financial statement is, let alone, how to read one. There are online courses such as accounting for non-accountants and other courses on financial statements and bookkeeping that can fairly quickly teach you what the financial statements are and how to read them. Understanding them is imperative in running any business.
- Now that you know how to read a financial statement, do you know what the numbers should be? What percentage of collections should your payroll numbers be? What about rent, etc.? If you don’t know, there are resources online. Watch all of the White-Board Wednesday online videos from Joel Parker, DVM. They are great at teaching you numbers as well as other aspects.
- Practice Management – Learn as much as you can with the free stuff online. From the White-Board Wednesday videos to other online courses, you can learn a lot for no cost to minimal cost. This will quickly help you grasp the key concepts of managing a practice.
These are just a few things you can do to prepare you to own a practice. And remember, practice owners typically make 20% to 25% more than an associate veterinarian. In addition, the equity you build in a practice is a great source of retirement. So, congratulations on completing another year as a Veterinarian and cheers to a New Year which may bring you Happiness, Joy, and Practice Ownership.