When veterinarians decide to get into practice ownership, they spend many hours analysing possible practices to buy or sites to start up in. They fill spreadsheets with costings and projections, competition analysis, ideas and business plans before they act.
When they are in practice, they spend countless hours agonising over how they are going to make their practice work for them. They develop systems and procedures, stressing about which supplies and advertising they will commit to, go to clinical and business courses…all to make sure they are at the top of their game, so that they can offer a quality, efficient service of integrity to their clients.
With the methodical nature in which veterinarians get into and run their practices, it is quite paradoxical that they spend nearly no time thinking about how they would like it to all end – and let’s face it – it will end. Someday, somehow, the practice that you currently own will one day no longer be yours, and this end of practice ownership can either come on your terms or on someone else’s.
Far too many veterinarians ignore this inevitability. They turn up to work, day after day and year after year, as if each day and year will be like the one that preceded it…working with little vision about what it is all leading to.
The way most veterinarians own a practice is akin to driving a car without a destination, without ever checking how much petrol is in the tank. Sure, the car may be nice and comfortable, they may be enjoying the journey, but when the tank starts to run dry (and it will in one way or another) the destination that they end up at may be undesirable and they may be left with few choices when they get there.
In 1989, Stephen Covey published his famous book, “The 7 habits of highly effective people”. It is consistently rated by business institutions in the top business self-help books in the world. While not all of the habits outlined in his book are relevant to exit planning, one certainly is. Habit number 2 in his book is to “Begin with the end in mind”. The takeaway point of this chapter is that if we take the time to be goal focused in our approach to our lives and businesses, we are much more likely to get outcomes that are right for us.
What this means for you as a vet business owner, is asking and having answers for the following questions for yourselves:
- What financial figure do you need to reach, in order to retire comfortably?
- Is there an approximate date or age that you are hoping to work until? Or retire before?
- Are there any bucket-list trips, hobbies, or relationships that you want to commit more time to that may require a better work-life balance than business ownership would allow?
- Do you know what your practice is approximately worth and how that value is increasing or decreasing over time?
- Do you know what your practice’s likely buyer profile looks like? (Is it likely to be a corporate, an aggregator, an experienced owner-operator or a new grad?)
- Do you know what that buyer profile is likely to be looking for (Pro tip: a corporate is looking for something very different to an owner-operator)?
If you know answers to these questions, you can work backwards and take steps to ensure that, when you reach your exit date, your practice is optimally placed to attract the best possible buyer, to offer the best possible price and terms to facilitate the exit that is best for you.
This doesn’t mean working harder. There are many, many variables that, if positioned correctly, can make a difference when you get to the finish line. For example: Ensuring that you have a long lease on the premises, the zoning permit on your premises is correct for use, reducing key-man dependence, having written agreements with employees, contractors and partners, making sure that financials are clear and not mixed up with other business interests, not taking excessive holidays in your final years, timing reinvestment to ensure that it is reflected in revenue and profit before you sell, etc., etc. A far more comprehensive list can be found at our exit seminar.
A veterinarian’s practice is usually one of their most valuable assets. If vet practice owners applied the same methodical process to exiting ownership that they applied to entering and operating their practice, its sale would be able to make a massive difference in their (and their families) lives post sale.
Simon Palmer is the Managing Director of Practice Sale Search, Australia’s largest practice brokerage. If you’d like more information on practice sales or want to have a confidential discussion about your practice’s circumstances, email Simon at info@practice salesearch.com.au or call 1300 282 042.