Practical Business Guide to Starting Your Veterinary Practice

About the Authors xi

Acknowledgments xii

Introduction xiv

1 First Things First 1

1.1 Why … Do You Want to Be a Practice Owner? 2

1.2 Understanding the Pros and Cons of Practice Ownership 4

1.3 Industry Options Abound; Have You Considered Yours? 8

1.4 Self- Assessment: Are You Practice Ownership Ready? If Not Now, Will You Ever? 12

1.4.1 What Does It Take to Be a Practice Owner? 12

1.4.2 Life Stage Considerations 13

1.4.3 What If You’re Not Ready – Yet? 16

1.4.4 Will You Ever Be Ready? 16

2 Define Your Vision, Define Your Dream 18

2.1 Purpose 21

2.2 Value 23

2.2.1 Patient and Client Experience 23

2.3 The Importance of Clearly Defined Boundaries 25

3 How to Start 27

3.1 Healthy Habits 27

3.1.1 Work–Life Balance Healthy Habits 27

3.1.2 How About a Little Honest Self- assessment? 28

3.1.3 Business Healthy Habits 29

3.2 What’s Your Business Plan 32

4 Cash and Finance 36

4.1 Options for Financing the Practice 37

4.1.1 Self- Financing 37

4.1.2 Traditional Financing (Bank Loans and SBA Loans) 39

4.1.3 Owner- Financed Purchases 41

4.1.4 Partnerships (Co- Ownership or Equity Partners) 41

4.1.4.1 Which Path Is Right for You? 44

4.2 Steps to Become Loan- Ready for a Startup Veterinary Practice 45

4.2.1 Build a Solid Financial Foundation 45

4.2.2 Understand the Lending Process 46

4.2.3 Prepare Your Documentation 47

4.2.4 Create a Vision, Not Just a Dream 47

4.2.5 Act Like a Business Owner Before You Are One 47

4.3 Working Capital 49

5 Starting from Scratch or Buying an Existing Practice? 51

5.1 Pros and Cons 51

5.1.1 Starting from Scratch: Pros 52

5.1.2 Starting from Scratch: Cons 53

5.1.3 Buying an Existing Practice: Pros 54

5.1.4 Buying an Existing Practice: Cons 54

5.2 Align Your Goals 55

5.2.1 Financials 55

5.2.2 Location Strategy 56

5.2.3 Staffing Considerations 56

5.3 Check Your Emotions at the Door – Learn from Actual Case Studies 60

6 Budget and Projections 62

6.1 Basic Understanding of Budgets 62

6.2 Five Steps to Budget Development 62

6.3 Basic Understanding of Projections and Why You Need Them 67

7 Building Your Team 74

7.1 Developing a Professional Team – Who Do You Need and How to Find Them 74

7.1.1 Startup Consultant 75

7.1.2 Attorney 75

7.1.3 Certified Public Accountant (CPA) 76

7.1.4 Marketing Expert 77

7.1.5 Real Estate Broker/Agent 77

7.1.6 Architect 78

7.1.7 Practice Management Consultant 78

7.1.8 Vendors 79

7.1.9 IT Specialist 79

7.1.10 Lender 80

7.2 How to Pick an Advisor That Is Right for You? 81

7.3 Basics of Hiring Your Internal Team 82

7.3.1 Define Your Perfect Team 82

7.3.2 Calculate the Cost 86

7.3.3 Post the Job 86

7.3.4 Hire Your First Superstar 87

7.3.5 Onboarding 89

7.3.6 Training and Support 89

7.3.7 Stay Interviews and Performance Reviews 92

7.4 When to Hire 97

7.4.1 How Do You Know You Do Not Have Enough People? 99

7.5 Employee Handbook 100

7.6 Organizational Chart 107

8 Legal 112

8.1 When Do You Need an Attorney 115

8.2 What to Expect 116

9 Entity Selection 118

10 How to Choose Practice Management Software 121

10.1 How Do You Pick One? 121

10.2 What If There Is No Perfect Choice? 124

10.2.1 Business Considerations 125

10.2.2 You’ve Sel‎ected the Winner 125

10.2.3 When to Switch PIMS? 126

11 Financial Data 128

11.1 Accounting Basics 129

11.1.1 Desktop Accounting Software 136

11.1.2 Cloud- Based Accounting Software 136

11.2 What Should You Be Looking At? 137

11.2.1 How Do You Know You Have Good Data and Sound Information? 139

11.3 Cash Flow Issues 141

11.3.1 Build a Cash Reserve 142

11.3.2 Cash Flow Projection 143

11.3.3 Implement Strict Accounts Receivable and Discount Policies from Day One 143

11.3.4 Manage Inventory Like Your Practice Depends on It (Because It Does) 144

11.3.5 Control Your Personal Draw 144

11.3.6 Implement Financial Controls from the Start 144

11.3.7 Build Flexibility into Your Staffing Plan 145

11.3.8 Warning Signs Your Cash Flow Needs Immediate Attention 145

11.3.9 The Light at the End of the Tunnel 146

12 Inventory 147

12.1 Inventory Management Basics 149

12.1.1 Putting the Concepts Together 149

12.1.2 Putting It All Together 151

12.2 How to Start 152

12.2.1 Develop a List of Products 152

12.2.2 Classify Your Inventory 153

12.2.3 Set up the Initial Stocking Level 154

12.2.4 Establish Reorder Triggers 155

12.2.5 Build Vendor Relationships Early 155

12.2.6 Develop SOPs 155

12.2.7 Set up Your Online Pharmacy 158

12.2.8 Group Purchasing Organizations 159

12.2.9 A Place for Everything and Everything in Its Place 160

12.3 How to Delegate Inventory Management 164

12.3.1 Create Job Descriptions and Inventory SOPs 164

12.3.2 Choose the Right Person 166

12.3.3 Provide Training 166

12.3.4 Establish Accountability 166

12.3.5 Delegate 167

13 What Is There to Know About Laboratory Contracts 168

13.1 Types of Laboratory Contracts 168

13.2 Key Components to Understand 169

13.2.1 Contract Duration 169

13.2.2 Financial Commitments 169

13.2.3 Benefits and Incentives 169

13.2.4 Important Contract Terms to Examine 171

14 Payroll 173

14.1 Payroll Schedule 175

14.1.1 Weekly – How Does It Work? 176

14.1.2 Bi- weekly – How Does It Work? 176

14.1.3 Semi- monthly – How Does It Work? 177

14.1.4 Monthly – How Does It Work? 178

14.2 Associate Veterinarian Pay 178

14.3 How Do You Get Paid 181

14.4 Payroll Related Pitfalls to Avoid 185

14.5 Understanding Worker by: Employee vs. Independent Contractor 187

14.5.1 Common Examples and Gray Areas 187

14.5.2 Responsibility for Classification 188

14.5.3 Consequences of Misclassification 188

14.5.4 Determining Worker Classification 189

14.5.5 Real- World Veterinary Scenarios 190

14.5.6 Financial Implications of Classification 191

14.5.7 Administrative Differences 192

14.5.8 Let’s Put It all Together 192

15 Benefits 194

15.1 Timing of Benefits 195

15.2 Paid Time Off 196

15.3 Employee Discounts – Pet Care Benefits 198

15.4 Bonus – Incentive Plan 199

15.5 Pitfalls to Avoid 200

16 Fraud 206

16.1 Internal Controls 207

16.1.1 Separation of Duties 208

16.1.1.1 Billing and Accounts Payable 208

16.1.1.2 Cash Handling 210

16.1.1.3 Accounts Receivable and Payment Collection 211

16.1.1.4 Inventory Management 212

16.1.1.5 Payroll 212

16.1.2 Technology Solutions 214

16.1.2.1 Practice Management Software 214

16.1.2.2 Payroll Systems and Timecards 215

16.1.3 Implementation of Internal Controls for Smaller Practices 216

16.1.3.1 Owner and Manager Oversight 216

16.1.3.2 Part- Time Financial Oversight 217

16.1.3.3 Outsourcing and External Oversight 217

16.1.3.4 Scheduling Rotation and Cross- Training 218

16.1.4 After the Internal Controls Are in Place 218

16.2 Red Flags 219

16.2.1 Financial Red Flags 219

16.2.1.1 Unexplained Changes in Financial Metrics 219

16.2.1.2 Transaction Irregularities 220

16.2.1.3 Inventory Anomalies 220

16.2.2 Employee Behavioral Red Flags 221

16.2.2.1 Changes in Work Patterns 221

16.2.2.2 Attitudinal Changes 221

16.2.2.3 Change in Personal Circumstances 222

16.3 Detection Techniques 222

16.3.1 Primary Detection Methods 222

16.3.1.1 Effective Detection Strategies 223

16.4 SOPs for Minimizing Employee Fraud 224

16.4.1 Minimize Risk SOPs 224

16.4.2 Response SOPs When Fraud Is Suspected 225

16.4.2.1 Don’t React Prematurely 225

16.4.2.2 Consult Professionals 225

16.4.2.3 Build Your Evidence 225

16.4.2.4 Report to Authorities When Appropriate 226

16.4.2.5 Follow Through with Prosecution 226

16.4.3 Creating a Culture of Integrity 226

17 Marketing 235

17.1 Marketing Basics 236

17.2 When to Start 239

17.3 Marketing Ideas 241

18 The Grand Opening, Your Time to Shine 246

19 Congratulations, You Are Open. What Now? 250

Bibliography 252

Index 253