Strategic planning for veterinarians might be the most important process that those in a veterinary business will undertake to influence their potential success. Unfortunately, strategic plans for veterinary practices are as rare as a 40-hour work week for equine vets.
Yet we all have strategies that we use as the basis for major life decisions such as marriage, raising children, retirement planning or health. For example, if you are married, you and your spouse have likely spent considerable time thinking about what it takes to maintain a long and happy marriage. Similarly, most parents have a philosophy about—and a plan for—raising healthy, happy and confident children that are well prepared to take on the challenges of the world. These life plans are no different than a business strategy in that the latter is nothing more than an action plan for a business to successfully compete in the market on a long-term basis.
A good strategic plan is based on multiple integrated components. First, there are the vision and mission of a business, followed by an analysis of the surrounding competitive and business environments. Once these are done, the strategy is then shaped through four essential elements. The first two involve choices: selecting business goals and determining the services to be offered to which client types. The third element is creating the business’ Value Proposition, or the key reason why a customer will choose your business over another one. Finally, the business must identify the core activities that it offers or that are needed in order to fulfill the strategic plan.
Creating a business strategy is not something that is done in a day-long session with the business owners. Rather, it is completed step by step and should include numerous key stakeholders in the business. The business owners will sign off on the plan, but they should include other vets and longtime staff for their insights into the building blocks of the strategy.
Mission and Vision
The basis of any business strategy lies in its vision and mission, as was discussed in EquiManagement’s summer 2016 issue. A business’ vision is usually internally focused and is its guiding philosophy. It is based upon business values and purpose. A business’ mission tells the world what the company aspires to do, and it is usually encapsulated by a brief description of how the business will reach its envisioned future. Without a clear vision and mission, there is no foundation upon which to build a strategy.
A key component in developing a business strategy is an in-depth analysis of the current business environment. Areas to consider are the local equine economy, as well as that of the general economy on the local, state and national level.
Looking at the changing demographics in an area should be a focus, too. This could all be part of a SWOT analysis, or the Strengths, Weaknesses, Opportunities and Threats that face a business.
In our area, the top-level English sporthorse competitions have stopped growing, but the mid-level ones are flourishing. When we examine the general economy, we can look at employment and population growth, new industries in the area, and the threats to the existing business status quo.
Again, using our area, our manufacturing base has declined, while banking and technology industries have strengthened, resulting in higher salaries for those workers. We are also seeing rural areas being pushed farther away from cities, making it harder for urbanites to access riding opportunities. In addition, we are seeing an increase in immigration from countries where horses play less of a role in sports and recreation.
So, on one hand, there are opportunities with people making higher wages, yet equestrian sports are not the first things that come to mind when parents are looking at getting their children involved in sports or other recreational activities.
A business environmental review should also include a competitive analysis to help understand where there are opportunities or unrecognized challenges. The standard for this is in the Porter’s Five Forces tool developed by Michael Porter, a professor at the Harvard Business School.
Here are the Five Forces, with examples:
1. Threat of New Entrants (other veterinarians)
2. Threat of Substitutes (internet information or lay practitioners)
3. Bargaining Power of Suppliers: Do suppliers set a price, or can vet businesses negotiate better prices?
4. Bargaining Power of Customers: Do your customers price-shop, or are they loyal to your practice, making price less of an issue?
5. Industry Rivalry: What is the intensity of veterinary competition? Are there too many vets in your area, or not enough?
Having a clear and critical understanding of the business and competitive environments gives us the information required to make the choices needed for our strategy.
You can have hard or soft business goals, which are used to measure the effectiveness of your strategic plan. You can develop firm metrics for growth and expansion, such as setting a goal to grow revenue 5% a year; or your goal might be to increase the share of dentistry from 15% to 25% as part of the total service revenues.
Business goals can also be less quantifiable and more aspirational. For example, a business can strive to be known as an industry leader in sporthorse medicine, or as an excellent place to work, or as a preferred externship option. These goals are harder to measure, but they can focus attention on areas that are important to the company and might help achieve more measurable goals.
Choosing the right client type and services as part of a strategic plan can be the most difficult part of the exercise. There might be client types that we prefer, but their numbers might be shrinking. One business in our area was known as a Thoroughbred racetrack practice, but they had to start searching for business growth in English sporthorse disciplines. It was very challenging for them because they didn’t understand the client type, or the sports, so it was easier to fall back on what was comfortable, even though that business was shrinking.
Alternatively, you could be in an area where most vets perform a high level of dentistry, but none are doing advanced procedures. This could be an opportunity to offer services to a new client type: referral veterinarians.
Who Are the Clients?
Consideration of client type and service offerings are also important when we consider our pricing model. You might have a personalized, client-focused business with higher prices, or a business that has lower prices because you offer transactional client interactions with minimal value-added services.
Knowing your client type is important to how you set your prices.
The Value Proposition is critical because identifying the essential reason your business is preferred by your clients helps you keep a laser focus on what makes you successful.
The Value Proposition tells potential clients in one sentence about the value your business adds, or about the problems it solves better than your competition.
It can also include reference to your pricing relative to the value you offer. For example, a high-level sporthorse business that travels to various horse shows might state that it offers consistent and comprehensive sporthorse medicine to its patients wherever they are. A general practice could claim that it offers fair-priced veterinary services to the local horse community.
When creating your Value Proposition, it is helpful to hone in on the one thing that your business does that no other business offers. It is too easy to say that you are an equine veterinary business. This doesn’t answer the question of why a horse person should choose your business over another. In essence, it succinctly states your strategic plan of how your business will compete.
An overlooked aspect of a strategy is determining the key activities that your business offers that fulfill its Value Proposition to clients. These could include effective practice management software, hiring the right type of vets and support staff, good inventory control or emergency coverage.
These seem routine to most vet practices, but put yourself in the place of that business transitioning from racehorses to sporthorses. Do you have a good scheduling system so you know where to go at specific dates and times, rather than working up and down the shed row? Do you have the right type of support staff to interact with dressage owners if you have been used to dealing with racehorse trainers?
When we review our core activities, we are actually doing a comparison of actual performance with potential or desired performance, or what is know as a GAP analysis, to understand what we have and what we need to ensure strategy success.
Many of the components of a strategy are based upon changing elements, so any plan should be reviewed and modified, if need be, on an annual or biannual basis. Our world is changing too quickly for us to trust that the strategic plan we have put together is good for five or 10 years. Looking at your environment and client type over the past five years will give you an idea of the speed of change.
Equine veterinary businesses are like any other business in that they need a plan to sustainably and successfully compete in the local marketplace. It isn’t enough to assume that the demand for your services is sufficient to compete. Developing a strategic plan is essential to ensure the success of any business.