Recently I spoke with a veterinarian who wants to practice for 50 years. She has put in 44 years towards achieving that goal, although to her it has less to do with accomplishing an objective and more to do with living a dream. Many equine veterinarians see veterinary medicine less as a profession and more as a calling, the perfect fit for an analytical mind, a compassionate heart and an enduring love for the horse. But at some point, you may be ready to stop practicing, and like most veterinarians, you may plan to rely on the sale of your business as the financial foundation for your retirement.
Whether you are six months or six years away from retirement, don’t wait to make your practice something that will interest buyers. The sooner you start, the more time you will have to polish it up, or muck it out as the case may be, to make your practice more desirable. Use this list of “dos” and “don’ts” to get you started.
DO put some thought into the ideal buyer. What personality traits and lifestyle would be the best fit with your clients? What is it that makes your practice perfect for you? Those same characteristics may make it a great fit for someone else. Keep your eyes and ears open and think outside the box. If your practice fills a unique niche in your area, the ideal buyer may be a local competitor who can’t fill that niche now.
DON’T count women out. We have all read the surveys that women are less likely to want to own a practice than men. Even more alarming, now we read that many men don’t want to own practices either. What to do? First, read these surveys with a healthy dose of skepticism. What we do know about younger generations is that they want a clear path for advancement. For up-and-coming doctors, that path may lead directly to practice ownership.
Younger doctors may be more financially astute than you were at that point in your career.
Recent graduates had access to business classes in veterinary school, and to organizations like Veterinary Business Management Association (vbma.biz), an association with chapters at 33 veterinary colleges. These doctors have been coached regarding what questions to ask, so don’t take it as an affront if they challenge your thinking.
DO clean up your books. Single owner practices may mix practice and personal expenses, either by mistake or with their accountants’ advice. A prospective owner will expect to look through your financial statements, including all the gory details. Make a clear distinction now between personal and business expenses. Save yourself the potential embarrassment of explaining why the cost of your family room drapes appears under “repairs and maintenance” on the practice books. If you are using Quicken, upgrade to QuickBooks, software tailored to small businesses and capable of creating the reports buyers expect to review. Don’t let something as simple as inappropriate accounting software make your practice appear anything less than professional.
DO collect accounts receivable. Buyers will pay pennies on the dollar for your outstanding accounts, and that’s if they agree to buy them at all. The best way to minimize accounts receivable is to take payment at the time of service. This is a matter of setting a new expectation of your clients and a bit of training for your staff so they can explain the payment options available with confidence. Get the clients’ permission to keep their credit card authorization safely on file, or remember to pick up a check on the next call. Check or credit card payments can be arranged in advance for clients who may not be present during the appointment. Mobile credit card readers that interface with smartphones make it easier to accept credit card payment on the spot.
DO maintain and replace your vehicles and equipment as needed, and continue to invest in new technology. Let a buyer know that you’re keeping up with technology, because they sure are! Your practice will be worth more if a buyer doesn’t have to spend thousands of dollars upgrading computers or diagnostic equipment, or buying a new truck in the process. If you don’t believe your equipment has value, it will be hard to convince a buyer otherwise.
DON’T let your practice suffer from inattention in the years before you want to sell. It happens. The winters get colder, the nights get darker and joints get stiffer. Sometimes the idea of spending time with grandchildren or on favorite hobbies is more attractive than yet another week of farm calls. When you’re ready to slow down a bit, bring in a part-time associate or a relief doctor to cover the days you would rather take off. Spend time getting to know your new doctor, so your confidence in that person rubs off on your staff and your clients. Set this doctor up to succeed and you will bring about a win-win situation where your revenue and reputation remain high.
Too often, I see doctors who lose their passion for veterinary medicine or choose to pursue other interests to the point that the practice becomes a hobby rather than a way to make a living. This decision, whether made consciously or by default, can significantly redefine what you have to sell. Why would a buyer pay a premium price for the potential lost through benign neglect? More people are interested in buying a business that is thriving than one they will need to rebuild, regardless of what the opportunity might be. For ambulatory practices, the cost of entering the market is relatively low. Yes, perhaps your practice could be purchased at a discount, but is that less risky than starting a new practice from scratch?
DO maintain strong relationships with your clients and your community. Work with 4-H and Pony Clubs. Be a guest lecturer on Career Day or for a community college agriculture class. Take part in the county fair and ride your favorite steed in the 4th of July parade. Volunteer at pancake breakfasts or pack races. Show people that you take pride in your work and in your community.
DO consider what’s next. What are you retiring to? If your favorite fantasy is moving to France to paint Monet’s classic gardens, pack your palette and spend a week vacationing in Giverny. If you want to sail the oceans but the closest you come to open water is the local reservoir, take yachting lessons. If reality doesn’t live up to your fantasy, you have time to dream up something new. Maybe you will trade practicing medicine for teaching college courses on immunology or infectious disease, vocational classes on hoof care or weekend seminars on horsemanship.
The best time to start thinking about selling your practice is the day you buy (or start) it, and the perfect time to sell your practice is when you don’t need to, when you are healthy and your practice is in its prime. However, if you’re a little behind in planning, there is no time like the present to make up for lost time. Look at your practice from a buyer’s perspective and make your practice more marketable in the future. You may increase your chances to continue “living your dream” long after you retire.
Leslie A. Mamalis leads Summit Veterinary Advisors’ equine business consulting services. She is based in Littleton, Colorado.