http://veterinarybusiness.org john sheridan bvetmed cvpm dms mrcvs a strategy for growth, financial...

http://veterinarybusiness.org

John Sheridan BVetMed CVPM DMS MRCVS

A Strategy for Growth, Financial Planning, Leadership & Management, Team Building

Plenary Session


1965

1985

2015Consider the trends in

veterinary practice over the last 50 years

There have been many changes – which do you

think have been key?


A recognition that the delivery of high quality professional veterinary services in a demanding marketplace depends on three essential

components:

Cliniciansvets, nurses, technicians & clinical

support. Committed to their vocation, superior professional standards of care for patients and exceptional

service for their clients

Resourcesin which clinicians can operate in

an environment serviced by professionals with the necessary

operational, marketing, personnel, planning, financial & management

skills

A Leaderwith a clear vision of what the

enterprise is for and where it’s going and an ability to take the lead, share the

vision, inspire confidence & motivate the team to achieve shared objectives.


What are your personal and professional objectives ?

Clinical

standards

Loyal clients who seek, accept and pay for your advice

Healthy patients

Enthusiastic and motivated staff

Market share

Growth, Profit and a healthy ROI

Happy working environment

Career

development

opportunities Involvement,

recognition and

reward

Better work-lifestyle balance

A bigger

personal

income


All good, sound aspirations which are in your grasp

butevery one of them will depend on the ability of your veterinary practice to operate effectively,

efficiently and economically as a business and to:

generate a healthy profit


Consider these two veterinary practices in a town or city just like yours

Practice AOne owner, good location,

great premises, good parking,2 employee vets, 7 support staff, high standards, busy

Practice BOne owner, good location,

great premises, good parking,2 employee vets, 7 support staff, high standards, busy

But the value of Practice A is more than double the value of Practice B

Why?


Because:Practice A is growing whilst Practice B is static

The profit generated by Practice A has exceeded the profit generated by Practice B, by more than 100% over the last three

years

So the value of Practice A, which is based on an appropriate multiple of one measure of profit (such as EBITDA), will also

exceed the value of Business B by more than 100%

That’s why you need an in-depth understanding of your practice profit and the Key Performance Indicators (KPI’s)

which have a major impact on profit


How can you achieve all your personal, professional and financial objectives for your

veterinary practice business?

The first stage is to prepare a strategic, medium-term (5 year) business plan

Let’s consider your career as a practice owner and clinician:


A strategic plan for your practice in 6 easy steps

Step 1 – the overview – spend an hour or two walking around the practice - look with fresh eyes – take me with you!

• How much stock is in the pharmacy, lying about in the consulting rooms or other work areas?

• Does every member of staff seem to be busy? Talk to them as they work. Ask them if anything is getting in the way of the job they are doing.

• Are they doing what you would expect them to be doing?• Do the premises, inside and out, look to be clean, cared for and presentable?• Walk around the in-patient, preparation and kennel areas. Note how many kennels or

cages are occupied?• Observe all the animals - now pretend you’re a client and look again• Take a look at the appointment lists and the telephone message and complaints

book.• Phone the practice or observe what goes on in the reception / waiting area and hear

what your staff members say on the telephone.• Are they saying what you want them to say?


Step 2 – Now go back to the office and record your impressions

• Can you identify any single overall objective that every member of your practice team is striving to achieve?

• What did you observe that made you proud of ‘your’ practice• Did you observe or hear anything which made you feel angry, ashamed or

uncomfortable about ‘your’ practice• Did you identify any problem which you feel is so important that you must

take steps to correct it – today?• Now list any issues which you feel must be addressed as being of strategic

importance and incorporated in your business plan for action in the medium term.

• Finally list any issues which you feel need to be addressed as current policies for review, rejection or amendment


Step 3 – Now do some financial homework

• Retrieve your financial accounts for the last three years and enter some of the data on a spreadsheet

• No details, just the key headings and the trends• First the Profit and Loss Statement (Income and Expenditure)• For each financial year enter the revenue, the cost of drugs and

supplies, the cost of all the people and all the rest i.e. the costs of premises and all the overheads

• Don't worry too much about where you allocate each small cost item as long as you maintain the same system for each year

• Calculate the cost heading and net profit in financial terms and as a percentage of income

• Your management task is to review the major trends over the three year period.


What’s the situation in your practice?

Note: The vet costs include a realistic cost of the owners professional input as clinician/ manager


What’s the situation in your practice?

?

?

?

??

?

?

?


• Now do a similar exercise to compare balance sheet data over the same three year period

• Include your calculations for the three common working capital ratios – stock days, debtor days and liquidity

• Review the major trends over the three year period


So now you have much of the information you need to record your practice strengths and weaknesses

From your tour of the practice and the notes you have recorded

From the financial trends over the past three years with particular reference to those relating to:

• income growth or decline• the three major cost headings• the impact on profit and• trends relating to the three key working capital ratios.

So if for example, profit has declined, you will have a fair idea as to whether the problem is that the practice is generating insufficient income, or that one or more of the only three cost headings - 'the supplies', 'the people' or all the rest' are growing too fast in financial terms or as a percentage of revenue


Step 4 – Assemble your thoughts for the strategic, medium term (5 year) development of the practice.

What are the key issues?

• Clear personal, professional and commercial objectives for the practice

• The themes, the values, the standards which will guide your plans for the ongoing development of the practice

• Financial questions:• does the practice deliver a healthy profit for re-investment in your people,

your facilities and your services?• does it deliver a healthy return on your investment? • is the value of your investment growing in line with your expectations?


If it doesn’t, the good news is that you could improve the profitability of your practice by 50% or more – and

it doesn’t mean that you have to work 50% harder or longer it doesn’t mean that you have to see 50% more clients or increase

your fees by 50% it does mean that you need to manage your practice resources more

effectively it does mean an investment in management skills It does mean you have to work smarter


Step 5 – Now define your strategic objectives for the medium term. At this stage, don’t worry about how you will achieve them – just record them relating to such issues as:

Your role – as clinician, manager, leader

Legal structure – sole trader, partnership, LLP or other corporate structure – seek professional adviceFinancial objectives – profit, ROI, business value

Service Delivery – first opinion/referral, client groups, patient groups, location, premises, outletsProduct and Service Sales – income source, relative profitability, professional fees and chargesYour marketplace – population (people and animals), other practices, vet population, competitors, market share, your USPYour people – what skills do they have?, what’s missing, attitude, training, teamwork, motivation


Step 6 - Now we need to look closely at year 1 of your 5 year plan

• Get year 1 right and you’re well on track to achieving your 5 year objectives

• We’ll look more closely at defining your year 1 key objectives, drafting a budget and making it work in the Companion Animal Sessions later today


Remember Practice A and B?

Because Practice A is owned by a leader:• with a clear vision, a strong belief and a commitment to achieve it• with the ability to share the dream and lead by example • who concentrates on establishing what is special about this practice• who believes that their practice growth is independent of the

economy• who strengthens client relationships• who recognises the value of financial and other key performance

indicators – and uses them to plan for growth• who sets goals, measures and monitors• who communicates value not price

Why is Practice A growing and much more profitable than Practice B? – here are some possible reasons


Leadership and Management – what’s the difference?

• Many definitions – here are my suggestions:• Leadership is about establishing a vision, setting a

direction, encouraging, motivating and supporting the group to torn that vision into reality

• Management is concerned with planning, organising and controlling people and other resources in accordance with principles or values that have already been established.


Your leadership role in practice

• Why is Practice A more successful than Practice B? – because of it’s leader

• Could you retain your ownership and leadership role, continue as a clinician but delegate much of the management responsibilities?

• Of course – the role of the leader is very different from that of a manager. It’s been said that the mark of a true leader is not a position or title held, but how many people are willing to follow them


People tend to follow those who:

• Inspire a shared vision• Lead by example• Have a high level of energy and enthusiasm• Encourage collaboration, develop and support others

and build relationships• Drive for results• Demonstrate courage


The old view of the leader being at the apex of the triangle is changing

• Team members who are in constant touch with clients and their animals and delivering the services they seek, can make or break your practice.

• Perhaps the role of the leader is to facilitate their task and as far as is practical, to eliminate anything which interferes with the delivery of that service.


• Are you that leader?• Then who is handling the management?

Does that describe you?


So what about management?

Management is concerned with:• Planning - understanding what's going on now, knowing

what you want to achieve and planning a route to get there

• Organising - utilising your resources (premises, equipment, people, skills, money) in order to achieve your objectives and

• Controlling - not in the sense of restricting but in measuring and monitoring - because if you can't measure it, you can't manage it - and what gets measured gets done!


The management role in veterinary practice

• everyone in a veterinary practice has a responsibility for managing some of the practice resources.

• the number of non clinical-related tasks constantly gets larger and more complex and practice success, however it measured, depends on the effective, efficient and economical use of all the financial, property, equipment and manpower resources which are available


How are the management tasks dealt with in your practice?

• some practices employ a specific individual identified as the Practice Manager, responsible for all or most of the management tasks in practice.

• the manager reports to the owner(s) and provides them with the information they need, as and when they need it, to keep them informed about practice performance and to enable the owner(s) to make those decisions which need to be determined at owner/director level.

• in other practices, a number of individuals are each responsible for managing different practice resources, enabling the practice owner or clinical director to retain an overview of all of the management tasks


Use a checklist to decide whether or not your practice needs more/better management

• in each case, ask yourself whether the task is being managed well, reasonably OK, poorly or not at all

• in each case, note who is responsible for this task in your practice


Here are some of the management responsibilities

HR responsibilities including:• Staff training• Staff appraisals• Recruiting support staff and• Recruiting professional staff• Job descriptions• Contracts• Payroll• Shifts, schedules and rotas• Meetings• Protocols, SOPs and practice

handbook

Marketing & Service Delivery:• Advertising and Promotion• Clinical and other reminders• Promote healthcare and OTC sales• Client and/or patient advocate• Complaints• PR and Practice Image• Pricing, fees and charges• New Service development• Events• Marketing planning


Here are some more management responsibilities

Practice Assets:• Property• Equipment and facilities• Stock (Inventory) Control• IT Hardware, Software and service

Financial Responsibilities:• Cash Control and Banking• Credit Control – Accounts Receivable• Book-keeping• Data retrieval for professional

advisors• Prepare & distribute Management

Accounts• Review and Amend Operational

Policies• Pricing, fees and charges• Supplies / Vendor relationships• Insurance policies and arrangements

Business Strategy:• Vision, Mission and Objectives• Business leadership• Planning – budgeting • Investment and strategy


Team BuildingNow let’s consider your practice team

• High quality professional services are delivered by a team of enthusiastic, skilled and motivated professionals

• your biggest asset and your biggest cost• ask yourself

– you know what they do but– what are they for? – what do they achieve?

• do you know?• do they know?

• Talk to them!


Involve them all & ask - what is the prime objective of this practice?

• to offer the very best veterinary services for the animals in our care?

• to build a loyal client base of animal owners?

• to enable our clinical staff to practise their profession?

• to create a happy working environment for all the staff?

• to generate sufficient profit for re-investment in facilities and staff?

• what else?


They’re all important but every member of your practice team must understand that:

• it is essential that your practice income exceeds all its expenses if it is to pay its way, re-invest and continue to offer the highest standards of professional care for its clients and their animals

• do you know how many transactions (at the ATV) must be dealt with by every vet every day?

• do you know how much revenue your practice need to generate every working day, hour or minute?

• do all your key staff members have these numbers at their fingertips?


Does every member of your practice staff understand these commercial realities?

• how can you train them?

• here’s a suggestion

• Pop Goes the Weazel – a simple tool you can download

http://veterinarybusiness.org/pop-goes-the-weazel-download/

And do they know that their individual and joint objectives are simply to win and retain clients for

your practice


In this session we’ve considered a number of important general issues which will have a major impact on the business health of your veterinary

practice

• In the remaining sessions we’ll look more closely at:• The hidden treasures in your practice, some of the key

numbers and how to double the value of your business and• Your career in practice and how to become a veterinary

practice superhero


John Sheridan BVetMed CVPM DMS MRCVS

Thank you

http://veterinarybusiness.org john sheridan bvetmed cvpm dms mrcvs a strategy for growth, financial...

Documents

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practice owner

veterinary practice

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busy practice bone owner

value of business b

good location