Financial rewards, the freedom to practice and serve your patients as you choose and the chance to benefit those living right in your own community. These are just a few of the reasons established vets, associates and even fresh grads decide to move forward and open a veterinary practice.
Buy an Existing Practice or Start from Scratch?
Whether you’re dreaming of owning your own practice someday or you are ready to take action now, you have two basic choices when it comes to owning your own veterinary business. You can either buy an existing practice and modify it to suit your needs, style and preferences, or you can build a brand-new practice from the ground up, making exactly what you want and ending up with an office and team that is just right for you.
Both options have clear benefits, whether you choose the built-in revenues and brand recognition of an established practice or fulfill your entrepreneurial dreams by launching your own brand, ownership will put you on the path to success.
Benefits of Owning your own Practice
Why buy or begin a practice in the first place? When you are the owner instead of an associate, you can build your own brand, focus on the client base you are most interested in and offer the level of care that suits you best. From a purely business standpoint, practice ownership lifts the limits on your earning potential and allows you to eventually reap the rewards of your hard work.
Option 1: Buy an Existing Practice
Acquiring an existing practice allows you to inherit a built-in group of clients and to access regular revenues right away. If the practice you are interested in buying already has an excellent reputation in the community, you’ll enjoy the rewards of built-in goodwill as well. When you acquire a practice, you also acquire a team that already knows one another, and that already has built-in procedures and job duties in place.
Acquisition can make it easier to get started since the only “new” element in the practice is you and your fresh ideas. There are some drawbacks of acquiring a practice, though. While you can access the established practices set up and procedures, they could be outdated; those inherited team members may not be thrilled to have a new boss – and patients themselves could miss a beloved former proprietor and resist the change. Consider the following when you think about buying an established practice:
- The practice is already operating: Ideally, it is operating well and turning a profit. Established revenue streams and cash flow mean you can focus on branding and building on a solid foundation. You may also be able to pay yourself a better salary than you would if you started with no established clients or revenues.
- You’ll save time and have an income: Your own quality of life may be better if you buy an established practice, particularly if you are raising a family as you grow your practice. You’ll generally be able to draw a larger salary with this model as well; one of the biggest concerns our clients have is moving forward in their career while paying off student loan debt. The right established practice may allow you to do both.
- The real estate involved: You may have to buy the property associated with the practice; your real estate is one of the most significant expenses your practice will face. If the practice is in an ideal location and in great shape, then you’ll reap the rewards of having an optimal property. If the practice is in an area you don’t like, one experiencing a decline or if the actual structure needs an overhaul, then the real estate could be a considerable drawback. You could even end up inheriting less than ideal rental terms; evaluate any practice you are considering to be sure this critical factor is all it should be.
- The current practice style: Your style could conflict with the former owner’s; this can sometimes lead to a drop-off of clients, who go elsewhere after a change. It does not always happen but is a risk associated with choosing an existing practice.
- Your own entrepreneurial spirit: You want your own practice for a reason. Can you look past the idea of starting from the ground up to access the benefits of an existing practice buy? For some, the practice just won’t feel like it is owned unless it was built from the ground up; if this sounds like you, an existing practice may not be your best bet.
Option 2: Start your Own Practice from Scratch
While the built-in benefits of an established local presence, inherited community goodwill and even an already-trained staff is appealing, there are reasons to consider starting up a new practice from the beginning.
If you already have a client base or are well known in your community, then striking out on your own may be a way to put your excellent reputation to work for you. If your area is experiencing growth, as many small to mid-sized communities across the nation are, then you could swiftly build a new practice by merely fulfilling a need in this expanding population center.
If you want to bring a new type of practice to an area that can support it and is currently underserved, then opening a new practice allows you to achieve your goals and become the primary provider in that community.
Consider the following when you think about starting a brand new practice:
- Location: Since you’ll be starting fresh, you can choose the area that is right for you. You can also decide to buy or rent; this decision will have far-reaching implications for your practice since real estate will be a significant practice expense.
- You have a clear vision: If you have a very firm idea of what your ideal practice should look like, what patient interactions should be like and the standard of care you wish to provide, then starting fresh allows you to build exactly what you want. Depending on just how strong those convictions are, doing anything but forming your own practice could feel stifling and limiting.
- You have business skills or training: Whether you buy or start fresh, you’ll need to bring some basic business savvy to the table, but starting out with a new practice requires far more up-front work. If you love planning, marketing, coping with the details and creating firm timelines, then you’re a natural match for a new practice. If you can cope when these things are in place or even build upon a foundation, but don’t want to figure it all out, then an established practice might be a better choice for you.
The Bottom Line: Should I Buy an Existing Practice or Start a New One?
At the end of the day, this important decision will come down to the established practices you have to choose from and how you feel about starting from the ground up. If you have very set ideas, want to go into a new, underserved location or want to create your own unique brand, then starting a new practice is likely your best option. If you prefer to have almost everything already set up, clientele and community goodwill already in place and don’t mind being “the new guy” or “that new girl,” then an established practice is a good bet.
No matter which option you choose, Mark J. McGaunn, CPA/PFS, CFP® leads the veterinary/financial planning divisions at McGaunn & Schwadron, CPA’s, LLC and can be reached via firstname.lastname@example.org or (781) 489-6651. Mark helps both new and established vets make the best possible financial moves. Position yourself for success; speak with Mark McGaunn today.