As a qualified and experienced vet you may decide to set up your own practice. Will you specialise in companion animals or large animals? Check out our practical guide for help with starting and running your own veterinary practice.
- Research your target market
- Your fee income
- Establish your customer profiles
- Veterinary hospital
- Buy an existing business
Research your target market
You will need to find out whether there is enough local demand for your veterinary practice. This will depend on:
- the size of the local populations of the types of animal you plan to provide treatment for
- the affluence of the local client base
- the number of existing practices in the area
Check out the competition in your area to find out how many other practices are already in existence (remember that some vets may be looking to retire which could mean there's an opportunity for you to replace them). Don't forget that veterinary services may also be offered in your area by:
- charitable organisations
- veterinary clinics operating from within major pet product retailers and also by standalone practices that are owned by the major retailers. (For example, Pets at Home has over 350 in-store and standalone practices and has ongoing expansion plans)
In addition, POM-VPS (Prescription Only Medicine-Veterinarian, Pharmacist, Suitably Qualified Person) and NFA-VPS (Non-Food Animal-Veterinarian, Pharmacist, Suitably Qualified Person) medicines are available from agricultural suppliers, saddlers and veterinary pharmacies (including those that trade exclusively online) and, of course, pet shops and supermarkets sell a wide range of pet food, pet care products and 'general sales list' medicines.
The Veterinary Medicines Regulations require you to allow clients to take prescriptions that you issue to be dispensed elsewhere. As a result, the traditional veterinary sector faces competition for sales of medicines from online pet health stores/pharmacies that offer a full range of veterinary medicines, often at significantly lower prices than a veterinary practice would be able to sell them for.
It may be that you will only be competing directly against some of these businesses because you will be providing a specialist service. For example, you might have expertise in dealing with particular animals, such as racehorses or farmed fish and shellfish.
Although other veterinary practices in your area will be your competitors, it is worth being on good terms with them so that, for example, you can co-operate with them to provide 24 hour emergency cover, or cover for when you are on holiday. Try to find out how much competing practices charge. This will help you to set your own fee scale.
Why will clients choose your practice
All practising vets must be registered with the Royal College of Veterinary Surgeons (RCVS) and have obtained the necessary qualifications so it is likely that all the existing vets in your area are providing veterinary services of a high standard. However there may be ways in which you can differentiate your practice from others. For example, feedback might tell you that late evening and weekend surgeries would be helpful for working people. If your area contains many young families you might consider doing simple things like providing a play corner in your waiting room.
Clients have come to expect a very high standard of care for their animals and you should make sure that your premises are modern and inviting and that your reception and nursing staff are well-trained, friendly and smartly turned out.
Find out what people want
You might consider carrying out an informal survey of animal owners and any local organisations offering services to animal owners to find out if there are any services that are not currently being provided that would be popular. Don't overlook businesses such as boarding kennels, breeders or livery stables.
Research current trends, plus legal and tax issues
Your fee income
It's likely that the majority of your income will come from two main sources:
- professional fees for providing veterinary services
- income from the veterinary medicines you prescribe and dispense (including any charge you make for providing a prescription for clients who then purchase the prescribed drug elsewhere) and from the non-prescription medicines and other pet products that you sell
When you set your hourly fees you will need to:
- work out the total costs that the practice will incur during the year. Include your own drawings and an element for profit, but ignore the cost of the drugs/medicines you will buy. You should also include an amount for depreciation and to represent a return on the capital you have invested in the practice. This is essential if you are to be able to improve and develop the practice
- estimate the number of 'chargeable hours' that you will have in the day - this may be quite low if you are likely to be making many farm visits
- decide how many working days you will have in the year
To calculate the hourly fee that you will need to charge to cover all your costs, multiply the number of working days per annum by the number of chargeable hours in a day. This might work out at, say, 1200 chargeable hours per annum. Divide your total annual costs figure by this number to arrive at your hourly rate. You can break this down further to establish the fee per consultation - for example each 15 minute consultation should be charged out at a quarter of your hourly fee.
In order to recover your motoring costs you may decide to charge your clients a mileage fee when you make a home or farm visit.
Profit on medicines
In addition to charging fees for your professional services you will also add a mark-up to the cost of the medicines you prescribe and sell. For example, you might add 50% to the list price of POM-Vs as these are available from a more limited number of suppliers. Because there is more competition on POM-VPS and NFA-VPS medicines from other suppliers (agricultural merchants and saddlers, for example) you might apply a smaller mark-up to these products, for example, 25% or so.
Other sources of income
While consultation fees and medicine sales will make up the bulk of your practice turnover, you may also have income from other sources like sales of pet food and accessories, and commission from arranging pet insurance. You might carry out lab tests for other practices.
You may find that you are very much busier at certain times of the year than others. This is likely to depend to a large extent on the nature of your practice - for example small animal practices are often busy in the late spring and early summer because people wanting to board their pets need to have vaccinations brought up-to-date. Pet travel rules require owners that want to take their animals abroad to have them blood tested and vaccinated. They also need to have a chip implanted.
For large animal practices, the busy times generally reflect those of the client base such as lambing and calving, or the hunting and horse racing seasons. The timing of any Official Veterinarian work you do for the Animal and Plant Health Agency can depend on your location. For example, with TB testing of commercial cattle, herds may be required to be tested twice a year, once a year or once every four years depending on the level of risk.
If you consider that your practice will be significantly busier at certain times of the year your cash flow forecast should reflect this. Not only will your income vary from month to month, but also your costs, such as medicines, travelling expenses and, if you need extra pairs of hands, your wages bill.
Establish your customer profiles
The nature of your practice will dictate the type of client that you will have. For example, if you specialise in large animal work the majority of your clients are likely to be members of the farming community, equestrian businesses and horse owners. Other client groups that typically require the services of a veterinary practice include:
- companion animal owners
- businesses such as boarding kennels and catteries, breeders and pet shops
- commercial organisations such as abattoirs, race courses, fish farms, zoos and so on
- animal charities
- the Animal and Plant Health Agency (APHA), if you act as an Official Veterinarian
It is likely that you will offer account facilities to your regular large animal customers but you should aim to collect payment from many of your clients at the conclusion of the consultation or treatment.
Pet insurance policies
Research has shown that pet owners with pet insurance are more likely to go to the vet than those without cover, so you might want to consider promoting pet insurance to your clients. When you treat animals that are covered by pet insurance, you will either be paid by the pet owner who will then reclaim your fees from the insurance company or you will receive payment directly from the insurance company, usually some time after the completion of the treatment.
Special offers and discounts
Many vets are reluctant to charge the full amount of their fees to some clients. For example, those on low incomes and elderly people often have difficulty in paying for treatment for their pets. You might decide to charge this type of client a lower fee. Similarly, if an owner brings in several animals at the same time, for example, for vaccinations, you might offer a small discount. Some vets set a lower hourly rate for routine consultations and a higher rate for more complex work such as surgery, or for emergency call-outs. You will have to decide on your discounting policy in the light of your client base. However, you must make sure you bring in enough income to cover your costs, drawings and investment in your practice.
As well as offering the normal range of veterinary services you might decide to specialise in providing in-patient care, both for the animals that are brought directly to you for treatment and for animals referred to you by practices which do not have in-patient facilities.
You will only be able to use the name 'veterinary hospital' if you can meet Royal College of Veterinary Surgeons (RCVS) standards and pass RCVS inspections.
The British Veterinary Hospitals Association provides a standards document for veterinary hospitals which sets out the RCVS requirements.
Buy an existing business
You might decide to buy an existing veterinary practice rather than start your own venture from scratch. Buying a going concern can mean that:
- the premises, specialist equipment, medicines stock, accommodation for in-patients and office equipment are already in place
- there are established clients
- the business can generate income immediately
- suppliers have been identified and relationships established with them
- the business has a track record, which can help if you are looking for finance
- staff are already in place
- the business website has already been set up
However, look critically at any practice that you are interested in to make sure that the price you negotiate with the seller is a fair one. Try to establish why the business is for sale - for example, is the owner keen to retire or is there another personal reason for selling up.
Your market research into the sector as a whole and the locality in particular will help you to establish whether or not the owner is selling because he or she can no longer generate enough income from the business. This may not necessarily deter you - many business people are confident that they can turn a failing business around. The important thing is to have established the current position so that the price you pay for the business is not too high.
Other matters to consider include:
- the state of the premises, fittings and equipment. Will you have to spend money refurbishing or replacing assets
- the condition and value of any stock, such as drugs, consumables, pet care products for resale and so on that you are buying. Check this over carefully before agreeing a price
- existing staff rights
- how to retain key personnel once you've taken over
- does the business owe money that you will be responsible for
- if you are paying for goodwill, to what extent does this depend on the skills or personality of the seller
Ask your accountant to look critically at the business accounts for the past three years and discuss with him or her the selling price in the light of what the accounts reveal. Make sure you budget for other professional fees such as legal fees and valuation and survey costs.