Don’t Wait to Improve Your Practice Value
If you may sell your veterinary practice in the future, it is beneficial to determine its current value while you can still have time to make changes. Improving your practice value even years before you are ready to sell may help increase profitability now and command an attractive price when the time is right to transition to a new owner.
How veterinary practice value is determined
A professional appraiser determines the value and true profitability of your practice. Your profitability is your financial return for owning and operating the business. It encompasses the revenues remaining after:
- Paying all of the practice’s customary operating expenses, including salaries,
- Paying fair market rent, even if you own the real estate, and
- Fairly compensating yourself as a practicing veterinarian.
Practice value also encompasses the real and intangible properties that make a veterinary hospital an attractive investment for potential buyers. This includes exceptional management practices and a proven track record of generous, stable net profits. Highly valued practices are typically:
- Well equipped with current technology that is in good repair;
- Physically attractive with a staff that delivers outstanding customer service;
- Multi-doctor practices offering a full range of veterinary services, from boarding and grooming to laser surgery and advanced medical care.
Veterinary practices that are not managed with this level of staff efficiency and technological advancement may not expect to achieve the highest valuation when it comes time to sell the business. In a worst-case scenario, practices that have failed to create an environment that is appealing to potential buyers may find they are not only unable to command an attractive price – they may have to settle for less than expected and may have to wait a bit longer.
5 ways to build practice value
The good news is that any veterinary practice can be improved with proper planning to help build real and perceived value. The secret is to start with clean financial reports, and then work step-by-step to enhance your facility and services. Here are five steps that may help you build practice value:
- Track your income and expenses by profit center, making sure to remove items that are not true operational expenses.
- Keep your facility and equipment in good repair.
- Offer the best quality services and medicine.
- Implement internal systems to effectively remind clients of needed services and capture charges.
- Invest in the education of your staff – they have the largest impact on what your clients experience at your hospital.
When to perform a practice valuation
Many practice owners wait until they are ready to sell their practice to perform a practice valuation. However, a valuation by a professional business appraiser who specializes in veterinary hospitals can also be a powerful practice management tool, even if you’re not planning to sell in the short-term. The valuation analysis diagnoses your practice’s financial health and gives you an understanding of what improvements your practice may need now in order to position your business for increased profitability and maximize your return at the time of sale.
Consider making changes to improve practice value at least three to five years before selling. Research veterinary practice upgrade and expansion financing to help you build a practice that will be sought after by potential buyers. The investment in your practice may pay for itself when it comes time to transition to a new owner.
The team at LenDRgroup Consulting cares about the long-term success of your practice. No matter if you are in need of practice financing or business consulting, we are able to craft a customized plan to fit the unique needs of not only your practice, but also your career. We bring a lending platform of 300+ dental and healthcare-specific lenders, and we built this network with the purpose of helping dentists, veterinarians, and physicians. We want you to achieve your dreams of practice ownership while eliminating the obstacles associated with practice financing.
To date, we have helped hundreds of medical professionals expand and grow their practices. LenDRgroup Consulting recognizes and understands the needs of your business and can provide guidance to help avoid costly mistakes. So, let’s get started. Contact us today to schedule a one-on-one consultation.