5 first steps to a new veterinary hospital

May 23, 2016
Tom McFerson, CPA, ABV

Tom McFerson, CPA, ABV, is partner at the veterinary accounting firm Gatto McFerson in Santa Monica, Calif.

Building a veterinary clinic is a long, detailed process. But a journey of 1,000 miles starts with a single stepwell, five steps.

Building a veterinary hospital is so EASY a PUPPY could do it! ... we might be overselling here. (Photo Alison Fulton)Building a new veterinary hospital can be a long, grueling and risky process. Want to give yourself the best chance for success? Wrap your head around these five crucial steps from the beginning ...

1. Build a team

There are hundreds of important decisions to be made building your new hospital. Many of these issues will be areas in which you-the practice owner-have little or no experience. Variable interest rates? Conditional use permits? Disabled parking requirements? Without a core team of advisors to help, you'll be floundering in the dark. You'll need:

• Architect/Contractor. This can be one or two people, depending on your budget and needs. The contractor and/or architect should be experienced not only with the inner workings of a veterinary practice, but also the inner workings of City Hall. Knowing what your facility needs and how to get it approved by your local building inspector may be the most valuable tool at your disposal.

• Banker/Lender. You might have a great relationship with your local bank, but does that bank have the familiarity or flexibility to provide the loan you need? Consider lenders with veterinary experience, many of whom have handled hundreds (or even thousands) of loans like yours.

• CPA/Financial Advisor. I don't mean to toot my own CPA horn, but you need to someone who can verify that your project makes financial sense. It's easy to get swept away in the euphoria of a new build, but make sure you have someone on your team willing to say no when you can't afford something.

• Attorney. Many decisions you make during this process will have massive financial and liability repercussions. Peace of minds comes with a qualified attorney looking over your shoulder.

2. Create a construction budget

Permits. Subcontractors. Overages. These are terms you'll become familiar with as you put together your construction budget. What size facility do you need? How much can you afford? How much will you be borrowing? These are questions that should be considered when putting together your financial plan for the new facility. Your team from above can provide invaluable guidance.

3. Choose who's in charge

Who will keep your project on track? Overseeing the daily, nitty-gritty details of a veterinary construction project is almost a full-time job. Most owners feel compelled to take on these duties, but when combined with seeing patients and running an existing, thriving practice, it can all become too much to handle. To ensure (as best you can) that the project sticks to your timeline and budget, consider delegating these duties to a designated, qualified person in charge.

4. Plan a post-construction budget

What will your new cost structure look like? Should you raise prices right away? How many new clients should you count on? Getting a handle on the new cash flow is an important part of the process and something you need to think about before the project begins, not after your big Open House. Is the project financially feasible? A post-construction budget is one way to answer that all-important question.

5. Look out for Numero Uno (that's you!)

You can count on one thing-this process can be fun, but it's almost always grueling. There will be ups and downs and long periods of uncertainty. Ultimately, the stress takes its toll, so set aside time each week and look out for your own emotional health. Whatever it takes to recharge your batteries-a bike ride, a weekend away, a marathon binge-watch of Game of Thrones-do it, and don't feel an ounce of regret. The long-term success of your practice will depend on you being at the top of your game before, during and after your big new-hospital build.

Tom McFerson, CPA, ABV, is partner at the veterinary accounting firm Gatto McFerson in Santa Monica, Calif.