Don't forget the expenses
Your veterinary practice pulls in a lot of money, but it costs a lot to keep it going.
Regardless of the financial information you're privy to, you can get a feel for how much money comes into the practice. Just go to the front desk where payments are collected. But that's not the whole picture. That incoming money is gross revenue, which doesn't take into account the expenses your practice faces. All the fees clients pay must cover the rent or mortgage, building and equipment repairs, drugs and supplies, utilities, continuing education, insurance, taxes, and doctor and staff compensation and benefits. Net revenue is what you're left with after subtracting these costs.
Lorraine Monheiser List, CPA, CVA, MEd, with Summit Veterinary Advisors in Littleton, Colo., says to think of your practice's finances in terms of a pie chart. "The entire pie chart is gross revenue, and the slices show team members all the expenses," List says. "Not a whole lot of that is profit, or net revenue."
Which leads to the topic of payroll. You take home a certain salary and so does the practice owner. Yes, his or her salary is more than yours. But remember that the owners—or owner—are assuming a risk by running the business. As a result, they need to build equity in the practice in order to sell it later. They also need to earn a profit, which they often invest right back into the clinic. So if your owner generously shares the practice's finances with you and your team members, be sure that you keep the numbers in perspective.
