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A team that saves the day
Even if your practice doesn't need to be rescued, wouldn't it be nice to have these three management angels in your corner?
To be successful in any business, you need to surround yourself with individuals who have the expertise you lack. No one's an expert in everything, you know. You've heard it before, but the true test of intelligence is whether you can admit how little you really know.
Mark Opperman, CVPM
You need at least three advisors—an accountant, a lawyer, and a management consultant. Together these people possess the skills and knowledge to help your practice succeed. True, building a business team may not be as glamorous as taking orders from a mysterious man named Charlie. But taking this step will help you reach your goals for your business.
Hiring your team of advisors
This big step is the one most practices are least familiar with. Ask any advisor you're considering hiring about his or her:
- Fee structure. Yes, you have a right to ask how much you're going to pay. Most expert advisors charge by the hour or by the project. And they may charge different hourly rates depending on who works on your project—a bookkeeper or junior lawyer vs. an accountant or senior lawyer. So be sure to ask about the maximum amount they'd charge for their services.
Accountants will provide an letter that puts their services and the associated costs in writing. Never hire an accountant without this. Some advisors will provide you with an engagement letter that also states the scope of work to be provided and the associated costs. Visit vetecon.com and click on Web Exclusives to download a sample engagement letter.
- Availability. How accessible will the accountant, lawyer, and consultant be when you need them? Let's say the IRS just walked in the door and demanded all your financial records from the past three years. So you call your accountant. But he's out of town. Or you discovered a team member who was helping herself to your inventory and you need to know how to proceed legally. Where's your lawyer?
You have to be reasonable about this, but you also don't want to get into a sticky situation with no help. So talk to advisors about these kinds of scenarios up front.
- Communication skills. This is a big one: How well do your business advisors communicate with you? Do you understand the advice, or do they talk over your head? If you have a business advisor who presents information in a way you don't understand, don't hire that person. As a veterinarian you must talk at a level clients understand. If clients fail to get it, it's not their fault—it's yours. If your lawyer, accountant, or consultant communicates with you and you don't understand what they're saying or how to apply that information to your practice, it's not your fault—it's theirs. They aren't providing you with any value and I would terminate the relationship.
- Approach to service. Your advisors shouldn't do everything for you. They'll do what they're best at and ensure that you and your team can do the rest. For instance, you don't want to pay an accountant to do your payroll or bookkeeping. You can hire a payroll service or do the bookkeeping in house.
An attorney may suggest you try to work out a legal problem yourself or go into arbitration instead of filing a lawsuit. A consultant will not come in and hire your healthcare team, but he or she will teach you and your management team how to hire well.
More than a tax man
So, the best approach to service is the constructive service approach: Your advisors do what they do best and teach your team to do the rest. Your advisors should leverage themselves effectively, providing you with the best value for your dollar.
- Reputation. To find out your prospective advisor's reputation, contact the Better Business Bureau in your area or the state from which the advisor is being hired. Check with your local or national CPA and legal associations. For consultants, check out the American Veterinary Practice Management Consultants and Advisors and the Veterinary Hospital Managers Association ).
You can also check with other business professionals in your area who are using the services of these individuals. Request and contact references provided by your potential advisors. After all, you're going to be listening to and following their advice and you need to be able to trust them.
- Knowledge of our profession. Veterinary medicine is a different kind of business. There's a lot of capital in equipment and instrumentation. It's also a "cash" business and, in small animal practice, involves a minimum level of accounts receivable. It's important for any business advisor to have vast knowledge of the profession.
When you're hiring, ask how many veterinary clients the advisor has worked with and check references. There are many accountants and consultants who specialize in the veterinary profession and, although they may charge a little more, they're typically worth it. When hiring a lawyer, look for expertise in the area in which you need assistance.
- Ability to stay up to date. Does your business professional stay in the loop? During an interview, ask if your candidate is required to obtain CE and, if so, by how much he or she exceeds the required level. Accountants probably have it the hardest; the laws change all the time and they need to keep current. But the same holds true for lawyers and consultants.
If the advisor is veterinary-exclusive, ask about which meetings he or she attends. A conference can be an ideal opportunity to meet with potential advisors. With current technology, you can get excellent service from professionals located almost anywhere in the country. But it's nice to see them in person once in awhile, and the national meetings are an ideal opportunity to do so.
- Team environment. If you hire a large national firm with hundreds or thousands of accountants, lawyers, or consultants, you may not get the attention you deserve. If you hire a firm with one or two individuals, you may not get the service or resources you need. What happens if the sole accountant in that CPA firm dies? Size isn't everything, but it can affect performance.
Proof is in the pudding
There are hundreds of examples of how good advisors have helped practices make remarkable turnarounds. I'll just start you off with three:
- Consultant. I worked with a practice that was purchased by a group of veterinarians from a retiring owner. The practice was very high volume and low cost. The new owners didn't want to maintain this type of practice but didn't know how to change it without losing the client base. I developed a business plan to provide a different level of service and reeducate the clients.
We implemented the business plan with great success and the new owners are amazed at their new practice. The practice income almost doubled in three years and they enjoy the new work environment. This is a perfect example of how a consultant can help an owner realize his or her dream.
- Lawyer. I know of one practice that fired a team member because she was being dishonest. The employee recorded that she worked hours when she actually didn't. She also spent a great deal of time on the Internet shopping and sending personal e-mails. She even made long-distance calls to family members while she was on the clock using the practice's phones.
After she was fired, she went to the state labor board and cited the practice for wrongful discharge. The practice manager, thinking she had an open and shut case, didn't seek legal counsel and attended the hearing without representation. The team member had counsel. The board found in favor of the fired employee because the practice was unable to present its case. Most of the evidence wasn't accepted into court because the practice manger didn't know the proper procedures.
A legal eagle
The practice then hired a lawyer, and six months and $6,000 later, it won a reversal. If this practice had retained representation in the first place, it probably wouldn't have had to go through all the time and expense of a reversal.
- Accountant. A key time to meet with your accountant is after nine months of operations. This is when you can forecast your practice's income and expenses to year's end and make some important business decisions.
Depending on what those projections show, you may choose to purchase a new piece of equipment and take advantage of IRS code section 179, which allows for advanced depreciation. Or you might fund your retirement account or even change the type of retirement vehicle you're now using.
An expert with a business edge
The accountant may advise you to open a 529 account for your kids, put your spouse on the payroll, or prepay bills. The point is, many of these tax savings strategies can't be used once the year has ended—they need to be taken care of before December 31.
You'll benefit, too. So get these professionals in your corner right away.
Veterinary Economics Hospital Management Editor Mark Opperman, CVPM, is owner of VMC Inc., a veterinary consulting firm in Colorado. Send questions or comments to email@example.com