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Is your veterinary practice too big to fail?
There are lessons to be learned from the many companies that have disappeared in recent years.
I've always thought that the concept of a company being “too big to fail” was profoundly ridiculous. According to the website Investopedia, the term describes the concept whereby “a business has become so large that a government will provide assistance to prevent its failure because not doing so would have a disastrous ripple effect throughout the economy.”
The fall of giants
Consider these once-ubiquitous businesses that failed in recent years:
- Blockbuster, once the uncontested leader of the film-rental world, was brought to its knees by a former customer who hated the late-return penalty policy. That's how Netflix was born. Blockbuster closed the last of its doors in 2014.
- Blackberry, a name once akin to Kleenex, is becoming increasingly irrelevant, in part because of the almighty iPhone. The company's stock plummeted from a high of $138 in 2008 to about $8.64 today.
- Kodak, which we were led to believe swiftly made the transition from film to digital, filed for bankruptcy, crawled out of it, and remains a ghost today. When digital cameras first appeared, Kodak executives stubbornly refused to embrace the new technology.
The list goes on. Remember MySpace, Pan Am, Hummer, Oldsmobile, Circuit City, CompUSA, Tower Records, Borders Books, Linens ‘n Things and Radio Shack?
Protecting your business
I am not trying to compare the magnitude of the failure of international banks and large companies with the failure of veterinary practices. I am simply observing that veterinary practices are not immune to failure. How can you make sure this doesn't happen to you, the small business owner?
Protect your income. Don't rely on income from spay/neuter surgeries, immunizations and medication sales. No matter how hard you try, a small practice cannot compete with online pharmacies, low-cost vaccine and sterilization outfits, and practice chains that drive prices down. Lowering your fees to try to compete on price alone is a recipe for disaster. Instead, focus on your services, your customer service and your expertise.
Offer value-added services that your competitors don't. Bring in specialists, hire associates with expertise in a specific field and retain employees who go overboard to serve clients.
Work on your exit strategy early. At stake are not only your retirement but also the livelihood of your employees. Selling a practice to a colleague or an associate is becoming harder and harder, so what's your plan B? Inform your close contacts of said strategy. If something bad happens to you tomorrow, what happens to your clinic? Do the people you leave in charge know what to do?
This is especially important for solo practitioners. What if you have a serious car accident, a back injury, a broken hip, a heart attack or some other misfortune that leaves you unable to practice? How do your employees get a paycheck so they actually stay on board? Do you have a contingency plan to find a relief veterinarian on short notice?
If yours is a multidoctor practice, consider the consequences if one or more of your colleagues left on the same day or if half of your staff decided to quit one afternoon? It happens.
Get involved. Many practice owners find accounting and practice management boring, handing off these responsibilities to someone who may or may not have the knowledge (or ethics) required to do the job effectively. What if your hospital manager or administrator leaves the practice with no notice? Make sure you know the passwords to all relevant accounts, and be able to do payroll and pay bills. Have a minimum amount of knowledge and involvement in the financials of your practice to keep an eye on what is truly happening.
Establish systems to keep track of financial transactions. If someone embezzled from your practice, would you know? Embezzlers are professionals, and I bet they know more about your financials than you do. Enlist the help of a trusted CPA.
Maintain your reputation. Make sure your reputation as a clinic and as an employer is excellent. Strive to provide excellent customer service and state-of-the-art patient care. If you haven't done so, define your practice's core values, mission and vision. And only hire people who embrace them.
Dr. Zeltzman is a board-certified veterinary surgeon and serial entrepreneur. His traveling surgery practice takes him all over eastern Pennsylvania and western New Jersey. You can visit his websites at DrPhilZeltzman.com and VeterinariansInParadise.com.