Dr. Bill Wagner
You Forgot to Make an Important Resolution this New Year!
As each year passes to the next, we often set resolutions to accomplish in the new year. Whether small or large, there’s a common theme of trying to get something done this year that we wish we’d done last year:
“I’m going to go to the gym more often.”
“I’m going to read more.”
“I’m going to finally learn how to play the piano.”
We’re used to setting personal goals at the start of a new year, and large organizations typically do something similar through annual strategic planning. However, most small business owners don’t have an annual routine of setting clear, achievable goals for the year and establishing a roadmap for how they are going to achieve them.
With the new year, there’s no better time to start than now!
How do I build an annual strategic plan for a veterinary clinic?
1. Pick 3-5 core metrics to focus on improving this year. These should be “big picture” metrics that may require input from several areas of the business to improve. Revenue, cases per month, gross profit margin, net profit margin, total caseload, and client satisfaction scores are all examples of great metrics that you could focus on as Core Focuses.
2. Set SMART goals for each Core Focus, with SMART standing for Specific, Measurable, Achievable, Realistic, and Timely. Each goal should be accompanied by a subset of goals called “rocks” or “epics” that create a roadmap to accomplishing the larger goal. For example, for a Core Focus of “improve revenue”, a SMART goal could be “improve revenue by at least 10% by December 31st.”. From there you could set several “rocks” such as “evaluate our fee schedule and make appropriate adjustments by January 31st”, “hire one additional associate DVM by the end of Q2”, and “Launch telehealth services and advertise it to existing clients by the end of Q3”. Remember that “measurable” is a very important part of a SMART goal! Every goal should be paired to one or more “Key Performance Indicators” (KPIs) that you check on set intervals to ensure that your goals are staying on track.
3. Make a budget! An annual budget is a guideline to ensure you and your team understand the business. As situations are ever changing in practice ownership, a budget will change also, but it does provide you with a clear “fairway” for how you expect money to move in and out of the business over the next year and identify unexpected/outlier expenses.
4. Include key players in the strategic planning, such as practice managers and other team leaders. As a leader one of your most important roles is effectively delegating work to members of your team. You can’t do everything yourself! (Although it won’t stop you from trying) Including the team leaders of the practice in the process of setting goals ensures that they’re more likely to be Achievable and Realistic. It also creates accountability, as they will be committing to the achievability of those goals and their personal roles in getting them accomplished as they’re helping you set them. Including your leadership also instills a sense of confidence in those that you have hired. This will be beneficial in the long run, increasing engagement and building a culture of thought.
5. Think 3 years out with your current goals. This step will have you and your team thinking about the how the decisions you make today will provide value in the years to come. This way of thinking will set up future strategic sessions for success.
This process leads to the important resolution that you may have forgotten to make this year:
Regardless of how near or far you are from retirement, you should build your ownership transition plan!
“Quality, time, and cost” have always been a “pick two” scenario at best in the business world. You can have something done well. You can get something done quickly. You can have something done at your preferred price. You rarely, if ever, can have all three.
Transition planning is the same: You can have a great transition where you, your practice, and your team are well taken care of by a values-focused buyer. You can (sometimes) have your exit happen quickly. Your exit can maximize financial return to ensure a rewarding retirement. At least in the current market, you’re unlikely to find all three. That is why there is no such thing as “too soon” to set your transition plans in place.
The further you are from retirement, the more options that you will have in shaping your exit to match your goals and the more you will be able to leverage an extended exit timeline into a greater total financial return for your equity. In addition to leveraging a longer exit timeline, planning well ahead for your exit also means that you will be able to capitalize on historically high valuations for veterinary practices. With consolidation of medicine sitting in the “early to middle innings”, characterized by there being many groups who are actively buying clinics and creating a competitive environment, it is a good time to consider securing a long-term transition plan that locks in favorable terms.
AVP is a growing veterinary group that is vet-founded, vet-operated, and not private equity-backed. We provide a "third option" in veterinary practice ownership through co-ownership. Our partnerships combine the best of both worlds of the autonomy of independent ownership and the resources of being part of a network. Our partners secure a lucrative path to mid- or long-term exit and can rest easy knowing their clinic will continue to succeed as part of the nation’s most compassionate network of veterinary practices. If you are interested in getting a jump start on your New Year’s resolution to build your ownership transition plan, you can contact me at firstname.lastname@example.org or come visit our team at Booth 1435 at VMX in Orlando!