The current slow down in many practices requires proactive action

The need for taking active steps to drive business is so important that business advisory software (Profitdiagnostix) has made some additions and are offering direct marketing software. They are using text messaging services for pet owner re-activation and engagement. Veterinary practices have an advantage of being able to access large lists of pet owners as they have been collecting customers and pets contact details accurately in their practice management systems for long periods of time. These lists have historically always been underutilised but contain all the information needed to bring back disengaged customers, missed vaccinations, run senior clinics and even seasonal campaigns. In a recession, there is a dire need to drum up business in a cost effective way, and this is undoubtedly the best way to do it, as opposed to large spends on unfocused social media campaigns where you don’t know what pets people have, if they even have a pet or any information about that pet such as its age.

Our gut feeling tells us that we are exposed to two very different demographics in veterinary practices – those that use credible business advisory services are by nature the types of practitioners that are interested in the finances and making proactive/educated business decisions – these are the ones doing well and their businesses are still valuing high. On the other side, where we perform valuations for practices that have never had any focus on their business outside of just ‘being a good vet’ currently we are being faced with a lot of surprises in this demographic with very low value businesses as a result of minimal profit. However, there is a warning label that comes with using business advisory services – we are also now often confronted with practices who have been ‘advised’ that their practice is worth millions, but when it comes down to a formal valuation their business is only worth a fraction of what they were expecting – there are many ‘business advisors’ out there who cannot accurately interpret a set of financial statements but seem happy to come up with a value for your business.

With a further minimum wage increase on the cards, we expect another surge of tough times because the inevitable result of this will be an increase in inflation once again – businesses need to pay people more, and the only way to offset the increase in wages is by increasing prices (this is a well known economic phenomenon known as the Wage-Price Spiral). Our advice now is to be engaged, know where your business is losing money with accurate financial advice and drum up business if you are in the 70% of practices that now have shrinking customer numbers.