1. http://veterinarybusiness.org John Sheridan BVetMed CVPM DMS MRCVS Prepare to double your veterinary practice profits and the value of your business in just 12 months – starting today

2. http://veterinarybusiness.org The value of your investment in the practice will depend on: the profitability of your business the marketplace for buying and selling veterinary practices and on the availability of potential purchasers willing and able to acquire your practice at a value which meets your expectations

3. http://veterinarybusiness.org So – what do we mean by ‘profit’? Cash is a fact – profit is simply an opinion and needs to be defined Profit - the difference between the revenue generated by a business by selling goods and services to willing clients or customers – and the total costs involved in providing those goods and services. Sounds easy! But a variety of specific definitions of profit, each designed for a specific purpose can be used, quite legitimately, to identify the financial performance of a particular business enterprise. The ‘net profit’ identified at the bottom of the Profit and Loss Statement for a sole trader or partnership for example - calculated as a basis to determine the individuals tax liability - little value for management purposes. Perhaps it would be better defined as ‘profit before owner’s remuneration’. Other typical measures of profit include: EBIT – earnings before interest and tax EBITDA – earnings before interest, tax, depreciation and amortisation. An appropriate multiple of EBITDA is commonly used as a basis for valuing business enterprises, including veterinary practices.

4. http://veterinarybusiness.org Profit – what profit? Consider a ‘model’ practice

5. http://veterinarybusiness.org The reality may be very different in the UK – evidence that median net margin after all costs, less than 10% margin from product sales realistic so margin from professional service sales totally inadequate That picture is very similar to the situation around the veterinary world (Australia, USA, Canada, South Africa) what about practices in Hungary in general and your practice in particular?

6. http://veterinarybusiness.org So we need a plan to double your veterinary practice profits and the value of your business: Step 1 - Two questions: How much profit did your practice make last year? What did that represent as a percentage of revenue?

7. http://veterinarybusiness.org You can use a simple, free, online benchmark tool to compare the profitability of your practice with other similar practices, in your specific marketplace http://veterinarybusiness.org/international-online-benchmark-service/ It’s free!

8. http://veterinarybusiness.org What should you be aiming for? Scores based on NCVEI/VetPartners EBITDA data

9. http://veterinarybusiness.org Discussed briefly during the plenary session earlier today Step 2 – Your Medium Term (5 Year) Strategy

10. http://veterinarybusiness.org So now you have a clear picture of what you want to achieve and where you want to get to – in the next five years Whatever your personal, professional and commercial objectives Never forget that: every one of them will depend on the ability of your veterinary practice to operate effectively, efficiently and economically as a business and to: generate a healthy profit

11. http://veterinarybusiness.org Step 3 - the next job is to concentrate on year 1 – get year 1 right and you’re well on your way The number one key component of year 1 is: The budget - do you all set and follow an annual financial budget? Here’s how

12. http://veterinarybusiness.org This is a 3.0 vet practice One owner and two employee vets FTE Let’s look at some numbers – a hypothetical SA practice in the UK How was this sum calculated ?

13. http://veterinarybusiness.org Now we’ll set some key objectives for next year Remember – the budgeted margin is not a ‘hope’ but an ‘intention’

14. http://veterinarybusiness.org Auto production of next years projections

15. http://veterinarybusiness.org Step 4 - the next job is to : –define policies required to achieve specific objectives in year 1 –define policies which will contribute to your strategic objectives –answer the questions what? who? how? when?

16. http://veterinarybusiness.org Some suggestions, examples and tips when looking at the big picture and setting objectives – think bold when considering the what? who? how? when? – think small does that make sense? suppose your bold objectives were: –margin up 50% –top line up 25% –costs down 25% (as %age of top line) would you have to: –increase fees by 25% and/or –work 25% harder or longer and/or –reduce salaries by 25% –or a number of other ‘bold’ steps no! no! – why not?

17. http://veterinarybusiness.org Because veterinary practice is largely a ‘fixed cost’ business and now is the time to think ‘specific’ and ‘small’ to achieve big changes

18. http://veterinarybusiness.org First – a clinical initiative to grow the bottom line by circa 20% Let us consider two ‘real life’ examples

19. http://veterinarybusiness.org The same three vet small animal practice But you can do similar calculations for any specific clinical service appropriate for your practice

20. http://veterinarybusiness.org A study by Vetoquinol some years ago suggested that 10% of all dogs suffer from CHF assumptions –active patients per vet – 1,250 –assume 45% are dogs - 563 –assume 10% have CHF - 56 –dog visits per year – 4.5 times (FDI) –assume need to examine dogs with CHF on 2 extra occasions per year –then canine transactions increased by 112 –existing transactions per VS = £210,885/£45 = 4,686 –after cardiology initiative increases by 112 equivalent to 2.4%

21. http://veterinarybusiness.org Three vet small animal practice (owner plus 2 employee VS’s) 647,840 160,664 281,996 135,445 69,744 100.0% 24.8% 43.5% 20.9% 89.2% 19.6% 278,938 10.8% 578,105

22. http://veterinarybusiness.org Second – a ‘business’ initiative to grow the bottom line by 20% plus

23. http://veterinarybusiness.org Average consulting charge as %age of standard consulting charge Why is this number very, very important?

24. http://veterinarybusiness.org Here’s an example Assume Increase Average Cons Charge by £2 Additional Revenue per vet straight to bottom line £5,600 So margin increased by £5,600 equivalent to: 21.6%

25. http://veterinarybusiness.org Step 5 – make it all happen A written clinical protocol for each condition, agreed and implemented by all the staff Need to recognise issue of clinical autonomy so consider spectrum –preventive medicine and long term treatment (practice protocols) –acute medical cases (more clinical autonomy) Clearly defined standard operational policies for administrative issues Staff who accept and comply with SOP’s Clients who accept and comply with the professional recommendations Management operational protocols which monitor compliance and take appropriate corrective action when needs be The success of these and similar illustrations depends on:

26. http://veterinarybusiness.org 1.The big picture – need to set bold objectives but it’s the few small details about the what? the who? the how? and the when? which are essential to make it all happen 2. Look in the mirror The person you see may be getting in the way of the success you deserve And yet that’s the only person who can ensure you can achieve everything you want to achieve in your career in veterinary practice Two Final Tips

27. http://veterinarybusiness.org John Sheridan BVetMed CVPM DMS MRCVS Thank you