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Mark Moran
Director, Vets in Business Limited
There are two issues which, in the present economic environment, appear to be the drivers of future success for veterinary practices. The first is the ability of the practice to create a distinctive place for itself within the minds of the local pet-owning community, and the second is the ability of the practice to make good use of its increasingly expensive facilities, technology and staff.
With 12 veterinary practices to choose from, the pet owners of Telford are spoilt for choice, so Walker and Wikeley will have to innovate to attract and retain new clients. Clients expect their vet to be available when they want them, and will look for practices that offer evening and weekend appointments, as well as a full range of services.
Several of Walker and Wikeley's competitors are 'veterinary corporates' which are able to achieve savings in back office areas such as finance and IT, as well as being able to negotiate discounts from the major suppliers of drugs and consumables. Increasingly, these organisations are using these scale economies to enable them to reduce the prices of routine services.
Before looking for a new branch, Walker and Wikeley will need to ensure that their existing facilities are being fully utilised to remain price competitive and retain their margins.
Steve Golby
Managing partner, AC Mole & Sons
Walker and Wikeley have achieved a lot in two years and are sensible to pause and consider the options available to them. Initial success has been achieved through a substantial investment of capital and effort and, as a result, they find themselves with a growing practice.
Their achievements to date have been built on the provision of a personal and caring service enhanced by the use of appropriate technology. I am not sure that trying to replicate the model on another site will achieve the result they desire. There is a danger that the logistics of running a dual-site operation will reduce the time available for client contact and the ability for income generation, cross-selling and client referral.
They should review their financial data and the ratio of fee income to drug sales; a ratio of less than three to two might imply that their fee levels are on the low side or, alternatively, their purchasing procedures need reviewing. They should also revisit their capital expenditure and ensure that capital allowances tax claims have been maximised.
If turnover can be optimised from the current surgery, then more income should drop straight to the bottom line. Organic growth in the short to medium term will generate finance internally, something that is often overlooked when expenditure is being planned.
Sarah Rickard
Commercial manager, HSBC, Birmingham
Walker and Wikeley's concerns are very common, particularly for young, growing businesses. The key to increasing turnover will be by providing excellent service, through which they will win new business.
Opening a new surgery is one way to grow, but as they know from their previous experience things don't always run smoothly. There is heavy capital investment required for the equipment, the deposit for the property, as well as the various other ongoing operating costs.
A solid base is required to support any growth, and your business should be sufficiently profitable and your finances robust enough to support increasing costs and potential problems that might occur.
Whatever they decide to do, getting funding correctly structured is essential. Don't be tempted to go for the easy option of an overdraft. Debt needs to be funded over the lifetime of the asset it is financing. Leasing is often a good option and has tax advantages. If they are purchasing the property, getting the right commercial mortgage is key. The important thing is to work out the monthly payments their cashflow can reasonably support, rather than going for the cheapest option. Often the term of the loan has more of an impact on payments than interest rate.
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All Practice Management
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