In a perfect world, large animal veterinarians would engage in long-range business planning to shape their practices. They would also call on lots of experts to help turn their practices into finely tuned business machines. In reality, they usually don't, a BEEF magazine survey found.
Two-thirds of the veterinarians surveyed by BEEF don't have a written business plan. Of the one third that do, less than half turned to outside experts for help in developing their plan. And of these, only about one in four used a veterinary consultant or other certified business analyst to help shape their plan. The rest turned to more traditional sources, such as bankers and accountants.
This flies in the face of advice put forth by business consultants, who maintain veterinarians need all the help they can get on the business side of their practice.
"A good resource team for a veterinarian includes a banker, a tax accountant, a financial planner (for investment and retirement funds) and an operational consultant," says Thomas Catanzaro, head of Catanzaro Associates, a Colorado-based veterinarian consulting firm. "Once we get past one-doctor practices, a corporate attorney should be added. Not just any attorney, but one who understands professional corporations."
Veterinarians don't shun consultants entirely. About 40% said they had an ongoing relationship with a business consultant. But many veterinarians use consultants sparingly to answer an occasional business question.
One apparent reason for the limited use of consultants is the cost. Extensive use of veterinary consultants can be quite expensive, especially when the cost is spread over just one or two veterinarians. Nearly two-thirds of the veterinarians in the BEEF survey were in practices with one or two veterinarians.
What do these findings mean? Overall, the survey shows many veterinarians go from one year to the next with no formal long-range goals or plans and little outside expertise to find problems in their practice.
Still, many veterinarians feel there are good reasons for adopting a long-range plan. "You can't get something - a goal - if you can't measure where you're at," says Cory Witham, an Iowa veterinarian who wrote her business plan with the help of her brother, who has a degree in marketing, business and entrepreneurship.
The lack of advanced planning found at many practices doesn't mean, however, that veterinarians aren't concerned about their future, or with problems that impact their business. Many veterinarians told BEEF they had concerns about getting paid, the profitability of their practices and their cash flow.
They also worried about the short-term health of the beef industry. In fact, when consultants were asked to cite the two most pressing problems facing their practices, many cited problems with the beef industry, including slumping demand for beef, beef quality, low prices and falling consumer confidence in the product.
They also worried about factors reshaping the economic world in which cattlemen and feeders compete. Among other things, veterinarians cited foreign competition, competition from chicken and pork, and consolidation in various stages of the beef industry, including meat packing.
Why the concern? The most likely answer is that large animal practices stand to lose if the beef industry shrinks or if low beef prices render ranchers and feeders unable to afford a full line of veterinary or nutrition services. One respondent said his client base had eroded because of the low number of ranches. Another remarked that low beef prices have impacted preventive care used by his clients.
In the worse case scenario, specialists won't get paid at all. Take the situation in northern Iowa where Cory Witham runs her veterinary practice and her husband owns a feedmill and does animal nutrition work.
"He'll go out and remind them that it's time to pay us and they usually say 'OK,' " she says. "Unfortunately, everyone's lost a lot of money on hogs and cattle and there isn't any money to go collect.
"A big concern is the state of the current economy. The media talks about how wonderful it is and that just doesn't match life in rural America. Everyone in Iowa is broke, broke, broke.
"The assumption that I started with is that things have got to get better and someone will have some money sometime. (But) of my husband's and my clientele, we've had 60 percent of them sell their farms in the last six months."
In the long term, however, veterinarians and nutritionists overwhelmingly expressed confidence in the beef industry's future. Asked if they were optimistic about the future of the beef industry, nearly 82% said yes. This may reflect the fact that the beef industry is cyclical. Today's hard times will eventually give way to higher beef prices.
Aside from short-term concerns about beef, veterinarians have another worry. Even as the beef industry is undergoing rapid change, so is the veterinary business. Younger veterinarians are entering the job market laden with college loans that often exceed $60,000. This could cause some veterinarians to shy away from large animal work where the pay is less than premium, the hours are long and the work itself is dangerous.
Already, some veterinarians forecast a shortage of large animal specialists in the near future. The changing face of veterinary school enrollment could help shift veterinarians away from large animal work. More and more veterinary students are women and some veterinarians are concerned that women veterinarians will elect small rather than large animal practices when they graduate.
In fact, the BEEF survey suggests a shift from large animal work may already have begun. Almost all of those responding to the survey were male, and there were few veterinarians under age 40. This suggests a shortage as older veterinarians retire.
Often, the problems of one type of small business are similar to those of another. With that in mind, BEEF asked consultant Lenny Libis, a specialist in health care practice management, to suggest questions that might help veterinarians improve the business side of their practice. Here are some of the points he raised:
* "Do you have a business plan? Do you just come into work every day or do you know where you are going?
* "Do you know what you want your business to look like in five years? Do you know who your customers will be in five years?
* "Can you develop economies of scale by growing? If you can't, why grow?
* "Do you have a method of finding out automatically about innovations in your field?
* "Do you have available credit for times of crisis or opportunity? If you don't have credit and a crisis hits, you might be in trouble. If an opportunity arises and you don't have credit, you might have to pass.
* "Do you or someone else review your profit and loss statement? The first thing I do when I go into a business is look at the balance sheet. A lot of times, they don't even know they are bankrupt."
What do veterinarians worry about? One of their leading concerns centers on employees. When BEEF asked veterinarians to list the two most pressing business management concerns facing their practice, employee issues surfaced more often than concerns about getting paid by their clients.
Veterinarians worry about finding enough staff. They worry about finding affordable technical assistants and finding lay staffers. They worry about training their staff, employee management and labor relations.
One veterinarian said he was concerned about "finding suitable people to work here." Another was concerned about "keeping good employees."
That puts veterinarians in the same boat as most other American employers. There often aren't enough good workers to go around. That problem may have been worsened in recent years by the booming American economy which gives quality workers, especially those with training, the ability to pick and choose where they want to work.
Several other trends surfaced in the BEEF survey. Few veterinarians cited inventory issues as a concern, while many cited concerns over collecting accounts receivable for goods and services.
In fact, veterinary consultants say both issues are important. "Many veterinarians could improve their profits without raising prices by improving their accounts receivable and inventory control," says consultant David Horn of Brakke Consulting. "Those are the big opportunities for most veterinarians to improve the profitability of their practice."
Time management issues were frequently cited by veterinarians as a pressing issue, though it isn't clear from their comments whether they were concerned about long hours or concerned that they weren't using their time effectively to maximize their income. Veterinary consultants say effective time management is one way to boost income.
If you ask veterinarians to list the most pressing issues facing their practice, you may get a very different answer than if you asked a veterinary consultant the same question.
For example, the BEEF survey found the most pressing issues facing veterinarians were in order of ranking - problems facing the beef industry, personnel issues, account collections, time management, client relationships, cash flow and profitability. Inventory issues ranked very low.
Veterinary consultants would agree that these are important issues. But they tend to see a much broader list of problem areas than the veterinarians they advise.
For example, veterinary consultant Marsha Heinke says typical problems facing veterinary practices also include:
U Lax inventory controls.
U Poor accounting systems to track income and expenses.
U Undercharging for veterinary services.
U Lack of advanced budget planning.
U Malpractice issues.
In the BEEF survey, veterinarians barely mentioned these issues or didn't mention them at all.