How to Budget for Your First Year as a New Veterinary Practice Owner
Starting your own veterinary practice can be an exciting journey, but securing financing is often one of the process's most significant (and intimidating) steps. Many new practice owners don’t have large cash reserves or private investors, so financing is usually necessary. Working with financial experts and veterinary consultants can help you make informed decisions that support your long-term success.
Here are five essential questions to consider as you plan your financing journey.
1. What Will I Need Financing For?
Before diving in, assess strictly what expenses will require financing. Here are some major categories:
Practice Space: Your first decision will be where you’ll practice. This could mean purchasing an existing clinic, leasing a new space, or even constructing your facility from the ground up. Some veterinarians also consider buy-in options at practices where they’ve been associates or even franchise opportunities.
Equipment: Equipment expenses can add up quickly. Think x-ray machines, exam tables, surgery lighting, dentistry units, and computers. Many lenders offer capital leases to alleviate upfront costs, letting you pay over time and start generating revenue sooner. You could also explore high-quality used equipment on platforms like usedvetequipment.com, which can provide substantial savings.
Daily Supplies: Daily supplies—such as pharmaceuticals, syringes, cleaning agents, gloves, and more—are essential for smooth operation, but they’re recurring expenses that can add up.
Operating Costs: Besides equipment and supplies, ongoing costs include salaries, insurance, utilities, and more. Factoring these into your business plan is crucial for understanding your monthly expenses.
2. How Much Can I Afford to Live On?
Realistically, your practice might not turn a profit for the first 1-3 years. You may not be able to draw a regular salary during this time. Consider how this financial reality will impact your life, especially if you have personal financial responsibilities like dependents or other expenses.
Purchasing an established practice can sometimes mean quicker revenue, as you’re starting with an existing client base. However, building a practice from scratch may require a longer timeframe to become profitable. Understanding your financial tolerance—and having a personal financial plan—can give you confidence as you take on the demands of a new practice.
3. How Will My Student Loans Affect My Financing?
Veterinary lenders generally don’t require you to have your student loans fully paid off before you apply for a practice loan. Still, your student debt status matters—lenders are unlikely to approve a practice loan if your student loans default. Remember that you must account for your student loan payments in your personal budgeting and financial planning.
If you’re uncertain about how your student debt might impact your financing options, don’t hesitate to consult a financial expert to explore your eligibility and options.
4. Do you know where I can find the Right Lender?
Some lenders specialize in veterinary practices, and they can be an excellent option because they understand the field's unique financial needs. On the other hand, Small Business Administration (SBA) loans offer flexible terms and government-backed security, making them another viable choice.
When assessing lenders, compare factors like:
- Required down payment
- Loan term and interest rates
- Fees and penalties
- Options for graduated repayments (small initial payments that increase as your practice grows)
A business plan and financial projections are typically required, so be prepared to present these documents when applying.
5. How Can I Navigate the Financing Process?
Even though starting a practice involves uncertainty, planning, and preparation can help you make informed choices. Consulting with a CPA, a veterinary management expert and a demographics professional can provide valuable insights. These experts can guide you in developing a business plan and financial projections to support your financing application.
Investing in expert advice, along with doing your own research, will pay off as you move toward achieving your practice ownership dreams.
Feel free to contact me if you need personalized guidance on securing financing for your practice. I’d be happy to help.
Brad Haven, Jr.
530-722-4977
