Most veterinarians experience a range of transitions throughout their professional lives--from buying into a practice partnership, to purchasing or starting a new practice, upgrading and expanding an office space, and planning a practice sale. Consequently, a veterinarian's financial support needs will vary during his or her professional lifecycle, depending on the type of transition.
For maximum success during these periods of growth and change, veterinarians should create an active 5-year plan by following these six steps:
- Map out key growth milestones. Create a plan that shows when you will launch your hospital, expand exam rooms, and upgrade equipment. Outline exactly how you want your career and hospital to grow, thus enabling you to prepare physically, emotionally, and financially.
- Identify a core team of reliable advisors who can support and guide you through the various phases of your career. Surround yourself with people you trust to help you meet your 5-year plan goals. Though members may change as your career evolves, your core group should initially include:
- Lender or bank: helps structure financing that fits within your budget
- Attorney: negotiates and drafts contracts, leases, and employment documents, and provides tax advice and planning
- Accountant: provides accurate hospital accounting and filing of tax documents
- Insurance broker: preserves hospital value by insuring it against loss
Develop a well-constructed cash-flow projection. Achieve profitability while demonstrating your plans for realistic hospital growth. Keep a monthly cash flow projection for 12 to 24 months, and an annual projection for 5 years. Update and regularly track your projections. Use this formula to project your net cash flow:
CASH FLOW PROJECTION
Estimated annual revenues:
Minus fixed expenses (rent, insurance):
Minus variable expenses (dental supplies, lab work)
Minus staff costs (salaries, benefits)
Minus cost of debt service
Equals Net Cash Flow
The resulting net cash flow figure may indicate a need to increase your annual revenues in order to maintain current standards or meet future goals.
- Maintain at least two revolving credit accounts to show you are credit worthy.
- Demonstrate you know how to manage credit wisely--do not use all the credit available to you.
- Do not apply for credit with too many lenders within a short timeframe, as this can negatively impact your credit rating.
- Always make on-time monthly payments to demonstrate you are reliable in paying back your loans.
If you're ready to talk about loan options for your practice purchase, start-up, expansion, or upgrade, call us at Wells Fargo Practice Finance to find out about our practice financing packages. As an AAHA member, you automatically qualify for preferred rates on competitive fixed-rate loans.
To learn more, call your Wells Fargo financing specialist at 866-4MY-PAWS (866-469-7297) or visit us at wellsfargo.com/veterinarians.
All financing is subject to credit approval and, as applicable, SBA eligibility.
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