Purchasing a veterinary practice may easily be the largest transaction you take part in. Whether you are looking to grow your practice, purchase an existing practice, or build your practice from the ground up, there are a few steps you’ll need to take to get started.
Veterinarian Practice Location
The location of your veterinary practice should not only fit your desired lifestyle but also fit within your community. You should take the time to understand the area’s demographic and interests as it relates to your practice’s business model. Does the community you are looking into have potential competitors? If so, how strong is the competition? What will differentiate your practice from the competition?
Understand What Veterinarian Equipment You Will Need
Once you have decided on a location, you’ll want to look into what equipment your practice will need. Updates and growth are expected with any new business, so focus on the equipment you will need right away. Updates to the practice and future equipment purchases can be done once the practice has established itself.
Securing Practice Financing
After you have decided on a location and determined the cost of the equipment your practice will need, it is time to begin exploring your financing options. Acquiring or starting a new veterinary practice is a big step. You’ll want to find a lender who is familiar with the veterinary space to help you with long term success. Below are a few ways you can finance your practice:
- Self Fund: Don’t be afraid to utilize any savings to finance all or part of your new practice. You shouldn’t empty out any emergency funds or retirement accounts. Any additional cash flow can be considered to use to get your business started.
- Home Equity: If you have enough, you can look into tapping into your home equity. Meet with your financial institution to explore the possibility of an equity line of credit, which will allow you to have access to cash when needed. The major benefit of using an equity line of credit is that you are borrowing at a lower interest rate. Although the line of credit will be used to fund your veterinary practice, keep in mind that it does place your home at risk if your business does not perform as forecasted.
- Traditional Loan: A traditional loan may require you to provide a down payment or collateral. If acquiring your practice, ask your lender about a cash flow loan. A cash flow loan allows for the lender to analyze the practice’s cash flow in order to determine the amount of debt the practice is able to support. Collateral are tangible assets that help secure financing for your practice. When providing collateral, you agree that the lender is able to take something tangible and sell it to get the loan repaid if you fail to. Collateral also makes it easier to get a larger loan and improve your chances of approval. A lender takes less of a risk on a loan that has collateral.
- Consider a Microloan: If your practice is only in need of a small amount of funds, a microloan is the way to go. Microloans are usually less than $50,000, short-term, and also have low interest rates.
Identifying the right location, equipment, and loan for your practice may take some time. Don’t let the location itself deter you from moving forward as you can still build your dream practice once you have established your practice by expanding or renovating to accommodate any growth.