Location, Location, Location

location-location

Australia has one of the highest rates of pet ownership in the world. So does it really matter where you buy a vet practice? By Heather Vaile

The short answer is yes.

However, a steady increase in the number of vet graduates over the past 15 years combined with the growing corporatisation of the industry is creating a more difficult market for buyers, especially younger vets still burdened with student debts.

So what should you be doing to get your paw in the ownership door? And where can you buy or set up a practice that won’t take you nine lives to pay off?

Dr Phil Thomas is a busy reproduction specialist who owns seven general veterinary practices in Queensland. He is also a part owner of Queensland Veterinary Specialists (QVS) and an emergency clinic co-located with the specialist practice.

He says finding the right location is “absolutely vital” and “the practice tenure, the tenure on the physical location, is the single most valuable thing that any of us actually has.”

But it’s “definitely getting harder” to find the right spot.

“I would say most young vets aren’t opening up practices from scratch in suburban areas anymore because the footprint has already been taken up or Greencross or National Veterinary Care (NVC) have opened up. It’s difficult to get a clean geographic location without someone having captured that client group already.”

According to industry forecasting firm, IBISWorld, market concentration of veterinary practice ownership will continue to increase over the next five years and the leading four companies in the market will account for 18 per cent of industry revenue by 2020-21. Many vets are finding they simply can’t compete with the big corporates’ purchasing power.

When asked how close to another practice is reasonable, Dr Thomas says without missing a beat: “three kilometres away.” Then, as a lightning-fast afterthought, adds: “Well, the truth is you can be right next to another practice as long as you’re better than they are—but if you want clean air, I would say in a suburban area, something around the vicinity of a three-kilometre radius leaves you safe.

“Do demographic research … You can extrapolate from human demographics to assume pet demographics.”—Dr Phil Thomas, Queensland Veterinary Specialists

“Now, plenty of us have neighbours that are much closer than that. Some vets even have Greencross just one block away. But we have quite a different offering to what they’ve got.”

So what advice would he offer potential buyers?

“All of the existing suburbs in metropolitan areas are all going to have practices in them, so you’ve got to find where the practice growth is happening—on the outside of cities or in regional areas where there is likely to be population growth.

“Do demographic research and find out where new suburbs are being built. You can extrapolate from human demographics to assume pet demographics. The socio-economic group of the owner is not vital; what matters is human body numbers.

“And in my opinion, the best suburbs are standard, boring middle-class suburbs.”

“Alternatively, you could find a practice which seems to be doing a poor job or has a practitioner that is not servicing their clients particularly well and compete directly with them. It can really be as brutal as that.”

He also points out that not all practice sales are advertised.

“New vets could approach a vet who has a practice where they want to be, and say ‘I’d like to buy it’ or ‘I’d like to join you’ or ‘would you like a partner?’

Dr Tony Thelander is the principal of ValuVet, a national veterinary consultancy  and clearing house that handles the brokerage of practice sales.

While he agrees that the location of a veterinary practice is important, Dr Thelander says that many vets are able to run very successful practices in ordinary suburbs, primarily because they market their services so well.

“A less exposed position with parking for clients with nervous animals is preferable to a more exposed position without it.”—Dr Tony Thelander, ValuVet

“The main thing is to match your skill set as a vet with what is in demand and pitch your services to the relevant community,” he says. “Look up demographic information about suburbs that interest you on Google or visit local town councils and real-estate offices.”

And while having good street visibility is advantageous, he sees practices on busy roads without accessible parking as problematic. “In my experience, a less exposed position with parking for clients with nervous animals is preferable to a more exposed position without it.”

Dr Thelander also points out that internal pathways to ownership are still possible for young vets. “But you have to make sure you show the existing owner that you are partner material. And that means not just working nine-to-five.”

Dr Steve Anich currently owns two practices, one in Drummoyne in the inner west of Sydney and the other in semi-rural Dural, 36 kilometres north-west of the city.

He joined the Drummoyne practice in 2007 and was able to buy it just 15 months later. The previous owner had become unwell and wanted someone he could really trust to take over.

One day in 2012, a rep visiting Drummoyne mentioned that a little practice with a separate house was on the market at Dural. The owner wanted to retire and move after 40 years on the job.

Although Dr Anich was not actively looking to buy a new business, the idea of a ‘renovator’s delight’ sounded attractive. Sydney property prices were going through the roof, and the Dural property plus business was going cheap.

After doing a little research into the suburb’s demographics, Dr Anich decided to buy the practice and renovate.

Four years down the track, Dr Anich says revitalising the old clinic has been hard work but overall, he sees it as a good long-term investment.

“My advice to potential owners is to perhaps not to be as spontaneous as I was,” he says. “Think very carefully about where you want to buy and whether you are willing to move there. If not, consider how the commuting might affect you, especially if you’re already working long hours.”

Vet Practice magazine and its associated website is published by Engage Media. All material is protected by copyright and may not be reproduced in any form without prior written permission. Explore how our content marketing agency can help grow your business at Engage Content or at YourBlogPosts.com.

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