What has happened in other professions, including dentistry and optometry, is now happening in veterinary. So, what can independent operators learn from big businesses? By Chris Sheedy
Despite its recent share price woes, Greencross’s corporatisation of the veterinary industry in Australia has been a success. With over 130 clinics and over 200 retail stores around the country, acquisition rates have been impressive. No matter where you stand on the matter, the experience of corporatisation for the industry tosses up a lot of interesting and valuable questions and lessons. One of those is around why so many vets running independent practices have decided to take the corporate path.
For veterinary business consultant Jane Bindloss who, with her veterinarian husband, owned Pets At The Vets in Melbourne’s North Ringwood, the decision to sell to Greencross was simply to do with timing.
“We believed ours was a model veterinary practice,” says Bindloss, who is now director of Sane Management Solutions for Veterinary Practices. “We focused very much on team strengths amongst staff, and on doing what was best for the pet when it came to customer service and pet welfare. But my husband was due to retire and I was focusing more on Sane at that time, so it was a good opportunity for us when Greencross came along.”
After selling to Greencross, Bindloss stayed with the business for a further six months and her husband stayed for another two years. In that time they witnessed first-hand the offerings of the corporate space.
Because their practice was already well managed, there were few immediate and obvious benefits of the corporate model. But for a business that is in need of management assistance, she says, there are several learnings to be taken from the corporate world.
“If a team within a practice does not have strong, shared core values then the introduction of such values can be a wonderful thing,” says Bindloss, who has held the positions of national president of the Veterinary Nurses Council of Australia and president of the Australian Veterinary Business Association. “But if a team has had deeply entrenched, shared core values for several years, the introduction of new values delivered down from an external management can be difficult for the team to adopt.”
Also, the introduction of centralised data services, inventory control, staff management systems and other processes that reduce staff workload and increase efficiencies can be a blessing for a struggling vet practice. It is these systems that often attract practice owners to corporates in the first place, Bindloss says. However, such efficiencies can also be a great benefit for independent practice owners who can implement similar systems without selling up.
“In the last few years we [Bindloss and Sally Boyle, her business partner at Sane Management Solutions for Veterinary Practices] have recruited about 10 business managers for veterinary hospitals,” she says. “These are people with an MBA who are logging in at $100,000-plus. That decision is usually a result of us working with a practice for one or two years and coming to the conclusion with the owners that they really do need a business management expert on board.
“We also often recommend the outsourcing of such processes as payroll and bookkeeping. At the end of the day, managing people is a time-consuming job. If you want a healthy team, you have to apply yourself. Sometimes owners are not the best people to do that because they don’t have the training or they don’t have the desire.”
Playing it safe
Dr Greg Chapman, award-winning author and small business transformation expert from Empower Business Solutions, says people in various industries are often attracted to buying or selling into a franchise or corporate model because it’s a safer, easier way of going into business.
“You’re buying a business in a box,” he says. “Everything is laid out. You pay for it, of course, but everything you need is there and a lot of the marketing is done for you. But you also have to follow the rules because the bigger business doesn’t want you to damage its brand. So, they want the service provided in a particular way. That’s not to take away from their model at all—I’m sure it’s quite good. But for some people, they might feel it’s more of a straitjacket. They might be more entrepreneurial and want to try different things. And of course, they’re always paying franchise fees.”
Chapman agrees with Bindloss that the corporate model introduces many valuable lessons for independent operators. If you buy a franchise, the franchise owner hands you a book on how to run the business, he says. They provide training and guidance to assist in running the business and to ensure your business is compliant. If you build your own practice, you have to write your own manual, and that will happen a lot more quickly and successfully if you borrow some ideas from the corporates.
“Think of things like the policies and procedures around how you take payment, what are your policies on credit, what are your staff management and HR policies, etc,” he says. “If you somehow got your hands on a copy of the corporate manual, you would probably do well to go through it and take two-thirds of the content—all of the back-office stuff around managing the finances, ordering supplies, managing staff, etc. Then the other third would be about doing your own thing, doing things your way.”
‘Doing things your way’ is the likely reason a practice owner would choose not to sell into a corporate, while the argument for the corporate model is often around not having to do the things you don’t enjoy doing. But there is plenty of ground in between, Bindloss says.
“There is an absolute need for management support for veterinary practices in Australia,” she says. “This is well known in the industry, and it is an issue internationally, too. But vets in Australia are doing quite well. We’re doing much better at it now than we did five or six years ago. We have acknowledged that certain things are not a part of our core business expertise or are simply not things we want to do.
“So, we are outsourcing and we are taking in people to help us, and when a practice decides on this strategy, the effects are immediately obvious.”