Matthew Gillman is a business financing expert with more than a decade of experience in commercial lending. He is the founder and CEO of SMB Compass, a specialty finance company providing education and financing options for business owners. Learn more at smbcompass.comRead Articles Written by Matthew Gillman
It’s no secret that running a successful veterinary practice can be costly. You must think about the costs associated with payroll, medicine, supplies, utilities and rent. Not to mention unforeseen expenses such as clinic repairs or equipment replacement. When you’re barely keeping afloat financially, there’s not enough leeway for emergencies. But, more importantly, mapping out your veterinary practice’s expansion is difficult when you have only “just enough” in your bank account.
Since it’s the start of 2022, how about shaking things up and investing in the growth of your practice? You’ve likely heard the adage “You have to spend money to make money.” So, now might be the time to secure additional financing to move your business forward.
Here are five reasons why your practice might need financing in 2022.
1. When Making a Growth Decision Is Difficult
Having enough working capital is crucial to your practice’s financial health. Without it, your options to grow are limited. For example, you’re unable to open a second clinic, you cannot afford to hire more team members, you can’t offer more veterinary services, and so on.
That is why many business owners opt for financing: to build enough working capital to enable them to pursue their ambitions. Taking out a loan can help you make the growth decisions you usually put on hold when you have a limited budget.
When you have enough money in your account, planning the next business step is easier. You also enjoy discounts from suppliers when you can afford to purchase in bulk.
2. When Cash Flow Is a Problem
A lot of small business owners have difficulty managing their cash flow. Look at your inventory. Are all your products moving? Are clients paying on time?
You might not see how cash flow issues damage your practice’s financial health, but they can be problematic when you factor in the operational costs and time spent managing them.
That is where additional funds come in. They allow you to maintain a healthy inflow and outflow of cash. You can easily withdraw money from your account when profits are low. You can adjust your supplier orders when a particular product is in demand. You can restrategize your marketing efforts during peak seasons.
Loans help keep your money flowing at a steady state so that you won’t have to worry about driving revenue.
3. When You’re Not Getting Enough Clients
No matter the business, you need to be where the customers are. That means you must establish your presence on social media.
According to the 2021-2022 American Pet Products Association’s National Pet Owners Survey, 70% of Americans own a pet — the equivalent of 90.5 million homes. In addition, a Statista survey revealed that millennials are the No. 1 pet-owning generation (32%), which is higher than baby boomers (27%) and Gen Xers (24%).
Forbes explained the trend as “Millennials are on their way up in terms of income and spending, while boomers are trending down.” But beyond their spending power, millennials are likely to boost the pet industry with their “overwhelming passion for pets.”
Those facts tell you about the market you should attract to find more revenue. All you must do is be present in the channels where millennials spend money.
A 2021 survey by CreditCards.com found that 72% of millennials feel the impact of social media on their buying decisions. By comparison, Gen Z was at 66%, Gen X at 49% and baby boomers at 45%.
In essence, if you want to expand your practice’s reach and get more clients, you need to be on social media channels like Facebook, Instagram and TikTok to reach them. However, while those social platforms are technically free, maximizing the results will require a practice owner to pay for advertisements, which can be expensive.
One of the benefits of getting financing is you can use it for marketing and social media campaigns that attract specific pet owners. Not only that, but you also get to customize your veterinary clinic for when you launch in-house promotions and client events.
4. When Your Equipment Needs Replacing
Like any medical device, what you use most is prone to damage and might wear out over time. The question is, do you have the money to repair or replace your equipment in the event of a malfunction?
Alternative financing can help you purchase new equipment. For example, equipment financing allows a practice owner to buy or lease using staggered payments rather than a one-time outlay.
Most small business owners get equipment financing because it’s much easier to qualify for, and the equipment purchased or leased serves as collateral.
According to Jay Katz, DVM, of Northlake Animal Hospital in Lake Park, Florida: “With the rate veterinary medicine is growing, additional capital for equipment will allow additional revenue streams and practices to increase revenue and profitability. Overall, adding capital through financing has allowed us to hire and grow at a pace we simply wouldn’t have been able to do without it.”
5. When You Constantly Run Out of Inventory
Empty shelves are usually a good problem because you know your products are in demand. However, clients can be turned off if your shelves are always empty. They might look for someone who has enough stock to fulfill their needs.
When it comes to managing inventory, find the right balance. First, understand your clients’ purchasing behavior. Which products do they always want? What brands do they trust? Which products move fast, and which ones lead to obsolescence?
If costs are the problem, buying in bulk will almost always solve it. Additional financing could help you purchase high-demand goods in bulk, saving you money and time.
If you believe your veterinary practice is ready to take the leap in 2022, getting a small business loan will go a long way in helping you. Just remember to plan where you’re going to use the money and discuss your unique needs with the lender.