Keith and I wrote a Blog in November 2021 with our views on the start up market, which was at an early stage following the pandemic. Almost two years later we would like to update our thoughts and observations.
In simple terms, the “trend” has become a strong reality. We are often receiving up to three new enquiries each week regarding starting up a new practice. This includes both young vets and those of more mature years. Practices types range from first opinion small animal, to complex referral practices under the leadership of highly experienced vets with appropriate expertise.
The easy and probably lazy answer to why this is happening, is a move away from the “corporate” model. There is much comment in the press about vets and clients not enjoying the corporate experience. Whether this is just an “urban myth” or not is somewhat immaterial. The fact is that we are seeing more and more people wanting to start up their own independent practice.
There is no doubt that there is a strong demand for veterinary services that is still not being met in full. The significant increase in pet ownership, particularly dogs and cats, that took place during and following lockdown has meant demand has increased at a time when the number of vets has decreased, in part due to Brexit.
So, whilst the picture looks very rosy for new practices, there are additional challenges that have come along since the back end of 2021. The first of these is the cost of living “crisis”, that is affecting most households in the country. As prices of food, for example, have risen, disposable income has suffered and discretionary spending tends to be directed towards essentials.
Allied to the previous point, the cost of borrowing money has increased. In November 2021, base rate stood at 0.1%, whereas as I write today, the rate is now 5.25%. This affects vets in two ways. Clients have less disposable income and your own cost of borrowing is appreciably higher than two years ago. We have also seen the cost of raw materials rise significantly and thus alteration and refurbishment costs are that much higher than in 2021.
All these matters have to be born in mind when starting to plan your new start up practice. As we always say, a thorough business plan and robust financial forecasts are essential if you are to convince a funder to support you.
Given all these challenges, you may well ask if it is still a good idea to look at a start up. Our opinion remains positive in this respect. All the clients we have helped over the last two years are doing well, some of them incredibly so. We have a number of clients who have kindly been willing to speak to other vets that are thinking of taking the plunge. They have provided a “warts and all” commentary on what worked for them and what they would do differently with the benefit of hindsight.
In summary, if you are even considering starting you own practice, do please contact us. It is never too early to have that initial discussion and we are likely to be able to save you considerable time through pointing you in the right direction and discussing your plans.