Developing a Strategic Business Plan for Your Veterinary Practice

Joe Horner, Extension Economist

Commercial Agriculture Program
University of Missouri
Columbia, MO 65211

to develop the business

in the future

Abstract
Food animal veterinarians are
faced with the need to adjust
their implicit or explicit business
plan due to rapid technological
and structural changes within
the beef, dairy, and swine
industries. Veterinary practices
that are proactive in identifying
threats and opportunities can
better position their practices to
benefit from the opportunities
while managing the threats
posed to their practices.
Business planning is a process
that compels the practice owner
to think of their business as an
integrated set of business
practices, focused on the
mission developed within the
plan. This paper seeks to
explain the process of
developing a veterinary practice
business plan, with an outline
and examples to guide practice
owners in developing their own
strategic business plan.

In this paper, it is assumed that

veterinarians are primarily
motivated by the second reason.
Business planning of any kind
compels the owner to think in a
systematic, integrated way about
their business. However,
business plans that are
developed with the goal of
attracting capital tend to spend a
higher proportion of their effort
in creating the financial section
of the business plan. Because
this paper is written for the
practicing veterinarian, it will
focus on the strategic segments
of the business plan for the
veterinary practice, and have
less emphasis on developing the
financial section of the plan.

What is involved in a
Business Plan?
Developing a business plan is
about thinking more than
writing. First, the planner
determines what he or she wants
the big-picture to be, based
upon their core competencies
and goals. Next, the blueprint
for the practice is developed
through a structured outline.
Over time a detailed,
comprehensive plan takes shape
as the pieces are knitted together
in an integrated fashion. Ideally
a business plan for a veterinary
practice is updated annually to
serve as a road map to the future
and as an audit to validate if the
practice is staying on the
planned course

Why Develop a
Business Plan?
There are two common reasons
to develop a business plan:
1.) To attract capital to the
business, either by
acquiring a loan or an
investor
2.) To complete a strategic
guide for creating
policies and practices

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There are several different

outlines available for developing
a business plan. All of them
basically are focused upon
describing the 3 Cs:
The Company
The Customer
The Cash
To create a complete business
plan usually takes 40 to 400
hours, and fills 10 to 30 pages.
Like a house, it is built once and
updated forever.

Basic Outline:
There are eight sections of a
business plan for a vet practice.
What needs to be covered under
each of the seven sections will
be elaborated in the following
pages.
Cover Sheet
Statement of Purpose
Table of Contents
Business Description &
Strategy
Financial Plan
Summary
Supporting Documents

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Cover Sheet

Table of Contents

This is an easy first step, but an

important one. The first page
should look clean, organized,
complete, and professional.
Whether the plan is strictly for
internal use or for capital
suppliers, the cover should make
the statement:
WE ARE A SERIOUS
BUSINESS.

Identify Core
Competencies

Develop
Business Plan

Identify
Opportunities

Services & Solutions

Competency

Target Market 1
Low Price
High
Volume

Target Market 2
Low Volume
High Price

Competency
2

Specialty

Spin-offs
From specialty

Competency

Include these items on the cover

sheet:

Caution: Thinking Required

Practice Name
Practice Address
Owners
Phone number of the practice
and the owners
Fax number
Web page
E-mail
Consider including a picture

The table of contents is the third

page, but is completed last. It is
simple, but it makes a powerful
statement: We are organized.
We do not waste time turning
pages.

Statement of Purpose

Business Description
& Strategy

The second page is another

simple step. A paragraph or two
on a page by itself defines the
purpose of the business plan.

The Practice: Identify Core

Competencies

For example:

Describe the practice:

Legal structure &
ownership
Location
Leases
Employees & job
descriptions
Facilities & layout
Hours of operation
Emergency practices
Equipment
Sideline businesses

This is the strategic business

plan for Hill Country Vet Clinic,
LLC. We are a two person,
mixed animal, veterinary
practice based in Anytown,
Missouri. The following pages
describe our practice, the
market it serves, our customers,
the core competencies we have
developed, the opportunities we
have identified, and how we
plan to take advantage of those
opportunities in the future. A
complete marketing and
financial plan, as well as the
supporting documents for our
clinic are included.

Describe the doctors:

Training
Employment contracts
Experience
List the core
competencies

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Target Market 3

Brief financial description:

Total assets,
liabilities, &
annual revenue

Population numbers &

demographics
Define the competition
List the competition &
map them
Define their strengths
& weaknesses
Estimated
market share by category

The Market: Identify

Opportunities
Define the overall market in
which you work
Geographic area Map
included
Farm numbers and
demographics
Animal numbers by
species
Map obvious animal
concentrations
STP -- Segmentation, Targeting &
Segment

Target

Identify market segments

Develop profiles of segments

Positioning

Select segments that are

attractive to your practice

Create solution for target

client based upon competency

Positioning
Based upon estimated profit
margins, volume of business,
and the core competencies of the
practice, choose which market
segments are most attractive to
your practice.

Segment the Market

Divide the market up into
different, easily definable
niches.
Typical ways to segment a
market include: Scale of
Business Operation,
Geographic, Demographic,
Income, Occupation,
Motivation, Life Stage, &
Loyalty.

Select the market segments that

your practice wants to target
going into the future.
Positioning the Vet Practice
In this step, one identifies
possible positioning concepts

Using Scale of Business& Motivation

to segment the market
Scale

Cow/Calf
1 to 40 hd.

Cow/Calf
Cow/Calf
40 to 100 hd. >100 head

Lifestyle

Market
Segment 1

Market
Segment 2

Market
Segment 3

No/Low
Input

Market
Segment 4

Market
Segment 5

Market
Segment 6

Cost Benefit Market

Analyzer
Segment 7

Market
Segment 8

Market
Segment 9

Motivation

Target the Market

for each of the targeted

segments.

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Develop and price a vet service

package for each of the targeted
segments.
Profile each Segment:
Thinking like a typical customer
of each market, develop a
profile for the client in each of
the niche markets. Define
exactly what veterinary services
each segment wants and what
the segment may be willing to
pay for that service.

The challenge with marketing

solutions instead of marketing
products or services is that the
customer must become the focus
of the marketing strategy. The
marketer must truly understand
his or her customers perceived
problem in order to package a
specific solution to that
customer.

Market Segment 1
Extract Income from
Opportunities

Typical Client:
They have cattle so their
children can grow up the same
way they did. He or she wants
convenience because the living
is made elsewhere. Time is
scarce. Cows may be named.
Treat like a companion animal
customer. Will pay for
prevention. Mr. Dont hassle
me, heres a check!

This is the heart of the

business plan, where all the
thinking ties the pieces
together
After the description of the
practice and the market, the vet
business plan details which
segments of the market are
going to be targeted and how. A
brief description is made of how
each particular vet service
matches the practices core
competency with a target
markets needs.

Traditionally, businesses were

defined by whether they were
products or service oriented.
Today, many effective
businesses realize that
marketing a solution to a
problem is a more effective way
to package and sell their
combined products or services.

Financial Plan
The three financial statements
listed below are part of a
standard business plan.
Existing practices that have an
ongoing relationship with an
accountant may simply request
that an annual income statement,
cash flow statement and balance
sheet be prepared for inclusion
in the business plan.

Solutions to customer
problems may be easier to sell
because it may be simpler to
communicate the value of a
solution than it is to
communicate the value of a
service or product. Also, firms
often find they can charge
higher margins for solutions
than either products or services
due to the fact that customers
have more difficulty comparing
prices against head-to-head
competitors.

Incorporated practices are most

likely to have these statements
already prepared. For those
practices that need to prepare
the statements themselves,
simple guides are available from
some of the business planning

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web sites listed in the resources

at the end of this paper.

A simple one-page summary of

the overall business plan is the
final touch before attachments.
It is a final opportunity to make
an integrated, cohesive whole
out of all the different pieces
that have been fitted into the
business plan for the practice.

Income Statement:
An income statement or profit
and loss statement is an annual
accounting of profitability. It
includes cash income and
expenses as well as changes in
inventory and non-cash
expenses such as depreciation
and amortization of goodwill
from purchasing an existing
practice.

Supporting
Documents
This section may be altered
depending upon whether the
purpose of the business plan is
to secure capital or to guide
internal strategy.

Cash Flow Statement

A cash flow statement lists the
sources and uses of cash during
the year. Operating income and
expenses are listed as well as
new borrowings, debt
repayments, and capital
infusions and withdrawals. A
monthly, quarterly, or annual
cash flow statement is prepared
depending upon how critical
cash management is to the
business. Projected cash flow
statements are normally part of a
loan request. They can be easily
prepared by editing last years
actual cash flow statement to
reflect expected changes in the
coming year.

Typical attachments may

include:
Resume(s) of doctors & owners
Partnership, LLC, or
Incorporation papers
Employment Contracts
Leases
Loan Information
Demographic Source Material

Business Planning
Resources
Small Business
Administration
Business planning website,
with downloadable outline
file.

Balance Sheet
A balance sheet is a complete
detailed listing of assets,
liabilities and owners equity.
Normally it is best done at the
end of the practices fiscal year
so that it can be aligned with the
income tax return to analyze
progress.

http://www.sba.gov/starting/inde
xbusplans.html

Iowa State/Vet
Information Network
Online Course for Veterinary
Entrepreneurial Training
http://www.vetmed.iastate.edu/d
epartments/bms/academics/wvet
/pages/learn.asp

SCORE
Service Corps of Retired
Executives

Summary

http://www.score.org/

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Missouri Small Business

Development Centers
http://www.mosbdc.org/index.shtml

Missouri Business
Development Network
library, includes many
useful forms and
checklists.
http://www.missouribusiness.net
/library.asp

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