3 reasons to start your exit plan today

Don't you get discouraged when you diagnose a pyometra and the animal's owner says, “I know I should have gotten her spayed … ” And isn't it downright depressing when somebody comes in with a pet with a large tumor that's later found to have accompanying lung metastasis, and the owner says, “I knew I should have come in when that mass popped up and started growing fast … ”?

It's hard to know what to say to those people. Yes, life is busy and pulls us in a hundred directions-family, finances, career and other obligations all contribute to procrastination. But to a certain extent, part of good judgment is knowing what can be put off and what demands immediate attention.

I see those lapses in judgment every day, as we all do in the practice of veterinary medicine. Remarkably, though, I also see it often in my veterinary law and consulting practice. Frequently, those same veterinarians who would like to give a stern lecture to their clients who postpone important prophylactic care for their pets call my office to try to fix problems resulting from their own failure to do sensible advance planning in their personal and practice lives.

The most frequent “wish I'd done something sooner” lament we hear is the all-too-common situation where a veterinarian (associate, partner, whatever) contacts us having signed an employment or shareholder agreement without first getting it reviewed by a professional advisor. The situation is always so much simpler when we look at a contract before it's been signed and placed into effect.

But nearly as common is the practice owner who calls us saying he wants to sell his hospital “as soon as possible.” I hate hearing those words. It's akin to having the owner of a 30-pound cat tell you, “He's started drinking constantly and I know we should have started cutting back his food years ago … ”

So let's look under the hood of the “I need to sell right away” scenario and see how it happens and what veterinarians can do to prepare for the moment when they're ready to bug out.

1. You're not immortal

It's almost like DVMs under the age of 55 feel exempt from the aging process. Whether it's due to the competition they survived while obtaining their degree or the holistic penumbra that surrounds work with animals, many veterinarians seem to deny that they'll ever cease to be young. I believe that feeling young is in general a healthy thing, but when a person subconsciously denies advancing age, he or she often procrastinates on business matters related to aging-and that's an unhealthy thing.

Whether you own a factory, an apartment building or an ownership interest in a professional practice, waiting too long to plan for its eventual disposition is a big mistake. Developing an exit strategy is comfortable and theoretical when begun at a relatively young age. It doesn't seem imminent so it can be approached logically and objectively.

But those previously immortal veterinarians who are suddenly faced with illness, an empty nest, colleagues and friends passing away, or other reminders that our time is finite can become fearful and tense about their chances of liquidating their practice interest. Those are not the sorts of emotions that lead to solid business decisions.

2. You could burn out

What isn't understood about professional “burnout” could fill a library. But two things I do know is that burnout is pernicious and it's insidious. Nobody plans on burning out, but anyone who owns a business, including a veterinary clinic, should plan for the possibility.

The importance of planning for adverse events rises with the stake we hold in elements of our present. If you own classic Corvettes and lose interest in them as you age, no problem. Just send them to an auction and pocket the proceeds.

If you lose enthusiasm for your partnership interest in a clinic or your solo practice animal hospital (but don't want to walk away until you receive its full value), you may pay a dear price if you want out fast and have no plan. Businesses and professional practices can be sold, but when one is sold in a rush or a panic, the price will almost certainly reflect the urgency. Remember October 1929.

3. Buyers might not love your small town

The provincial lifestyle in rural America is gradually disappearing. Hometown boys and girls don't stay down on the farm anymore. And for generations, these were the folks who, after obtaining a degree and a few years of experience, bought out the older practice owners in the small cities where they were raised.

Today, if you own a thriving clinic in metropolitan New York or Los Angeles, there may be a host of potential buyers out there, including other practice owners, big veterinary corporations and recent graduates looking to move to the big city.

But if you live and practice in a smaller city with limited entertainment offerings, lousy weather, a deteriorating economy or a lot of competition, practice buyers may turn out to be in short supply. They can be found, but the search may take time and may even involve cultivating a qualified associate.

The search for the right buyer, qualified both professionally and financially, can rarely be carried out successfully when the seller is desperate to escape his practice. Simple, sensible pre-planning for eventual sale of a veterinary hospital includes the following common-sense steps:

> Regularly have a qualified professional analyze the clinic's free cash flow. Is it realistic to think that a bank would lend money to someone interested in your practice?

> Advise your team that you're beginning a ”long-term search” for a successor so they don't get edgy when you have potential associates or buyers in to look over your hospital.

> Spend a few dollars keeping the inside and outside of the building nice. Your clients may tolerate a “vintage” look but potential buyers are more likely to want good curb appeal.

> Maximize contributions to tax-qualified savings such as IRAs and your 401(k) plan. Prepare for the chance that your hospital may not sell for the amount you need to fund retirement.

> Scan the available information on possible clinic purchasers. Might you cultivate a young competitor nearby? Does anybody at church or your favorite watering hole have a relative in veterinary school?

> Get to know the secretary at the nearest veterinary school admissions office. If an acceptance letter is headed to a kid in your town, four years later it might turn into an available associate. After that, who knows?