How to survive a partnership

When two former veterinary school classmates teamed up to open a practice in Connecticut several years ago, neither one expected the union to end in all-out client confrontation. But it did—in the parking lot shared by the doctors after they eventually separated. When the partners finally decided to go their separate ways (I don't know all the details, but I suspect a woman was involved), they didn't go far. Instead they opted to set up rival practices next door to each other, allowing them to keep an eye on which practice their once-mutual clients preferred. I heard that one doctor even accosted a client as she entered the opposing practice.

As a consultant, one of the worst things I deal with is dysfunctional partnerships—those situations where one partner sees white, the other sees black, and no one is willing to look for the gray. What comes between partners doesn't really matter. What's important is how they handle their differences. Poorly managed partnerships bring the whole practice down, from the doctors involved to the staff and clients. But well-managed relationships benefit everyone—especially you. To avoid the pitfalls of partnership, follow my advice below.

TEST YOUR COMPATIBILITY

You must look at a partnership as a professional marriage. In fact, you'll probably end up spending more time with your business partner than your spouse. I strongly suggest that you work with someone at least three—ideally five—years before you offer the option of partnership. You need to like this person. You don't always have to agree, but you must respect each other well enough to agree to disagree. In the last year or two of this "anniversary" period, treat your potential partner as though he or she were already an owner. Bring this person into the decision-making process. Delegate responsibilities and observe how your potential partner works under pressure and deals with difficult issues that affect the practice.

I recently met two individuals who were considering partnership. One of them, the current practice owner, had been at the practice for over 20 years, while the other had worked there only the past three years. The associate wanted the practice to switch from its current yearly vaccination program to adopt the newer vaccination guidelines, but the practice owner was apprehensive, fearing loss of income.

It was interesting to watch the two work through the situation. The associate was careful in her approach and took her time discussing the proposed change with the owner. She didn't take an attitude of "I know better than you" but instead was courteous and respectful. Slowly the practice owner came to agree with her point of view and eventually made the change. The new policy went into effect without a hitch. And more importantly, the two of them worked through a touchy subject and did it well. This partnership has great potential.

THINK LONG-TERM

Many sole owners ask me why they should even consider partnership. Things are going well, they say; they get to maintain complete control over their practice, don't have to ask anyone for permission, and make a pretty good living. Sounds great, doesn't it? But what happens if you die, become disabled, or for some other reason can no longer practice? What will happen to your practice then? I'll tell you what might happen. The practice could sit dormant for months while your spouse mourns your death, its value deteriorating all the while. When your spouse does finally decide to sell the practice, only the equipment and real estate will have retained value. Not a pretty picture for your family.

On the brighter side, what if you want to sell your practice or initiate an exit strategy? You need someone to sell to. If you have a partner, you can gradually sell your practice shares to him or her, have an exit strategy in place, and maybe even sleep better at night.

MENTOR YOUR PARTNER

Another good reason to bring on a partner is to mentor him or her into the position of ownership. Those of us who own businesses know that it's not easy. If you're going to sell your practice to one of your associates, it behooves both you and that person to know how to run the business so the practice continues to be successful. Even simple things like paying bills or scheduling employees may be foreign to an associate. I teach at many veterinary colleges and am amazed at how many students don't know what a bank reconciliation is. We need to mentor our future practice owners.

To help bring associates into management, I like to break up the practice into three or four divisions: operations, finance, marketing, and facilities. Each owner takes on responsibility for one or more of these divisions, becoming its director.

> The director of operations is responsible for personnel, employee scheduling, and the scheduling of surgeries and appointments.

> The director of finance oversees the practice's accounting, inventory control, payroll, insurance, and regulatory issues.

> The director of marketing ensures that reminders are sent out and handles practice promotions, charitable activities, advertising, and team education.

> The director of facilities manages the physical plant, hospital cleaning, kennels, security, maintenance, equipment, and leasehold improvements.

In overseeing these divisions, the doctors don't actually do the inventory control or send the reminders, but they do work with the individuals who perform these tasks. When associates are in a director position, they learn how this area of practice operates and are therefore much more prepared when they finally do own the practice. It's a slow and gradual—but highly effective—way to mentor a new associate into ownership. I suggest that directorships be rotated among associates every six months or annually so that everyone learns all aspects of the practice and its management.

TAKE YOUR TIME

Don't rush into partnership. Get to know how your potential co-owner thinks and acts. We all act differently as partners than we do as employees, and veterinarians are no different. I have personal experience with this process. In the last few years I've taken on a partner in my own business—Sheila Grosdidier, RVT—and it's the best thing I've ever done. Sheila is the best partner in the world. No, we don't always agree, but we do respect each other and can work out our disagreements. She's taken our business to a completely different level than I could have achieved on my own.

Don't let partnership be one of the biggest mistakes you'll ever make. Make sure you give it time. If you feel something is wrong with the individual you intend to partner with but can't quite put your finger on the problem, listen to that inner voice. More times than not, it will be correct.

Mark Opperman, CVPM, Veterinary Economics' Hospital Management Editor, owns veterinary consulting firm VMC Inc., in Evergreen, Colo. Please send questions and comments to ve@advanstar.com.