In search of the new normal

Since the stock market fell off a cliff in October 2008, it has made a steady climb back. Is it time to buy? Or is the stock market again scaling another wall of worry?

In the years prior to the market meltdown, a real-estate bubble had been slowly building. When it finally blew, it had swollen beyond recovery, fueled by easy credit and creative financing available to any creature with a pulse. In the United States, the cumulative result has been a large drop in personal wealth. Americans collectively lost some 12 trillion dollars in assets. This loss over a short period approximates the annual GDP (gross domestic product) for this country ($14 trillion; see Suggested Reading 1). The numbers are incomprehensible.

What are the concerns?

• Accelerating personal and public debt

• The shrinking value of the U.S. dollar

• Constipated consumer spending (which accounts for 70 percent of our national economy)

• Tightening credit for small business and startups

• Overall drop in real-estate values for businesses and consumers

• The average American household losing 22.8 percent of personal wealth over the past 18 months (as of November 2009; see Suggested Reading 2)

• Ongoing mortgage defaults

• In the last year, 17 trillion dollars or its equivalent being spent to prop up the global economy (Bloomberg News, Nov. 2009)

• Loss of 3.6 million U.S. jobs over the past 12 months.

Questions everywhere you look

What does this mean for veterinary practitioners? Will the value of our homes and business real estate return to pre-2008 levels? Is it time to sell or buy? Will we ever get back to normal? Can we ever agree on a new normal? What's the answer? Well, no one knows. Welcome to uncharted waters. After all, negotiating through the current economy is akin to driving through fog (without a GPS, compass, sextant, crystal ball ... just instinct).

If there are no answers to the aforementioned questions, then should we freeze up and do nothing? No, we cannot freeze up. And something certainly can be done.

Paralysis with analysis

We must shore up our ability to provide exceptional service. Veterinary medicine is a service business, and exceptional service will win out over income reports and financial trend analysis any day. That is not to say that a little financial analysis won't be of help. After all, business analysis serves a crucial role, but its exclusive use in the current economic climate is like looking in a rear-view mirror while driving into a long, dark tunnel. Trend analysis and computer modeling didn't help the banks, Wall Street or Washington. In fact, they didn't see it coming.

Facing reality

We are facing the twin realities of high unemployment and consumer nervousness. It is time for everyone to take a deep breath and look for ways to improve relationships with existing clients in order to provide some of that old "mom-and-pop" service from the olden days.

These include:

• Being more available to clients

• Not putting customers on hold for longer than two minutes

• Making sure that clients do not have to wait for long periods of time to see the doctor

• Making that extra phone call

• Fixing communication issues with clients early on

• Learning to admit mistakes to clients when you err. (Most lawsuits are communication breakdowns.)

• Providing more flexible hours

• Hiring people-oriented staff with talent

• Remembering the names of clients and their pets

• Getting more involved in the community

• Not letting technology come between you and your client. (E-mails will never replace a personal conversation.)

We can only affect those areas of our professional lives that we have direct input into. Worrying about the economy won't do you any good. The economy will work its way out in time. Nonetheless, it is still the great unknown.

Here are some more questions that can be answered with a yes.

• Will our practices be affected?

• Will there be a need to make adjustments in our financial expectations for the short term?

• Will there be hard sledding ahead?

• Will our practices survive? (Some will, some won't. But that has always been true.)

Have you noticed?

If service needs to be improved in order to overcome the current crisis, why is it sometimes so elusive for so many businesses? Go to many restaurants, and you will find fewer servers. Go to the mall and peek inside a few of the stores. There is a paucity of staff, and it's everywhere.

In this economic climate, business owners are reluctant to take on new employees. They are either laying people off, not replacing workers that leave or not hiring at all. The slow down is impacting our profession as well. Many practices are not hiring. New grads are finding jobs but with fewer choices in today's labor market. Could this lead to problems for the nation's veterinary offices? Yes indeed, especially if service is sacrificed. The bottom line is that less service leads to less customer satisfaction, and that leads to fewer sales.

The service conundrum

The partners at Elsewhere Veterinary Hospital noticed that it is taking longer to process patients. Clients have to wait longer to see the doctor.

This practice has a productivity problem. This loss of productivity could be the result of inadequate staff numbers or improper scheduling of current staff. The conundrum is that if client visits are down (which they are for most veterinary hospitals), then those payroll checks start to seem very expensive. Employees do cost a lot of money, and new taxes and new employee-related costs for small businesses are coming soon. This makes the average hospital owner very nervous. Reducing staff numbers looks tempting. The downside of low staff numbers is this: Customer satisfaction is correlated with proper staffing. Therefore, the solution is not to lay people off, but to find an optimum schedule to provide exemplary service to your clients.

Out of necessity, many owners serve as a full-time practitioner and manager. They try to manage "on the fly." And it is mostly inefficient. Do your clients wait while your staff is on the telephone with your vendors or other clients? Keep in mind that back-ups and long wait times due to understaffing may cost you good clients. The solution is to do as much management work as possible when clients are not in the waiting room. If your client backup persists, you may be better off hiring a hospital manager, adding efficiencies in the systems and still offering a thorough work-up. For several years, the consumer in America has been a jester. The consumer is once again king.

The new road

What a great time to be a consumer with cash. Everything is on sale even if it doesn't say so. Houses and cars are cheap compared with three years ago. Consumers want greater quality, greater value and more attention. And they will get it from smart business owners. There is a significant lesson here for practice owners — those who have bent over backwards for their clients are well prepared; those who have been kiting along getting adequate financial results with sloppy management and poor client relations during the good times will be in for a big shock.

This economy and recovery put us all on a new road. This new road has no maps and is currently unmarked. We don't know yet where it leads. But if the future is anything like the past, veterinary medicine will find its way just fine. But to succeed, we need to focus on offering better service than ever before.

Dr. Lane is a graduate of the University of Illinois. He owns and manages two practices in southern Illinois. Dr. Lane completed a master's degree in agricultural economics in 1996. He is a speaker and author of numerous practice-management articles. He also offers a broad range of consulting services. Dr. Lane can be reached at david.lane@mchsi.com

For a complete list of articles by Dr. Lane, visit dvm360.com/lane