Should You Buy or Build a Veterinary Practice?
Veterinarians interested in practice ownership generally have two primary paths: buying an existing veterinary practice or starting a new one. Both options can provide opportunities for ownership, but they involve very different financial and operational considerations.
For veterinarians considering veterinary practice financing, comparing the two approaches can help determine which option better fits their goals and financial situation.
Buying an Existing Veterinary Practice
Purchasing an established practice provides immediate access to an operating business.
The practice may already have clients, employees, equipment, a facility, vendor relationships, and established systems.
Starting a New Veterinary Practice
Building a new practice gives the veterinarian greater control over the business from the beginning.
The owner can select the location, design the facility, choose equipment, establish services, and create the operating model.
Existing Client Base
One of the biggest advantages of buying an established practice is an existing client base.
A new practice has to develop its client base after opening, which can take time.
Established Revenue
An established practice provides historical financial information that can help a buyer evaluate the business.
A startup does not have an operating history, making future revenue more dependent on projections and assumptions.
Greater Control With a Startup
Starting from scratch allows the veterinarian to make decisions without inheriting existing systems or processes.
The owner can build the practice around their preferred workflow, technology, services, and patient experience.
Location Considerations
A buyer may be limited by the location of practices available for purchase.
A veterinarian starting a new practice can select a location based on demographics, competition, accessibility, visibility, and expected demand.
Facility Design
An existing practice may already have an appropriate facility, reducing the need to design and build an office from the ground up.
A startup provides the opportunity to design the facility specifically around the owner’s needs.
Equipment
An established practice may include equipment as part of the purchase.
However, buyers should carefully evaluate the age and condition of that equipment because replacement costs may become necessary.
A startup owner can select new equipment but may face a larger upfront investment.
Staffing
An established practice may have an experienced team already in place.
A startup owner has to recruit and train employees, which can take additional time and resources.
Brand and Reputation
Buying an established practice can provide an existing reputation, online presence, and relationships with clients.
A new practice must establish its brand and reputation from the beginning.
Growth Opportunities
An existing practice may already have established demand, but its growth potential can depend on its current capacity.
A startup may have significant room for growth but must first establish a reliable client base.
Financial Predictability
An established practice generally provides historical financial information.
This can help a buyer evaluate revenue trends, expenses, profitability, and cash flow.
A startup relies more heavily on projected patient volume and expected operating performance.
Startup Risk
Starting a new practice can involve greater uncertainty because there is no established patient base or operating history.
However, the owner also has greater control over the practice’s structure and strategy.
Acquisition Due Diligence
Buying an existing practice requires thorough due diligence.
The buyer should review financial statements, tax returns, equipment, leases, contracts, staffing, client information, liabilities, and other relevant records.
Startup Planning
A new practice requires extensive planning before opening.
The veterinarian may need to address real estate, construction, equipment, technology, staffing, licensing, insurance, marketing, supplies, and working capital.
Financing Differences
The financing requirements can be very different between an acquisition and startup.
An acquisition may involve financing the purchase of an established business, while a startup may require funding for construction, equipment, technology, and other opening costs.
Working Capital
Both options require adequate working capital.
A startup may need additional funds while it builds patient volume, while an acquisition may require working capital for transition costs, staffing, inventory, or planned improvements.
Which Option Is Better?
There is no universally better choice.
Buying may be attractive to veterinarians who value an established client base and historical financial performance. Starting a practice may be more appealing to veterinarians who want maximum control over the location, facility, services, and operating model.
Evaluate the Specific Opportunity
The decision should ultimately be based on the individual opportunity rather than a general rule.
A strong existing practice may be more attractive than an expensive startup, while an underserved market with strong demand may make building a new practice appealing.
Final Thought
Buying an existing veterinary practice and starting a new one both have advantages and challenges. An acquisition can provide an established client base, employees, equipment, and financial history, while a startup provides greater control over the practice’s design, location, services, and operations.
Veterinarians should compare the total investment, expected cash flow, level of risk, ownership goals, and growth opportunities before deciding which path makes the most sense.
