Many of the veterinary practice owners VetEvolve engages with are waiting for the right moment to sell their practice. Although it may veterinary practice brokers seem like a good idea in your larger plan to hold onto your practice until closer to retirement, there are a number of benefits to choosing to sell your veterinary practice now.
With inflation hitting every business hard — including veterinary practices — and fees skyrocketing for labs and vendors, it has been challenging for veterinary owners to keep their prices competitive while continuing to drive revenue growth. Add to this a nationwide veterinarian shortage forcing practices to operate short-staffed and making it difficult to hire, and the complex landscape of owning a veterinary practice now starts to come into full view.
With the direction the economy and the veterinary industry are headed, the challenges veterinary owners face today only stand to become more difficult as time goes on. Selling a veterinary practice now rather than later can help to drive sustainable practice growth faster, and free up your money for investment so you can achieve financial freedom and have a larger retirement income sooner.
From here on, the challenges of combining practice ownership responsibilities with clinical work will only increase. Grow the next stage of your veterinary career refocusing on clinical time and partnering with VetEvolve which is skilled in the rest of it.
While the economy is headed in the wrong direction, you can get on the right side by selling your veterinary practice sooner rather than later. If you plan on reinvesting into the group you want to sell your practice to, a sooner investment is better due to the time value of money.
To properly understand the time value of money, let’s run through a quick example of calculating future value. The future value equation is FV = PV x (1+i)n, where FV is future value, PV is present value, i is the interest rate per period, and n is the number of periods. For the purpose of this example, let’s imagine you’re investing $10,000 with a 5% interest rate.
If you invest the $10,000 now, the value of that $10,000 in 5 years would be FV = $10,000 x (1 + 0.05)5, or about $12,763. In ten years, the value of that $10,000 would be FV = $10,000 x (1 + 0.05)10, or about $16,289. So in ten years’ time, $10,000 uninvested will be more than $6,200 less than $10,000 invested ten years earlier. As time goes on, your money will continue to grow exponentially, so the sooner you start investing, the better.
While many practice owners want to hold onto their practice until closer to retirement age, younger practice owners may benefit financially from selling earlier and investing back in the company that bought the practice. In this way, owners are able to continue to support the growth of their practice without the burden and risk of practice management in a complex veterinary environment.
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