Hello, everyone. Welcome to another episode of Veterinary Industry Insiders. I'm your host, David Hall, one of the co-founders here at GeniusVets. We've got a fantastic show for you today. I’m very excited to bring on Tom Seeko of Florida Veterinary Advisors. Tom and I have been talking for months and months now, and finally, we were able to get the planets to align and bring him onto the webinar. Tom started his career within the financial services industry in 2011, after learning the industry—the good and bad. Tom transitioned in late 2013 to another firm to really focus on full-time comprehensive financial planning. In mid-2014, while in training, he was presented with several occupations and professionals. The veterinary community became the most exciting to him based on his passion and love for animals. Since then, Tom and his team have spoken nationally at WVC, Vets 360, IVECCS, done dozens of presentations to veterinary schools and associations, and are scheduled to speak at the AVMA in 2022, and VMX in 2023.
In 2020, they founded the Smarter Vet Financial Podcast. The vision for Florida Veterinary Advisors is to become the predominant voice within the veterinary profession about personal and business financial planning and to be that go-to resource.
About Florida Veterinary Advisors
Tom, tell us a bit about Florida Veterinary Advisors—maybe start with the mission and philosophies of the company before we dive into the specific services you provide. What's your vision for Florida Veterinary Advisors?
I have a short and a long version, so I'll keep it to the short one if anyone ever wants to talk to me outside of this. When I first started all of this, it was and it still till this day is that I want to help at least 10% of the veterinary community become financially independent. And it's been one of those things through providing education, one-on-one financial consulting with people, which includes personal business, financial planning. What I want to do is to grow this up into a business to where people know us when they are looking for financial stuff, they know Florida veterinary advisors. That's where I've been progressively pushing this to. And at the present moment, we work in over 40 states.
Types of Financial Professionals
In some of our earlier conversations, when you were describing this to me, you talked about all the different types of financial professionals. Can you outline that for people? What are all the different types of financial professionals that exist?
So it's really broken down into a few different categories and sometimes it can overlap because in my world we all get put in the little boxes at times because I'll always ask like, “Hey, do you have someone you work with?” And they're like, “Yeah, I have someone.” And my immediate question next is, okay, so what do they help you with? Like, what do they do for you? Because it's usually, it's like, because I'm called a financial advisor or a financial professional, it doesn't mean that we all do the same thing. So what I mean by this is that you've got what they call insurance agents that are out there. Like we call financial professionals, they sell different types of life insurance and disability, maybe some group benefits. Then you got what we call investment advisor representatives. They solely focus on investing, and back in the seventies or so like there were things like stockbrokers. It was a huge thing.
Now today, it's kind of like, you can do your own thing. If you want to buy and sell your own stocks, you literally just go open an account at one of the cheap brokers out there. But if you really want some technical investing options, typically you would go with an investment advisor to provide you with a little bit more diverse investment strategies, maybe access to things the general public can't get to. And then you also have, like the other side of it, you've got like an actual financial planner slash let's say consultants that are out there to really help, let's say, look at things from a bigger picture and then pull it all together. So as you're making financial decisions, you can be able to prioritize things and not kind of react to your financial life, but you can be able to respond in a way that makes the most sense for you.
So our category, where we fall with all of this, we can satisfy all three of them, but the main way that we ever engage with people is that we will charge a planning fee, which is the premise of all of it for business financial planning, for personal financial planning. And we go through a process where it's designed to then uncover certain things. And if you want help with certain insurances or investment advice or certain things, we can help you in addition to the planning agreement. So it's kind of like an all-in-one kind of shop. Some people like it, some people don't like the way, like I just wanna fee-only person, which my first question is, well, who's helping you with everything else, and how do you know you're getting the right stuff when they kind of just push you off on other people, and they go figure it out? So it's always something to be very cautious and aware of. And maybe if it's something that you just want to buy a product, or it's something you're trying to satisfy really quick, then you can, you know, you can pick or choose your poison kind of thing.
So it's something that's, I think, analogous in my world, being a founder of a tech company, and having worked with so many tech companies and startups, a lot of times that you'll have founders that don't have the development expertise. And so they go out and they'll hire this developer for that and that one for that and that one for that. What they really need is a CTO to bring it all together. That's by far the most important thing to making sure the entire strategy actually works. So you don't find out that like, oh wait, these things are not talking to each other in the right way. And we're heading towards inevitable collapse.
Well, something I’d add here too, because there're so many times we work with practice owners for instance, and they say they have someone and we ask them like, what do they do? Well, they set up my 401k or my simple plan, or I have someone that invests the money for me and we're like, okay, so what about everything else? How are you handling the rest of your finances?
A lot of times people will kind of put that wall up at the beginning because they're like, well, I've got someone already, and they haven't really thought beyond that. People don't know what they don't know. And until they take the time to sit down and try to learn it more, they're probably going to just respond and react to the things that are presented.
I had a client of ours recently, where he was presented by another insurance company. They came in, presented him with a good case, and then he just started buying stuff I asked him later, okay, so why did you do that? How did it help you? And he is just like, well, they came in here and they presented it to me, So he was just more responding and reacting to things than he was actually planning from what we had discussed before. And I can lead a horse to water, I can't get the horse to drink it. So the best I can do is provide people with that direction. It's just something to pay attention to because a lot of advisors will say they do all these things, and we can all seem like the same on the surface. But realistically, when you start sitting down with someone, you will really start seeing what the real value is that they provide for you.
The Veterinary Specialty in the Finance World
Tell me a little bit about what really made you get started with the veterinary profession and come to specialize in serving this industry.
Really when I hit my career about two, maybe three years in, I was in a position where I was selling products to people. I got really tired of just having quotas to hit, and being told I had to sell something to people. Maybe they didn't need it or maybe it wasn't the right time for them. And that was how my compensation was structured and it just didn't feel right for me. And it wasn't very nourishing for me. So I had a lot of thought and a lot of just reflecting on what I wanted to do. I wanted to do the full-blown planning. I wanted to help guide people in a way to where we want to look at every little piece of your financial life, look at how your habits, behaviors—how all of those things and your emotions integrate into your decision making and create an actual plan that's adaptable to life.
How do we do that and then do things that we can control? So when I pivoted to the other company, which is our parent company if any of you ever look at it it’s called West Shore Financial Group, but we have a business, my partner CJ and myself, we own Florida Veterinary Advisors. We have our own team, that's an affiliate with West Shore. And I was sitting down one day in a training class and I was like, I really want to help a profession. I keep being encouraged to like if you try to help everyone and anyone, it's very hard to build a business around that. I was like, how do you do that? So, I was in a training session. I was presented with many different professionals that were out there. A lot of from white collar attorneys, accountants, engineers, other medical doctors, optometrists, it could be executives, and I saw veterinarians sitting on the page. And the question I asked myself was of everyone that's on here, who can I identify and connect with the most? And who would I enjoy working with? And I was just thinking, I was like, you know, certain professions. I'm like, they're too analytical. I can't handle it. It would drive me insane because I'm more of a driver from a personality standpoint. But then I saw the veterinary profession, the community was there and I was like, well, I love animals.
My wife always pokes fun at me, because of my obsession when we have dogs and cats, and I have a little dog whose name is Theodore. And she's always like, “Can you stop? Stop loving the dog so much.” He’s a little seven pound, little white hair. He's the best. I love him. He's actually sitting down on the floor with me as I'm talking right now.
As I started doing a little bit of research out there, we started asking people locally, we started talking to them and we're like, I met one of the local association presidents for one of the people around in our area. We talked to her like, hey, so how do you feel about your finances? Are you getting the direction you have? What kind of guidance have you gotten to this point? And she was just like, yeah, I'm just being sold products. I really don't have much of a plan. And as we started digging further and further, we're like, well, I think there's really something we can do here to help be able to be that educational voice for the veterinary community.
And year upon year just started happening. And then around 2017-2018 is when we really started grabbing a foothold in the veterinary community. And then within the last, you know, couple years we've really started blossoming where we're becoming national speakers. We have our podcasts, we have all the different things that we have. And we see the impact we're having. And I will say the industry, to a certain degree, the veterinarians and people practice owners are accepting us. But I think the overall veterinary community as a whole is still kind of like, they still haven't fully embraced, hey, we need some financial voice that's out there to support the community because of the focal point. So I'm hoping to change that as part of our vision over time to how do we make it to where it's more widely accepted and people want, it's not something that I hear all the time, we don't need financial guidance, so we don't need this stuff that's out there.
But I hear time and time again, you guys need to be speaking here, you need to be doing this. You need to be doing that. But then we talk to the decision makers. They usually squash it on us. So my focal point every day keeps driving me. I'm doing it for the people we work with and for the people that come constantly keep asking for it. And it's just, it's become like, I know you can see from the way I'm talking right now, I'm very passionate about it. I want to help the veterinary community. I'm trying my hardest. And every day I wake up, how do I have that little extra step every single day.
Tell me more about what you guys are doing to support the profession. I love that. I think it's the right way to go, lead by delivering value first lead by really showing that you're committed to helping the profession and the other things tend to work themselves out. What are the specific things you guys are doing?
In the first place, even without being involved with anyone else or having the conversation that I'm having with you right now, we've just taken upon ourselves to, one, we have created the Smart Event financial podcast, where we release an episode every week now. We changed that in 2022. It's a combination of personal financial topics, business financial topics, interviews with other veterinarians, industry professionals, a combination of all those things. And we just do that because we wanna educate people and provide that for them so they can listen to it in a car ride. They're about 20 minutes apiece each. And then actually I was recording, we were recording a bunch of them earlier today for the upcoming schedule. And then from there, we became race providers. So then we could provide CE across the United States and for other places that recognize CE, and we have seven courses that we have created that are available for people to watch and get financial education and be able to get CE.
So we're like, let's do that. And then I also have taken upon it, like we've created certain videos that we've posted on YouTube that we've designed, we've got articles that we've written as well. And then beyond that, what we've really done is we've gotten plugged into the veterinary schools. So we're part of the Veterinary Business Management Association, the VBMA. We speak at between five to 10 schools a year, we are actively plugged in with the different conferences that are out there. We speak at some of the regional ones, we speak at the national ones, we speak at some of the local associations. So we do a lot of speaking every year. And then in addition to it, we've all also been writing for different publications. So I've actually written for Veterinary Practice News and a couple, DVM 360 is another one. At the other standpoint of all of it, we've got just other content and courses and things that we're building along the way as we, one, work with people like Genius Vets and others that are out there to like, how do we just be able to provide more guidance for your community and also for other veterinarians that are out there. So we've got a lot of projects and actually, I've got something right now coming in the pipeline, the seven-day financial wellness challenge we're creating.
Tell me about that [seven-day financial wellness challenge].
I wanna turn it into a 30 day, however, we thought we would start small. I'm actually dealing with a friend of mine, her name's Dr. Marie Holowaychuk if anyone's familiar with her at all. She's based out in Canada. And we sat down, she focuses on health and wellness stuff. And we talked about the idea of how to introduce more financial stuff. So we're like, well, let's start with seven days and we're gonna give people little actionable steps that they can do, and we're going to have videos, we're going to have handouts, and at the very end of it, we're actually going to have a giveaway that we're going to give people that one lucky person that's going to get as they complete the end of the challenge. And our goal is to run it a couple of times during the year. So then people can sign up and then take that next step. And if it goes well, we're going to create maybe a 14-day one and then a 30-day one that will have a little bit more intricate, maybe a little even simpler steps, so we can break things down more for people.
Tell me who are you trying to serve specifically? Who are you trying to serve? What kind of roles within the profession and what kind of value are you looking to deliver?
The two main ones that we're trying to work with the most are practice owners and veterinarians. So they could be associate veterinarians working for smaller practices. They could be corporate veterinarians, they could be veterinarians that are working for other companies as sales reps. Now, it doesn't really matter. That has been our main focal point. However, we do keep it open to any, there are really just two pieces of criteria that I have. One, do you have an open mind, do you wanna actually really learn? And two, are you willing to take action? So if you're willing to answer those questions and be honest with yourself and say, yes, we're more than happy to work with you. You could be a practice manager or a technician. You could be someone that's not even a veterinarian, and you work within the veterinary community, we’ll work with you.
However, I never want to exclude people. However, a lot of our materials and a lot of the content that we create has been specifically designated to veterinarians and practice owners along the way. And I think it's because it's been received very well by those two different audiences within the veterinary community because it seems that there are other people that are interested, but sometimes people just need more information. Maybe they just feel like they're stuck financially and they can't really get beyond that. So we're looking to create some stuff for more of the overall staff and team and everything else that's within practices. It's just a matter of aligning ourselves with other people who actively spend time doing that right now. And we're happy to provide the content, but just us from a business model until we can scale ourselves more. Maybe one of these days we'll pull that in-house as well.
How to Educate Veterinary Professionals on Financial Practices
I get that you provide a lot of education, right? And at a high level talking about we get in and we provide a lot of education. We walk through a process, but can you unveil a bit more about how you are really bringing clarity and making finances simple for practice owners and veterinarians?
So the first thing is just helping them dream. I will tell you, there are so many times that we ask people what they want, and why do they want it? And I will tell you, 19 out of 20 times, people look at us and they have no clue. And if they give us anything, it's a very simple, short answer, and we want to help them dream. We want to help them understand what we call our RFPs, or their reasons for planning, and the whole goal behind that is, we want to be able to prioritize those things so we can have a focal point of where are we going, how do we align with these decisions that you're trying to make to fit with that? And from a personal planning standpoint with everyone, period, we all make money. And we all have a certain desire at some point or another, where we don't have to constantly keep working for a paycheck.
We want to eventually be able to say, hey, I can choose to show up to work or not. And our whole number one goal with them is to help them really be able to truly understand that. And along the way, what we do is help them organize their finances. So everything from how they're protecting themselves from sickness, lawsuits, injury, to how they're managing their cash flow and paying themselves to utilizing dead cash in the business, to systematically building up their personal wealth from their business to how are they building up accessible money versus money that you can't touch, and the taxes and the risks that you're taking with it, to your strategy to one-day exit your practice, to be able to produce income from the money that you have been saving.
What's your plan? So we'll walk through, we have a series of conversations that we have with people where we lay the foundation and beyond that we will stack other meetings on top of that for, let's say, it's a little bit more intricate planning that we need to talk about where it's like, hey, I want to talk about what do I do now, I want to exit by selling to my associate, that's my goal.
So then we'll sit down and be like, okay, so what does that look like, and how can we structure this, one where you have minimal risk, two, where you pay the minimum amount of taxes, and three, we can get you out in a certain time period. Is it possible for us to work that out? So we will sit down and talk through that and design that with them and then create that structure and then help them not just create it, but help them implement it and see it through, all the way through the end of it. So there are so many different moving pieces to it. And then just one last thing is they might have attorneys and they might have accountants and they might have insurance professionals and different people they work with. And our number one goal is to make sure, Hey, as you're working with these people, you're not getting answers from them and feeling lost on what you should be doing.
We're looking at things from a 30,000-foot view, and then we are able to sit here and say, Hey, how do we inject these different professionals in these different things along the way to make sure it aligns with what you want, why you're doing all of this. So it can be very, I will tell you at a minimum, we expect to work with people for at least 12 months. So when we engage with them, there are many months that we'll work with, but our goal is to work with people all the way through to retirement. So no matter what it is, we're here as your go-to financial guides to help you understand, make sure you're asking the right questions, and making the right moves.
The Push to Sell in the Veterinary World
You touched on something I want to kind of move the conversation towards a little bit. Let's talk about one of the biggest trends shaping the landscape of the veterinary industry today, the corporate takeover of veterinary medicine. There's a wave of independent veterinary practice owners that are deciding to sell their practices, and there's a wide variety of acquisition groups out there right now. In this industry, we all have a sense that we know the forces that are driving these decisions, but you, you work with a lot of the practice owners that are making these decisions. What are the various reasons that you are seeing from your clients that are pushing them to sell?
I know when we first talk with a veterinary practice owner, most of the time what happens is that they don't really have a solid plan in play. So they've worked their entire career, they've been just working and working and working and working. And a lot of them have had the idea of, at some point, I'm just gonna sell my practice, and then I'm going to retire. That's what it's going to be. And from when we first meet with people, we will really sit down and ask them, okay, so what is your plan? You're going to sell it for X amount of dollars, what kind of income is that going to produce for you? What's your plan? What's your strategy? And a lot of them haven't, let's say, build up enough assets outside of their business. So where they're relying very, very heavily on that sale of their practice.
And so many of them have gotten to the part where they're very burnt out. They're exhausted. They just, they’re like, I wanna retire yesterday. So then what's happening is that these buying groups are coming in and offering substantially more money than what an associate, anyone else could provide them because, one, maybe the person doesn't have any money to buy the practice or two, there is just not enough funding. They can't get the appropriate funding to do it. So now they're in this position of like, well, I see the cleanest dirtiest shirt that I have right now is that I can, this buying group over here is willing to offer me, you know, 10 times the profits that I'm making. And the associate's only gonna give me five and like, I need every dollar that I can get.
So then they jump in that direction. And then here it is, they sell it. A lot of people that I have talked to want to keep their culture. They wanna maintain the way their practice is, which a lot of buy groups are definitely communicating this to them. I've had mixed reviews when it comes out there. If some people are saying, yes, the practice is very similar. And then they say, after a couple of years, they're not the same anymore. They're just not the same practice anymore. And you know, there's a lot of them that really care for it. But then I think because of the amount of time and the amount of work that you, a lot of these practice owners, and I'm sure many people have heard this phrase, they're working in their business, not on it.
So they're stuck working in there all the time and they can't pull themselves out for a moment and really start planning more beyond that. For example, I had a client of ours who wanted to have a veterinarian to buy the practice, but he's like, I'm almost 70 and he's like, I need to get out of this. I can't find anyone. In all respect too. He never actually looked for one either. It was kind of like, and I know the industry's changed to a certain degree and there's a lot of open positions today. However, it's just gotten to the part where you like the amount of effort required to do it at times that they see the easiest route is this. The people down the road are going to offer me all this money.
It's a shame in my mind. I do think there's a certain degree, it's great having corporate medicine. And also at the same time, it does sadden me to a certain degree because it's like private medicine is what's really built the industry up over time. And I think it loses that touch after a while. So I really would like to be able to try to encourage more, if they can, to be able to sell to another person. However, if you're one of those people that are like, I want to get out in a year, you don't wanna get out in six months, you might not have any other options, but to sell to corporate due to the fact of just the parameters that you put on yourself at that point in time.
Certified Exit Planning
Tom, I know that you're a certified exit planner. What is a certified exit planner? Tell me about that.
It really gets kind of confusing for some people, because whenever I do say that, people are like, I'm not ready to exit. And some people that are ready to exit wanted to exit six months ago. So a certified exit planner, really the whole goal behind that is to help you start being able to plan and get business in a position. Even if you're just starting off in your business ventures, you just started one, or you just bought one, two you're in the middle of your business, to you're ready to get out and retire at some point.
The number one goal of the certified exit planner is to really be able to help you, one, understand, okay, what does your plan look like over time from a personal perspective? How are you managing your personal finances? How are you getting to a part where you have an income plan to, okay, how are you growing your business? How are you managing the culture inside of your practice? How are you considering all the different options that are out there to exit, there are a few different steps that you can go through to be able to take, to do that? But then along the way, we can help be able to be engaged in the conversation to pull in the right professionals, along the way, as we're looking to start doing these transitions where we can help structure of like, Hey, I wanna sell it to another veterinarian. Okay, cool. Let's talk through all the different options. And then we can pull in the attorney to drop the agreement. If we need to pull in a lender to be able to finance some with the deal, then we'll pull in a lender to do that. We need to get the accountant involved, to understand the circumstances that we're going through, we'll pull the accountant in to make sure that we understand the tax ramifications and the different things that can be involved. So we're like a glorified quarterback to a certain degree. And we want to make sure at the same time that people are being able to prioritize their decision-making, such as when you should have an exit plan.
A lot of times people ask me this—when should I have one [an exit plan]? Before you get in business, you should know how you're gonna get out of business. You should just know because otherwise, you're going to get into this business and keep going and going and going. And maybe one of these days you hit it big and you do well. And then you grow your practice into this multi multi-million dollar practice to where you get 10, 15, 20 million for it.
But maybe it never happens that way. And you got stuck being in the whirlwind of the practice, and you never really focused on what was important to you along the way. So the more that you can really boil that down, it can help set you up for more success. And I mean, that even leans back on the whole corporate thing too, where the generations that have passed, it's just gotten to the part where they need every dollar they can get. So if they had planned for this more in advance, then there's a chance they could have a different position to take.
As far as that certification goes, what does it take to achieve that certification? What would you have to go through?
It was about 70 hours of training that I had to do. And then every single two years I have to do, I think it's close to 36 hours of continuing education to maintain and just keep current with it. And what it did is it walked through, there were seven different steps when it came to being able to walk through with regards to how to exit and prepare to sell the practice or a business period. Of course, you can take the steps and kind of flip-flop them depending on where you're at in your business, but I had to literally sit down and I had studied a lot of material, and then I had to do case studies. And then I had to write up case studies of how I would help them and what would I do to support them in order to be able to prove that I knew enough about what I was actually telling people what to do. So you know, I passed it all. They approved me. So I guess I did what I needed to do from a standpoint. I felt like I wrote two novels in the process of doing it, but it was a good learning experience.
As a certified exit planner, you're helping practice owners identify and evaluate all the options when they're considering selling a practice. Why don't you tell us about the various scenarios that you've been helping clients navigate? What are all the different paths and options for a doctor who is looking to sell their practice today?
There are not many of them, really, and it's a matter of which direction do you really want to go, is the first thing to understand here. Do you want to keep it private? Do you wanna sell it to corporate? Do you plan on keeping it for a long time in the way that, I've always simplified it as there are three main doors you can walk through? The first one is that you can sell it to another person or to a bunch of employees. There's a thing called ESOPs if anyone's familiar with that. If your practice is doing a certain amount of profits, you can actually sell your practice to your employees and they can own the stock of it. It's a really interesting tax advantage way that you can go about selling the practice. But if you're not, that size of a veterinary practice, then maybe you want to sell it to another veterinarian or multiple veterinarians, or maybe practice managers that, in the state provide you the opportunity to sell it to a non-veterinarian.
The first thing is you'd really want to understand that there's at least a five to 10-year runway to establish that in the most appropriate way, from the most tax advantage in the least amount of risk to structure it well, unless you were just going to go get financing, which financing terms, there are some options out there, but they're not abundant. They're just not abundant out there. So being able to structure it in a way that works. The second one is you can sell to a buying group. So if your desire at some point is to just sell it to someone, you need about a year and a half, two years in advance, which is a good idea to make sure your finances are well, you've got good tax returns prepared, at least three years of taxes.
Make sure you have up-to-date profit and loss statements for the last three years because your taxes communicate how the practice does on a year to year, but then your profit and loss statements are what show, Hey, how is my business doing from a month to month standpoint? So you can be able to really see—is my business cyclical? Is it pretty consistent? Do I have months that are down, and months that are up because when you have clean financials, it gives you a really good negotiating position. So then you can go out there and you know what you're talking about, and you're not relying on these buying groups to then tell you how, how much it's worth you might be able to get more for it because you've done your due diligence in beforehand, but also making sure you get your own valuation due if you haven't.
And then the last way is really, you can pretty much keep it until you die. You can choose to keep it and keep working there. I've had a few different people we've talked to where they, and certain like ownership rights and the practice and everything else, which it can be a good and a bad thing, depending on the way you want the practice to continue on. Or if you want to provide the autonomy for that other person or family or whoever it is to continue on moving with it. And the other thing you could do is you could just close the doors. Usually, that's option four, but not many people are gonna just take your veterinary practice and just say, Hey, I'm just gonna close the doors. Especially not today.
So the most common two are sell to an associate or sell it to corporate, and each one has its steps that you should take. And it's not something like all of a sudden like, Hey, I want to just sell to corporate. Let me go talk to corporate tomorrow. If you're thinking of even selling, you should be looking several months in advance to make sure you have good financials. And then also you should coordinate what your financial, your personal financial plan is going to be. Because otherwise, I've had many people that are out there that will receive millions of dollars and then they dump it in their checking account. And it's sitting in their savings account and it's like, what's your plan? They're like, I don't know, I'm going to invest it, or I'm going to do something with it.
And they don't know if it's going to be enough, one, to provide them income every year, but think about it for the next 20, 30, or 40 years. Is it gonna be enough to handle unexpected life expenses or different things that pop up? So when you don't take the time to really focus and plan that out, most times it seems like, again, people are reacting to what's in front of them. And I talk to practice owners all the time and they're like, yeah, I've gotten like four offers or four practice buying groups that have reached out to me in the last two weeks wanting to buy my practice. And I'm like, okay, well, let's, we're getting there. Let's make sure your personal financial plan is wrapped up. Let's make sure we get your financials in a good position. Let's see if you have the ability to sell it to another associate if you want to. But it's really, it's all about the options. Like, what do you want?
This is something that we've been really looking at a lot for the past few years. Here at Genius Vets, working with a lot of our clients, we've had a lot, they're all getting offers and exploring it, some are selling, you know, we've gotten a lot of exposure, different buying groups. It's a topic that we've really talked a lot about. This year, we're speaking at a number of events, leading owners' tracks at events across the country throughout this year. And the topic that we're talking about a lot is, you know, how most veterinary practice owners are kind of at the fork in the road where they can either make the decision to sell or struggle or grow. Because this is this amazing time in the history of veterinary care where we believe it's the greatest opportunity in their lifetime to grow and strengthen their veterinary practice for years to come.
But for a lot of professionals and certain situations, owners selling is a great decision that they can make for themselves right now for a lot. And we're encouraging a lot to maybe consider other paths, consider holding onto it, and address the struggles that are causing a lot to go in that direction. And you've kind of touched base on that. One of the sad statistics that we've found today is that roughly about 70% of veterinary practice owners who do decide to sell regret that decision within six months. I imagine, and I think that that part of that is not all buying groups are the same. And there are, I mean, there are some really massive corporate ones that, that generally a lot aren't, aren't selling to as much there are some really, really good groups out there.
And we know and work with a few of them closely that are fantastic. And unfortunately, there are actually a lot of buying groups out there that aren't what they appear to be. And aren't what they say they are. And are really kind of just a money grab. They're private equity backed and they can buy a practice at 12 X and they can turn around and sell a group of practices at 24 X and it's arbitrage for them making money, there's an unfortunate amount of that that's going on. But one of the big things I wanna ask you about is one of these travesties, if a practice owner's gonna sell we're looking to put out a lot of content and information that supports them in that decision and just really wants to make sure that they're going about it in a way that is most advantageous to them.
Some practice owners today, when they make the decision to sell, they kind of take their foot off the gas and they start just thinking about the numbers and thinking about, like, what's next. And in the meantime, they're not going to pedal to the medal on building and growing the practice. And of course, over the last couple of years with COVID, all veterinary practices have gone through this really incredible growth. But if they're taking their foot off the gas, if they're letting things kind of go, there are definitely situations and we've heard the stories of numerous of them where potentially, it's not a next-day process. If someone's gonna sell. They're going through and getting evaluated, getting a letter of intent, even at that point, it's not a contract it's not settled.
So if they take their foot off the gas and the practice kind of, if it goes down stagnates or whatever, could look less appealing and they could actually get less by the time that the sale is ready to close the offer could change. And conversely, for practices that take that as I'm gonna sprint to the finish line here, and I'm gonna do everything I can to increase the value of my business. I mean, that could be the difference of millions of dollars by the time that the sale ultimately closes.
How to Make a Successful Veterinary Practice Exit
So my question to you is, what are some of the things that you see clients doing, or think that practice owners can do if they have made that decision? What are things that they can do to really spend the last year of ownership increasing the ultimate value and sale price that they're going to get?
It really boils on to two simple things real realistically, and I'll touch on that in just a second, because when it comes to these practices that are selling, especially even with some of these groups, depending on if it's a multi-doctor practice, or let's say a solo doctor because there have been buying groups jumping into the one doctor practices now. There might be contingencies or earn-out periods where they're having to hang around for a few years. So even if you were to let the things start running into the ground, it’s going to hurt you, ultimately because you're still maybe a partial owner in it, or maybe you've given up all ownership rights, but now like you're leaving money on the table because well, the practice needs to be doing X or operating at a certain level to be able to get the rest of your money.
There's been a couple that I've talked to recently where I've felt like the people coming in trying to buy or giving them a very raw deal from the metrics that they're looking to try to hit. So when it comes to this really being able to prepare and maximize value over time is, one, I don't handle this personally, but making sure you have a CFO or like an accountant that can serve as like a financial officer for you, someone, or even like a consultant and a CPA that can take a closer look at your financials and be able to make sure they're reconciled, make sure that your actual charges matchup up with what's actually on there. Your profit and loss statements are really clean, managing to be able to work through if there are certain expenses that are being spent in the business are the ways to clean that up.
So you don't keep paying money for these things. For instance, there's one of the practice owners we were working with you spending over $30,000 a year on marketing expenses, which we do not know any of the return or anything that he was getting on it. So we discontinued that altogether, which automatically juiced up his profits by 30K right off the bat. And he wasn't even doing any marketing expenses from there, but that's just like a really simple thing. Are there ways to really be able to juice that up and make sure you have really clean financials? And I will tell you 10 times out of 10, I might be maybe 9.5 outta 10 times. When I talk with someone, their profit and loss statements are a mess. Their taxes are a mess. They have no idea what exactly is communicated to them.
And they're going into this scenario in this conversation with these people, giving them all of this stuff and having no idea what to expect. So it's like, that is like a huge no-no what I would say. So like making sure you get all that buttoned-down, but then there are also people that can play a critical role within your practice. Is there a way for you to secure those people, to make sure that they stick around through the deal? Is there a way to retain them in a way to where they are saying like, Hey, I've got another veterinarian or I've got a practice manager that, if they leave, they have key relationships? They have really super strong like they're very plugged into this practice. If they were to leave right after the fact of it all, that could completely change the dynamic of these things depending on if they were to leave right before the deal gets closed or whatever the case is, and you find a way to secure those people into the practice, along the way, which then basically makes them stay.
So after the deal gets sold, and once everything gets settled, at least they're still around and you don't have to worry about recently there's someone that lost their practice manager and the process of going through due diligence with a letter of intent on the table. And I was, there's not a lot I could do about it. Now we're having to try to find someone else to kind of fill the spot. And of course, it could probably be like, yeah, it's easy. But well, if that person was very created a really good culture, created a really good environment, took a lot of the responsibilities and everything, it might be hard to one find that person and then to train them out to be able to do all that stuff again. So it could impact the results over the course of time. So those would be the two main key things that I would say, especially if you're looking within the next year of trying to do that, of looking to say, I want to sell the corporate.
So you worked with one practice and you said you found that they had a $30,000 marketing expense and advised them to stop that. And as you said, without no knowing what the return on investment was from that, it's not that, and it immediately looks on the balance sheet. Like now they don't have that expense and it increases the profit margin, which in the short term can make it appear on the balance sheet that they're even more profitable, right? However, which is true, but a lot of these, as you said, a lot of these deals are structured as earnouts to a certain extent, as a portion of what they're ultimately going to get paid happens over an earn-out period where they're still working in the practice. And in fact, a lot of these deals, also depend on how much they're gonna get paid based on the practice performance during the earn-out period. So they'll say for you to hit your maximum, that you're actually getting offered here, we wanna see your practice grow at 10%, a year, 15% a year over the next two years for you to be able to kind of hit and level up these expenses.
I will say you right off the bat, I think it's a really raw deal for anyone to get into personally, especially when they're like to a part where it's like, I have to make sure these numbers hit what, in order to get what, and some people jump right at it. And like someone I talked to recently, I talked them out of it because I was like, this is not, you wanna get out of this practice soon. And you're leaving a bunch of money on the table is kind of very contingent on whether or not you hit these numbers. And I totally, I totally feel you on that one, David, because it's like, if you are leaving out of your practice and now you're sitting here, I've got to build this back up again. Like, yeah, that is a big component of the wholesale price of it.
But there's that from a personal financial standpoint, right? Like if a deal's gonna be potentially structured that way that by stopping marketing, you're obviously cutting off your ability to grow, but from your own financial standpoint, potentially in a deal. But then there's also that standpoint of most of the practice owners, they really do tend to have a whole art for this business that they grew. This was their baby. Like none of them wanna see this business do poorly in the years after they leave. They wanna see their staff well taken care of. They wanna see the business thriving. They want to get out on top and make sure that they do well. But I think in general, they all have a heart, if not a personal financial incentive to see that business continue to thrive and grow.
And I would just say, veterinary care like more and more, especially millennials and younger have less dedicated lifelong relationships where they're just bought in and definitely going to keep going to the one person because that's what they always did. They're much less loyal. They're willing to go to someone else. Maybe not always just because of a price point difference, but because of a feeling like they actually have a relationship that's their go-to person and, and what creates that relationship is information. And ultimately that's really what marketing is, is the delivery of information that builds that relationship supports. Those people get them to come to you and keep them coming back. So I would really, kind of question whether pulling off marketing is good for the business in both the short and long term.
What I will tell you realistically, he would wanna do something, but I really, the moral to the whole story of it all is it was just, it was something that he was paying for. He had no idea what he was generating any returns on. He had nothing to justify from the people that he was working with of what they were doing or what it was doing for him. So right off of there, it was pretty much like a sunk cost. Like there are certain marketing things you do just from a branding perspective. And I know you guys being in that world, you just gotta keep your reputation out there. You create your...we have things for ourselves. We call it our social media business card where people can just see that we're out there. People see that we're busy and then there's other marketing stuff that's trying to really drive more people to us and things that we're doing.
And he had no clear distinction what the two of those were or what it was doing for him. And it's not like his business was significantly growing from some of the things that he was doing, because he had no idea what they were doing in the first place. So it was just, I would agree with you, it definitely, there are certain expenses you should be doing. And I mean, we even have marketing expenses and things we pay for as our company, because it's kinda like a necessary evil, but you need to know what kind of return is generating for you, because if you're spending 30 and you're making a hundred, then a million percent. I mean, first of all, any company that they're working with that is keeping them in the dark that's opaque, it's not kind of showing them exactly what the results are. Shouldn't be doing that at all whatsoever. You send them our way.
When Veterinary Practice Owners Decide to Stay
I know so many of the practice owners you work with really do see the value in continuing to own their practices long-term. So tell me about your approach to working with those practice owners, their doctors, and staff?
So it's a combination, a couple of things from our role of what we can actually help with is one, it really, again, it really starts from the what's personal financial plan and why we even always start there. Why keep even pulling it back to that? Because there are times we'll just work with people solely from a business standpoint, but everything decision you make in your business is going to have a direct impact on your personal life. So whether or not you're saving money on your business, on your personal financial balance sheet, or if you're, how you're going about wanting to do certain things in your lifestyle and everything else. It's really important to understand the risks that are associated with your personal life. How are you building up assets, what your plan, but then on the other side, when it comes to the practice, is we all also want to understand, okay.
So how has your business impacted in the event that, you're no longer here? Maybe if you become sick or injured, if you have business partners you're working with, are there key people inside the business that if something happens to them, they became sick or injured or no longer around, how does that impact the value of your business? We'll talk about employee culture and wanting to talk about the people that you can call like are replaceable. To a certain degree, I think people are replaceable, but I don't a hundred percent agree with that because like you could hire someone that can seem like, yeah, they're kind of just doing some work, but they might be doing a darn good job at the work that they're doing and trying to find the person to do that specific role again at the level that they were doing it. It's not that simple. I've gone through it myself with hiring 10 different people so far since we've been in business. And the other part of it is that you've got the people that are really impactful, that maybe they got key relationships, they drive the revenue of the business. They help impact the culture or the atmosphere that's in there.
And what are you doing to make those people want to stick around for a long time? And we usually refer to this as what we call the three Rs, what are you doing to provide to recruit people, draw people to your business. So, of course, it's from a competitive standpoint at times, are you offering retirement a plan or are you not, do you have health insurance or do you not, do you have disability or do you not like those types of things?
But then also rewarding, you know, what are you doing to reward people, to encourage them and motivate them on an ongoing basis on things that they know that they can control. So a lot of times where a lot of practices, they get it wrong is that they will just reward people and give them bonuses because the practice did well this month, it's Christmas, everyone gets a Christmas bonus, but no one truly understands why they're receiving that money. They're just getting it. And then the expectation again is, am I getting another bonus next year?
Let's Talk Incentives
I hate that. I mean, I love rewarding people. I love Christmas. I love being generous. I love if people feel that, but that idea of, oh, I can count on this. That's happening. If that's what you want, just give people a raise. I think otherwise it's setting up an expectation that just isn't tied to anything, it's not actually really helpful.
Yeah. And rewarding. It's important for them to understand, what can I, what should I be doing that, one, can help push the practice more, make it more profitable. And then at the same time, knowing that I have control over, but then the other part here is retention and retention is not 401k plans. It's not offering them health insurance. It's when we define a retention program, there are actually four pieces of criteria that it has to meet. It has to be deferred. So they have to be there for an extended period of time to receive it. Two, it has to be substantial in value. So there has to be some big pot of gold at the end of the rainbow that they're going to receive by sticking around. Three, there's a cost-recovery component to it. So if they were to leave, you can choose to give them some or not give them any based on whatever you want to do.
So the practice might not be out of at all money, but then it also four has to solve something emotionally for them. So what is it doing to basically saying, well, maybe it's going to help Timmy's college? At some point, they want to put their kid through college or maybe they want to help with more funding for their retirement. Maybe they're interested in buying into practice at some point. So having meaningful retention programs in play is super important. And then on the other flip side of it all is we're talking with a practice owner beyond that from planning, how are they utilizing the money that's accumulating in their accounts to either grow the business or put it in their personal balance sheet. How are they building their own assets? And then how are they systematically using the BI on an ongoing basis to accumulate wealth outside? Because a lot of the time what's happening is that the money is just money in money go.
I've had multiple conversations in the last six months. They're like, I'm thinking about pulling money out of my business to pay off my mortgage. That's my response. I'm like, why? And they're like, well, because I don't know what else to do with it. And they're like, it sounds like I don't want to pay my mortgage anymore. And I'm like, so what does that do for your income plan? How does that help you? And it's like, you're not going to use your house to provide you income when you retire, are you, well, it's going to help reduce my expenses, but if we can help show you have more income in retirement by you having that money. It doesn't matter. It kind of like offsets itself. So would you want more income or less income? What do you want at the end of the day? So we help them understand how do you create a good structure around that? So all of these things pull together and then we'll be working with accountants and attorneys and all these other people along the way, with things that we can't satisfy because it's not our of level of expertise, but we'll be able to help pull things in when we need to, along the way.
Love this. This is one of my favorite things that you go into and talk about. An area that I think every business owner really needs to spend a lot of time on. Here at GeniusVets, we've been going, working with the grant Cardone Ventures Organization. And something that we pulled from their frameworks for business management is a concept of sitting down with every employee and having these PF meetings, they call them, where we talk with each individual employee and talk about their personal professional and financial goals over a one, three and five-year timeframe. And I mean, these conversations have regular one-on-ones, as part of our management structure. And we have an amazing company culture. And we uncover what they're really looking to do, they want to take their family to go do this trip to Walt Disney World. And that's something that's really just been in their heart for a long time. And they didn't come out until we really started having these conversations. And as a business with allowed us to do was look at our incentive structures, and start figuring out ways where we could more closely and directly tie performance in a certain area to help them meet their life goals.
I love it. There's one example of someone giving me too a long time ago and like, how do you structure these things? And a good example was this, even if you have a reception at your practice and find out how many dormant clients you have, so dormant clients or anyone that hasn't been there for over 12 months defining what a dormant client is. And then what are they doing to help encourage these people to come back in or having like how many times are they actually scheduling follow up appointments with pets that are in there and like giving them something that they know that they can control and monitor, but then you also from an owner or from a leader, you have to also be able to have something to track it and also have ongoing accountability for it as well because it's hard for you to just say you're going to do something.
And then not like our whole team we have every Thursday morning, we have what we call wig meetings. Well, all the important goals and we get together and we talk about their wildly important goal. How do they do, where do they struggle? What do we need to do to get refocused back again on what you're doing? And it's like, we have that accountability ongoing. So then they understand how do I make an impact on it? So you at least give them a chance to win, and they're not kind of stuck in a certain spot. And then you're also assisting them in a way where it keeps them focused. It keeps them on track of things. So it's not an easy thing to do. And I think that's why a lot of people avoid it, or they just never approach it because it's like, they don't know how to do it. They don't even know where to start. They don't know how to keep up with it. They don't feel like they have enough time. Like there are so many different reasons out there, but if you really want to have a profitable and very nourishing practice with a great team, like you have to do it, it needs to be done, figure out. Yeah.
It's so important to find those KPIs, those key performance indicators that are the metrics you can track, and you shouldn't have too many of them and you shouldn't have too few of them. There's a Goldilock zone there. There's a top of the bell curve where it's just right. You've got the right number of things, it's manageable. It's not adding a whole bunch to their tasks, but it's giving you that important business data you need to monitor their performance and you can do it consistently and ongoing. But when we've got, I've spent years going through and creating those in my own businesses and in clients' businesses. And I, there was something really magic that happened when we added this layer of going like really understanding the person. And instead of just giving them KPIs that were like, this is the business bottom online, make it happen where we are really able to connect it back to something that was much more human, much more personal. And ultimately just actually get a greater level of buy-in that was just magic. I mean, I strongly recommend it to all business owners. In particular veterinary practices.
Yeah. It's tough. I will tell you we personally have struggled with figuring a lot of those out for the longest time and it, sometimes you got to, you do it, and then you're like, okay, it's not working, so we need to change it. And then you might need to change it multiple times before you find that one thing that really matters the most. And like CJ and I, we have constant conversations around these things ourselves, because it's like, is it really helping? Do they understand, is it clear? Do they have something they can control? Is it really impacting what they need to be doing? And sometimes they're not going to, the people who are doing are not going to think about it. We have to, as the owners have to sit down and really be like, okay, so how can we help them? So it's cool. I actually thoroughly really enjoy having those conversations too, so it can be very exhausting, but it can, it's also very fun and enjoyable.
So, you know, what are some of the things like understanding a little bit more about the practice. How, when did it get started? How well is it doing? What are the profits like? What are the goals?
The visions of it all really starting to under and more of the challenges that could be potentially positioning with that practice owner, will gather some more information and just like high-level information around this. And then we have an engagement letter that we will prepare with a lot of, what are some things that we can assist with all in the way? So the first conversation we ever have with people is at no cost to them. It's really just to sit down, have a conversation, see where you're at. Are we a good fit? Are we going to work well together? And then talk about really, if this is the right timing for this. And then that's when we'll talk about what would the fee be involved to work with us? What are the next steps specifically? What are we going to start focusing on next? So that entire conversation is really just to really kind of rah together, see what we can accomplish, what could work out. And then from there, if it really makes sense, then we'll roll out the right carpet and say, okay, these are the next steps. This is how our team's involved. These are the meetings we're going to have, and so forth and so forth.
Reaching out to Tom
I'm sure every client you work with has their own personal financial journey, right? They're in a somewhat unique situation when they first start working with you, they have their own unique goals and aspirations that you help them achieve over time. There's really no one size fits all financial plan, but I'm sure you have a bit of a framework for how you get started with new client relationships. So we've got a lot of practice owners, managers, and associate vets who've joined the webinar today and lots more that are going to be listening to the podcast. Why don't you walk us through what to expect when we reach out to Florida financial advisors?
The first thing that really is we would schedule the time to sit down and talk. So I would say to a practice manager if you wanted to sit down with us to Steven to get that one out there in the clear is that we could sit down and really talk more about the three Rs: recruiting, rewarding, retaining. What can we do? We also offer financial wellness-type stuff. So we could talk about what could that look like. But realistically, what we would do is sit down with a practice owner or the key decision-maker, and then we would talk through more or less. Okay.
Tell people, just as we wrap up, how do they reach out to you? How do they find you? How do they contact you?
The best way you can always go is to our website. You can search us online at Florida Veterinary Advisors, or you go to FLVeterinaryAdvisors.com. You can always go listen to our podcasts. I know in all of our descriptions Smarter at financial podcasts, Because it’s all out there, if you want to shoot me a message or call me directly, my cell is 813-434-0885. You're more than welcome to reach out to me, shoot me a text, give me a call. I'm happy to coordinate a time to chat with you and discuss things a little bit further. But the best thing you can always do is go to our website and fill out our contact form and that way someone on our team will make sure to get with you very shortly to schedule a time to talk.
Thank you so much for your valuable time and for spending a little bit with us. This is David Hall from GeniusVets signing off, and remember that your veterinary practice already has a full-page profile on our website @geniusvets.com. Just go to geniusvets.com, you can look up your profile by city, state, and the name of your practice. And it's free to claim. These profiles are amazing for thousands and thousands of veterinary practices around the country. These profiles on geniusvets.com are already outranking practices' own websites and Google search results. The goal is we want all links to point to you when people go looking for veterinarians in your neighborhood. So just go ahead and claim that—it's completely free. And we do tons of other things to help veterinarians, from practice culture workshops to monthly social media toolkits. So plug into what we're doing, check it out, go to geniusvets.com and until next week. Thanks so much.