In These Economic Times, There IS Room For Optimism - And Here's Proof

The economy remains in the forefront of our thoughts and concerns. It certainly appears that the last quarter of 2008 was doom and gloom for most. The last quarter of 2008 became scary territory and, for the first time in a long time, had clients rightly shaking in their boots. Although 2008 is not that far behind us, I want to share some of the feedback we are receiving about the first few months of 2009.

We are hearing that things are picking up, especially as we enter into the last month of this first quarter. Some practices report having the best January they have ever had, while others did not start to see things pick up until February. Either way, for most practices, the first quarter of 2009 seems to be moving in a better direction than the last quarter of 2008. I have heard more and more that there appears to be a light at the end of tunnel; cash flow is improving and practices remain optimistic. I am certainly glad to hear this as VMC has encouraged our clients to remain optimistic when being optimistic was hard to do. As consultants, we are realistic and certainly understand the anxiety that many of you feel. Our goal is to provide our clients with the tools and resources to weather this unfortunate storm. We have continually stressed the need to stay focused on providing high quality care and service. Even in the midst of the last quarter of 2008 we assisted our clients with stepping up their game and not throwing in the towel. We kept them on track by enhancing their perception of value, reminding them to charge for services rendered, not to discount and even increase their fees as they normally would. We collectively worked hard and that hard work has appeared to pay off.

Here are some examples of practices that have struggled in these tough times and the results of their hard work.

Practice #1
In December, I was contacted by a practice that experienced a $50,000 decrease in sales in November 2008 compared to November 2007. As you can imagine, the owner and manager were concerned and wanted immediate direction and guidance. I spoke at length with the practice and acknowledged that the month of November was horrible. During that conversation I also asked how December was going as we were 10 days into the month at the time. They were so focused on November that they didn't even know. I had them compare the revenue for the first 10 days of December 2008 to that of December 2007 and in those few short days they were already up by $15,000. Even with this optimistic number, they kept going back to November. Not trying to undermine the situation - I had to assist them with getting over what happened in November. No question, it was a bad month; but I couldn't allow November to continue to overshadow what needed to be done. I worked at length with this practice to stimulate business and review opportunities to increase income and decrease expenses. We implemented a target marketing program for the month of February and worked harder than we had ever worked to make sure November was a thing of the past. I spoke with the practice this week and was excited about the enthusiasm that I heard on the other end of the phone. They were like children sharing the results of an awesome report card.

In a nutshell, the target marketing program was a great success. In these tough economic times they had more than doubled the number of dentals during the month of February 2009 compared to February 2008. Their cash flow is better because of their efforts to increase income and decrease/control expenses. The team is motivated. Instead of giving in, they have remained focused on what needs to be done to continue to provide exceptional care to their clients and their pets. They are preparing for their second quarter target marketing program and are thinking of ways to increase foot traffic and volume. Although they have had to work hard, they certainly do not feel their efforts are in vain.

Practice #2
Speaking of tough economic times - I am consulting with a practice in the Detroit, Michigan area. What a tough place to be. This state has represented the worst unemployment rate in the nation for months. Despite their circumstances, in 2008 this practice saw an increase in their average client transaction of nearly 2% and an increase in their professional client transaction of 5%. Although their sales were down, we did not get concerned because this 2 doctor practice dropped down to a 1 doctor practice in April of 2008. They were down in sales less than $30,000 for the entire year. I certainly would hope that a full-time DVM could generate more than $30,000 in an 8 month period - even in the Detroit area. The national average says that a full-time equivalent (FTE), GP DVM generates on average between $30,000- $37,000 per month. You can see my optimism in that this practice would likely have seen an increase in sales if they had remained a 2 doctor practice the entire year. In consulting with the practice, we calculated their daily breakeven point and over head cost per minute so that we could educate the team on what it takes to operate a high quality veterinary practice. We discussed the importance of recommending what is medically prudent, charging for what we do, not discounting. And we focused on enhancing the perception of value in all aspects of the practice. They were astounded by the numbers, but found this information to be very informative and enlightening. On the last day that I was there, they exceeded their breakeven point in four hours. The owner attributes this to not being afraid to recommend what was appropriate for all of the pets she saw and adding value to the client's experience. If this type of improvement can occur in Detroit during these tough times, it can happen in your town.

Practice #3
This practice is also in a tough state, Ohio. Ohio is one of the top 10 states with the highest unemployment rates. I consulted with them in January of this year. The Saturday after I left, they generated more revenue that one day than they had on a Saturday since they purchased the practice six years ago. They not only made their breakeven point, they exceeded it in half of a day as they are only open half days on Saturdays. They said it was because of recommending what is appropriate, adding value and simply charging for what services are rendered.

Practice #4
This last practice had a tough 2007 and started off 2008 even worse. It's as if this practice began to experience the tough economic times before everyone else. However, by the end of 2008 this practice implemented a business plan of enhanced perception of value, adjusting fees so that they were fair and competitive (this even meant increasing some fees,) charging for what they did and not being afraid to recommend what was appropriate for each and every pet despite the economic times. They stayed true to being the pet's advocate. This required a lot of hard work and commitment from the entire team - this practice experienced an increase in sales for 2008 of over 2%. This may seem small, but the previous year they saw nearly an 8% decrease in sales. As for 2009, when I spoke to the owner last month, they had to extend their dental month because they had been so busy. Not only does the owner attribute it to all that they worked on throughout the year, she specifically thanks her team. We hired a team of "10's" and enhanced customer service and support to the owner.

In summary, I am painting a picture of optimism in what we know is a hard time to be positive. This article is not to boast or brag. VMC played a small role in these endeavors; it was the commitment and dedication of these practices that really made a difference. This article is to help anyone who is feeling doubtful to remember that you have to remain hopeful. As practice owners and managers, you must work harder than you probably every have to hire a team of 10's, properly train them, cultivate an environment of excellence, recommend what is appropriate and charge for what you do. Here are four practices that were taken out of their comfort zone and within a short few months are seeing the fruits of their labor. Don't throw in the towel or succumb to these tough times. Continue to be the pet's advocate while providing high quality service and care and adding value to your client's experience each and every time they interact with your practice and team.