Veterinary Clinic Business Plan
The Southwest Veterinary Clinic will be located in southwest Richmond. It will offer a full range of medical services to the area’s pet owners. Southwest Richmond is a mix of industrial and residential property, with approximately 20,000 moderate-income residents, many of whom are elderly with multiple pets.
Currently, the three nearest veterinary clinics are a fifteen-minute drive from most southwest Richmond residents. The Southwest Veterinary Clinic, however, will be just a five-minute drive away.
Edward Anderson, DVM, and Michelle Johnson, DVD, have a combined seven years of veterinary experience. Edward has four years of experience at the Richmond Emergency Veterinary Hospital, while Michelle has served as a staff veterinarian at Blue Cross Hospital for three years.
Both Richmond Emergency and Blue Cross Hospitals cater to southwest Richmond residents. Edward and Michelle have treated numerous pets from this area over the years, earning praise for their service. Thirty customers have already confirmed their intention to use the new hospital’s services.
#### 1.1 Mission
Our goal is to help pets live long, healthy lives. We believe a key element to pet health is a great relationship with your veterinarian. Everyone at Southwest Veterinary Clinic is committed to professional, personalized care. We pride ourselves in our dedication to the highest standards in veterinary medicine. We have a full-service clinic with state-of-the-art technology.
#### 1.2 Keys to Success
– We treat our patients like our own pets and strive to provide the service customers desire and deserve.
– We take an individualized approach to long-term care for each patient, providing clients with enough information to make appropriate healthcare decisions for their animals.
#### Company Summary
Southwest Veterinary Clinic will be located in southwest Richmond and will offer a full range of medical services to the area’s pet owners.
#### 2.1 Company Ownership
Edward Anderson, DVM, and Michelle Johnson, DVD, are co-owners of Southwest Veterinary Clinic.
#### 2.2 Start-up Summary
Southwest Veterinary Clinic’s start-up costs include medical, surgical, and lab equipment. Additionally, there will be a $30,000 interior remodeling cost for the clinic. Edward Anderson and Michelle Johnson will invest $80,000. To secure funding, they will also obtain a $70,000 SBA loan.
Start-up Requirements:
– Legal: $2,000
– Stationery etc.: $1,000
– Medical/Surgical Equipment: $40,000
– Lab Equipment: $30,000
– Insurance: $2,000
– Rent: $3,000
– Clerical/Bookkeeping Setup: $2,000
– Kennel Equipment: $5,000
– Waiting Room/Examination Rooms Setup: $10,000
– Total Start-up Expenses: $95,000
Start-up Assets:
– Cash Required: $25,000
– Other Current Assets: $0
– Long-term Assets: $110,000
– Total Assets: $135,000
Total Requirements: $230,000
Start-up Funding:
– Start-up Expenses to Fund: $95,000
– Start-up Assets to Fund: $135,000
– Total Funding Required: $230,000
Assets:
– Non-cash Assets from Start-up: $110,000
– Cash Requirements from Start-up: $25,000
– Additional Cash Raised: $0
– Cash Balance on Starting Date: $25,000
– Total Assets: $135,000
Liabilities and Capital:
– Liabilities
– Current Borrowing: $0
– Long-term Liabilities: $150,000
– Accounts Payable (Outstanding Bills): $0
– Other Current Liabilities (interest-free): $0
– Total Liabilities: $150,000
– Capital
– Planned Investment
– Michelle Johnson: $40,000
– Edward Anderson: $40,000
– Additional Investment Requirement: $0
– Total Planned Investment: $80,000
– Loss at Start-up (Start-up Expenses): ($95,000)
– Total Capital: ($15,000)
Total Capital and Liabilities: $135,000
Total Funding: $230,000
2.3 Company Locations and Facilities
Southwest Veterinary Clinic will be located on the corner of 7th and Stewart, two of the busiest streets in southwest Richmond.
Products and Services
Southwest Veterinary Clinic will offer the following services:
– Internal medicine and surgery
– Orthopedics
– Dental care
– Skin disorders
– Geriatric care
– Endoscopy
– Reproductive services
Market Analysis Summary
Southwest Richmond is a section of the city that has become primarily industrial. There are approximately 20,000 residents in the area who are currently underserved in basic services. The area’s residents can be put into three groups: elderly, moderate-income families, and young single adults. All three groups own pets but find it difficult to find local veterinary resources. Southwest Veterinary Clinic will fill the community’s need for reasonably priced local veterinary services.
4.1 Market Segmentation
Southwest Veterinary Clinic will focus on three customer groups:
– Elderly: This group is pivotal to the success of the clinic. They are proactive about their pets’ health and demand a strong relationship with their pet’s veterinarian. They will become loyal customers who will refer friends and neighbors.
– Moderate-income Families: This group is important for sustained growth. A veterinary service relationship with a family can last 10-20 years during which time the family can own numerous pets.
– Young, Single Adults: This group primarily visits the clinic for emergencies, reproduction services, and shots, but still represents a significant source of customers.
Market Analysis
Potential Customers Growth Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Elderly 5% 6,000 6,300 6,615 6,946 7,293 5.00%
Moderate-income Families 10% 10,000 11,000 12,100 13,310 14,641 10.00%
Young Adults 10% 4,000 4,400 4,840 5,324 5,856 10.00%
Total 8.57% 20,000 21,700 23,555 25,580 27,790 8.57%
Strategy and Implementation Summary
The clinic’s success relies on its visibility in the community. The location, on the corner of 7th and Stewart, two busy streets in southwest Richmond, is crucial. Being visible in the community and using the name “Southwest” will communicate the clinic’s local presence to residents seeking veterinary services.
Edward Anderson and Michelle Johnson will meet with the three Southwest Seniors Organizations and the five Southwest Neighborhood Associations to introduce the veterinary hospital. During these meetings, invitations to the clinic’s grand opening will be distributed.
Additionally, Southwest Veterinary Clinic will offer a 15% discount on pet’s next visit to customers who refer friends and neighbors to the clinic.
Competitive Edge
Southwest Veterinary Clinic’s competitive edge includes:
– Location: It is situated on the corner of 7th and Stewart, two streets with heavy traffic. The closest veterinary clinic to the Southwest area is a fifteen-minute drive away.
– Southwest Area Focus: Currently, there are no southwest-focused veterinary clinics in the area. Southwest Veterinary Clinic will be the only one.
To develop effective business strategies, perform a SWOT analysis. Use our free guide and template to learn how.
Sales Strategy
The sales strategy of Southwest Veterinary Clinic will focus on growing through referrals. Satisfied customers referring others will be critical to the clinic’s success. To encourage referrals, the clinic will offer a 15% discount on the next visit for each referral.
Here is the sales forecast for the next three years.
Sales Forecast:
Year 1 Year 2 Year 3
Sales:
Services $417,000 $450,000 $490,000
Other $0 $0 $0
Total Sales $417,000 $450,000 $490,000
Direct Cost of Sales:
Year 1 Year 2 Year 3
Services $98,700 $110,000 $120,000
Other $0 $0 $0
Subtotal Direct Cost of Sales $98,700 $110,000 $120,000
Management Summary:
Edward Anderson and Michelle Johnson will co-manage the clinics daily operation.
Personnel Plan:
The Southwest Veterinary Clinic will have a staff of three:
– Receptionist
– Veterinary assistants (2)
Year 1 Year 2 Year 3
Edward Anderson $45,600 $50,000 $55,000
Michelle Johnson $45,600 $50,000 $55,000
Receptionist/Clerical $24,000 $30,000 $33,000
Veterinary Assistants (2) $52,800 $53,000 $55,000
Total People 5 5 5
Total Payroll $168,000 $183,000 $198,000
The following is the financial plan for Southwest Veterinary Clinic.
Break-even Analysis:
The monthly break-even point is $30,000.
Break-even Analysis
Monthly Revenue Break-even: $28,351
Assumptions:
– Average Percent Variable Cost: 24%
– Estimated Monthly Fixed Cost: $21,641
7.2 Projected Profit and Loss
The following is the projected profit and loss for three years.
Pro Forma Profit and Loss
Year 1 Year 2 Year 3
Sales $417,000 $450,000 $490,000
Direct Cost of Sales $98,700 $110,000 $120,000
Other Production Expenses $0 $0 $0
Total Cost of Sales $98,700 $110,000 $120,000
Gross Margin $318,300 $340,000 $370,000
Gross Margin % 76.33% 75.56% 75.51%
Expenses
Payroll $168,000 $183,000 $198,000
Sales and Marketing and Other Expenses $6,000 $6,000 $6,000
Depreciation $11,424 $11,424 $11,424
Leased Equipment $0 $0 $0
Utilities $3,600 $3,600 $3,600
Insurance $7,200 $7,200 $7,200
Rent $36,000 $36,000 $36,000
Payroll Taxes $27,465 $30,300 $32,400
Other $0 $0 $0
Total Operating Expenses $259,689 $277,524 $294,624
Profit Before Interest and Taxes $58,611 $62,476 $75,376
EBITDA $70,035 $73,900 $86,800
Interest Expense $14,242 $12,901 $11,502
Taxes Incurred $13,311 $14,872 $19,162
Net Profit $31,058 $34,702 $44,712
Net Profit/Sales 7.45% 7.71% 9.12%
7.3 Projected Cash Flow
The following is the projected cash flow for three years.
Pro Forma Cash Flow
| Cash Flow | |||
| Year 1 | Year 2 | Year 3 | |
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $417,000 | $450,000 | $490,000 |
| Subtotal Cash from Operations | $417,000 | $450,000 | $490,000 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| Subtotal Cash Received | $417,000 | $450,000 | $490,000 |
Projected Balance Sheet
| Balance Sheet | |||
| Year 1 | Year 2 | Year 3 | |
| Assets | |||
| Current Assets | |||
| Cash | $78,618 | $103,779 | $147,154 |
| Other Current Assets | $0 | $0 | $0 |
| Total Current Assets | $78,618 | $103,779 | $147,154 |
| Long-term Assets | |||
| Long-term Assets | $110,000 | $110,000 | $110,000 |
| Accumulated Depreciation | $11,424 | $22,848 | $34,272 |
| Total Long-term Assets | $98,576 | $87,152 | $75,728 |
| Total Assets | $177,194 | $190,931 | $222,882 |
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | Industry Profile | |
| Sales Growth | 0.00% | 7.91% | 8.89% | -2.90% |
| Percent of Total Assets | ||||
| Other Current Assets | 0.00% | 0.00% | 0.00% | 32.60% |
| Total Current Assets | 44.37% | 54.35% | 66.02% | 59.90% |
| Long-term Assets | 55.63% | 45.65% | 33.98% | 40.10% |
| Total Assets | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 14.18% | 9.51% | 8.70% | 31.10% |
| Long-term Liabilities | 76.76% | 63.91% | 48.47% | 21.50% |
| Total Liabilities | 90.94% | 73.41% | 57.16% | 52.60% |
| Net Worth | 9.06% | 26.59% | 42.84% | 47.40% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 76.33% | 75.56% | 75.51% | 40.00% |
| Selling, General & Administrative Expenses | 71.42% | 70.80% | 68.96% | 23.70% |
| Advertising Expenses | 1.44% | 1.33% | 1.22% | 0.50% |
| Profit Before Interest and Taxes | 14.06% | 13.88% | 15.38% | 3.60% |
| Main Ratios | ||||
| Current | 3.13 | 5.72 | 7.59 | 1.95 |
| Quick | 3.13 | 5.72 | 7.59 | 1.26 |
| Total Debt to Total Assets | 90.94% | 73.41% | 57.16% | 52.60% |
| Pre-tax Return on Net Worth | 276.30% | 97.66% | 66.90% | 5.50% |
| Pre-tax Return on Assets | 25.04% | 25.96% | 28.66% | 11.60% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 7.45% | 7.71% | 9.12% | n.a |
| Return on Equity | 193.41% | 68.36% | 46.83% | n.a |
| Activity Ratios | ||||
| Accounts Payable Turnover | 8.22 | 12.17 | 12.17 | n.a |
| Payment Days | 27 | 36 | 29 | n.a |
| Total Asset Turnover | 2.35 | 2.36 | 2.20 | n.a |
| Debt Ratios | ||||
| Debt to Net Worth | 10.03 | 2.76 | 1.33 | n.a |
| Current Liab. to Liab. | 0.16 | 0.13 | 0.15 | n.a |
| Liquidity Ratios | ||||
| Net Working Capital | $53,490 | $85,625 | $127,768 | n.a |
| Interest Coverage | 4.12 | 4.84 | 6.55 | n.a |
| Additional Ratios | ||||
| Assets to Sales | 0.42 | 0.42 | 0.45 | n.a |
| Current Debt/Total Assets | 14% | 10% | 9% | n.a |
| Acid Test | 3.13 | 5.72 | 7.59 | |
| Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
| Plan Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
| Current Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
| Long-term Interest Rate | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | 10.00% | |
| Tax Rate | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | 30.00% | |
| Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Pro Forma Profit and Loss:
| Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | |
| Sales | $15,000 | $20,000 | $23,000 | $26,000 | $30,000 | $34,000 | $36,000 | $40,000 | $44,000 | $46,000 | $50,000 | $53,000 | |
| Direct Cost of Sales | $4,000 | $5,000 | $5,300 | $6,000 | $7,000 | $8,000 | $8,400 | $9,000 | $10,000 | $11,000 | $12,000 | $13,000 | |
| Other Production Expenses | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Total Cost of Sales | $4,000 | $5,000 | $5,300 | $6,000 | $7,000 | $8,000 | $8,400 | $9,000 | $10,000 | $11,000 | $12,000 | $13,000 | |
| Gross Margin | $11,000 | $15,000 | $17,700 | $20,000 | $23,000 | $26,000 | $27,600 | $31,000 | $34,000 | $35,000 | $38,000 | $40,000 | |
| Gross Margin % | 73.33% | 75.00% | 76.96% | 76.92% | 76.67% | 76.47% | 76.67% | 77.50% | 77.27% | 76.09% | 76.00% | 75.47% | |
| Expenses | |||||||||||||
| Payroll | $14,000 | $14,000 | $14,000 | $14,000 | $14,000 | $14,000 | $14,000 | $14,000 | $14,000 | $14,000 | $14,000 | $14,000 | |
| Sales and Marketing and Other Expenses | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | $500 | |
| Depreciation | $952 | $952 | $952 | $952 | $952 | $952 | $952 | $952 | $952 | $952 | $952 | $952 | |
| Leased Equipment | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Utilities | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | $300 | |
| Insurance | $600 | $600 | $600 | $600 | $600 | $600 | $600 | $600 | $600 | $600 | $600 | $600 | |
| Rent | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | $3,000 | |
| Payroll Taxes | 15% | $2,220 | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 | $2,295 |
| Other | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Total Operating Expenses | $21,572 | $21,647 | $21,647 | $21,647 | $21,647 | $21,647 | $21,647 | $21,647 | $21,647 | $21,647 | $21,647 | $21,647 | |
| Profit Before Interest and Taxes | ($10,572) | ($6,647) | ($3,947) | ($1,647) | $1,353 | $4,353 | $5,953 | $9,353 | $12,353 | $13,353 | $16,353 | $18,353 | |
| EBITDA | ($9,620) | ($5,695) | ($2,995) | ($695) | $2,305 | $5,305 | $6,905 | $10,305 | $13,305 | $14,305 | $17,305 | $19,305 | |
| Interest Expense | $1,240 | $1,231 | $1,221 | $1,211 | $1,201 | $1,192 | $1,182 | $1,172 | $1,163 | $1,153 | $1,143 | $1,133 | |
| Taxes Incurred | ($3,544) | ($2,363) | ($1,550) | ($857) |
| Pro Forma Cash Flow | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Cash Received | |||||||||||||
| Cash from Operations | |||||||||||||
| Cash Sales | $15,000 | $20,000 | $23,000 | $26,000 | $30,000 | $34,000 | $36,000 | $40,000 | $44,000 | $46,000 | $50,000 | $53,000 | |
| Subtotal Cash from Operations | $15,000 | $20,000 | $23,000 | $26,000 | $30,000 | $34,000 | $36,000 | $40,000 | $44,000 | $46,000 | $50,000 | $53,000 | |
| Additional Cash Received | |||||||||||||
| Sales Tax, VAT, HST/GST Received | 0.00% | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| New Other Liabilities (interest-free) | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| New Long-term Liabilities | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Sales of Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Sales of Long-term Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| New Investment Received | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | |
| Subtotal Cash Received | $15,000 | $20,000 | $23,000 | $26,000 | $30,000 | $34,000 | $36,000 | $40,000 | $44,000 | $46,000 | $50,000 | $53,000 | |
Pro Forma Balance Sheet
| Pro Forma Balance Sheet | |||||||||||||
| Month 1 | Month 2 | Month 3 | Month 4 | Month 5 | Month 6 | Month 7 | Month 8 | Month 9 | Month 10 | Month 11 | Month 12 | ||
| Assets | Starting Balances | ||||||||||||
| Current Assets | |||||||||||||
| Cash | $25,000 | $24,557 | $20,999 | $18,234 | $17,357 | $19,079 | $22,908 | $26,878 | $33,950 | $43,399 | $52,975 | $65,238 | $78,618 |
| Other Current Assets | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Total Current Assets | $25,000 | $24,557 | $20,999 | $18,234 | $17,357 | $19,079 | $22,908 | $26,878 | $33,950 | $43,399 | $52,975 | $65,238 | $78,618 |
| Long-term Assets | |||||||||||||
| Long-term Assets | $110,000 | $109,048 | $108,096 | $107,144 | $106,192 | $105,240 | $104,288 | $103,336 | $102,384 | $101,432 | $100,480 | $99,528 | $98,576 |
| Accumulated Depreciation | $0 | $952 | $1,904 | $2,856 | $3,808 | $4,760 | $5,712 | $6,664 | $7,616 | $8,568 | $9,520 | $10,472 | $11,424 |
| Total Long-term Assets | $110,000 | $109,048 | $108,096 | $107,144 | $106,192 | $105,240 | $104,288 | $103,336 | $102,384 | $101,432 | $100,480 | $99,528 | $98,576 |
| Total Assets | $135,000 | $133,605 | $129,095 | $125,378 | $123,549 | $124,319 | $127,196 | $130,214 | $136,334 | $144,831 | $153,455 | $164,766 | $177,194 |
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