Business Structure and Finance Flashcards
Strategy
Your long-term plans for your business
Vision Statement
- Understanding meaning and purpose
- Future based
- Aspirational
Mission Statement
- Who, what and why
- Based in the present
- Actionable
Strategic Fit
» Matching resources and capabilities with strategy to gain an advantage
» What is your business environment?
» Where do you need to invest?
Strategic tools to evaluate external business landscape:
1. STEEPLE
2. SWOT
3. Porters Five Forces
Roadmap for achieving a competitive edge:
1. Porter’s Generic Strategies
Steeple
Social factors
Technological factors
Economical factors
Environmental factors
Political factors
Legal factors
Ethical Factors
SWOT Analysis
Strength
Weaknesses
Opportunities
Threats
Porter’s 5 Forces - Competitive Pressure
- Supplier power
- Threat of new entry
- Rivalry
- Threat of substitution
- Buyer power
Porter’s Generic Strategies
- Cost Leadership
- Lower cost
- Broad target - Broad differentiation
- Differentiation
- Broad target - Differentiation focus
- Differentiation
- Narrow target - Cost focus
- Lower cost
- Narrow target
Business Costs of Vet:
» Salary ~20% of expected turnover
» NI contribution
» CPD costs
» Pension costs
» Professional subscriptions
» Benefits in kind (car, pension contributions)
» Uniforms
» Social events
» Training and development costs
Costs
Fixed vs Variable
Fixed Costs - dont vary with income/ activity level
* Building costs
* Employment costs
* Utility bills
* Maintenance
Variable costs - change according to level of business
- Stock
- Overtime
Profits:
Turnover/Revenue = total value of work after VAT subtracted
» Gross Profit = amount remaining after VAT and the direct costs of sales subtracted
» Net Profit = amount remaining after all trading expenses have been deducted
Gross Profit Margin:
Indicates the amount of revenue left after subtracting the cost of goods sold, expressed as a percentage of total revenue:
Gross Margin (%) = Gross Profit/ Revenue
How efficiently a company is operating
Improve Profit Margin
Waste - drug, consumables
Clinical vs non-clinical
Internal vs external lab testing
Health scheme benefits
Pricing strat
Charging culture
Clinical approach to work
Preferred drugs
Stock control
Pet Health Scheme
Monthly direct debit
Membership benefits
* Vaccinations
* Parasite tx
* 6-month health checks
* Microchip
* Reduced price neutering
* Reduced price dentistry
* Percentage discount on all fees
Bonded clients
KPIs - Measure:
How much work is done
How efficiently work was done
How resources are used in process
Outcomes
Vet KPIs:
Stock to Service ratio
ATV - average transaction value
Clinical auditing - post op complications
Client facing interactions/ billable visits - consults, hospital adits, ops
Net promotor scores = client/ staff satisfaction
Ambulatory Work
Overheads?
* Practice likely smaller
* Location less essential for clients
Expenses?
* Fuel prices and availability
* Vehicle payments, contingency plans
Labour costs?
* How many employees?
* Appropriate use of vet’s time?
Payments and debts
* Payment at time of visit more difficult
* Time and money spent chasing debt
Ambulatory Work - Financially Viable
Territory
* Appropriate area
* Size/Accessibility/Competition
What kind of veterinary work?
* Herd health? Repro? GP?
* OOH
* Days and time of operation
How will you get payment?
* usually by invoice
* Increased risk of late or no payment
Visits as efficient as possible
* Zones on different days
* Health plans for more regular monthly payments
Offer unique selling point for meds
* Online/Convenience/Part of health plans
Estimate
Educated guess at what a procedure may cost, but not binding
Given as a range (best to worst-case scenario)
Quotation
- Fixed price offer that cannot be changed once accepted by client
- Price holds even if practice has to carry out much more work
