Professional studies - models of business and finance

Question 1

What are the different business models in veterinary practice?

Answer 1

Sole traders/partnerships
Limited liability company
Public liability company
Veterinary corporations

Question 2

What was the most common form of veterinary business before 1998?

Answer 2

Sole traders/partnerships

Question 3

What is a sole trader business model?

Answer 3

Self employed
Personal risk high
Taxed using personal allowances

Question 4

What are the benefits of using a sole trader business model?

Answer 4

Full control
Simple to operate
No legal requirement to file business accounts n public record

Question 5

What business model is used as a way of reducing personal risk?

Answer 5

Limited liability partnership

Question 6

What is a limited liability partnership?

Answer 6

Each member pays tax on their share of the profits (like a general partnership) but they arent personally liable for the debts of the business

Question 7

What is a joint venture?

Answer 7

A business proposition/arrangement between two or more persons/limited companies
Not a partnership

Question 8

What needs to be ensured when in a joint venture?

Answer 8

Ensure the structure enables exit and responsibilities are defined

Question 9

What is the basic company structure of most veterinary companies?

Answer 9

Private limited company

Question 10

What does limited liability mean?

Answer 10

Company (seen as a person in the eyes of the law) is liable for its debts but the shareholders liability is limited to the amount they have invested in the company

Question 11

Since when have veterinary businesses been able to be companies?

Answer 11

1998

Question 12

Who are required in a limited liability company?

Answer 12

At least 1 director and 1 shareholder

Question 13

What is a director?

Answer 13

Someone who is responsible for making sure that the company fulfils its legal requirements to produce financial accounts in accordance with UK accounting standards

Question 14

What do public liability companies have to have?

Answer 14

Must have a qualified secretary (accountant)
Must have 2 directors
At least a minimum of £50000 in share capital which can be traded on the stock market to raise capital

Question 15

What are the different ways that companies and corporations can operate as a veterinary business?

Answer 15

Independent veterinary company
Corporate consolidator
Corporate joint venture partnerships/franchises
Large independents

Question 16

What are corporate consolidators?

Answer 16

Large companies buy the individual vet practices but original branding/practice staff are retained
Looks same to customer
But HR, marketing, finance etc. go through central company

Question 17

What is an example of a corporate consolidator?

Answer 17

IVC

Question 18

What are corporate joint venture partnerships/franchises?

Answer 18

When large companies provide a loan to start up a new practice or buy the assets of an existing practice in a joint venture
The partner (vet that invested) pays back the loan but is still supported by the central company
Partner gets to run day to day but are locked into branding and supply chains etc.
Exiting from this involves finding another partner to buy it off existing partner

Question 19

What are examples of corporate joint venture partnerships/franchises?

Answer 19

Vets for pets, medivet

Question 20

What are large independents?

Answer 20

Operate in the same way as corporates but grow through organic growth

Question 21

What is an example of a large independent vet practice organisation?

Answer 21

Goddard group

Question 22

How many vet practices are owned by a corporation?

Answer 22

50%

Question 23

What are the different methods of financing veterinary businesses?

Answer 23

Vendor finance
Unsecured bank loan
Shares
Debt
Private equity
Angel investors 
Corporate acquisition
Public sale of shares

Question 24

What is vendor finance?

Answer 24

Vet business loans the money to a new partner

Question 25

What is public equity?

Answer 25

The public sale of shares, public invest

Question 26

What are angel investors?

Answer 26

High net worth investors that provide finances for start ups eg. Dragons den

Question 27

Why would people sell to corporate businesses?

Answer 27

Instant return for independent practices that are looking to retire