Professional studies - models of business and finance Flashcards
What are the different business models in veterinary practice?
Sole traders/partnerships
Limited liability company
Public liability company
Veterinary corporations
What was the most common form of veterinary business before 1998?
Sole traders/partnerships
What is a sole trader business model?
Self employed
Personal risk high
Taxed using personal allowances
What are the benefits of using a sole trader business model?
Full control
Simple to operate
No legal requirement to file business accounts n public record
What business model is used as a way of reducing personal risk?
Limited liability partnership
What is a limited liability partnership?
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
What is a joint venture?
A business proposition/arrangement between two or more persons/limited companies
Not a partnership
What needs to be ensured when in a joint venture?
Ensure the structure enables exit and responsibilities are defined
What is the basic company structure of most veterinary companies?
Private limited company
What does limited liability mean?
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
Since when have veterinary businesses been able to be companies?
1998
Who are required in a limited liability company?
At least 1 director and 1 shareholder
What is a director?
Someone who is responsible for making sure that the company fulfils its legal requirements to produce financial accounts in accordance with UK accounting standards
What do public liability companies have to have?
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
What are the different ways that companies and corporations can operate as a veterinary business?
Independent veterinary company
Corporate consolidator
Corporate joint venture partnerships/franchises
Large independents
What are corporate consolidators?
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
What is an example of a corporate consolidator?
IVC
What are corporate joint venture partnerships/franchises?
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
What are examples of corporate joint venture partnerships/franchises?
Vets for pets, medivet
What are large independents?
Operate in the same way as corporates but grow through organic growth
What is an example of a large independent vet practice organisation?
Goddard group
How many vet practices are owned by a corporation?
50%
What are the different methods of financing veterinary businesses?
Vendor finance Unsecured bank loan Shares Debt Private equity Angel investors Corporate acquisition Public sale of shares
What is vendor finance?
Vet business loans the money to a new partner
What is public equity?
The public sale of shares, public invest
What are angel investors?
High net worth investors that provide finances for start ups eg. Dragons den
Why would people sell to corporate businesses?
Instant return for independent practices that are looking to retire
