Why don’t more veterinary practice owners and managers use business consultants?
Veterinary practice owners need help running their businesses, but how the veterinary consulting industry works may not work for them. Here's how to change that.
Earlier this year, I hypothesized that the business model employed by the vast majority of veterinary business consultants is no longer working for practice owners. I set out to find why more veterinary practice owners don’t use coaches and consultants; I spoke to owners, managers and consultants, I conducted anonymous surveys and tried to draw parallels from data in other industries.
The process did not by any means follow the scientific method and while I haven’t drawn any definitive conclusions, some clear trends began to emerge. I wanted to share them here in the hopes of continuing the discussion.
Firstly, I’d like to highlight that my goals in relation to this are the same as those of practice owners and consultants: Profitable, well-run veterinary practices with happy teams and clients. Any criticism of the industry is in order to improve it, so that we may move closer to attaining this goal. I have friends, acquaintances and colleagues on both sides of the table (well, they’re all on the same side, most consultants were practice owners at some point), and I see that the status quo is not working for either parties. Practice owners are struggling with their business performance, while consultants are bending over backward to acquire clients.
Here’s what I found:
The top percent of practice owners see the value consultants bring and do not hesitate to invest in a consultant. I don’t know what that exact percentage is, and it varies country to country. In Australia, I’d say it’s 10 percent; in the United States, it’s higher. These are the practices that are financially performing well, and the consultants who are able to gain these practices as clients have full schedules. Many of the issues I write about here don’t apply to the consultants and practice owners who operate within this market niche. But the question remains: Why don’t more veterinary practice owners and managers use consultants?
The majority of practice owners and managers I surveyed said that when they have a problem in their practice, they try to resolve it on their own by Googling solutions or seeking the advice of colleagues. (See Chart 1)
Chart 1: How are practice owners and managers currently solving their biggest practice management problems?
Even the ones who have used consultants in the past said that finding the right person to help them was too complicated. I believe this is in part due to the increasing number of independent veterinary management consultants in the market and homogenous services. Seventy percent of survey respondents said that even after they review the consultants’ websites, they remain unsure if the consultant can help them solve their specific practice management problems.
One hundred percent of survey respondents said they do not want to enter into an annual service agreement with a consultant (50 percent strongly agree; 50 percent agree). This figure was lower when I spoke with practice owners and consultants, particularly those in the top 10 percent of the market.
Ninety percent of survey respondents said they strongly agree with the following statement: “Before I even contact a consultant, I want to know what their fees are.” Speaking to practice owners and managers, I believe there are a few reasons for this:
- There is the perception that consultants charge exorbitant fees, even if that’s not always the case.
- Veterinarians don’t like to say “no.” The traditional model of veterinary management consulting requires a practice owner or manager to contact the consultant, discuss their business, receive a proposal and review the consultant’s fees. At this point the client can accept or reject the fees, and it’s this awkward rejection that veterinarians want to avoid.
- Veterinarians don’t want to be judged as poor business owners. Veterinarians are high achievers and believe they should be able to run a successful business. Asking for help from a consultant is admitting defeat, and opening up one’s books is opening up oneself to criticism.
Practice owners and managers I surveyed and spoke with said that it’s difficult to judge the quality of a consultant prior to engaging them. And who wants to go through the proposal process multiple times to find a good fit, then enter into an annual contract with one person? A number of people cited this as the reason they don’t use consultants — they said they wanted a variety of expertise and points of view, and being “stuck” with one consultant for 12 months didn’t appeal to them.
While some consultants do offer help with implementation, there was a perception among the practice owners and managers I spoke with that a consultant only offers advice, leaving the owner to implement the required changes on their own.
I looked at many consultants’ websites and noticed that they state they offer a “tailored service suited to your needs” and urge the prospective client to contact them to discuss their needs. This was in stark contrast to many other services and sites I was visiting. For example, software vendors have shifted from on-premises licensed software to public cloud-based offerings. Annual licenses have been replaced with monthly pay-per-user software as a service (SaaS), with no annual contracts and automatic billing. Think Quickbooks and Microsoft Office 365.
Hubspot CRM offers three monthly plans on their website.
Does the image below look familiar? Here are the highlights: Transparent monthly fees, no contracts, easy online signups, ability to cancel anytime.
These pricing models are not employed only by traditional software companies. They are growing in popularity across many industries, and consumers are becoming accustomed to the flexibility and transparency this model offers. There are easy, online, monthly subscriptions now for coffee delivery, wine delivery and even women’s underwear!
What is so different about veterinary management consulting? Why is the industry not adapting to meet the changing demands of consumers, as many other industries have done? Insisting that prospective customers contact a consultant to discuss pricing, specific service offerings and contracts poses a threat to veterinary management consultants. The model is outdated.
The wider management consulting industry is responding to these and other market changes since the GFC, which include caps on consulting projects, tighter budgets, requirement to prove return on investment and demand for lower hourly rates. There has been a shift toward becoming more virtual, carrying out projects online and minimizing the amount of personal time spent in the office and/or on the road.
In the recent years, disruptors have emerged in the traditional market with a new business model that removes the need for the ‘firm’ and allows the business owner or manager to gain access to management consultants directly. HourlyNerd allows small to medium-sized companies to engage an ivy-league MBA for a short term project, Clarity allows tech startups to schedule phone calls with Silicon Valley experts online and SpareHire helps companies of all sizes engage global financial consulting talent.
Harvard Business Review published an article in 2013 in which the disruption of the management consulting industry was predicted to mimic that faced by the legal industry — emerging law firms are innovating quickly and ‘unbundling’ services, with a focus on fixed-cost pricing structures and use of technology to make access to legal advice more accessible.
Yet not much has changed in the veterinary management consulting space. So how do we get the large, middle segment of the market to engage a consultant? I believe we need to change the fundamentals of the business model employed by veterinary management consultants to attract practice owners and managers outside that top few percent of the market that are currently using consultants.
- Firstly, let’s change the terminology and eliminate some of the preconceptions surrounding consultants: that fees are high and that there is no help with implementation. Practice owners don’t want to engage “consultants” but they do want help running their practices.
- Eliminate annual service agreements and monthly retainers. Offering a more flexible business model with less commitment could go a long way toward reducing the complexity of the purchase decision.
- Add transparency surrounding fees to eliminate the requirement for owners and managers to contact consultants, receive proposals and then reject them.
- Be clearer about specific services offered to help answer the question “can this expert help me solve the problem in my practice?”
- Utilize practice managers as experts in management and administration. The final point is a significant shift in the status quo and requires further explanation. Some practice managers with significant experience see consulting as the next logical step. Some consultants I spoke with said that the market is becoming overcrowded with practice managers who are trying to get into consulting. They are copying the existing business models and even the existing fees charged by experienced consultants. Many struggle to build their reputation and compete with established players. I believe this is because they are all competing for that top few percent of the market. But isn’t there significant value that practice managers could bring to the large, middle segment of the market? Absolutely, and they should employ the new, more flexible business model to differentiate themselves and meet the previously described needs of this segment.
There is no doubt that as market conditions change and as practices face new challenges, so will their need for consulting services. The real question is how these services will be delivered in the future.