Is more debt good for your financial future? July 28, 2020 By Jules Benson, BVSc, MRCVS, and Gina SpadaforiIf you’re hoping to buy or expand a practice, you may think your educational debt means you won’t be able to get a business loan. Even if you could get funded, the very idea of adding a few hundred thousand dollars in debt may give you what is commonly, if not medically, described as the heebie-jeebies. It’s time to change your thinking. Not only are you likely to be overwhelmed with lenders happy to do business with you, but owning a profitable practice is also one of the best ways to pay down your student loans in less time. That will leave you able to do things you’d like better than servicing personal debt. Think buying a home, saving for retirement or your kids’ college fund, or going on real vacations. “Being in business for yourself and growing that business makes sense,” says Greg O’Brien. He and his wife, Emily, own O’Brien Veterinary Group in the greater Chicago area. “Getting your mind set to do that can be challenging, even for a group of people as intelligent as veterinarians. Often, the first thing so many veterinarians need to do is examine and reprogram their relationship with money.” Understanding the number crunching Kristina Yee, DVM, of Rochester Hills, Mich., had a head start on thinking like a business owner. She comes from a family of entrepreneurs and has lectured on finances at the nation’s schools and colleges of veterinary medicine. An experienced practitioner, she knew when she started as an associate 13 years ago that she wanted her own practice. “A couple deals fell through, but then, everything just lined up,” she says. “The location was a mile from home, and the price worked. I was comfortable as an associate, but you always want to be able to do things your way.” She opened Hometown Veterinary Hospital just after the Fourth of July, her timetable thrown off about six weeks by pandemic-related issues. She started with a staff of five, including herself, and has been booked pretty solidly ever since. “We’re still waiting on some things,” Dr. Yee says. “But my clients don’t care there’s no art on the walls yet.” Owning a successful business offers financial advantages associate veterinarians never see, both O’Brien and Yee agree. But for anyone stressing over their student loan debt, the biggest advantage for practice owners is the ability to take a profit over and above taking a salary out of the business. And that profit—assuming you have the knowledge and the skill to make it happen—is what will free you of your student and business loan debt more quickly. “I know from speaking at veterinary schools and with colleagues that for many, there’s hesitancy thinking about taking out a business loan when you have student loans,” Yee explains. “We’re not used to carrying that level of debt, and it’s scary. “But when you own your own practice, you can pay student loans off faster. Your outcome is a better work-life balance because of the investment in yourself.” O’Brien says that because veterinary education is so demanding and requires such focus, finances don’t get much attention from many veterinary students and veterinarians. “If you’ve come from a background with a poor understanding of finances, or even a fear or dislike of them, you’ve got to get a handle on that,” O’Brien says. “But it’s certainly more than possible for a group of people who are not lacking in the ability to understand complex issues. Once you get through this personal stock-taking, you’ll be able to look at the business and its finances, along with your personal financial status, with a more pragmatic view, especially when it comes to borrowing money.” Yee didn’t have those concerns. She had networked for years and looked at all the lenders available to her. She even had an opportunity most new practice owners don’t: She had family interested in backing her. “I am a second-generation Chinese-American, and for immigrants, pooling money is often the way to get started,” she says. “It’s flattering, but I didn’t want to owe anyone, so I went the lender route. I just thought it would be cleaner.” When he speaks to veterinary students, O’Brien stresses the financial literacy Yee worked hard to develop. For the last seven years, he has taught an elective course in practice success skills at Purdue University’s College of Veterinary Medicine. That, he says, has given him an inside look at the challenges facing not only veterinary students, but also practicing veterinarians. “A lot of veterinarians have hang-ups about the idea that it’s OK to make money,” he says. “Physicians are largely shielded from this because in human care, medical pricing, billing, and collections are handled by third parties, or they’d probably have these hang-ups, too. It’s the nature of being in a caring profession. Owning or expanding a practice through a business loan will have limited success if you’re not willing to be both a veterinarian and a savvy small business owner at the same time. “But of course, veterinary medicine is a pay-as-you-go profession in terms of what clients experience. Even with pet health insurance, there’s a reimbursement model in which the client pays the bill first, no matter how small or how large it may be. And since the client is paying, that puts a lot of pressure on veterinarians, whether they’re associates or practice owners.” O’Brien says that even if veterinarians know intellectually they need to be profitable to keep the lights on, it’s difficult for many of them to face clients and not feel guilty for charging fairly to keep the practice viable and their own finances on track. “This is one of the reasons why veterinarians are such wonderful people, but it puts intense pressure on them on top of the strain of dealing with life and death decisions and emotional clients every day,” he says. “Educating yourself on business and finance, and then acting on that knowledge, can be very satisfying.” Bottom line: The whole idea of capital funding is one of those purposeful steps you have to navigate as a successful business. A matchmaking endeavor O’Brien notes finding the right lender requires research, and it’s important to find a good fit for the owner and for the practice itself. Lenders are anxious to loan money to good veterinary practices, he says, and many have divisions that do nothing but lend to businesses in the medical fields. That said, starting, buying, or expanding a practice through a business loan will have limited success if you’re not willing to be both a veterinarian and a savvy small business owner at the same time. “If you are going to take the leap to buy a practice, make sure you operate it profitably,” O’Brien advises. “And not just for your own financial health. You’re also doing it for your team, your patients, your clients, and your community. If you’re not a successful business owner, your quality of life on every dimension suffers.” There’s so much information to absorb, he says, noting that in addition to skill centers and obvious sources such as books, there is a great deal of information on personal and business financial management on YouTube. “Ask yourself: Is this a knowledge gap or is it a skill gap?” O’Brien says. “Sometimes, veterinarians don’t know what they don’t know, but there’s no problem if you know how to find out what you’re missing. Great news: There are many resources, including those that advise how to buy or expand a small business, and veterinary practices in particular. The only thing you need to do is get started.” Yee agrees, and adds that in addition to finding the right fit with a lender, it’s important to know that in business, everything is negotiable. “Many of my colleagues don’t know how to do that, but in my case, I negotiated for everything, including a lower interest rate. Do your homework and don’t just accept what’s offered.” After years of dreaming, researching, and working toward her goals, Yee says she is finally where she wanted to be. “It’s exciting, and I’m still in disbelief I’m the owner,” she says. “But I have received so much in the way of faith and support in what I do. It was worth it.” Jules Benson, BVSc, MRCVS, is an associate vice president and the chief veterinary officer for Nationwide. In this role, he oversees the company’s veterinary research and relations with the veterinary community. Gina Spadafori is a communications specialist for Nationwide, a former syndicated pet-care columnist and the author or co-author of 17 books on pets and their care, including Dogs For Dummies and Cats For Dummies.