“Profit” Should not be One of the Seven Words you Cannot Say in a Veterinary Practice
Remember George Carlin’s classic comedy skit about the seven words you cannot say on the airwaves? I used to listen to the controversial Carlin when my parents weren’t home, and as a teenager was thrilled that somebody recorded a comedian actually saying the forbidden words. But a client said something to me last week that made me realize that in the veterinary industry an eighth word has been added to the list: profit.
I had driven north from my Boston office to meet with the client. One of the 40-year-old co-owners of the mixed animal practice walked into his manager’s office during a lull in the action and engaged in a philosophical discussion with me over the eighth word, profit. He said that somewhere along the line he had accepted the fact that profit was not a requirement in the veterinary medicine. Thankfully, his wife and co-owner had pointed out that without a profit, and one that was growing year after year, the expansion that had just been financed couldn’t be paid for. She was happy that her husband had finally listened to her (and me) after 3 ½ years, even though they had been discussing the same topic since opening their practice.
This was the first time I had ever heard somebody say firsthand what I had heard about many times second or third hand. I thought it was unique to veterinary medicine, and was surprised to discover the same sentiment elsewhere, even in rock & roll.
I was listening to Sirius XM in my car during tax season and heard Gene Simmons and Paul Stanley from the band KISS fielding questions in a town hall format before their Rock & Roll Hall of Fame induction. One subscriber asked whether they were embarrassed by the mass marketing of thousands of KISS retail products: lunchboxes, dolls, etc. Gene is a particularly shameless self-promoter. He answered the question by saying that artists, and anybody that has a business, should not be ashamed to make a profit. In our 24/7 news world, you may not know that it took a band 10 years of playing bars and college festivals to secure a recording contract from a major label. Gene said that in the music business, professional sports, and other industries with potentially ephemeral life spans, you have to (a) generate profits to recoup all the expenditures and low-earning years during your rise to fame and (b) generate profits to compensate for a shortened high-earning career. I agree.
In the case of veterinary medicine, the long climb starts with college, then continues with veterinary school, internships, and low-earnings years. Veterinarians can take 10 years or more (probably more) to turn a profit. Sounds like a band playing the Sunset Strip night after night for a decade before finally scoring a record deal. You have to seize the opportunity as if it may be your last performance.
People who say that profit isn’t an important part of a veterinarian practice forget that the vet is probably still paying off $162,000 in student loans many years after graduating. Shouldn’t the doctor be able to pay his daily living expenses and undergraduate student loans from his regular salary? Shouldn’t she be able to use the profits from owning a veterinary practice to pay off vet school loans? Is it greedy to aim for additional profit for taking a chance on a risky endeavor (as every entrepreneurial venture has some potential for implosion)? We place companies like Beats by Dre, Starbucks, Apple, and Zappos on a pedestal and celebrate their financial and marketing achievements, their maniacal following, and their profits. Why can’t we celebrate the profits of a veterinary practice owner for providing a very valuable service?
Mark J. McGaunn, CPA/PFS, CFP® leads the veterinary/dental/financial planning divisions at McGaunn & Schwadron, CPA’s, LLC and can be reached via email@example.com or (781) 489-6651.