veterinary construction projects

What to Consider Before You Start a Veterinary Construction Project

When your team members are constantly in a bumper car battle in the hallway, or an all-out war breaks out to take an open exam room, it may be time to consider getting more space at your veterinary hospital. The signs of growth are hopefully subtle and haven’t reached these disastrous proportions before you take the hint that it may be time to grow your business.  Taking on a construction project may seem daunting, but the end result can be important for the continued growth of your practice. Designing and building a new veterinary hospital takes a considerable amount of time, so starting the planning early can help with the execution and end result of this endeavor. Whether a renovation or ground-up build, here are four considerations to think about before starting a veterinary construction project:

  1. The People
  2. The Finances
  3. The Space
  4. The Timeline

The People

Design with the end in mind. People, both clients and team members, and the needs of their patients should ultimately be at the heart of your decision of whether to grow your facility and how. It may be worth your while to spend some time talking to several of your loyal clients and your team members to get their perspective on how your current facility impacts their experience. By using a human-centered design approach and first empathizing with the end user, you may find solutions for your new build to problems you didn’t even know you had.

Start by asking them about their experiences.  Ask them to paint you a picture and walk you through every step of their last experience with your clinic either as a customer or employee.  Start with before they even get on the property or in the building. No details are insignificant. If you can, record the conversation or take copious notes listening for what was important to them and how they were feeling about their experience. Rarely, does this exercise not illuminate pain points that can be improved on in the future design of the clinic. Once you get the whole timeline of their last experience, dig in deeper. What did they like most about their experience? What about the least? What would they like to see in the future? Their answers may surprise you, so do this with a variety of clients and team members. Even if the process doesn’t reveal anything earthshattering, it may confirm some good practices and reveal some unknown pain points that can be avoided in the new project.

The Money

Consideration for the finances of a construction project can be a bit of a chicken or egg scenario.  Do you first calculate how much your practice can afford to build or how much what you want to build will cost? Ultimately, the real question is can you afford what you need? The goal is for the new build to increase business, not stress your cash flow. A frustrating scenario is when an owner overbuilds and cannot enjoy their new space because they are overly stressed trying to generate enough business to support the new building’s cost. An equally disheartening scenario is when an owner cannot afford to build a space that will truly allow them to grow; their finances only support a newer version of the same size space they are currently in. By examining your finances early, you can start to have more realistic expectations as what the final product will be.

Total project costs can be dramatically different than just the construction costs. To complete the project architectural, electrical, mechanical, structural and civil engineering costs will be incurred. If building from the ground up, the site acquisition cost and site development cost will also be part of the total project expenses and need to be factored into the construction budget. This includes site development costs, such as grading, utilities, paving, stormwater management and more. All of this will be in addition to the actual costs of the ‘sticks & bricks’ of the building itself. Other costs to think about are IT cabling, security system, phone service, cabinetry, office furniture and equipment. Contingency costs (funds built into the loan budget to serve as a buffer in case unforeseen issues arise or there are cost overruns) are also important to a successful build. Assembling and listening to a team who is experienced in veterinarian construction projects will help ensure your budget includes all the necessary categories.

Conventional and SBA lenders have favorable terms available for financing veterinary construction projects. To determine how much debt the practice can reasonably support, the lender will evaluate whether the cash flow of the business is sufficient to cover the monthly payments associated with financing the construction project. In addition to cash flow, other factors about the practice the lender may examine include:

  • Revenue trends
  • If revenues are maxed out due to limited space
  • If upgrades are needed to keep up with the competition
  • What new services you will be able to offer

Lenders not only consider the business’s ability to pay the loan but also your personal credit history as a major factor in their decision. Having early conversations with your lender can set you up for more successful access to financing.

The Space

Now armed with the information provided by the end users on what the new space needs and an understanding of how much you can afford, you need to start evaluating what the end result of the space will be. With the help of your architect, you will want to establish your wants vs. needs list for your practice. Ask yourself these questions:

  • What additional services will you be offering?
  • What equipment will be required?
  • How many exam rooms will you need now as well as for future growth?
  • What kind of building and style do you want for your practice?

The answers to these questions will influence the design of your building, and ultimately the cost of the building.

The Timeline

Construction projects like these don’t happen overnight, so having realistic expectations on timelines are important to successfully get into your new space. The planning process can last anywhere from years to months. Either way, the more effort put into the early planning stages can have a dramatic influence on outcomes. For instance, realizing early that you may not need an extra 500 square feet could save you upwards of $100,000. The cost influence curve is an important concept to recognize in any construction project; as you move through the stages of your project, your ability to decrease costs continually diminishes.

Depending on the type of construction project, once ground breaks to being fully operational can take anywhere from months with a renovation, to sometimes over a year with a ground-up construction. Geography and time of year can also be important factors to plan around.  Breaking ground in the dead of winter in Northern states may be worth just waiting a few months before starting due to a headache frozen ground can cause. With commercial real estate, determining if the property is properly zoned and the timelines on zoning and permits should be researched to help gauge realistic timelines for the project.

The key for setting a realistic timeline is your team—and getting the right team on board early is critical to a smooth project. The team will likely consist of a lender, architect, contractor and of course, you—the owner. Veterinary industry construction expertise may cost more upfront but may save you time, headaches and long-term costs in the end. This team should work together to ensure a successful project and support you as the owner in decision-making.

Conclusion

By working closely with your lender, architect and contractor or design/build firm, you can execute a successful construction project that helps your practice prosper. Keeping your people, your money, your space and your timeline in mind help lay the foundation for you to love the new space you build.