The idyllic picture of the American Dream—owning a car, a house and running a business. But for many veterinarians, that dream has become distorted into a series of debt and regret, and the struggle has become quite real. It is no secret that the cost of veterinary education has skyrocketed in recent years, but does that mean that the burden of student loan debt associated with getting the degree has put the other piece of owning a veterinary practice out of reach? Conventional wisdom says yes, of course. But let’s step outside our traditional narrative and look at ownership from a different perspective for a moment.
Sam did her time and paid her dues in return for her education and those all-important initials behind her name that allow her to practice veterinary medicine every day. Along with that knowledge and license came the equivalent of a home mortgage on her personal financial statement. Now, Sam has been out for a couple of years working for a practice doing a great job of delivering exceptional service and quality care to the pet owners in her community. Sam knows that the science she learned in school was important, but her experience at that practice has taught her so much more about being a good veterinarian. This leaves her with a nagging feeling every month when she makes that hefty payment on the debt for her formal education as that large balance still looms in the background.
Her frustration mounts when she thinks about her brother who spent a similar sum on his education, but is not being burdened by it. His job in another field pays nearly double for the same number of hours of work. Sam ponders both sides of the issue: is her debt the problem or is it her income? By industry standards, she is being paid fairly for the work she is doing, but her financial frustration weighs on her. Sam stays late, treats clients exceptionally well and does everything she can to see as many patients as she can. While she has been able to increase her income some by doing this, it is not putting a dent in the tremendous burden of her educational expenses. Sam is passionate about practicing medicine but doesn’t know how she is going to ever make a dent in the debt she incurred to be in this business. An idea strikes, “Side hustle!” Maybe she can leverage her knowledge to write on industry topics for media outlets. So, on her next day off, she heads off to the local coffee shop to try her hand at becoming a writer.
She settles in with her steaming coffee, opening her laptop, and facing the infinite void of the blank page that all writers initially trudge through. As she concentrates and taps away at her keys, her friend Layla who owns the coffee shop stops by to say hi. The small talk wanders into a more meaningful conversation as the two realize it has been awhile since they caught up with each other. Soon they find themselves pining over a weekend getaway, and Layla says, “well, let’s just go!” But Layla finds herself staring at the longing regret descending upon Sam’s face.
“What do mean you can’t afford it?” Layla pries. “You have a great job!?”
Sam goes on to explain how the crushing burden of her educational costs weighing her down. Layla snickers and teasingly jests “you mean to tell me that my piping hot bean water can afford me a vacation, but you being a doctor can’t?” Sam’s head lowers as she shamefully nods to confirm Layla’s assessment.
“That is nuts; there has to be a way for you to leverage that fancy pants degree of yours so you can afford a little fun in your life!” Layla pauses, then says, “Well have you started considering owning a veterinary practice, not just working at it?”
Sam sheepishly admits, “Kind of, the owner is getting close to retirement, but I just am not confident that I get the business stuff like I do medicine.”
“Well we can fix that!” exclaimed Layla. “Lesson number one! Look over there at that barista, that is you currently. Hired to make and deliver quality service to happy paying customers. Being paid a fair wage for the work you are doing. For me as the owner, that barista is just one of the many expenses I must cover out of every dollar she collects.” Sam nods knowingly, but not knowing where this conversation was going.
“You see,” Layla continued, “as an owner taking the risk and investing in all of the assets for that barista to serve coffee to our patrons, I can earn a profit from not only the coffee she serves but also all the coffee the other three baristas serve throughout the day as well. Right now, as an employee, you only have access to a limited slice of the income pie, but when you own the business too, you have access to other slices of pie.”
“But I love practicing medicine; I don’t want to give that up for owning a veterinary practice, I didn’t go to school for that.”
“Of course not, and you don’t have to! I still serve coffee several days a week because I love it too! And for my work as a barista, I am entitled to the same wages as any employee when I am the one behind the counter. But as the owner, I have access to a piece of each dollar the business collects from every happy customer that walks through the door, not just the ones I serve. Sam, owning a veterinary practice could get more pie for the same knowledge you paid for with that expensive education.”
She paused to sip on her coffee while Sam digested what she had just heard. Then Layla quickly jumped back in excitedly, “oh and the best part! The best part is that I get to work at the same place, seeing the same customers, all while building investment. The most beautiful part about owning the business you love is that you are also investing in an asset that you know everything about!” Sam silently cocks her head to one side, so Layla goes on.
“Obviously, I am diversified and still own stocks and bonds in an investment portfolio, but with those investments, I own a very tiny piece of a company in an industry I may know little to nothing about, and have very little say in what goes on in them. But with the coffee shop, it is still a company, an asset in my portfolio like the others, except I own 100%, with all the say in what goes on, and it is in an industry I know and love.”
Sam began connecting the dots, “I haven’t thought about it that way, but I get it. The problem is,” she hesitated, “I don’t know how to pay for the dang practice in the first place. I can afford to buy those tiny slices of companies because in those small chunks they are affordable. But to buy 100% of the clinic is a much more expensive barrier. Owning a veterinary practice would make my student loans look small.”
Layla nodded knowingly, “I remember that feeling too.”
“Really?” Sam asks. “So how did you get from barista to business owner?”
“Well fortunately for us, this country likes Mom & Pop small businesses, so there are loan programs available to help folks like you and me get a piece of the American Dream.”
“How so?” Sam inquires, intrigued.
“Inherently, small businesses are riskier loans for banks and other lenders, so they often shy away. But since Main Street is a pillar of the American economy, the government is willing to back loans to people like you and me. If we meet certain qualifications and are running businesses that support local economies, it can be a win-win for everyone. The government’s guarantee helps the banks get comfortable taking a risk on you even though on paper you don’t look so stellar because you spent years not making an income while you were studying to be a doctor.”
“But I am still not clear how I am going to afford to pay down that loan though,” Sam mutters.
“You don’t, silly! The business does!” Layla exclaimed. “You see part of the loan qualification process is making sure that based on the historical performance of the practice you are buying, there is enough money available each year to pay all of the operating expenses, pay you a reasonable living wage and afford to pay the new proposed debt.” Layla pauses then clarifies, “ultimately, yes you are responsible for paying the loan back, but it functions differently from your home mortgage. The income that pays your home mortgage comes from your job correct?”
“The income that will be paying for the business loan is coming from the money the practice generates. So, the loan approval is based on an analysis showing the practice’s ability to pay down the debt, not a separate income stream like with your house. The new debt only occurs if the thing making money is bought.” She went on, “so if the past performance of the practice shows that it can support you, the debt, plus some cushion, there is a decent chance you can get a loan—if you have a good credit score and some cash that equates to a meaningful contribution as a down payment.”
Layla sees the lightbulb snap on in Sam’s eyes, she smiles and as she stands up saying, “My work here is done for today!”
Sam’s eyes continue to brighten as she absorbs all of what Layla just told her and begins her research. Finding the SBA website, she stays at the coffee shop the rest of the day researching what it is going to take to set her on the path to owning a veterinary practice.
As a veterinarian, you have the same opportunity as Sam. Are you ready to Own It?