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Starting a new veterinary practice

The complete guide to starting a new veterinary business from scratch. Every step: from the groundwork preparations to the business plan, legal requirements to insurance, recruitment to opening day.

If you're doing your research on the dos and don’ts of starting a vet practice, congratulations! You’re embarking on an exciting, meaningful journey, one that few are brave enough to tackle. You will impact many lives in your community 🐶🐈

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1. Business Planning

Starting any business can be a difficult task, but with careful planning, the process can run quite smoothly. As success lies in the detail, here are the first considerations that will lay the groundwork for your new practice’s success:

Required skills & experience

More than the right person, it takes the right sum of skills, ambition, and experiences to start and run a successful business. Life has its enthusiastic dreamers and determined doers – both are needed here, along with the experience of working right across a veterinary practice. You might have started off at a companion animal clinic, gone traveling earning your way as a locum, built up your skills and experiences throughout the pet ownership cycle, and eventually come to treasure the strong bonds you form with a local community and their four-legged loved ones.

Whatever shape your journey has taken, now’s the time to surround yourself with smart people who believe in you, and start putting that wealth of experience and skills to good use!


Your Vision, Goals & Market

The next thing to visualize is what your ideal practice looks like. Is it an owner-operated general practice treating companion animals in your local area? Or have you got the expertise to handle exotics, like birds and lizards? Is it a mobile vet service, traveling from farm to farm, treating horses and production animals? Are you dreaming big and have a specialty referral animal hospital in mind? Will you do emergency? It’s important to determine early what you want.

Likewise, it’s key to know what you want from life in the medium and long term. Have you got a family or hobbies? Do plan on spending long hours in the clinic or do you treasure your time outside of work? The life of a veterinarian is intense, and responsibility only grows when you own the practice.

To retain a flexible lifestyle, found your practice on flexible cloud software – enable yourself to work remotely, wrap up a day’s admin from home, after dinner, with a glass of wine in front of the fire. Your choice of practice management software will go a long way in determining what day-to-day life in the clinic will look like for the next decade.

It’s also critical to determine whether there is a case for opening a new veterinary clinic in the area. How large is the community you will be serving? Can you estimate how many companion animals live locally? What does the competitive landscape look like? Is there room to grow a new business in the middle of all other small animal GPs?

You need to know the answers to these questions for your clinic to get off the ground. Use tools like the AVMA Market Share Estimator to help determine the potential opportunity involved.


Business Plan

As our roadmap to success, a good business plan contains the following:

  • A timeline of key milestones, each with their own deadline. e.g., when can we realistically open for business, when must the insurance cover kick in, etc.
  • The key steps involved broken up into tasks and deliverables. e.g., the strategy for sourcing a suitable location, the lease or new build logistics, etc.
  • A financial plan with a detailed budget and breakdown of projected expenses, along with new customer goals.
  • A forecast of returns based on market research. This should consider the first the six months, one year in, eighteen months, three years, etc.
  • A clear plan for servicing the debt incurred.
  • The bones of a marketing strategy to ensure clinic production and new customer goals are met.


Services

To achieve such a plan, you need a solid idea of what day-to-day operations at the clinic will look like. What kind of services are on offer? Are we just treating cats and dogs, doing wellness plans and minor procedures only, or do we set ourselves up with the equipment to manage dental and specialist surgery? The more you specialize, the more gear’s needed, so these investments must be factored in from the outset.

Likewise, you should be clear about any extra services like emergency work, boarding, and mobile visits. Does your chosen location have the room for 30+ dog kennels? Will the team be doing emergency equine visits in nearby paddocks? If so, you’ll have specific hardware and software costs – things like cloud-based practice management software able to handle remote work and a good internet connection.

And of course, a thought must go to what services your local competitors offer. Sure, in 2021 global pet ownership rates have soured, but there are only so many specialist veterinary eye clinics any given area can sustain. Chances are, you’re this far into your journey exactly because you know of a gap in your local market but it’s worth mentioning.

When it comes to the services different veterinary businesses provide, the opportunities for specialization are endless. Regardless of what you settle on, defining a clear set of services early for the clinic will make your life much easier in the long run.


Pricing

After services, pricing is the next activity in the line. These are the most common approaches:

  1. Customer willingness to pay – If your customer is paying for services, how much is the maximum an average customer can pay? Price accordingly.
  2. Cost Plus In the cost-plus method, you add your profit margin over the cost incurred for that kind of a service. For this approach to wok, it’s key to map all costs incurred when executing any given service.
  3. Competition based – If your pricing is higher than competitors offering the same services, why should potential customers choose you? Find a way to offer a cheaper alternative.

Mapping the revenue journey helps with pricing. If you can determine where the practice will generate, spend, and potentially lose money, you can in turn identify opportunities to increase profitability. Small things like charging correctly for your time can make one of the biggest improvements on the bottom line. Again, a practice management software that automates out missed charges is crucial.

If you’re unsure what to charge customers, think of the demographics of your area. Can your average local pet owner afford $100 for a consult? Obtain price lists for each of your local competitors and figure out what works well. Traditional prescription medications are typically marked up 2.5 times cost, while preventives and chronic-use medications are set at approximately 1.5-2 times cost. Vaccine prices can be set based on historical pricing and food should be set at manufacturer's suggested retail price (MSRP).

If you charge fairly for the unique and valuable service your team provides and keep an eye on what your average customer can afford, you can’t go wrong.


Location

Every veterinary practice owner will tell you location is paramount to business success. Sometimes the choice is glaringly obvious, at other times it's torture. So many factors are at play: availability, affordability, suitability, how future-proof the site is, an easy or difficult landlord, foot traffic, access, etc. So why should you choose one site over another?

For starters, let’s look at what funds are available and settle on whether we’ll operate out of an existing building or construct a new facility from the ground up. We’ll also need to decide whether to lease or buy. All options have their pros and cons, but ultimately it comes down to what we can afford and where we see the right client base finding us. Locations in residential areas with heavy traffic and visibility are more expensive, but they’re also nearer to families with pets – potential clients.

There might also be local or state regulations to consider based on the clinic’s services. Are you subject to federal and state narcotics licenses for drug dispensation? Will you pay state board fees? Are you required to hold a particular business license to operate in your local jurisdiction? Specific regulatory requirements vary, so research your local requirements and talk to others who’ve been here before, as not to miss anything.

There’s also the option to cut down requirements and opt for a mobile veterinary clinic, saving money on location expenses. If you chose this route, you’ll save on outfitting costs, medical equipment, and laboratory instruments.

Alternatively, if you had a location in mind but are now having second thoughts – maybe the site isn’t as good for a startup practice as you initially thought – don’t force it. Take a step back and regroup. Taking your time to get the location right will pay dividends in the long run. With all the variables that go into getting a new practice running, expect some adjustments to your plan along the way. These course corrections only help guide you to a more defined, ideal situation.


Build vs Renovate

While many veterinarians choose to venture out on their own and build a new practice up from the ground up, you can also take over an established one, perhaps one where you previously worked as an associate. This usually entails renovations and has its own costs involved but will often be cheaper than a start-up. If you have the capital, you can also purchase the vet’s book of clients. This will make profitability a more immediate prospect.

Regardless of whether you’ll operate out of an existing building or construct a new facility, you’ll need to consider leasing vs buying. Both options have their pros and cons, but your chosen client base will drive the decision. Property near residential areas with heavy traffic and visibility likely will be more expensive, but it also will be closer to families with pets and, thus, potential clients. It can prove beneficial to hire a veterinary consultant, who can help analyze your area regarding average salaries and demographics.

If you’re looking to build or renovate, you should also get in touch with an architect in the very early stages. Good architects will guide you through the construction process and help with bureaucratic hurdles.

From a cost perspective, borrowers planning on renovating leased space will be looking at a loan ranging from $400,000–$600,000 – depending on how extensive the improvements are and how many of those improvements, if any, the landlord is happy to cover. For someone purchasing their own commercial real estate, loans can range from $700,000–$1,000,000. Once again, this depends on how much work is needed to turn the property into a functioning veterinary clinic.

An architect will play an important role here in helping you determine if the space is a reasonable option to be turned into a vet practice.


Costs & Financing

How much will starting my new practice cost? How will I finance it? These are important questions to think about because you’re unlikely to see a financial return in the first year. Veterinary practices can be expensive to start. Depending on the size of the practice, its location, and other factors, expect to spend at least $1 million on renovations, equipment, fixtures, and more before you even open the door.

Consider the following essentials just in equipment and basic services:

  • Medical and surgical equipment – 40K
  • Lab equipment – 30K
  • Waiting room and examination room setup – 10K
  • Kennel equipment – 5K
  • Practice management software – 3,5K
  • Bookkeeping setup – 2K
  • Marketing costs – 2-10K
  • Insurance – 2K

Once you go live, you then have the ongoing costs to consider. Veterinary clinics must keep a steady supply of prescription medicine on hand, as patients’ lives depend on it. Your inventory of drugs and specialty foods will prove to be one of the greatest ongoing expenses. Until your business grows, you’ll also need to dedicate a portion of your monthly budget to a marketing strategy.

Your largest and most important expense, however, will be payroll. The team on the front-end is your customer experience, while those behind the scenes are what keeps the business running smoothly. If you treat your employees like the asset they are, the business will be rewarded accordingly.

That’s why before pursuing this goal, be certain that you’re at a point in your life where you can give everything you have, plus more, to this new endeavor. It’s never too early to start thinking about the idea of practice ownership, but make sure you have the means to back it up.

As for the financing, raising capital isn’t usually a problem for veterinarians for one simple reason: vet hospitals are a good investment. Banks consider DVMs educated, low-risk borrowers, which gives you leverage with lenders.

In most circumstances, banks fund start-up veterinary practices via Small Business Administration (SBA) loans. SBA loans require a down payment of 10% for a startup practice and terms can range up to 25 years if real estate is involved. When going through the approval process for an SBA loan, you’ll need a solid business plan accompanied by three years of financial projections. Within these projections, the first two years will need a focused monthly breakdown. The business plan will rely heavily on your personal resume, plus any previous veterinary and management experience.

If your personal credit is sound, shop around for the best loan terms possible. Banks will be more likely to approve a loan if they see you’ve done your homework – good credit, a strong growth strategy – which is why this groundwork planning is crucial.?


Assembling the ideal project team

This is the time to surround yourself with good people. No need to worry about staffing yet, but a core team will be instrumental in getting the practice up and running. Choose a bank that understands the nuances of a veterinary practice. Find a practice consultant that works with veterinarians every day. Hire an architect who has designed veterinary practices and an accountant who understands the finances specific to veterinary practices. Selecting a team that understands the veterinary industry will be one of the most important steps you take to turn your dream into reality.

Even little things like talking to established veterinary practice owners about their own experiences are gold. People at all stages of their ownership journey. Hearing their thoughts on what worked and what didn’t, what type of resources they had in place when they first opened, is the sort of experience you can’t buy. Remember that you can always scale up, but it’s much harder to scale down.

Here are some final good questions to start asking yourself at this point:

  • What are your production goals and cash flow projections?
  • Will you be able to service the clinic’s debit in the first few years?
  • Will you start off as a solo vet or bring in a partner?
  • How many exam rooms will you need? What about kennel space?
  • Do you envision the business expanding down the line and requiring more space?

Once you have answers to these questions, we move towards creating a business plan to support all of these objectives.

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Download as a PDF our complete guide to starting a new veterinary business.

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2. Administrative Setup

Legal arrangements vary at both national and federal levels but, for the most part, the same basics apply. There are seven main steps. If taken one at a time, they’re something any well-organized DVM can manage. These are the main legal milestones when setting up a new veterinary business:

Step 1 – Forming a legal entity

Before you do anything else, you should register a legal business entity. This saves you from personal liability in case your practice is ever sued. Business structure types available to you include sole proprietorship, partnership, limited liability company (LLC), and corporation. If you chose to set up an LLC, you’ll need to elect a registered agent. You can hire one or act as your own.

To register your business, you must to meet all local and federal compliance requirements. It might be worth getting legal advice here. If you’re the business’ sole proprietor, have a think about whether you wish to operate under a different business name other to your own. When you settle on a name, crosscheck your state's business records, federal and state trademark records, and social media to confirm it isn’t already taken.


Step 2 – Acquiring a domain name

You’re required to register for a variety of state and federal taxes before you can legally open your doors to business. The first step is to apply for an Employer Identification Number (EIN). This is a quick, free step manageable via the IRS website, fax, or mail. Next up are small business taxes. Depending on which business structure you choose, you’ll have different options for how your business is taxed. These vary from state to state so getting your accountant to weigh in at this point isn’t a bad idea.


Step 3 – Forming a legal entity

You’re required to register for a variety of state and federal taxes before you can legally open your doors to business. The first step is to apply for an Employer Identification Number (EIN). This is a quick, free step manageable via the IRS website, fax, or mail. Next up are small business taxes. Depending on which business structure you choose, you’ll have different options for how your business is taxed. These vary from state to state so getting your accountant to weigh in at this point isn’t a bad idea.


Step 4 – Setting up a business bank account & credit card

You want dedicated business banking and credit accounts for three main reasons. Firstly, to protect your personal assets in case you get sued. In legal terms, this is referred to as piercing your corporate veil. Secondly, with good business credit you can access financing in the business’ name, at potentially better interest rates or greater limits. Thirdly, separating your personal and company assets makes accounting and tax filing much easier.

If you’re unfamiliar with them, look into open ‘net-30’ accounts to establish your business credit. These are business credit arrangement where the company pays the vendor within thirty days of receiving goods or services. They’re good for businesses that need to obtain inventory quickly but do not have the cash on hand.

Net-30 credit accounts also get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). Besides establishing business relationships with vendors, you’ll build business credit, qualifying for credit cards and other lines of credit.


Step 5 – Setting up business accounting

Make your life easier and bring in a Xero or any software accounting tool for small business with a native integration to your practice management software. Recording business expenses and income sources will be crucial to understanding the practice’s financial performance. Keeping accurate and detailed accounts also greatly simplifies annual tax filing.


Step 6 – Sourcing key permits/licenses

Avoid the fines. Take the time to secure all necessary permits and licenses to operate in your area. These will include some form of (1) state and local veterinary board certification, (2) collecting sales tax on goods or services, (3) Occupational Safety and Health Administration requirements, and (4) a Certificate of Occupancy (CO).

To determine your practice’s exact veterinary certification licensing requirements, you can access resources like SBA’s state license and permit guidelines, your town, city or county clerk’s office, or any of the local associations listed in US Small Business Associations directory.

Sales tax on the goods or services are straightforward enough and something your accountant will be across.

Similarly, health and safety requirements focus on hazard identification and best practice precautions when operating dangerous equipment. They are something you’d want to implement in the day-to-day running of your practice in any case.

As far as the Certificate of Occupancy goes, this is something required by any business operating out of a physical location. It attests that all building codes, zoning laws and government regulations have been met. If you plan on leasing a location for your clinic, check that the landlord has or can obtain a valid CO for a veterinary business. If you’re renovating, include language in your lease agreement stating that lease payments will not commence until a valid CO is issued. If you’ll be your own landlord, regardless of whether you’ll be operating on an existing site or a newly built location, the responsibility of producing a valid CO rests on your shoulders.


Step 7 – Getting the right insurance

As with licenses and permits, your practice will require insurance to operate safely and lawfully, protecting the team when something goes wrong. There are countless types of insurance policies, each suited to different kinds of businesses. If you’re unsure of what type of risk your business may face, start with General Liability Insurance. It’s the most common coverage for small businesses. Another good one is Workers’ Compensation Insurance, especially if you plan on being more than a one-man-band. Most states require some form of worker compensation coverage.

Need help with logistics?

ezyVet helps 2-3 brand new veterinary businesses go live every week. Ask the team any questions. A consultation is FREE with no obligations.

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3. Tools of the Trade

One of the most exciting parts of starting a new practice is the rare opportunity to start afresh with brand new systems and the latest technology. You might have spent the past five years quietly stewing at the inefficiencies in your old practice, out of patience with clunky old software, too much paper, manual ways of doing things. Perhaps you really want to be operating on iPads and tablets. Well, now is your chance to re-write the book – do what you want!

So what are the tools your practice will need?

Software (PMS)

For starters, you’ll need good cloud-based software. Technology has come far enough that there’s no longer a good reason to start a practice on a server-based PMS. Unless you’re operating out of an old Cold War bunker, it’s safe to assume you’ve got some access to the internet. And even if it isn’t a top connection, software like ezyVet Go allows mobile veterinarians to seamlessly move in and out of internet range, automatically backing up records, without disruption to operations.

Your veterinary software should underpin all clinic processes, support inventory management, book and track appointments in comprehensive customer and patient records, manage client registrations, miss no charges, and offer a customized view for all on the team. Through the client portal, clients too can access records online in a simple and time-efficient manner. There should be no need for paperwork in the clinic, as your information is at hand, whenever you need it, whether in the clinic, at home, or on the go.


Devices (Computers, iPads & Tablets)

The beauty of good cloud-based software is that all you require is an internet browser (i.e., Chrome, Firefox, Microsoft Edge), so how much you spend on hardware is entirely at your discretion. If you think the team needs fixed stations with multiple screens, make it happen. If you’d rather everyone move around freely and record their clinical notes on tablets and iPads, make it happen. If you’re a Mac user or a Linux devotee and don’t like Windows, that’s no problem either. Decide on the lifestyle you want inside the clinic, and choose your technology stack accordingly.


Diagnostics, X-Ray & Ultrasound

Under normal circumstances, irrespective of whether a clinic offers specialist services, it will boast diagnostics, x-ray, and ultrasound capacity. With industry leaders, IDEXX, offering their machinery for free to new practices signing on to their services, it’s a simple process for new owners to acquire the tools they need.


Printers and Label Machines

As with the devices above, the cloud-based nature of modern software makes it easy to plug and play. Find what you need and sync it up via Wi-Fi.


Credit Card Terminals

The ability to seamlessly pay using a quick phone or card scan is arguably one of the biggest game-changers, for a smooth customer experience at the clinic. PayJunction is the leader in this market and their charge-capturing technology integrates seamlessly with ezyVet. If you are thinking about using credit card terminals in your new practice, look at what integrates best with your software. Don’t leave clients and staff in the lurch, a credit card in hand and a timed-out machine unable to connect, all because you took a supposedly cheaper option.


Phone Lines

Getting a dedicated business phone line is one of the best ways to keep your personal life and business life separate and private. It gives your business legitimacy, makes it easier for customers to find and contact you, and provides a valuable channel between your team and pet owners. There are many services available to entrepreneurs who want to set up a business phone system, so shop around.


Telemedicine

COVID-19 brought the world to a halt and it’s been those vets with telemedicine who’ve moved ahead of the pack. Vets unable to offer video consultations, attach recordings to the patient record, and operate remotely during lockdowns are having to evolve to survive.


Electronic Whiteboard

Up until recently, electronic whiteboard was one of those expensive luxuries out of reach to most small-to-medium-sized veterinary businesses. Disruption to the market has come in the form of Vet Radar, the first true mobile-first solution to complement cloud PMS. The main benefits of an electronic whiteboard are patient care, workflow efficiency, and business performance.


Controlled Drug Storage & Registry

Regardless of how much you wish to spend in this area, some kind of storage is required for your prescription drugs. Tools like Cubex and Modeus allow vets to automate a large part of the admin involved with housing and dispensing controlled medicine. They also maximize profitability by ensuring no charge is missed. A Cubex cabinet also brings industry-leading security to your physical storage.


Prescription Management & Dispensation

Digital prescription management and dispensation is one of the best technological breakthroughs to cut down repetitive admin time in the practice. If your customers can find your online store, request a refill, check the status of an order, and pay online, that is money coming in on its own. Adopting the services of VetSource is well worth it for new clinic owners, especially when it integrates with your PMS, weaving together a single cohesive picture.


Distributor and Supplier Accounts

Leading product suppliers like Covetrus and MWI Animal Health will integrate directly with your PMS, making ordering and receiving fast and simple. Create your purchase orders from your PMS and send the order straight to your supplier at the click of a button. Then receive the invoice and inventory straight into your PMS when the order is delivered.


Reference Laboratory Accounts

Access to strong external reference laboratory accounts is something no good practice can do without.


Website

The last big tool veterinary practices can’t go without is a website. All legitimate businesses have one, your Facebook account isn’t a substitute for one, and if you build it right, Google will bring pet owners to your door. Once you’ve settled on your brand and found a good logo, get online, and throw up your address and contact details. These days there are so many drag-and-drop cheap solutions that anyone can quickly build a website at an affordable cost. Look at Squarespace, Shopify, Craft, or WordPress. And if it’s all too much, ask your niece or nephew to help!

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4. Recruitment & Marketing

We're almost there! Here are the last few steps to getting the practice up and running:

Hiring the right team

Unless you plan to do everything yourself, it’s finally time to recruit your team. As your background is in veterinary medicine, you’ll need experts in other areas to help you run the practice. Most practice owners start by hiring a business or office manager to help design their clinical workflows. This is done early in the process, around the time you’ve secured the services of an accountant, an attorney, a real estate agent, and perhaps an architect. With the help of your practice manager (and perhaps an expert DVM consultant), you can start looking at technicians, receptionists, kennel attendants, groomers and any other function required.

It helps at this stage if you can accurately forecast how many heads you’ll need in each area of the business. Hiring is an important and time-consuming activity so get help, either from an agency or from people you trust. Maybe this is the right time to call in favors from old colleagues. You’ll need to screen profiles, interview and make often difficult selection choices. Some staff will need to be hired early in the process, but other positions won’t need to start until much closer to open day.

When choosing your team, seek professionals who understand the veterinary industry and honest, hard workers with the right attitude. Good people/animal skills are of utmost importance across all areas of the business. Pet owners bringing their loved ones into the clinic are at their most vulnerable, and a warm friendly face at the counter with an easy rapport with their pet, goes a long way. Likewise, everyone remembers the one time an acerbic old vet was unnecessarily rough, making bringing poor Stella back in stressful and traumatic thereafter.

Lastly, it can be a good idea to hire a young marketing and social media professional, or contract a marketing firm, early in the process, to help announce your launch. Ongoing social media is vital for any successful clinic, as is a memorable launch that captures the attention of pet owners in the area. And don’t ignore the importance of paid advertising on Google searches, targeting veterinary keywords in your area. It’s not as complex as it sounds and is an incredibly powerful way of getting eyeballs on your business.


Establishing your brand

Now the fun part – marketing your new veterinary practice – AKA letting folks know you exist! There are several ways to let the local pet-owning community know you’ve opened your doors. For starters, all new businesses should have a website and social media pages. Those are your core essentials. In the specific case of a vet clinic, start with Facebook and Instagram. These are great tools for educating and attracting community pet owners of all ages.

There’s also a ton of more traditional ways to market yourself. You can advertise on the radio and in neighborhood newsletters. You can do print media marketing like advertizing in newspapers and magazines; opt for outdoor media like banners, billboards, posters; or an email campaign to everyone in your network. If you have a big budget, go for TV and radio ads too.

Depending on your own networks and social media skills, you can choose to do it all by yourself. However, getting as many people as possible to help will only make for a louder splash (get everyone sharing those FB new clinic posts).

Remember that alternatively you can outsource your marketing to a professional agency or hire someone to manage the clinic’s ongoing newsletters and social media. Some clinics have realized great success through partnering with other local businesses. Connect with a local groomer in the area and offer discounts for each referral.

Most importantly, have a big party! Hosting an open house for the community when you’re finally ready to open will get people through the door. It will give local pet owners and potential new team members the opportunity to meet each other and determine if it’s a good fit.

Whatever you do, be loud, different and make it fun. You really need to stand out. With a good marketing plan in place, you’ll be well on your way to establishing a successful practice.

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4. Bumps in the Road

The last thing to keep in mind is that it’s highly unlikely everything will go as planned when starting your new business:

Expect the Unexpected

The last thing to keep in mind is that it’s highly unlikely everything will go as planned when starting your new business. Expect to encounter some initial teething pains as you first open to business. Allow for subsequent growing pains, as you figure things out during the first few years.

It can take years to get the practice really humming along smoothly. While that might sound daunting if you’ve always dreamed of running your own veterinary practice, persevering through the challenges will make it even more rewarding in the long term.

Download the New Practice Guide for free

Download as a PDF our complete guide to starting a new veterinary business.

DOWNLOAD GUIDE
Tell us what we can help you with 😃

Need help with logistics?

ezyVet helps 2-3 brand new veterinary businesses go live every week. We have a whole team tasked with helping new practice owners manage all the detail, with them at every step of the way. 🦶

Feel free to reach out with any questions. It's a FREE SERVICE with no obligations.