I’ve been looking at a great forum for vets who are at a turning point in their careers. Should they stay in the profession, diversify or do something completely different? I found myself offering advice about limited company start up, having done it myself recently. In my previous role I was used to managing the macro business, supported by a finance team of full of accountants and administrators. When you are self-employed and starting from scratch you have to learn the micro side of the business such as registering the company, your own invoicing and bookkeeping, because the buck stops with you.
So in answering the forum question about the cost of registering a limited company, I used the bundle figure from my accountant of £300. I was rightly challenged about this, because registering a company online at www.gov.uk costs £12, so what was the rest for?
Time and effort.
On reflection the charge I paid was for the accountant’s time, advice, use of their address as my registered company address and filling in the paperwork for me. So that got me thinking about how my accountant charges me for their work and how ironic it was that a vet was asking about the cheapest way to register a company without having to pay a professional for their time. Does that ring any bells with you about how our customers behave?
So let’s draw some parallels and for good measure I’m going to compare accountants to lawyers. Having just sold and bought houses, I’m going to use conveyancing as a fixed price legal “product” to compare to the accountancy example. Dear reader, please do the vet extrapolation yourself and please get in touch if you don’t get the penny drop moment, because the parallels are clear.
- Gave a free first meeting, as a business development opportunity for themselves, to meet me, get to know what I needed and make a proposal.
- Gave me a written set of business terms at the first meeting, which I have to sign to become a client. The business terms spell out our relationship, their charging and the mutual expectations we have in our business relationship.
- Has a fixed hourly rate for everything, which I pay as a multiple of 5 minute allocations. This is for telephone calls, letters, and meetings and for every other conceivable interaction.
- Has a specific hourly rate for each of the disciplines in his practice, for example his partner rate is highest, a junior accountant is lower and administrators lower still. Therefore my monthly bill is a composite of his and his staff’s time, dependent on who did the work or the level of responsibility needed.
- Estimates the time required to manage my financial affairs for the year, communicates this in advance and then we agree a monthly direct debit payment. I receive monthly updates about how well I’m tracking to the agreed budget.
My conveyance solicitor:
- Was chosen on two criteria for our house move: first was locality and the second was price point, because conveyancing services are a loss leading, shop-able, legal product.
- Provided me with terms of business up front, required me to sign them and provide the proof of identity documents required for the conveyance.
- Was great, until I had problems with the survey and extra work was required. As this was unexpected, the value driven product had no scope for charges to ramp up. Therefore I ended up paying an hourly rate for the extra work.
- What I didn’t know, until I got the bill, was that clerks and a junior solicitor did the conveyancing, but the more complex work was a partner. This was an unexpected and significantly higher charge.
- Having started with a fixed price, value led product, which then required ad hoc work, I ended up paying significantly more than planned.
- As a shop-able product and as a client who was moving away, the legal practice were not inclined to treat me as a valued client.
- As a practice with a high proportion of conveyancing work, I did not have a great customer experience and their communication was mediocre at best.
In the vet world, costs and products fixate us. We find it challenging to charge for our time or to demonstrate value. I used to think was generational, lost in the mists of time and a different model of providing veterinary care in 1950. Yet we lament our ability to earn the same kind of salaries as other professional colleagues.
It’s not generational though, because there’s little evidence of the situation improving. That means it’s institutional. We’re effectively doing this to ourselves when we’re surrounded by examples of better ways to do it, in other professions and in veterinary models around the world.
What would our practice finances look like if we were legally required to sell drugs at cost + 10% plus VAT? That’s the situation in large parts of Europe and to me is eminently sensible and socially acceptable given the bad press about profiteering in pharmaceutical sales.
What would our practice finances look like if that first consultation with a new client was free, established the business relationship, T&Cs and then we charge properly for our time? It would mean the death knell for the depreciating sliding consultation scale. You can never charge Cons1 again once you’ve charged a client Cons3 or ConsFOC during a case. Imagine that paradigm shift.
If you’re feeling brave and you’d like to try something a little different, please get in touch for a free preliminary discussion. It’s one part of the quest for better practice finance that the VBC can help you with.