Good evening, everyone, and welcome to the latest webinar vet practise management webinar. My name is Andy Mee from Veterinary Management Consulting. And tonight, our speaker is Alison Warner.

She's the founder of Evolve and Grow Limited, a business coaching and consultancy firm based in London in the UK. Her passion is in developing untapped potential in both people and businesses. She's one of the UK's leading business coaches with unique expertise in the trades and construction industry.

With Fortune 500 experience under her belt, she's delivered outstanding growth for small businesses and is an industry thought leader featuring on the BBC, national press, and in sector publications. In 2017, Alison published Build and Grow, How to go from tradesperson to managing director in the construction and trade industries, which quickly became an Amazon number one bestseller. In the same year, Alison won the key person of influence Pitchfest.

Alison, over to you. Thank you very much and thank you for having me back on the webinar vets. I think this is my 3rd time before I've always been talking about strength development and the different psychometric tools that we use, but this evening.

I'm going to be, talking about the numbers. So, not too sure how many, people are into their numbers. Invariably what we experience are that clients, would like to improve their financial literacy, but, sometimes are not interested, really, or, they're actually frightened of the numbers, and they prefer not to know.

So, . But as we all know, as a business owner, it's so important that we're on top of our numbers so that we can, increase our, our profitability. You know, that's why we're, we're really in business, part of why we're in business, I'm sure.

So a little bit of background on who we are. I established Evolve and Grow in 2010. Prior to that, I'd worked for, businesses such as Pizza Hut and, Starbucks, and then for a brief period, Pizza Express.

So all really retail and hospitality and, and people might say, well, how come you're now working in construction and trades? It's really by accident. I, I was made redundant from Starbucks because I looked after, resourcing for the UK and Ireland, and when we hit the last financial crisis, there was no need for a recruitment department.

And, myself and my team were made redundant. Didn't think it at the time, a bit of a cliche, but it really was the best thing that could have happened. I never thought about working for myself.

I was a company girl really, through and through, and, started the business, as I say, in 2010. And about eight months later, I joined a chapter of BNI. Some of you may have heard of that, it's a networking, referral organisation.

And, through that ended up working with small businesses. So I've worked with all sorts of different sectors, financial advisors, osteopaths, web developers, IT companies. Haven't actually worked with a vets yet.

But, in amongst all of that, I also worked with construction and trades and realised that there was a real gap in the market. There wasn't really anyone specialising in that as an industry, . And so around 2015, I developed a division of the business called Build and Grow.

And, published a book, which I was fortunate enough, it became an Amazon number one bestseller, and although it's aimed at the construction and trade industries, to be honest with you, it, it applies to any business. There's a lot of practises in there that, you can apply to, to any business. I'm sure it would be of, of use to vets as well.

I have two of the coaches on the team, Rihanna and Sue, and we're based in Southeast London. That said, we work with businesses all over the country. Prior to going into lockdown, probably about 30% of our clients were online, now it's 100%.

And I actually, prefer that way of working. I find it's very focused when we're working online, because like I'm doing with you this evening, I share my screen and we're all looking at the same thing. And it can work particularly well.

So what we do, we're business coaching and consultancy, so we do offer different forms of consultancy such as recruitment and people development. Programmes, as I say, we specialise in construction and trades. We have a range of 6 month business development programmes and we have modules that address the 4 different areas of business, and I'll talk more about that in a moment.

And on average our clients increase their sales by 45% and profit by over 200% after 12 months. So as you can see, I'm quite in numbers, so, so important that, we measure the success of our clients growth, and it's so important as business owners, as I say, that we measure how we're performing as a business. So this evening.

I'll be talking about the following. So, this might seem basic, to some, apologies if I'm teaching you how to suck eggs here, but I will be going through the difference between gross profit overheads and net profit. Invariably a lot of people we work with, and it's not just construction and trades, but this is all kind of quite murky for them.

And I'll talk about it some more the reasons why I think that is, but essentially I think because we're not taught these things necessarily at school and then accountants speak a different language, it can all seem a bit smoke and mirrors. Are we talking about something called common sizing, which this is a way of making the numbers more meaningful. It's where we express our costs or.

Performance or profit as a percentage of sales, and that enables us to, as I say, make the numbers more meaningful, more on that later. I'll share with you a really easy way to calculate your break even sales. You may say, well, why is that important?

I think it's important because if you know what your minimum is, then, if you're not hitting that, you need to take some action pretty soon, whether that's increasing sales or reducing costs. And that nicely leads into my next point, where I'll be sharing simple ways to increase profits without getting new customers. Generally when people think about growing their business, they'll think about how do I get new customers, and actually that's the hardest way to do it.

It's one of the ways, and it's something you should obviously be thinking about, but it's actually the hardest way. I'll share with you what a financial forecast, in my view should look like. And also talk about the difference between profit and loss and cash flow.

Just going back to that, that previous point, financial forecasting, and, and actually a lot, what a lot of what I've covered so far. I actually learned 26 years ago at Pizza Hut, so Pizza Hut's probably not that well respected as a brand now. But back then it was, and I don't think I really.

Appreciated perhaps at the time, how, good they were actually teaching you to run a business. And, you had to know your numbers inside out. And a lot of the things that, I share with clients today, are actually coming from that training 26 years ago.

So I'd like to start by asking you a question, just a rhetorical question, to think about the health of your veterinary practise in these four areas. So this is a way that we measure the health of the business, and, we've got 4, the 4 different elements here. So if you think about any business, it's a mix of these 4 different things.

You've got the sales and marketing at the top. Which is the demand for your service. You've got the customer experience at the bottom, so how happy your clients are with the service that you're providing.

You've got your team on the right hand side, and for the team to be healthy you need to have sufficient people. They need to be sufficiently engaged and they need to be the right people. So even if you get two of those right out of 3, it will still mean that the team, are out of balance, that's our, our language.

And then on the finance and system side, this is things like visibility of the numbers, measuring the numbers that matter. Having systems in place to automate where possible, systems to make you as efficient as possible. So if you think about any business, where businesses fail, it tends to be because one of these four elements has gone out of balance.

And so often I actually give the example of Starbucks. When I was at Starbucks, initially I was in operations, and then I moved into HR and as I say, I looked after, resourcing for the UK and Ireland. And this was during a time where, excuse me, we were opening 3 stores a week, so.

It was pretty full on. If you think, you know, each store has on average 25, team members, a manager and an assistant manager and a team of supervisors, you know, that takes some, some doing and invariably I think what happened is potentially we were growing too quickly and the customer experience at times could have been compromised and certainly profitability. And so that's just one personal experience of mine that I think, yeah, maybe the business was a little bit out of balance there.

We see this in construction and trades as well, often we see that the demand for their service is not the problem. They might think it is, but it's often not. What's not in place are the team.

You know, the right people, reliable people, and they are not taking advantage of, the tech that's the industry's been quite slow, I think, to adapt to technology historically, and, because of that they're they're not as efficient or they don't know their numbers and, and that can really impact and then, you know, worst case scenario, the business falls over. So it's quite a useful model to use if you, you know, if you were to think about. Scoring each of those 44 areas out of 10 in terms of the health, you know, what would it be?

As I say that's so, we have got some poll questions this evening, but that's not one of them. Oh, and that nicely brings me on to the next poll, so. I'd like to ask all of you, which of these statements is most accurate for you.

So I believe, that we're going to have this launched for you and you can vote. So the first option is I have a monthly financial forecast in place which we review our performance against regularly. And make adjustments accordingly.

The second option, you can only choose one, is I have a general understanding of how to improve the financial performance of my business, but would like to learn more. The third option, I measure the health of my business by what is in my bank account. Well, the 4th option numbers are not really my thing.

So which of those you, whichever you resonate with the most, if you can . Indicate, and this will be quite interesting actually. OK, so we've got about half the people I've answered so far.

Just leave it OK. I think most people have answered, I will stop it there. So I, if I share those with you, can you see those, Alison?

Right. OK, I can. So the, can everybody else see these, or shall I read them out?

Read them out. So, we've had 31% of respondents say they've got a monthly financial forecast in place which we review our performance against regularly and make adjustments. That's really high, that's certainly much higher than construction and trades.

The most popular, 54% have a general understanding of how to improve the financial performance, but they'd like to learn more. That's good. 15% say they measure the health of, their business by what's in their bank account.

And nobody is saying numbers are not really my thing, so that's great. I guess that's why you're on the webinar this evening, cos if it's not, then you probably wouldn't have, have joined. So, right, so let's move on to the next slide.

So the, the problem that we often encounter is that financial literacy in terms of business is not taught at school. And then on top of that, few accountants actually take the time to explain accounts in layman's terms. And I think what an accountant actually put this quite simply to me recently, cos I said why is it that accountants aren't pointing out obvious things?

And he said, well, most SME accountants are compliance accountants, they're not advisory accountants. So that's, not to be, really critical of accountants, but it's just in our experience, this tends to be what happens because their, their job really is to prepare a set of accounts for HMRC and to limit the amount of tax that you pay. You could argue that their job is not to advise, you know, they're not business advisors, but I do think the ones that are more switched on are kind of starting to, to, to start to offer that kind of service.

As I say, many business owners aren't sure of what metrics they should be measuring to improve, business performance, and that's another issue. And often there is a genuine lack of confidence and, and sometimes fear around the numbers. That's, that's not uncommon at all.

So some people they've. They've trotted along quite merrily and they get by and they prefer not to, to look and to know what the risk is. So, in preparation for this webinar this evening, I did a little bit of research into the veterinary industry, which was pretty interesting actually.

So some of this you might have seen before, I'm not too sure, but in 2016. The BVA expressed concern over a survey which was done by the SPVS demonstrating that more than half of responding vet practises had below average profitability, and 15% were actually making a loss. Practise turnover ranged anything from 100,000 up to over 10 million, which is, is quite a, a big difference.

Net profit, which on average was 10.6% to 15%. So this is where I, I'm talking about, common sizing, where we express things as a percentage to make it meaningful.

And revenue per full-time vet ranged anything from 51,000 up to 776,000, but on average was 214,000 pounds. So that's bearing in mind that's 2016, so things may have changed slightly since then. So I thought I'd start with some, some fundamentals or basics.

Apologies if this is teaching some of you how to suck eggs, but as I say, invariably, the people that we work with across all industries are not completely au fait with a profit and loss account, so I think it's worth, pointing out. So, first of all, we look at net sales, that's sales net of VAT. And we look at cost of sales.

Now, a cost of sale is only a cost if it's incurred through making a sale. So for example, in a veterinary practise, this might be, medicines, could be merchandise, pet food, things that you're only going to purchase if you've actually made a sale. Net sales minus cost of sales gives you your gross profit, and this is the profit.

That's made before the overheads need to be paid for, and we split overheads out into two different types. One is semi-variable, so they can increase as sales increase. So for example, if you are growing your practise at some point, you're going to.

You need to employ more people and therefore your salary overhead line would increase. And we look at fixed costs. So these are as it would suggest a fixed amount and it doesn't increase in line with sales.

So for example, your rent and your rates. So your gross profit minus your overheads gives us net profit, and this is profit made after all expenses have been paid for apart from corporation tax, and as we know, corporation tax is 19%. Of this amount.

So one of the key practises that we like to get in place in businesses, which I'm sure you'll have is accounting software. But a lot of people aren't using the financial forecasting part of that accounting software. So I'm going to share with you what one looks like later in the webinar, but Xero has a, a great little tool called Budget Manager, where you can just put the financial forecast in.

And report against it, and you can run a profit and loss report each month to see your year to date net profit, and then you just calculate 19% of that, and that's really what you should have put aside, for tax. So coming on to common sizing, I've touched on it, already, but just to go over it again, this is where we express costs and profit as a percentage of sales, and this really makes the numbers meaningful. So in the construction and trade industries, I know that material costs should be anything between 28 and 35%.

So when people come to us and it's more than that, then I know to start asking some questions. So it could be that they're not charging enough, it could be that there's wastage in the business, it could be that there's theft in the business. It could be that they haven't got the best, prices from their supplier.

Those generally tend to be the, the main, reasons, but it can alert me to, an opportunity, should we say, in the business. It's also then possible to benchmark your operating percentage on that line against industry average to see how, you're performing. And so the next thing I did in my research was to look at, well, what are those average figures.

I've got KPIs there, key performance indicators for vets in the UK. This is actually from a study, of 2012, so about eight years ago, but you could argue, well, percentages probably aren't going to change, although the prices would percentages probably aren't providing you're increasing your, your prices, of course. So we can see here purchases on average of 22.6% of sales, internal laboratory 1.2%, external laboratory, 2.4%, carcass and waste disposal for 1.1%.

So giving you a total cost of sales of 27.3%. So for those of you who've got accounting software in place and.

And it's up to date, everything's reconciled. You could run a profit and loss report and work out your cost as a percentage to see, are you in that right, ballpark figure. If, if it's more than that, then, as I say, potentially there's wastage in your business.

You could be ordering 2. Much stock and it's sitting on the shelves. You could have wastage, you could have theft, or you might not be charging enough.

Those are some of the reasons, the main reasons, I think. So if we think sales are 100% minus the cost of sales 27.3%, that leaves us with a gross profit of 72.7%.

Which is pretty profitable. But of course then we've got salaries and other overheads to come off, and these can range anything from 37 to 46%. And then overheads, including those salaries can range anything between 57% and 66%.

As I say, this is for all veterinary practises within the UK. Now those percentages would vary, of course, depending on the turnover of the practise. So if the turnover is smaller, those overheads will probably be a bigger percentage.

And likewise with net profit, 6.7 to 15.7%.

So that's kind of a, you know, if you, you're doing more than that, you're doing a really, really good job of conversion, as we say, or flow through to hark back to my, old days at Pizza Hut. So we're gonna have another poll now. So if you can please indicate if you if you currently measure your financial performance in terms of costs as a percentage of sales versus target.

Actually that should say measure your financial performance in terms of. Costs as a percentage of sales, yeah. Don't worry about the target, that's a bit confusing.

So if you can just indicate if this is a yes or a no, do you calculate your costs as a percentage of sales, essentially? Yes or no? So I'll just wait a little bit longer for a few more to complete.

I think we've probably got all the answers we're going to. So, we've got 57%, yes, 43% no. OK, interesting.

Well, that's definitely better than some industries, very encouraging. So, the next slide is all about critical indicators, and I guess what we've been talking about so far are KPIs, key performance indicators, and so you might be thinking, well, what is the difference, between the two? So a key performance indicator is, it's something, for example.

Like your profit and loss that comes out on a monthly basis. It's a bit like looking in a rearview mirror of a car. It's been and gone.

You can't change it. Whereas a critical indicator, think of these as like traffic lights. They're kind of a warning system that alert you to a problem that perhaps you're measuring on a daily or weekly basis.

So it alerts you to a problem which allows you to, take action before it's too late. So examples of this in your world could be number of clients that you see on a daily and weekly basis, could be average spend per client, could be your percentage of merchandise or extra sold, and it could be your labour percentage. So these are things that, .

It may think we're thinking about measuring on a daily or weekly basis, and you might say, well why, one of the reasons could be, you know, if suddenly your average spend was to drop or your percentage of merchandise, was to, was to drop, then potentially there could be theft in the business, there could be fraud. Because if you're still having the same number of people coming through the door, but less money going through the till, so to speak, then that could be a reason. Your labour percentage, if you were to measure that, say, per vet, then that's a way of measuring productivity.

So these are just some examples. There tends to be about 3 or 5 per business, but things to measure on a more frequent basis which will enable you to take action before it's a real problem. So the key drivers of profitability, there's 4.

So one is obviously your turnover, your, your revenue. One is your gross profit performance, which we've talked about so far. Another one would be staff cost efficiency, so their productivity, and then the other one is obviously your overheads, and that's the, the last one there is really the easiest one to increase profitability because we can all reduce expenditure.

Quite quickly in some cases, and I'm sure I certainly did that exercise going into lockdown. Fortunately, our business wasn't really affected, but I was expecting it to be, and so that was certainly an exercise that I went through, looking all through our overheads to see, right, what can we we cut. So those are the key drivers, so we're going to look at each of these in a bit more detail.

So, again, in preparation for this evening, I just did a little bit of research and if we're looking at, at the new client aspect, you may or may not know this, but 45% of the UK households own a pet, quite, quite high actually. And so if you know how many households are in your area, then you can see what percentage of that potential market you've got and set a new target to increase. But as I said earlier, new clients, getting new people is probably the hardest thing, hardest way of increasing turnover, but of course it's always something that we should be looking at.

The second one is to try and get people to spend more whilst they're in the practise. And again, I think this is from 2016, the UK average spend per annum per client for vets is 250 pounds, so that would be worth, some of you may already know what your average spend is, but, that will give you an indication of whether or not you're in the right ballpark. And so, I think I'm gonna go through on the next slide actually, different ways to increase all of these, so I won't jump ahead.

And then the third one is frequency. So this is why, supermarkets, perhaps not so much now, but they did, you know, they'd give you vouchers to try and return within 7 days. But it's strategies to, to get people to come back more often and to retain them.

So really those are the, the 3 key things to think about in respect of, turnover. So if we look at new clients, first of all, I've just made a list of some things, some of these you may already be doing, but some things that hopefully there's some ideas on here that you may not have thought about. So the first obvious one I guess is to run a promotion, to have a special offer that you market your list for.

You may well have a referral incentive in place, you incentivize your current client base to bring along friends and then they maybe get 10% off, when they, the next visit you. Community partnerships I think can be very effective as it well. So this is where you may look to partner with a local pet food shop, for example.

You refer them business, that you promote them, and in return they promote you, which kind of nicely ties in to B and I, I touched on it earlier. How I've, grown my entire business really is through BNI. So BNI is a networking referral organisation.

There's lots and lots of chapters throughout the UK and, that we meet every week and you, if you were to be accepted into a BNI, you'd be the only vet in that group, so it effectively locks out your competition. But it's a really, really good way of building relationships with the local area, and, the idea is that you pass business to those other professions, and in return they effectively become your sales team. They're looking out for you and they're promoting you as a business.

And then finally, this is something we've done in recent years, PR PR can work very effectively if you're working with a professional public relations, . Person who knows how to approach trade magazines and press, radio, of the like, then they, can get you visibility and promote you in that way. So those are just some, some ideas.

In terms of the volume aspect, well, first of all, knowing your average spends and knowing what you are currently. And then perhaps setting a target to increase it by, I don't know, 1020 pence, 50 pence, whatever you think is realistic. And, the important thing here is obviously you're tracking it and you're measuring it.

Everything that you do, you should be tracking and measuring daily, weekly, monthly basis and sharing it with the team. And, you know, if I think back to my retail hospitality days, you know, we had a lot of fun. In terms of within stores and across areas and regions with team incentives and competitions to drive upselling.

Obviously you've got to do it in the right way, you don't want people to be too pushy, but if you make it fun, then I've seen some really good results with average spend being increased. Something else to think about might be the range of merchandise items that you sell. So do you have a full range of pet food?

I'm sure you do, but things like pet accessories, toys, thinking about everything that you could offer in addition to your core service. And then frequency, this is really about having a strategy to main contact, maintain contact with clients and to retain them. So, perhaps a bit more of an old fashioned one would be a newsletter, for example, but some kind of way of maintaining contact, and having a system in place to remind clients of when annual checkups are due.

And it's so, so important, to measure your client satisfaction to see if there are any areas that could be improved, and also to shout about the areas that you're doing really well in and to feed that back into your marketing. So all of these things are really, really good at driving retention of clients. And we've got our last poll, so I'd like to now ask you which of these statements is most true for you.

So the first one is we regularly have promotions in place to find new clients. And the second one, we regularly have promotions in place to increase average spend. Third one, we have a client retention strategy in place.

The 4th 1, we do all of the above. And the 5th 1, we don't do any of the above. OK, I'll just leave it up a little bit longer so more people can vote.

OK. I think we're about done. So, 0% for the 1st 2.

58% have a client retention strategy, 25% do all, and 17% don't do any. OK, well done to everybody who's doing, doing all of them, but 58% you say for client retention. Yes, and 0 for the first two, so.

Right. OK. Oh, well, hopefully you've got some ideas from .

From those slides, I hope so. So then let's look at increasing gross profits. So remember this is, the difference between, our sales once we've removed the cost of sales.

So the first one I would encourage you to think about is to really look at the prices that you're getting from your suppliers. Often we can find. You know, 1 or 2% cost savings by, negotiating and shopping around and keeping an eye on that at all times, you know, it's not a, it's not a kind of, a one-off task.

This is something that you should perhaps be doing, every 6 months or every year. But any sort of direct expenses, whether it's your merchandise or your medicine, it's a good practise to shop around and negotiate. The second one is to look at your inventory efficiency.

So this is your stock level. So of course we don't want to run out of stock, but equally you don't really want to have too much stock on the shelves because it could go out of date, it could be stolen, and it's effectively, it's money that's sat on the shelf which could be sat in your bank account. To reinvest in the business.

So that is certainly something to keep an eye on as well. And then the third one is price. So I think we can all be quite bad sometimes that we're not increasing our prices and our fees, but we should be doing that each year really, certainly in line with inflation, and that sometimes is also an area that we can really get benefit for our clients just by putting a small price increase, it can make a big difference across the year.

To focus on promoting higher margin merchandise, for example. So those are some examples to increase gross profit, and I'm gonna share with share with you in a moment an example of how by tweaking here and there, you can actually have this pretty significant compound effect overall. Increasing staff efficiency.

So, one thing to do here is to measure the average turnover that you're receiving per vet. As I say, the, the average in the UK apparently is 214,000 pounds per year in terms of what they can generate. So by measuring, and this isn't to beat people up, it's, you know, it's, you can introduce some competitiveness, but it can also give an indication of perhaps who might need some extra support.

Another area would be to look at efficiency of the front of house team and to use technology to automate processes wherever possible. And having the systems in place to provide that management information. So for example, if you do do an average spend incentive, you need to be able to, have an efficient way and an easy way of getting that data to you.

And then finally developing the team, and certainly the webinars I've done in, in previous times for the webinar that have been around this area, you know, the importance of doing regular one to ones with your team, having development plans in place, because, that's far more likely to, to retain them and to get, to get more from them. And then monitoring overhead, so, first and foremost have a forecast in place. I can't remember the exact percentage of people that said that they did have a forecast in place, but it was, it was pretty high.

And that's really encouraging. So to have a forecast in place to be, reviewing your expenditure against that on a regular basis, but also to have a cash flow forecast in place, and there's a new tool, a fairly new tool on the market called Fluidly, which integrates with, certainly Xero and QuickBooks and uses artificial intelligence. I'll show you an example of it towards the end.

To predict your cash flow. Now I would imagine in a veterinary practise, you probably, I'm guessing, don't have a huge problem with non-payment of invoices because I would imagine that you don't let people leave until they've paid. But it can still be something worth having in place because then you can plan your expenditure as well to influence your cash flow.

The importance of reviewing your overheads on a monthly and quarterly basis and sharing with the team, often I'm, I'm asked by clients, you know, how much information should I be sharing with my team? My personal view is share as much as what you're comfortable because the more information you share, the more they're going to understand and the more they're going to take ownership. And therefore, you know, do the right thing.

They might think twice before using two wipes rather than one, for example. And then thirdly, always look for ways to do things better and more cost efficiently, and this is about taking time out of your business to work on your business and to do this reviewing to see, right, are there, are there cheaper ways of doing this. So a way to calculate break even sales, is to look at your overhead, so the, cost of running your business on a monthly basis or annual basis, but remember to include the dividends that you need to take out of your business as well.

And divide that by your gross profit percentage. This will give you your break even sales. And as I say, I think why that's important is you need to know what is your minimum, .

In order to be profitable, to break even, really, really important. So I'm just gonna share an example of of how just by making a few adjustments, you can actually start to influence this break even considerably. So let's list of goodness, and let's say that the monthly overheads are 36,000 pounds.

Let's imagine that it's gross profit is 68%, so it's not as good as the UK national average. So 36,000 pounds divided by 68% gives us a break even of 52,941. OK, so let's now imagine that we made a small increase to prices.

We had a focus on selling more merchandise and introduced a team incentive to upsell. We shopped around for better deals on medicine supplies and merchandise. And overall, this enables us to increase our gross profit from 68% to 72%.

Let's also imagine that we carried out an exercise on overheads. So when you're going through your overhead lines, it's useful to think in these terms. So look at that expenditure and think, right, is this critical to the business, and am I able to reduce it?

If not, then it's the first option there, unable to reduce, it's critical. But it may well be that, OK, that line is required, so maybe it's a piece of IT software, for example, so it's required, but actually it could be done by using a cheaper provider. So that would be category B if you like.

And then maybe you'd find that you've been spending on a marketing line and you've discovered that actually you're not getting any return from it at all, so it's not adding any value and it could be removed. So this is the exercise I'm talking about that it's good to do on perhaps a quarterly, six monthly basis. Good housekeeping if you like, and I think a lot of people did this going into COVID.

going into lockdown, I should say, because, you know, everybody hit panic stations, but really it's something that we should be doing ongoing as general good housekeeping. So let's imagine that we did that, and as I say, gross profit increased from 68 to 72, and let's imagine that we were also able to reduce our overheads by 2000 pounds a month. Let's see what that does.

So we've reduced our monthly overheads to 34,000, we've increased our gross profit to 72%. It actually then now means our break even sales are only 47,222 pounds, which is a reduction of 5,719 pounds. Quite considerable.

And if we were to divide that by an average spend of 250 pounds per client, you'd actually make the same profit by taking. 23 less clients that month. So Quite, quite interesting, I think.

So yeah, this is what I mean about, you know, there's ways to massage the numbers and to do small things and increase your profitability without rushing out trying to get new clients and you know, you can do that as well, but there's some quick, quick fixes here, some easy, easy fixes, oops. So. This is an example of a financial forecast.

You may well have seen figures in, in this regard, before. This is how we tend to work with clients. So we'll take the performance for the last 12 months.

This column here, we'll common size it. And this is a real life client, so they wanted to grow to 600,000 in, 2019 from the previous year. But they had some challenges.

They definitely had some challenges. Their labour bill was way too high. The materials were too high, and so we worked with them to, as you can see, get it down to these targets.

We put targets in for the for the year and then the month and then showed them what it could look like in the two subsequent years of 2020, 2021. More on that later. This is the budget manager, example of Xero, so this, I, I love Xero cos it's so easy to use, you could literally train a 10 year old to use it.

And, we've got on the left hand side here, the performance for the month, and on the right hand side, the performance year to date. So you can run this profit and loss report, but you need to put the financial forecast into the budget manager, which is this column here, and then we can see how we've done each month. If it's red, we've overspent, if it's green, we've underspent, and then yeah, today we can see the same.

And, and then how we, how much we've beaten our target by. So really, really easy way, as long as your accounting software is up to date and your financial forecast is in there, it's literally a few clicks of a button and you can see how your business is performing. This is fluidly.

So this is the cash flow forecast software that integrates with Xero, and, using artificial intelligence, it predicts what your bank balance is likely to look like over the next few months, based on what it knows to, to come in each month and what it knows to go out each month. And then you can you can adjust it, you can also scenario plans. You can say, OK, if I was gonna hire a person on 30,000, what's that going to do to my cash flow?

So rather than just go on your gut instinct and then winging a prayer, you know, there is technology out there now that can give you this visibility, really, really useful. So once you've made your profit, look after it, and this is really good press practise on how to manage your finances so you don't spend everything. So the first and foremost, you must, must, must be paying yourself each month, really, really important.

So often I see business owners, dipping in and dipping out and taking what they think they can afford. It's so important that you understand how much you need to take out of your business each month and pay yourself and get it into a separate bank account, and don't be tempted to dip in and dip out. Secondly, it's really good practise to put money aside for your tax.

So a good way of thinking about it is, you know, it's not, it's not your money, it's proportion of that money is actually for HMRC and to have a separate bank account set up for the VAT and the corporation tax, and also personal tax if you fall into the higher tax bracket. And then thirdly, it's a good idea also to have a bank account for savings, to start to save working capital for rainy day, funds so that you can either reinvest it into the business or to keep you afloat during times that we've had. In previous months, and I think people are much more open to this way of thinking now, given what what's happened this year.

It certainly stood us in good stead in our business. In the end, we didn't need our rainy day fund, but it was nice knowing it was, it was there. So I just wanted to finish this evening, really just sharing a case study with you to show how this can work in practise.

So this was the building firm, the financial forecast I, I shared earlier. They came to us in 2018, they were turning over just 10, 350,000 a year. They're actually making a loss of 140,000.

Didn't realise that until we got the year end accounts through and, it was pretty hideous. So, as I say, I ask clients to sco, measure their business in the four areas, and this was the score that, the business owner gave. So he was very aware that it was the financing systems that was the real issue.

He was really, really busy, he was really busy cos he wasn't charging enough, . And so loads of customers, really happy but it was not profitable. So what was wrong, they had no accounting software in place, they had no visibility of profitability at all, they had no system or process to quote.

The team were not as productive as what they could be because they weren't being given targets to hit. There was no back office at all. It was just him, so he was trying to do everything, bless him.

So what we did was we created a profit calculator. This perhaps isn't so relevant for vets, but I don't know, so this is what it looked like. So he, when he was doing his quotes, he could, actually calculate what, the job was going to make in terms of profit after labour and materials against a target.

We created a cash flow forecast. This was before the days of, of fluidly, and so it was a simple spreadsheet, but it showed us what the bank balance was going to look like, as the weeks went on, which allowed them to push some payments back and try and bring others forward, and put payment plans in place, so he wasn't taking deposits. Just shows you the impact on cash flow.

So as I say, we implemented accounting software and a financial forecast. And the next slide is we recruited an office manager, really, really key. This is the process that we use to help clients recruit.

So from getting the job description and the job ad right through to sifting and screening the applications, telephone interviewing, we use psychometric tests to help inform the final interview, and we've got somebody fantastic who's who's still there today. We implemented Monday morning team briefings, the the team knew what they needed to achieve in that week. And this was the result.

So it was a bit like turning an oil tanker, because as you can imagine in the construction industry, it takes a while to, see the benefit because of the length of time of projects, but it took 9 months, but this was the result for a quarter. And if you remember, they were turning over just under 350 for the year, so he started to hit sales of just under 250 for the quarter, and he started to make a profit of 19.3%.

So, . Yeah, it wasn't a quick fix, but it was very rewarding to see. And that concludes the presentation.

So thank you very much. Do we have any questions? We don't so far.

So if anybody has any questions, if you could use the Q&A box, please. I've got a few for you. You mentioned about client satisfaction surveys.

Do you do those bespoke or do you use something like Net promoter score? How do you go about that? Both actually, so we do do them, bespoke.

We use SurveyMonkey, we tend to ask about 8 questions and we encourage clients to do them over the phone or to outsource them to get them done over the phone because. You tend to get a higher response rate if they're done in that way, but net promoter score is one of the questions that we include in that. OK, again, you, you, you talked about bad debt.

Actually, bad debt can be a problem in veterinary practises. You'd be amazed at the excuses because, clients, clients come up with as to why they've not brought their purse with them or whatever. So certainly the, the practises I work with, that's one of the areas we do look at, and, you know, getting on top of bad debt can make a big difference, .

What psychometric tests do you use? I mean, I can talk about bad debt if that's useful before I go on to psychometric. All right, OK, yeah, yeah, please do.

So the, the key thing there is, I mean, I'm assuming that if you are in that position and you have to let a client go without paying, that you then send them an invoice and that should come from your accounting software and you should have the auto reminder facility set up. Best practise so that, you know, you'd have, the invoice go out and then 7 days a reminder, 7 days a reminder, and then another 7 days they get a reminder, but it's got the legal wording in there, which, states that, you know, supplementary interest can be charged at, I think it's 8% above the base rate. So that's kind of to, you know, tick the box, as it were.

If that still doesn't work, and by that, the way, I should also point out that. Phone calls in addition to that email going out. If that still doesn't work, then I recommend having a relationship with a good, debt collection agency.

We work with STA, and so they chase the debt on your behalf with domestic customers, though it may well be different, come to think of it. But you know, generally people do want to pay, it's, it's trying to, I think, . Negotiate and come to some sort of agreement, even if it's agreeing a payment plan.

That would be my advice there, but yeah, your, your question sorry was about psychometrics. So we use two different psychometrics, one is called Talent Dynamics, which I've done a webinar on for the webinar vet, which is actually how Anthony, the founder of Webinar Vet, and I met, Roger James Hamilton created it. And it's very useful in recruitment and also team development.

So there's essentially 8 different profiles and you start to build the team around the strengths of the business owners so that the idea is you focus on doing what you do best and then you have other people that play to their strengths that are your opportunities. The other psychometric we use is strength scope, so again, a strengths focused, tool, and that's much more. I would say probably more for management, and it gives you an indication of what makes people tick and how to get the best out of them.

Yeah. We, we could talk for hours about this, couldn't we, Andy and Alison? It's the three A's.

Yes, we certainly could. I was just interested, yeah, the talent dynamics one. You disc, Andy, do you use a lot of disc in your place at any?

Mainly MBTI actually, but obviously you can't use that for recruitment. So the for recruitment we use Hogan, which is a big suite of hundreds of questions and, it's typically a kind of CEO level, we're using that. So I, I think, talent dynamics is really simple and easy to understand.

I, I've used psychometrics at Starbucks and familiar with those tools as well, but I think what I find is those ones, it's interesting, but it's, well, what do you then do with the information. Whereas talent dynamics is, is very clear and simple. I should also point out, yeah, legally you can't screen out using it on a personality-based test.

But you can use it to inform that final interview. Yeah, important caveat there. So your, your balanced approach, it's obviously very similar to the balance scorecard, which was created way back when.

I just wonder why you've kind of shifted the emphasis because obviously, the balance scorecard separates out finance and systems, whereas you separated out marketing and, and, and customer experience. I, I just wonder. Is there any particular reason for that?

I mean how I came up with that square was really off the back of talent dynamics, interestingly, because I was thinking about the profiles and where they sat and the different people, you know, the, at the bottom of the square is the tempo energy. Those people tend to have strengths that, lend themselves to nurturing relationships with customers. And the people at the top of the square are more strategic and have, skills that lend themselves to creating products.

So that's how I came up with it. You know, we used a balance scorecard at, Pizza Hut and Starbucks, but I hadn't really thought about it in, in relation to that, if I'm honest. It was, it was purely off the back of the talent dynamics.

OK, right, that's interesting. Right, I'll just wait a little bit longer to see if you've got any more questions. We've, just had the comment coming in, great talk, Allison, so simple when we breathe and take our time.

So, OK, it doesn't look like there's any more questions coming in. So I just want to thank our sponsors for this evening who are MWI Animal Health. And then please, if you look into the chat box, but we've had a slight technical glitch.

The, survey hasn't automatically appeared, but Lewis has posted a link there if you would please complete the survey. On what you thought about tonight's excellent presentation. I won't, I won't, bias anybody, but I, I was very good, Alison, very simple, straightforward, easy to understand, and, some really important detail in there.

So thank you very much for that. Thank you very much. OK, so thank you everybody for attending tonight and look forward to joining you on the next practise management webinar, and again, please complete that survey and we'll see you next time.