This client story/blog article is a part of NH SBDC's "reprint" series drawn from the Finance Guide, published in the October 2016 issue of Business NH Magazine, and is a longer version of the article found there.
Sara Laroux hoped to run her own veterinary clinic one day. Sara earned her Doctor of Veterinary Medicine degree in 2003 and an MBA in 2005, and then in 2014 her dream became a reality when she took over the Tilton Veterinary Hospital.
After her first year in business, Dr. Laroux’s books show the same level of profit as the previous year, when the clinic was run by the veterinarian from whom Sara bought the business. “My tax people figured I would lose money that first year, but it turned out quite the opposite,” she said.
Today she’s gaining an average of one new client every day. She credits that to the great base of customers she inherited from the former owner, plus the service she’s been able to provide by retaining two of his 30-year employees. ‘“They knew everything,” she said.
Financing such an endeavor took some creativity, Sara said, and a lot of players. Meredith Village Savings Bank, Ken Wilson of Belknap Economic Development Council (BEDC), and NH SBDC business advisor Sally Holder were all involved in one phase or another. In the end, the previous owner agreed to hold a 5-year note on the physical property (the building and grounds) for Sara, while she financed the business purchase with an SBA loan that was arranged through Meredith Village Savings Bank (MVSB). That loan accounted for about 20 percent of the purchase price. MVSB also extended a line of credit to Sara amounting to about 3 percent of the purchase price, which she used for working capital. The BEDC financed 17 percent of the purchase price through a 5-year loan. Finally, Sara contributed 5 percent of her own funds.
“I really think what we arranged worked out best for everybody involved,” she said. The prior owner will be paid off in five years, which made it easier on him in terms of capital gains. All along the way there were numerous discussions with financiers and lenders, people that Holder, BEDC and MVSB had recommended to Sara. After a lot of negotiating, Sara says, “I think it was equitable for both parties and worked out pretty well."
NH SBDC’s Sally Holder has continued to work with Sara on budgeting and, during a recent review of 2015, Sara learned 2015 came in just slightly below the total projected income for the year. Gross projected profit turned out to be 4 to 6% higher than they had projected. “I’m still not entirely sure how that happened,” Sara admits, but when her busy summer season turns to fall, she and Sally will meet again to take a closer look at all the numbers.
When Sara took over she added one employee, a full-time veterinary technician, and says now that if her current rate of growth continues, she’ll need to remodel or add on space to accommodate another technician.
She’s used to that, she said. When she bought the business, it needed some remodeling and a septic project ruined the landscaping. Sarah did most of the repairs and landscaping herself, in her spare time.
“I plan to spend my first five years in business making the business what I want it to be, then five years of ‘coasting’,” Sara says. “Then I hope to take 5 years to work towards selling the practice….that’s all dependent on how things go, and if things continue going as well as they are now.”
“I just give a lot of credit to Gracie Cilley at Meredith Village Savings Bank, the loan officer who put me in touch with both Ken Wilson at BEDC and Sally Holder at NH SBDC,” Sara said. “Sally’s been just a tremendous help whenever I wasn’t 100 percent sure of what I was doing with the budget. Both Ken and Sally now come in as clients, with their dogs Holly and Lady. ”
More great results: the former owner got to step away from the business, which is what he wanted, the day before Sara took over, and now she gets to serve him when he brings in his dog for visits.