Veterinary Blueprints
The Veterinary Blueprint Podcast is all about taking the blueprint of industry experts and breaking it down in short, digestible episodes you can use to take your practice to the next level. Join host Bill Butler as he interviews experts on client and practice management, financial strategies, human resources, and more. Gain valuable insights and stay ahead in the veterinary field by tuning in to tips from successful experts inside and outside the veterinary industry.
Veterinary Blueprints
# 17 Thriving Independently: Financial Strategies for Veterinary Practice Ownership with Tristyn Gies
Can independent veterinary practices really thrive alongside corporate giants? Join us live from the Western Veterinary Conference in Las Vegas as we challenge this myth with Tristyn Gies from Bank of America's practice lending division. Discover how a typical $750,000 loan can be a game-changer for aspiring veterinarians, providing the necessary funds for construction, equipment, and working capital. Tristan shares her wealth of knowledge on the financial durability of private practices and debunks misconceptions about their viability. Gain invaluable insight into the world of veterinary practice ownership, from crafting a solid business plan to the critical role of assembling an expert support team.
Travel across a vast territory with Tristyn as she discusses her experiences managing regions from Alaska to Iowa. Learn how building connections with local communities adds a personal touch to her work. This episode also offers practical advice on navigating the hurdles of starting a veterinary practice, highlighting the importance of early preparation and expert guidance. Whether you're a budding veterinarian or a seasoned professional, this episode is packed with tips and stories that underscore the rewarding journey to practice ownership. Don't forget to engage with us by liking, sharing, and commenting on this insightful episode!
Tristyn Gies
Bank of America Practice Solutions
Regional Business Development Officer |Veterinary Division
Cell: 614-746-9431 | Fax: 312-453-2158
Tristyn.Gies@bofa.com
LindedIn - linkedin.com/in/tristyn-gies-ms
Bank of America - Veterinary Practice Lending
Host Information
Bill Buter – Contact Information
Direct – 952-208-7220
https://butlervetinsurance.com/
https://www.linkedin.com/in/billbutler-cic/
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Welcome to the Veterinary Blueprint Podcast brought to you by Butler Vet Insurance. Hosted by Bill Butler, the Veterinary Blueprint Podcast is for veterinarians and practice managers who are looking to learn about working on their practice instead of in their practice. Each episode we will bring you successful, proven blueprints from others, both inside and outside the veterinary industry. Welcome to today's episode.
Speaker 2:Welcome to this episode of the Veterinary Blueprints Podcast. I am your host, bill Butler, and I'm coming to you live from West Vet, down in the Western Veterinary Conference, down in Las Vegas, nevada. I am live at the Bank of America booth, of all places, and I just I'm happy to be here meeting so many great people on this episode, and one of those individuals that I've gotten to know over the last month or so actually a little bit longer than that, but is Tristan Geis, and she is a banker with Bank of America and their practice lending division and I'm grateful to have her on today and I'll let her do a little introduction first. But we're here, day two at Western Vet Conference, and boy is it hopping. And in fact Tristan and I went out and had a great meal last night as well with a couple other associates. So welcome to the podcast, tristan.
Speaker 3:Hi Bill, Thank you.
Speaker 2:You're welcome. Well, thanks for joining me. We're going to have a lot of background noise. There's announcements and there's a DJ that plays as well. It's all part of the fun. It is all part of the fun, so why don't you tell our listeners a little bit about yourself and Bank of America and what you do in your role helping veterinary practices and owners?
Speaker 3:Yeah, absolutely so. I am the business development officer for the Pacific Northwest and dipping into parts of the Midwest. My job is solely focused to help support practice for small and private practices and DVMs who are looking to either start practice ownership, expand their practice you know anything that they really need as far as practice financials. I'm here to be a resource and a big part of their team.
Speaker 2:So if a veterinarian who wants some money to buy a practice, build out a practice, open a second location, they should talk to you at Bank of America. That's what you're saying.
Speaker 3:Absolutely. We only work with DVM, so it's a very specialized niche market that we're very excited to be a part of.
Speaker 2:So just jumping right in, you know there's a lot of lenders out there and we're not. There's many avenues and I think you all do something differently. But I think what I'd like to talk to our listeners today about with regards to lending and you know, just hey, I'm an associate somewhere and I'm interested in getting into owning my own practice. I think there's some myths out there for veterinarians about whether or not they can actually afford it, whether they can do it, and one of the first things that I want to ask is you know, I don't think I can compete with corporate-owned practices as a startup, and why don't you talk a little bit about that and how you know an associate out there can actually go out and compete?
Speaker 3:Yeah, that's absolutely definitely a common myth that we hear and I would call it exactly that it is a myth. During 2020, you know, when the rest of the world kind of shut down, the veterinary division and business really took off as a whole to a new height that we had never seen and we had, you know, as bankers, we saw this uptick of corporate consolidators and corporate owners really stepping into a space that they had never been before and it definitely had an impact. But, as with the pandemic, that has definitely slowed down and taken a step back.
Speaker 3:And we're starting to see the pendulum really swing and champion private practice ownership. So you know we're not here to hate on corporates and they definitely exist and do a good job in that realm but we're really here to champion the private practice owner and to anyone who is considering it, it's definitely an untapped market. There's plenty of room for growth. We see it all the time and we're here to rally and champion and make those dreams a reality.
Speaker 2:There's plenty of competition out there or plenty of opportunity out there. What's the average loan size that you're seeing come through Bank of America right now?
Speaker 3:Yeah, that's a great question. So right now we're really focusing between $700 and $750, potentially pushing higher if we can make that work, but I'd say $750 is our sweet spot at the moment.
Speaker 2:So your average loan size in the sweet spot where you can get deals done is $750. And the sweet spot where you can get deals done is $750. And what are you generally seeing? Associates who take out a practice loan with Bank of America use that for.
Speaker 3:So they're definitely using, you know, a significant piece towards construction. We want to make sure you have a beautiful, well-run, well-equipped practice. We also break out a separate division of that for equipment and then a third for working capital, so that way you know when you start you're not starting with nothing. You have capital in there to pay rent, buy supplies, basically support all overhead until you break even in a few months.
Speaker 2:So you give them some money to get everything going and get their foot off the ground. And I think across you know health care and across dentists and optometrists. I've heard that veterinarians have the lowest default rate on loans, meaning that there's risk involved, obviously, with starting a practice and taking out a loan, but generally, for the most part, veterinarians are pretty successful and make a go of it. Otherwise you wouldn't be loaning the money the way you're loaning it.
Speaker 3:Absolutely. We love veterinarians. Right now, I think the bank has like a less than 1% default rate. Don't quote me, I'd have to get real down to it but less than 1%, and we love the vets. It's very, very, very, very hard to have a vet practice fail.
Speaker 2:So I'd like to jump into another myth that I think is out there, and that's that all the corporate buyers out there, the consolidators, are buying all of the practices and there aren't any practices for sale at all.
Speaker 3:That is absolutely not true. Again, great question I understand where this myth comes from, but that is not the case. We saw, when the corporate consolidating really started becoming prevalent and took a really big hit in 2020, 2021, they were buying up a lot of practices you know one, one and a half doctor, up to five, six, seven doctors. You know they were kind of picking up everyone and as that has really slowed down and their attitude has changed a lot of times we notice that corporates are looking for the bigger practices.
Speaker 2:So those five or six doctor and up practices are the ones that they're targeting, but the ones that, from a financial standpoint, make more sense for them. Now.
Speaker 3:Correct, getting a little more attention. So there are definitely, you know, one to two doctor practices for sale.
Speaker 2:And with that I've heard the reason that it's harder for the consolidators of the corporate practices, because if it's a one docdoc or two-doc practice and they leave, it's very hard for them to replace that core veterinarian, whereas if it's a five or six-doc practice and one leaves, they're still able to make it work.
Speaker 3:Yeah, it's not as detrimental Not as detrimental to them.
Speaker 2:So the single-doctor practices out there, one or two doctor practices, so those are the ones that you're seeing a lot more of a private practice deals going through on.
Speaker 3:Yeah, absolutely. And then not only that, but a lot of times, you know, we see the transition be in house, so maybe an associate has come in or you know, a family, friend or something, and they're taking over that practice. And not only are they taking over that practice, but they're taking over the culture and the staff that comes with it.
Speaker 3:And so we see a lot of success, you know, kind of in that realm of passing down and having generational practices, and we see a lot of doctors move for those small practices too, you know they're just as prevalent. But when you take one doctor who's really passionate about private owner and replace them with another doctor who is just as equally passionate about taking care of their people and their practice, it's a great recipe for success.
Speaker 2:So with that you know, I think one of the other hurdles that an associate who wants to purchase a practice has run into is that you know they might be calling a lot of the. There's a lot of brokers out there that will help buyers and sellers of veterinary practices and some of them aren't quite as responsive when a veterinarian reaches out and says hey, I'm in your market, I hear that you're the rep for X broker and I want some help. I'm in the market to buy a practice practice and they don't get a call back. I've heard the reason for that is that generally the deals aren't as big for the one and two vet practices and that some of the brokers not all of them, but some of the brokers generally want to play in the corporate space because the multiples are higher and the money's bigger and so the single doc practices or a veterinarian associate looking to buy might have a hard time finding some assistance in working with a broker to get that deal or identify a practice.
Speaker 3:Yeah, you know, I definitely think that that might be the case with some. I know a couple of brokers who very much champion that small practice independent practice owned. So I would say that if you're in a position where you're not getting a callback, there are a ton of great brokers out there and there are a ton of options. So just do your research. One personality might not be the best fit with the other, but there are definitely ways to find those practices.
Speaker 2:And generally, lenders like yourself will know which brokers are more inclined to work with the private sales versus the corporate sales, and so you know, getting connected with a good lender is always a good starting point. So, as far as you know the money component and saying, well, holy cow, I've got student debt, and you know, another myth that that winds up coming up quite a bit in conversation is I've got too much student debt to be able to get along. And what would you? What would you say to an associate you know, a fourth year, fourth year associate saying I don't think I can get along because I've got too much student debt?
Speaker 3:fourth-year associate saying I don't think I can get along because I've got too much student debt. Yeah, to expect a fresh graduate, two to three years out of school, to not have any debt is absolutely asinine. You know we're a lender, we're realistic, we deal with money. We know you have student debt. A lot of our borrowers, 90% of our borrowers, have student debt. So if you're ever concerned, talk to a banker and get pre-qualified. But I would say that while it is a valid concern, it's not. As long as you're willing and equipped and able to do it, it's not going to stop you.
Speaker 2:So it kind of goes back to that earlier point that I made about low default rate that you confirmed. It's that because there's such a low default rate, if the math makes sense in the practice, the bank's willing to take a risk because they know it's low risk, Even though you personally have debt. The practice itself will generally tend to make money.
Speaker 3:Absolutely. I don't blink an eye when I hear student loans.
Speaker 2:So for veterinarians thinking about, or wanting to start the process of thinking, well, maybe I'm ready to start looking. What are some things that, when an associate comes to you, you think I wish you had started this a month ago, or I wish you had started this six months ago, or I wish you had started this a month ago, or wish you had started this six months ago, or wish you had started working on this 18 months ago, because you know, here you are ready to jump on this, but we've got to get some things cleaned up. So what's one of the first things that you know? What's some things that you would recommend an associate who's contemplating ownership start to work on?
Speaker 3:Yeah, absolutely. I've probably got about three key takeaways from this one. The first one would be talk to a banker. You know, there's a lot of thought around the banks being scary because it's just such a large amount of money and we're only interested in people who have good credit or, you know, excuse me, low student loans or whatever it may be, and that's just simply not the case.
Speaker 3:If you want to, you know, look at opening your own practice. It is never too early to have a conversation with a banker, Because if there's something to your point that needs to, be cleaned up or needs to be taken care of before you can start working on that approval. Wouldn't you rather know and have that goal a year ahead of time, instead of getting finally ready and then you know, finding out that you have to put away more money or you have?
Speaker 2:to work on something else. You find the perfect space, and then you call a banker and the banker says, all right, well, we've got to get your credit cleaned up and we'd like to see some money in the bank first. And you go well, the spot that I want for lease right now. What am I going to do?
Speaker 3:Right. It's not in the banker's best interest to push you into a loan before you're ready. If that's the case, you know that's not a good fit for us. So we will protect you and we want to get you cleaned up and is ready to go as soon as we can. So it's never too early. Talk to a banker. We'll take care of you.
Speaker 2:So you'll know what needs to happen, kind of when it needs to happen. So part of that building a plan, do you think that's another good component? And that's part of talking with a banker, obviously.
Speaker 3:Absolutely. So two and three kind of build into that. You're going to want to build your plan and then you're also going to want to build a team around that. So you know, when you think about owning a practice and building a plan, what area do you want to be on, how big, what services do you want to offer? You know, definitely have that in the back of your mind and have a direction and a dream, because that's going guide you. And then you know. Number three is probably the most important is build your team. Start with your banker, get pre-qualified, and then you know our job is to not only get you pre-qualified but also know everyone who plays in the veterinary space.
Speaker 3:That's why we hang out at these conferences, so we know the real estate brokers, the equipment reps, the lab reps, the contractors everyone who is going to be a good fit and veterinary specific, to make sure that we're able to help and surround you with the best team you have. So not only are you talking and getting all of your financials in order, but you're also surrounding yourself with people who believe in your dream and who know about veterinary specific businesses to make your transition as easy as possible. You're going to have enough on your plate and enough mental headspace going on. You want to surround yourself with people who are going to help lighten that load and take care of you.
Speaker 2:So the taking care of part before as they're getting started and this is just from my own experience in working with veterinarians insurance is usually thought of last, but it's one of the things that they should start thinking about ahead of time, because they're going to have to do it to do alone, right.
Speaker 3:Correct, yes.
Speaker 2:And then an attorney and down the road a CPA who specializes in veterinary. So banker attorney, cpa insurance, to get things going because there's so much help out there in the animal health space. So whether it's pharmaceutical reps, equipment reps, there's a lot of resources there, but the business side there aren't as many.
Speaker 3:Correct, and you know, on top of that, you hit them all in the head. It's insurances, it's attorneys, it's CPAs, lenders, even, at that point, a real estate broker, someone you'd want to have early in as well. Yes, surrounding yourself with the people who know the business acumen is incredibly beneficial and should not be taken lightly.
Speaker 2:So for my own entrepreneurial career, I don't have to think about knowing everything with tax and I don't have to think about knowing everything with attorneys. I hire an attorney. In fact, I'm going to be moving my office this year, and so I was on a call yesterday here from the conference with my attorney reviewing a lease, and while I can read a lease and kind of understand the general components of it, he looks at these every single day and knows exactly what's right or wrong and say, hey, you know, we want to try and get this put in the lease. So, relying on those experts in specific areas that they're great at and you might not be good at as a veterinarian, because you're really good at animal health You're not good at some of the business stuff potentially, and so that's where the team comes into play.
Speaker 3:Yeah, absolutely. And to be honest to you, like you've got enough in your head, do you really want to add lease review and all of that in there as well?
Speaker 2:I don't, I'd rather just be on a 20 minute call pay the attorney and say what do we? Need to put it. Let's get that in place. So what's the average time? You know, if I'm a veterinarian today and I've got clean financials and I got some money in the bank and I don't have a lot of credit card debt and I'm, you know, regardless of student loan debt and I look pretty good, what's kind of the timeline that you see or you know, not fastest or slowest, but what's the average time it takes to get a deal through the bank?
Speaker 3:From application to opening doors probably a year give or take a couple months. So you said it earlier.
Speaker 2:it's never too early to talk to a banker, so not hey, I want to buy this practice in six months. It's I'm 18 months to 12 months out. We should start the conversation now.
Speaker 3:Yes, yes, we love to help all of our vets, but the ones who can also help us give you enough notice and enough time is highly appreciated.
Speaker 2:Sure, and what are some of the things that slow or have caused problems? From your experience working with veterinarians, where you know a veterinarian is super passionate, ready to sign a lease on a space and something comes up, what are some of the common pitfalls out there that slow, deals down or stop them dead on their tracks?
Speaker 3:You know, a lot of times it can be getting the financing in place, whether that's. You know you need a couple more months of savings, or you know you need to maybe pay off a credit card debt, something beforehand. That can be a part of it. Another big piece honestly we see a lot is the real estate. Even if you find that space, if you don't have that lease reviewed, that can take up some time, and then if you have to go back to the landlord and negotiate, I would say that real estate is really one of the bigger ones that can put a pause on everything.
Speaker 2:In fact, I was working on one and the veterinarian had signed the purchase agreement and had signed it three different times and the landlord or the property owner had said no, okay, we're going to change this thing. He's like wait a second, I had a contract here. So you know, the important thing is to understand that, as Trista mentioned, it's getting that conversation started. As soon as you have the thought bubble above your head hey, I think I want to do this. I should probably talk to a banker and every bank's going to have a different process and what their requirements are. Just for again, for the veterinarian out there who's thinking all right, I'm 18 months out or I'm a year out, what's some stuff, or what are the requirements that you have to get going to get pre-approved?
Speaker 3:yeah, absolutely so. We're going to want you to know your production. If you have dreams of being a practice owner, it's likely that you're going to be working full-time for quite a few years until you build that staff up and build that revenue.
Speaker 2:So, knowing what you're capable of and being able to do you know, prove that and show that that's really important so you're going to want to see what that veterinarian's been producing, not just last month, but over a little bit of time.
Speaker 3:Yeah, absolutely Over the last year, I would say.
Speaker 2:What if they can't get those?
Speaker 3:You know what? That's a great question. We do have a baseline credit that we give full-time veterinarians and we understand that sometimes you don't want to ask your boss, you don't want to feel like you're tipping them off to your plans. So if you can't get those, that's okay. It doesn't stop an application. But if it's something that you can know and have a conversation about or at least have like a vague idea, that is helpful.
Speaker 2:Gotcha.
Speaker 3:Another thing we think of is we would like you to see, we would like to see some cash reserves have a rainy day fund. We don't require any down payment on our startup loans, but what we do is we want to make sure that, if the worst thing happens and you need to take some time off, that you still have the ability to put food on your table.
Speaker 1:pay your bills, you got a little money in the bank.
Speaker 3:Absolutely have some money in the bank. So that's the reason that we look at the cash reserves we want to make sure that you're a good steward and you're prepared.
Speaker 2:So cash reserves aren't one month's expenses. For the purposes of taking out an $850,000 loan, cash reserves is somewhere like $20,000 to $50,000.
Speaker 3:Yeah, absolutely.
Speaker 2:So question would it be better off I was an associate say well, I'm going to crush down my student loan payments versus putting money in the bank because I'm going to take out a loan. What's better to do, pay down student debt or put money in the bank?
Speaker 3:Keep that money in the bank. Keep it there Again. We expect you to have student loans. We know it's a part of life. We know that you've spent an incredible amount of years becoming doctors. We expect you to have it. I would rather you save up your money and keep those student loans as they are, because we can account for that.
Speaker 2:So pay down the credit card debt.
Speaker 3:Pay it down, get rid of it.
Speaker 2:Pay down the credit card debt, but leave the student loan debt because it's generally a pretty low interest rate Correct and put money in the bank.
Speaker 3:Correct. And then once you're an owner and you're making even more money, then you can jump away with those student loans, then you can pay those down. That's right, have a plan.
Speaker 2:So that's a good reason to talk to a banker early. So you're not going. Well, I just dumped all my savings into student loans to try and get my student loan down when really it doesn't matter. Oh, we've got somebody backing up here Exciting.
Speaker 3:Live and in person, don't worry.
Speaker 2:Don't worry, we're not getting run over, all right. So, tristan, why don't we give our veterinarians one last tip? As they're embarking on their journey to ownership from the mind of a banker.
Speaker 3:Mind of a banker, all right. So if our three tips are talk to a banker, build your plan and build your team, number four tip and this is a personal tip that I always give out is work smarter, not harder.
Speaker 2:Okay, I like that one.
Speaker 3:Yeah, have open, honest, painful conversations. If your friend has opened up a practice, talk to them about what they did or didn't like. If you're looking at insurances and you don't know what's going on, reach out to someone. You know, when we're sitting here and we're making connections and we're talking about building a team, you're going to want to surround yourself with people who believe in what you do and you're going to want to surround yourself with people who believe in what you do and you're going to want to have those honest, vulnerable conversations, because being a practice owner is hard enough.
Speaker 3:Make sure that you surround yourself with good people who know it and you're able to be prepared and have those hard conversations. You don't want to beat your head against the wall. People are doing this every day. You've got a ton of resources out there. Start looking.
Speaker 2:So to close, why are you so passionate about helping veterinarians?
Speaker 3:I've got a dog who has gone through two TPLO surgeries and I've got a 13 year old cat and a three-year-old COVID kitten, and they are the lights of my life. I love my veterinarians so much. They definitely love my animals more than they love me, but I'm very passionate about the people who take care of my babies in this community, because it's just an incredible group of people doing incredible things daily.
Speaker 2:Veterinarians are great people and they're easy to do business with.
Speaker 3:Absolutely. I love veterinarians.
Speaker 2:Well, I really appreciate the insight. Tristan, We'll make sure to have your contact information on the show notes, but if somebody wants to reach out to you, what's the best way to get a hold of you at Bank of America?
Speaker 3:Yeah, absolutely. Feel free to shoot me over an email. It's first name, tristan, t-r-i-s-t-y-n period. Last name G-I-E-S, at B-O-F-Acom. Or give me a call 614-746-9431.
Speaker 2:And you handle the Upper Northwest. So basically Alaska over to Minnesota over to Minnesota. Yeah, that's a big territory.
Speaker 3:I'm on the road a lot, so if you need me, I'm likely driving somewhere. I cover Alaska, Washington, Oregon, Idaho, Montana, the Dakotas, Minnesota and Iowa. Woo, I got lots of sweatshirts and lots of stickers from different places.
Speaker 2:Well, you need them for that part of the country. Maybe not this winter. Well, tristan, it's been great having you on the podcast and really enjoyed our time together. We had a great meal last night connecting and just looking forward to helping veterinarians with the assistance of Bank of America.
Speaker 3:Yeah, thank you for having me. Bill, Thank you for all you do. You're a great partner.
Speaker 2:Thanks, tristan. As always, veterinarians make sure to like, share and comment on the podcast. It helps with the algorithm and tune in to the next episode of the Veterinary Blueprints podcast, where business and entrepreneurship meet the animal health community.
