Whether you are looking to invest in a veterinary clinic or you need to secure financing for a clinic of your own, it is important to know how to determine market value. Entrepreneur.com warns that overvaluing companies is a common business mistake, especially for individuals new to business. Understanding how to evaluate the real market value of a veterinary clinic is the best way to protect and profit from your investment.
Consider the current outlook for the veterinary clinic you are evaluating. Unless the business is relatively new, looking at the current numbers is the best way to begin assessing market value. Has the clinic become profitable yet? Find out whether the clinic has paid for the equipment, business loans and additional expenses incurred to launch the practice. If the clinic is not profitable yet, assess how long it will take before it becomes profitable at its present rate of income. Look at the clinic’s business management. Is the clinic operating at full capacity? Assess whether a change in marketing or management could increase revenue and add value to the business.
Research the market for the veterinary clinic. Use this as the primary method for determining market value if the target veterinary clinic is a newer business. Investigate clinics of similar size in demographically similar locations. Make a list of at least five or six veterinary clinics and determine the profitability of each location. It is important to have enough clinics on your list to make comparisons for an accurate average market value. Evaluate the factors that make one clinic more successful than another. Do those clinics offer extra services or run more effective advertising campaigns? Answering these kinds of questions will help you evaluate the market for your veterinary clinic.
Study potential customers for the veterinary clinic. Conduct research on pet owners in the area. Is the number of customers growing or shrinking? Consider factors that affect pet ownership, like the number of pet-friendly rentals available and the number of new homeowners in the area. Investigate the average annual income of local pet owners and how often they visit the vet. Research the customers of the local competition. Assess the level of customer loyalty to evaluate how much of the market your veterinary clinic can potentially claim. Analyze your research to determine profit projections over the next three to five years; according to the Small Business Administration, a three-to-five year projection is standard for assessing profitability and market value.