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Veterinary business: how to start and run an efficient practice

  • Writer: CoVet
    CoVet
  • Nov 11
  • 16 min read

Most new veterinary practices struggle not because of poor medicine, but because of overlooked compliance, underestimated costs, and operational bottlenecks that create burnout before the practice reaches profitability.


We interviewed Byron S. Farquer, DVM, CVA, a veterinary practice broker and certified appraiser, along with Joe Fitzpatrick, CoVet's Head of Marketing, to outline what actually works when starting a veterinary business.


This guide covers the compliance requirements you can't skip, financial benchmarks that reveal true profitability, workflow systems that prevent owner burnout, and the technology infrastructure that supports sustainable growth. Whether you're building your veterinary business plan or refining your veterinary business management approach, these operational fundamentals determine whether you build a practice that serves you or one that consumes you.


Build efficiency into your veterinary business from day one. CoVet's AI copilot captures clinical notes as appointments happen


Why most new practices struggle before they even open


The decision to open a veterinary practice often starts with clinical confidence. You know you can handle a dystocia at 2am, place a feeding tube in a critical patient, or diagnose an obscure endocrine disorder. But the business side creates unexpected walls.

The three biggest pitfalls show up before the first appointment is even scheduled:


  • Underestimated costs: Equipment, buildout, and initial inventory add up quickly, but hidden expenses catch new owners off guard. Licensing fees, insurance premiums, and carrying costs during those first slow months can push practices into financial stress before they've established a client base.

  • Overlooked compliance requirements: DEA registration, state veterinary board licensure, local zoning approvals, and medical record retention laws all demand attention. Missing a single compliance step can delay your opening or create liability down the road.

  • Owner overload: New owners might end up working 12-hour days seeing patients, then spending evenings on SOAP notes, client follow-ups, and administrative tasks.

In our interview with Byron S. Farquer, DVM, CVA, a veterinary practice broker and certified appraiser, he noted a common pattern: practices where owners say "well, we make it work" or "doing it this way works ok for me" often signal they're out of step with current veterinary business management practices.


The practices that launch successfully build systems from the start, including documentation workflows that don't require late-night charting sessions. Tools like CoVet help new practices avoid this trap by capturing clinical notes in real time during appointments, so owners can focus on medicine during the day and actually go home at night. This systematic approach to reducing veterinarian burnout starts on day one.



Compliance steps that can’t be skipped when opening


"Many vets don't keep a close eye on profitability," Byron S. Farquer, DVM, CVA told us in our interview. "Some have nice facilities, perhaps a lot of great equipment, but they are shocked to find out their practice has such a low value due to low profitability." Poor record-keeping creates similar problems. Proper documentation systems support both compliance and the veterinary business resources you'll need for future growth.


Opening a veterinary practice means navigating a complex web of licenses, permits, insurance policies, and record-keeping requirements. Miss one step, and you risk delayed openings, fines, or liability exposure.


⚠️ Important disclaimer:

The information provided here is for educational purposes only and does not constitute legal, regulatory, or professional advice. The compliance requirements listed below are common examples but are NOT comprehensive. Requirements vary significantly by state, county, and municipality, and this list should not be relied upon as a complete checklist for any specific jurisdiction. Always consult with qualified legal professionals, your state veterinary medical board, and relevant regulatory agencies to ensure you meet all applicable requirements for your specific location and practice type. Do not use this section as your sole source for compliance planning.


Each agency operates on its own timeline, so start applications months before your planned opening date.


For specific compliance requirements that apply to your practice location and structure, consult the official sources directly. Your state veterinary medical board, the U.S. Drug Enforcement Administration, local business licensing offices, and veterinary-focused legal counsel can provide the authoritative guidance you need to ensure full compliance.


The following sections provide examples of common compliance areas and official resources. This is not an exhaustive list, and additional requirements may apply to your specific situation.


DEA registration for controlled substances


State veterinary board licensure


Business permits & zoning


Insurance coverage

Professional Liability (Malpractice) Insurance:


General Liability & Business Owner's Policies:

  • Available through AVMA PLIT and commercial insurance providers - see AVMA resources above


Business Interruption Insurance:

  • Typically bundled in Business Owner's Policy (BOP) packages available through veterinary-specific insurance providers


Veterinary medical records compliance


Note: State-specific requirements for veterinary medical records retention vary (typically 3-7 years). Contact your state veterinary board directly for your jurisdiction's specific requirements.



Building a documentation backbone from day one


The cost of poor documentation shows up in two ways: time and quality.

DVMs often spend significant time after their last appointment finishing charts, which can accumulate to multiple hours per week. That's hours per week that could be spent with family, on continuing education, or simply resting. Notes written from memory hours after the appointment miss clinical details that matter for continuity of care and legal protection.


What strong documentation systems prevent:

  • Missed handoffs between team members

  • Incomplete patient histories during rechecks

  • Compliance gaps that create liability exposure

  • After-hours charting that leads to burnout

  • Lost clinical details that compromise patient care


Clear, complete records protect both pets and practices. When a patient returns for a recheck or transfers care to a specialist, thorough documentation ensures nothing gets missed. From a liability standpoint, if a client questions treatment decisions months or years later, your contemporaneous notes are your best defense.


Real-time documentation solves both problems. CoVet captures clinical observations, exam findings, and treatment decisions as they happen during the appointment. The system produces accurate, shareable vet SOAP notes that meet compliance standards without requiring DVMs to recreate conversations from memory at 8pm.


New practices that capture SOAP notes in real time can reduce the after-hours charting pattern that contributes to burnout.. The choice to invest in practice operations optimization through soap note automation software pays dividends immediately: owners finish their days on time, records stay current and complete, and the entire team can access the information they need for seamless patient care.


New practices that capture SOAP notes in real time avoid the after-hours charting pattern that drives burnout. CoVet integrates with the leading cloud-based PMS systems.


Essential veterinary practice tech stack for new clinics


Building your initial technology infrastructure determines whether your practice runs smoothly or creates administrative bottlenecks. The right vet clinic software combination can significantly reduce the after-hours charting pattern from day one.


Core technology categories:

Category

Primary Function

Timing Priority

Practice management system (PMS)

Client records, billing, appointments, inventory

Must have before opening

AI copilot software

Real-time SOAP note documentation during exams

Critical for preventing burnout

Appointment scheduling

Online booking, reminders, follow-ups

First month of operation

Client communication

Text, email, automated follow-ups

Within first 3 months

Even with a comprehensive tech stack, practices struggle with the same bottleneck: capturing what happens during exams. Traditional software tracks what occurred before and after appointments but misses the critical moments when you're actually with the patient.


CoVet functions as an AI copilot that captures clinical observations, exam findings, and treatment discussions as they happen. The system produces formatted SOAP notes during the appointment, so documentation is complete when the patient leaves. This can significantly reduce the after-hours charting pattern that contributes to veterinarian burnout.


Integration matters:

Your software stack only works if the pieces connect. CoVet integrates with leading cloud-based PMS systems, ensuring PMS integration that makes your tech stack function as a cohesive system.


For comprehensive guidance on each software category, implementation timelines, and decision frameworks, read our complete vet clinic software guide.



Orchestrating workflows so the owner isn’t the bottleneck


New practice owners often become the single point of failure for every decision, every task, and every patient interaction. This pattern creates a ceiling on growth and a fast track to burnout.


Many new owners assume they can "figure out systems later" once the practice is established. This approach backfires. Without documented procedures from the start, every task requires explanation, every new hire needs individual training, and the owner becomes the bottleneck for all decisions. Early SOPs create consistency, reduce errors, and allow the practice to operate smoothly even when the owner is unavailable.


Standard operating procedures also protect quality as you grow. When you hire your second veterinary technician or add evening hours, documented workflows ensure care standards remain consistent regardless of which team member is working.


Essential SOPs for new practices:

  • Patient intake and triage protocols

  • Exam room preparation and restocking

  • Anesthesia monitoring and recovery procedures

  • Client communication for routine updates

  • Medical record documentation standards


Operational efficiency through delegation:

Effective delegation frees the DVM's time for cases that truly require doctor-level expertise. Veterinary technicians can handle intake histories, assistants can manage inventory reordering, and front desk staff can own routine client communication. This division of labor allows the practice to see more patients without adding DVM hours.


How CoVet enables team-based workflows:

CoVet offers Support Accounts specifically designed for team medicine. Veterinary technicians can use specialized templates to capture information before the DVM enters the exam room, then the doctor reviews and completes the record.


CoVet templates by workflow type:

Workflow

Template Examples

Efficiency Gain

Team intake

Support - History & Vitals, Comprehensive History

Technician captures patient info before DVM exam

Medical records

SOAP, Emergency SOAP, Recheck Exams

Real-time documentation during appointments

Client communication

Visit/Discharge Summary, Email templates

Automated follow-up reduces phone calls

Specialty procedures

Surgery Reports, Dentistry Charts, Anesthesia Reports

Procedure-specific documentation without custom templates

Handoffs

Medical Progress Note, Hospitalized Patient SOAP

Clean communication between shifts

CoVet supports over 80 templates across general practice, emergency medicine, surgery, dentistry, internal medicine, and more. The platform integrates staff and veterinarian workflows, creating the kind of veterinary workflow efficiency that allows practices to scale without burning out the owner.


The doctor focuses on medicine while the team handles operational details. Team engagement and retention improve when staff members have clear roles, appropriate authority, and tools that support their work through practice management training built into daily workflows.



Financial setup decisions that shape operations


"Many vets don't keep a close eye on profitability," Dr. Farquer S. Farquer, DVM, CVA told us. "Some have nice facilities, perhaps a lot of great equipment, but they are shocked to find out their practice has such a low value due to low profitability."


This disconnect between perceived success and actual financial health starts on day one. How you finance your practice directly affects daily operations. The choice between loans, investor capital, or personal savings determines your burn rate, break-even timeline, and ability to weather those critical first months.


Graphic showing expected and unexpected costs when starting a new veterinary cost.



Understanding true profitability from the start


Dr. Farquer shared an illustrative example of how financial clarity matters. One practice owner had $1.5M in revenue and was drawing a significant portion of $300,000 in net income. He assumed he was highly profitable. But he owned his building and wasn't paying himself rent (which should have been about $80,000 annually). His expected doctor compensation based on production should have been just under $240,000 per year.


The real calculation: $300,000 - $80,000 in rent - $240,000 in doctor compensation = negative $20,000. "He thinks he has a big profit but actually he doesn't."


For new owners, this means structuring your financials correctly from day one. Pay yourself appropriate doctor compensation. Account for facility costs at market rates, even if you own the building. Track real profitability, not just cash flow.



Startup costs new owners often underestimate

  • Facility buildout and renovations (often substantially over initial estimates)

  • Medical equipment and diagnostic tools

  • Initial drug and supply inventory

  • Practice management software and integrations

  • Professional liability and business insurance premiums

  • Marketing and website development

  • Carrying costs during slow initial months (payroll, rent, utilities before revenue stabilizes)

  • Legal and accounting fees for business formation and compliance

  • Hiring and training costs for initial staff



Key financial benchmarks to track from day one:


Dr. Farquer provided specific guidance on labor costs: "Support staff in a small animal practice shouldn't generally consume more than 18 to 20% of your revenue." Track this benchmark monthly using financial benchmarking tools to ensure costs stay sustainable as you grow.


Other essential metrics:

  • Doctor compensation as percentage of production

  • Overhead ratio (total expenses vs. revenue)

  • Average transaction value

  • Client retention rate

  • Revenue per veterinarian


Dr. Farquer also emphasized the importance of planning ahead. While profitability improvements take time to show their full value (appraisers typically look at 3-year blocks), establishing strong financial practices early creates compounding benefits. The habits you build in year one determine your financial health in year five.


Funding options and break-even timelines:

Funding Source

Advantages

Considerations

Traditional bank loans

Lower interest rates, builds business credit

Requires strong personal credit, collateral

SBA loans

Favorable terms for small businesses

Longer application process, strict requirements

Private equity consolidation

Larger capital availability, operational support

Reduced autonomy, profit-sharing requirements

Personal savings

No debt burden, full ownership

Higher personal risk, limited capital for growth


Simmons, Dr. Farquer's veterinary practice sales consultancy uses 14-18% of gross (after appropriate adjustments, including fair rent and fair owner salary, among others) as a benchmark for financially healthy small animal practices. This benchmark varies based on location, competition, and operational efficiency.


This all depends heavily on location, competition, and operational efficiency. The pricing and revenue management decisions you make in year one set expectations for years to come. Budget conservatively, track your benchmarks monthly, and ensure your financials reflect true profitability rather than just positive cash flow.



Marketing that supports efficiency and growth


Dr. Farquer noted a pattern in practices that struggle to attract buyers: "Surprisingly many practices still don't have a website, or at least a decent landing page, they don't leverage their database of clients for internal marketing, and social media marketing is sometimes limited to posting pictures of the 'clinic cat.' Millennials and especially Gen Z's prefer text communications, online appointment booking, etc."


Starting with modern client communication strategies from day one avoids this problem entirely. Your marketing strategy directly impacts operational efficiency. The way you communicate with clients determines how many follow-up phone calls your staff handles, how clear clients are about treatment plans, and whether your referral base grows organically.



Client education that reduces phone calls and rework


Clear discharge instructions, automated appointment reminders, and educational content can help reduce the volume of "what do I do next?" phone calls. When clients receive detailed post-visit summaries, they're less likely to call with questions that could have been answered at discharge.


CoVet generates automated visit summaries that include treatment details, medication instructions, and follow-up care in language clients can understand. This creates polished client communication that builds trust while reducing your front desk workload.



Word of mouth as an operational lever


Accurate, thorough client communication builds referrals. When clients receive clear instructions and feel confident in their pet's care, they recommend your practice to others.

Joe Fitzpatrick, CoVet's Head of Marketing, says many clinics start in the wrong place. "Do all the free things first. Google gives you Google My Business and Reviews. They don't cost anything but dramatically improve visibility online."



Building a community and digital presence that scales trust


For new practices, essential marketing foundations include:

  • Professional website with online booking capability

  • Claimed and optimized Google Business Profile

  • Consistent review request process

  • Automated appointment reminders (text and email)

  • Social media presence focused on education, not just pet photos


Joe emphasizes keeping it simple: "If it doesn't engage pet owners in your area, it's just noise." Focus on platforms and content that connect directly with local clients who can actually book appointments.



Comprehensive marketing guidance


We've created a complete guide covering veterinary marketing strategies, client acquisition, retention tactics, and digital presence development. For detailed implementation steps, pricing strategies, and growth tactics specific to new practices, read our full veterinary marketing guide.


The workplace culture development you build through transparent communication extends to your marketing. Practices that communicate clearly internally tend to communicate clearly with clients, creating consistency that supports both team satisfaction and client retention.



Tracking metrics that signal growth or burnout


The metrics you track from day one reveal whether your practice is scaling sustainably or heading toward team exhaustion. Most new owners focus exclusively on revenue, but operational health shows up in different numbers.



Staff utilization rates as a stress test


Dr. Farquer provided specific guidance on labor benchmarks: "Support staff in a small animal practice shouldn't generally consume more than 18 to 20% of your revenue." When this percentage climbs above 20%, it signals either overstaffing or pricing problems. When it drops too low, you might be understaffed and pushing your team toward burnout.

Track this ratio monthly. Compare your numbers against industry benchmarks to catch problems early.



SOAP note backlogs as a warning sign


One of the earliest burnout indicators appears in documentation backlogs. When DVMs consistently stay late to finish charts, or when notes from Monday's appointments aren't complete until Wednesday, the practice has a workflow problem.


This pattern compounds quickly. Incomplete records create handoff errors and compliance gaps. Staff morale suffers when the team knows they're always behind.


Real-time documentation tools address this directly. CoVet captures clinical observations during appointments, so DVMs finish their charts before leaving the exam room. This approach can recover significant time per week per doctor.



Essential metrics for new practices

  • Staff labor costs as percentage of revenue

  • Documentation completion time (same-day vs. delayed)

  • Staff overtime hours by role

  • Average transaction value

  • Client retention rate


Track these numbers monthly for the first year to establish baselines. You'll recognize deviations before they become crises, and the data will support decisions about when to invest in automation or hire additional staff.


Documentation backlogs signal workflow problems before they become crises. See how CoVet drastically reduces after-hours charting from day one.


Moving from startup mode to a scalable operating system


The difference between a startup practice and a scalable one comes down to systems. In startup mode, the owner makes every decision and becomes the bottleneck for growth. In operating system mode, documented processes allow the practice to function smoothly whether the owner is present or not.


The Veterinary Operating Maturity Model:

Stage

Key Characteristics

Ad-hoc

Notes from memory, owner handles all decisions, revenue tracking only

Systemized

Real-time documentation, written SOPs, role clarity, labor and backlog metrics tracked

Scalable

Automated workflows, team operates independently, full KPI dashboard

Most new practices start in ad-hoc mode. The goal is to reach scalable as quickly as possible.



Transitioning from owner-operator to leader of a team


As the practice grows, the owner's role shifts from doing everything to managing staff, monitoring metrics, and planning growth. CoVet supports this transition by enabling smooth handoffs as the team expands. When documentation is consistent and accessible, new veterinarians can review patient histories quickly. When technicians contribute to records through Support Accounts, the owner doesn't need to be present for every interaction.


Practice operations optimization happens when documentation, workflows, and metrics work together. The systems you build in year one determine whether year five finds you leading a thriving practice or trapped in operational chaos.




FAQs about starting a veterinary business


How much does it cost to start a veterinary business?


Startup costs vary widely depending on location, facility size, and equipment needs, and can reach into the hundreds of thousands or exceed a million dollars. Major expenses include facility buildout, medical equipment, initial inventory, software systems, insurance, and working capital for the first 6-12 months. Hidden costs like licensing fees, legal setup, and carrying costs during slow initial months often catch new owners off guard. Budget conservatively and plan for expenses running significantly higher than initial estimates.



What licenses and permits are required to open a veterinary clinic?


Requirements vary by state and municipality, but essential licenses include DEA registration for controlled substances, state veterinary board licensure, local business permits, and zoning approvals. You'll also need appropriate insurance coverage including professional liability and general liability policies. Start applications months before your planned opening, as each agency operates on different timelines. Consult with legal professionals and your state veterinary medical board to ensure full compliance for your specific location.



How do I write a veterinary business plan that attracts financing?


A strong veterinary business plan addresses operations, not just finances. Include detailed financial projections showing true profitability (factoring in market-rate rent and appropriate doctor compensation), a clear understanding of local market competition, and documented systems for documentation, workflows, and metrics tracking. Lenders want to see that you understand both the clinical and business sides of practice ownership. Demonstrate how your operational efficiency will support debt service and growth.



What insurance coverage does a new veterinary practice need?


Essential coverage includes professional liability insurance (malpractice), general liability insurance for property damage and injuries, and business interruption insurance in case equipment failure or facility damage forces temporary closure. Consider workers' compensation insurance if required in your state, and cyber liability coverage if you're storing client data digitally. Work with insurance providers specializing in veterinary practices to ensure appropriate coverage levels.



How long does it take for a veterinary clinic to become profitable?


Profitability timelines vary based on location, competition, and operational efficiency. Dr. Farquer noted that profitability improvements take time to show full value, with financial performance typically assessed over 3-year periods. Practices that invest in workflow automation and efficient documentation often reach sustainability faster because they can see more patients without proportionally increasing overhead.are and tools help manage veterinary practice operations?



What software and tools help manage veterinary practice operations?


Core software includes a practice management system for scheduling, billing, and client records, plus documentation tools that integrate with your PMS. Vet clinic software should include real-time SOAP note capture, automated client communication, and team collaboration features. CoVet offers PMS integration that works with your existing systems to capture clinical notes during appointments, reducing after-hours charting and improving workflow efficiency.



How can a new veterinary clinic attract and retain clients?


Start with the free essentials: claim and optimize your Google Business Profile, request reviews from satisfied clients, and ensure your website loads quickly with clear booking options. Joe Fitzpatrick, CoVet's Head of Marketing, advises: "Do all the free things first. Google gives you Google My Business and Reviews. They don't cost anything but dramatically improve visibility online." Consistent client communication, clear visit summaries, and automated follow-ups build trust and drive retention.



What staffing roles are essential when starting a veterinary practice?


At minimum, you'll need at least one licensed veterinary technician, front desk staff for scheduling and client communication, and veterinary assistants for exam room support. Dr. Farquer's benchmark: "Support staff in a small animal practice shouldn't generally consume more than 18 to 20% of your revenue." Start lean but hire before you're desperate. Build clear role definitions and standard operating procedures from day one so each team member understands their responsibilities and decision-making authority.



How do SOAP note automation tools improve veterinary workflow efficiency?


SOAP note automation captures clinical observations, exam findings, and treatment decisions in real time during appointments. This can significantly reduce the pattern of DVMs spending hours after closing trying to remember appointment details. Tools like CoVet integrate with your practice management system to produce accurate, shareable vet SOAP notes that meet compliance standards. The time savings—often multiple  hours per week per doctor—can help owners finish their days on time and reduce the risk of burnout that plagues many new practices.



What are the best strategies to scale a veterinary business beyond the first location?


Scaling requires moving from ad-hoc operations to systemized processes. Document your standard operating procedures, establish clear metrics tracking, and build workflows that function without the owner being present for every decision. Strong documentation systems, consistent team training, and reliable metrics create the foundation for adding locations or associate veterinarians. Focus on building operational systems in your first location before expanding. The practices that scale successfully have moved through the Veterinary Operating Maturity Model from ad-hoc to scalable operations.


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