Seven Income Drivers for Financial Success

September 28, 2018 05:45 AM
 
Earlier this week, we wrote about seven specific skills that would lead to financial success for swine veterinarians. Here are seven income drivers and how they relate to performance of swine veterinarians.

Earlier this week, we wrote about seven specific skills that would lead to financial success for swine veterinarians, based on a study of veterinarians by the American Veterinarian Association and sponsored by Pfizer. As mentioned, while this study was designed for veterinarians, the information is applicable to producers and other business owners.

Here are seven income drivers and how they relate to performance of swine veterinarians.

  • Employee development: This included such practices as having written job descriptions and a defined process for hiring new employees. It also included conducting written and oral annual performance evaluations. Employee development had a significant impact on income. Those who scored in the top third in this category earned an average of nearly $35,000 per year more than those who scored in the bottom third. Yet, with only about half of swine practices using these proven business tools, there's still considerable room for improvement.
  • New client development: This included such activities as sending letters of welcome to new clients, encouraging client referrals and rewarding clients for referrals.
  • Client loyalty: This was measured through a self-assessment tool in the survey. Respondents used a 5-point agree-disagree scale to rate their practices on several statements including: "This practice earns its clients" loyalty" and "clients frequently recommend this practice." While veterinarians who excel in new client development earn about 15% more on average than those who score poorly, the difference is much greater for client loyalty. There's a 35% gap between those who scored in the upper third compared to those in the lower third.
  • Business orientation: This included such attributes as using financial concepts and industry trends to manage the practice. It also included defining staff roles based on practice goals and linking salaries to practice productivity. Business orientation had one of the largest impacts on income -- a $47,000 per year gap in mean annual income between those who scored in the upper third and those in the lower third.
  • Negotiating skill: On the surface, negotiating skill might seem like an unlikely income driver. However, many things in veterinary practice involve negotiation. Convincing a production manager to switch to a new vaccination protocol, for example, is a negotiation. Specifying or purchasing the feed, equipment or drugs for a client's operation is another example of negotiation. Discussing a salary increase with an associate or with your boss, or a fee increase with your client, also are activities that require negotiations.
  • Frequency of financial data review: The study asked veterinary practice owners how often they monitored such items as revenue production for each veterinarian, aging of accounts receivable, key performance indicators and profit-and-loss statements. There was a clear income advantage to those who tracked more benchmarks more often (e.g., monthly), proving the old adage that you can't manage what you don't measure.
  • Sound judgment. This variable, which defined how a person approached decision-making, was measured through a battery of questions. There was a difference of 26% in the mean incomes of those who scored in the upper third on sound judgment compared to those who scored in the lower third.

60 Variables
In all, the study evaluated 60 variables that fell into 25 different categories. Nearly all had positive correlations to income. However, statistical analysis demonstrated that the aforementioned seven, more than the others, had the greatest influence on incomes of food animal practitioners. More than 2,600 practitioners participated in the study, completing a detailed 14-page questionnaire.

The results of the study are highly actionable. Virtually any veterinary practice not currently doing so can perform annual employee performance evaluations, initiate client referral programs and develop a set of key business performance indicators.

Editor’s Note: This article was originally written by John Volk a senior consultant with Brakke Consulting, Inc., Chicago, Ill. It has been edited from its original form by Farm Journal’s PORK.

Back to news


Comments

 
Spell Check

No comments have been posted to this News Article

Corn College TV Education Series

2014_Team_Shot_with_Logo

Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!

Markets

Market Data provided by QTInfo.com
Brought to you by Beyer
Close