Low Cost: suicide or alternative?
(
how can my clinic compete in the market?
)
Congreso de la Orden de Médicos Veterinarios, Lisboa, Nov’14
How intense is the competition?
Human Population (million) 298 Dog population (million) 78 Cat population (million) 86 Total dog + cat (million) 164 Vet Clinics 30.000 Pets per clinic 5.466How intense is the competition?
Human Population (million) 298 65 60 82 Dog population (million) 78 7.6 8 5.3 Cat population (million) 86 11 8 8.2 Total dog + cat (million) 164 18.6 16 13.5 Vet Clinics 30.000 4.300 3.800 4.300 Pets per clinic 5.466 4.325 4.210 3.140How intense is the competition?
?
?
Human Population (million) 298 65 60 82 11 46 Dog population (million) 78 7.6 8 5.3 1.9 4.7 Cat population (million) 86 11 8 8.2 1.1 3.4 Total dog + cat (million) 164 18.6 16 13.5 3 8.1 Vet Clinics 30.000 4.300 3.800 4.300 1.400 5.000 Pets per clinic 5.466 4.325 4.210 3.140 2.142 1.620How intense is the competition?
Human Population (million) 298 65 60 82 11 46 Dog population (million) 78 7.6 8 5.3 1.9 4.7 Cat population (million) 86 11 8 8.2 1.1 3.4 Total dog + cat (million) 164 18.6 16 13.5 3 8.1 Vet Clinics 30.000 4.300 3.800 4.300 1.400 5.000 Pets per clinic 5.466 4.325 4.210 3.140 2.142 1.620# Facultades Veterinarias
4 6 5 Centro Europa Alemania Inglaterra Francia# Facultades Veterinarias
4 6 5 Centro Europa Alemania Inglaterra Francia 6 12 Sur Europa España PortugalSuccess in business…
“doing things right”
vs.
Which is “the right Business Model”
for a veterinary practice?
•
In growing markets, every one survives.
–
Some people do ok
–
Some people do well
Which is “the right Business Model”
for a veterinary practice?
•
In growing markets, every one survives.
–
Some people do ok
–
Some people do well
–
Some people do very well
•
In mature /stagnant / highly competitive
markets, only 2 business models survive:
–
Low cost
Let’s analyze
the Low Cost model
Question:
Rent per month Net salary per month Total cost to clinic (per month)
650 euros 950 euros
2.630
1.200 euros 1.400 euros3.510
Which of these is a Low Cost Clinic?
A. The first clinic B. The second clinic C. None of them
Rent per month Net salary per month Total cost to clinic (per month) Transactions per day 650 euros 950 euros 2.630 8 1.200 euros 1.400 euros 3.510 21
Rent per month Net salary per month Total cost to clinic (per month) Transactions per day Cost Per Transact. 650 euros 950 euros 2.630 8 12,59 1.200 euros 1.400 euros 3.510 21 7,59
Rent per month Net salary per month Total cost to clinic (per month) Transactions per day Cost Per Transact. 650 euros 950 euros 2.630 8 12,59 1.200 euros 1.400 euros 3.510 21 7,59
Low Cost: economic simulation
•
Low Cost unit simulation:
–
2 veterinarians (1.500 € net / month, each)
–
2 support staff (1.000 € net / month, each)
•
Minimum yearly revenue required to make this
Low Cost: solution or suicide?
Procedure (before VAT) Price # per year Yearly Revenue
Vaccines OHT Castrations Dental cleanings Regular visit
Total
Low Cost: solution or suicide?
Procedure (before VAT) Price # per year Yearly Revenue
Vaccines 15 OHT 75 Castrations 50 Dental cleanings 75 Regular visit 10
Total
Low Cost: solution or suicide?
Procedure (before VAT) Price # per year Yearly Revenue
Vaccines 15 5.000 OHT 75 1.200 Castrations 50 600 Dental cleanings 75 200 Regular visit 10 4.000
Total
Low Cost: solution or suicide?
Procedure (before VAT) Price # per year Yearly Revenue
Vaccines 15 5.000 75.000 OHT 75 1.200 90.000 Castrations 50 600 30.000 Dental cleanings 75 200 15.000 Regular visit 10 4.000 40.000
Total
250.000
• 11.000 transactionsRequisites for a successful Low Cost (1)
These figures require…
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4.400 patients per year
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A 50% share in a 8.800 pet market… (50.000 people
city)
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A 25% share in a 17.600 pet market (100.000 people
Requisites for a successful Low Cost (2)
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High volume focused on 5-6 basic procedures
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Zero investment in “unnecessary equipment”
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Aggressive investment in local advertising, promoting
low cost approach
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Clear message: low cost clients know what they want.
It is not credible to be a low cost and a great trauma
surgeon.
Requisites for a successful Low Cost (3)
•
If not, you will become a:
•
Low Price
•
Low Volume
•
High Cost
Which is the alternative to
a Low Cost strategy?
Muito Obrigado
