Opening a Profitable Vet Clinic - Numbers you Need to Know

January 5, 2022 by Adam Hoeksema

There are approximately 118,000 veterinarians in the U.S. alone, but only about 30,000 vet clinics.  According to Praxis the average vet clinic owner makes approximately $280,000 compared to $80,000 for a veterinarian that works at a clinic as an employee, so there is clearly some upside potential for a veterinarian to open their own practice.  In the article below I walk you through our research on animal hospital startup costs, operating expenses, potential revenue and profit as well as show you how to enter all of your own assumptions into our veterinarian financial projection template so that you can see how profitable your specific vet hospital might be based on your business plan. 

How much does it cost to open a vet clinic?

The startup cost for a vet clinic can vary dramatically depending on the size and scope of your practice as well as whether you will build, buy or rent a facility.  There are 3 key startup cost categories for an animal hospital:

  1. Equipment and furniture
  2. Vet Clinic Facility
  3. Startup Working Capital (salaries, advertising, rent, insurance, and utilities)

Veterinary Equipment List 

According to the Independent Veterinary Practitioners Association your clinic will likely need the following list of equipment:

Startup vet equipment and furniture can cost approximately $85,000 according to Truic.  This should cover your:

  • Waiting room, office, and exam room furniture
  • Lab equipment
  • Kennels
  • Medical and surgical equipment

Buy, build or lease a vet clinic

The next large startup expense could be the cost to buy, build or renovate a building.  This is going to vary so dramatically based on your location that you simply need to do some research in your local area.  In the video below, Vicki Pollard, AIA, CVT, principal at Animal Arts in Boulder, Colorado gives a few vet clinic rules of thumb to help you answer some of these questions.

Vet clinic rules of thumb:

  1. You will probably need 2 to 2.5 exam rooms per veterinarian
  2. Minimum vet hospital exam room size should be 1,000 square feet
  3. New construction cost for a veterinarian clinic is approximately $250 per square foot
  4. Leasehold improvements or renovations to an existing building average $130 per square foot
  5. Of course costs will vary depending on your location around the country

Based on these rules of thumb if you have a clinic with one veterinarian with 2 exams rooms at 1,000 square feet each + 1,000 square feet of waiting area and office space for a total clinic size of 3,000 square feet, you can expect new construction cost of 3,000 x $250 = $750,000 to build a new vet clinic. The cost to renovate an existing building to open a vet clinic would be 3,000 x $130 = $390,000.  

Startup Working Capital for a Veterinarian Clinic

The last major startup expense would be working capital to pay for your operating expenses like staff salaries, rent, utilities, advertising, etc while you build up your customer base.  Some of the general expenses could include the following:

  • Accounting/bookkeeping - $300 per month
  • Advertising - $500 per month
  • Insurance - $250 per month
  • Professional Services (legal, marketing, etc) - $200 per month
  • Rent - $3,000 per month
  • Software subscriptions - $200 per month
  • Supplies - $500 per month
  • Utilities / Internet - $500 per month 

Of course all of these expenses can vary depending on your specific business plan. Then based on your staffing plan, your staffing budget will probably be your largest working capital expense.  

Veterinary Clinic Staffing

Your largest operating expense for your clinic is likely going to be your staff wages.  Based on an interview with Dr. Douglas, owner of Douglas Animal Hospital, in an ideal world you would have at least one technician, one assistant, and one office manager / receptionist per doctor.  If your facility has multiple veterinarians you may benefit from additional staff.  As you consider your staffing budget, we found some helpful data to base your assumptions on: 

Based on these salaries, a clinic with one receptionist, assistant, and technician would have approximately $6,000 in monthly salary expenses.  

With all of these assumptions, you would have monthly operating expenses of approximately $11,000 before you pay yourself.  It would be wise to have at least 6 months of working capital on hand when you start which means $66,000 in working capital. 

So total startup costs for a veterinarian practice can be as follows:

  • Equipment and Furniture = $85,000
  • Vet clinic facility = $390,000 - $750,000
  • Working capital reserve = $66,000

Total required startup costs to open a vet clinic = $541,000 to $901,000

Watch this video about typical startup costs for a vet clinic.

How much can a vet clinic make in revenue?

Now that we know how much it costs to open a vet clinic, and what the typical operating expenses look like, we need to know how much revenue a vet clinic can generate.  Based on 3 different sources (BVR, Today’s Veterinary Business, Live Oak Bank) a vet clinic can expect the following revenue per doctor:

Minimum annual revenue per veterinarian = $300,000

Maximum annual revenue per veterinarian = $1,000,000

Average annual revenue per veterinarian = $550,000

The wide range in revenue is primarily due to the location of the vet clinic.  An animal hospital in a small, rural town might only generate $300,000 per vet per year, while a clinic in a large, high cost of living city might generate up to $1,000,000 per doctor per year. 

Next, we want to be able to project revenue by service.  A survey of 700 vet clinics completed by Live Oak Bank provides a definitive industry standard breakdown of revenue by service area.  The summary breakdown of vet clinic revenue is as follows:

  • In-house pharmacy represents approximately 12.5% of vet clinic revenue
  • Vaccinations represent approximately 7.5% of vet clinic revenue
  • Lab services represent approximately 15% of vet clinic revenue
  • Dentistry services represent 3% of vet clinic revenue
  • Preventative care services represent 12% of vet clinic revenue
  • Examinations represent 20% of vet clinic revenue
  • Surgical services represent 10% of vet clinic revenue

This list of services represents 80% of vet clinic revenue, so in order to get to 100% you will likely find some services that you specialize in and generate a higher percentage of your revenue than the average to reach 100% of revenue.  This list should help you get an idea of what your breakdown should look like, but every vet clinic is different, so your specific percentages will be different. 

Now that we know how your vet revenue will likely breakdown between different services, we need to find a way to actually estimate your projected revenue.  My approach is to take the average annual spend on dog and cat vet services and multiply that by your number of active customers.  According to a survey on Statista the average amount of money spent on vet services for dogs is $241 per year and $125 per year on cats.  If we assume that your practice has a 50/50 breakdown of cats and dogs, the average per pet is $183.  

In this video below I show you how to enter your vet clinic services into our template and add in your own assumptions so that you can project revenue for your vet clinic

How much money can a veterinary clinic owner make?

In this video I walk through our veterinarian financial projection spreadsheet and show you where to enter in all of your own assumptions so that you can determine how much profit your vet clinic might make if you are able to execute on your business plan.  

Hopefully this has been helpful as you think about how to open your vet clinic.  My one bit of encouragement is to do it!  Becoming a business owner is scary, but so rewarding!  If you do your research, work hard, care well for your clients, and understand your numbers, you can succeed in this business.  As you are getting started, our vet financial projection template can be a huge help in making this an easy process, but please don’t hesitate to reach out and ask for help - ProjectionHub Consulting

Top Right Photo by from Pexels

Top Banner Photo by Tima Miroshnichenko from Pexels

About the Author

Adam is the co-founder of ProjectionHub which is a SaaS web application that helps entrepreneurs create financial projections for their business. Since 2012, over 40,000 entrepreneurs from around the world have used ProjectionHub to help create financial projections. Adam also serves as the Executive Director of Bankable. Bankable is a Small Business Administration (SBA) lender that makes loans from $500 to $250,000 to Indiana small businesses that are unable to secure financing from a traditional bank.

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