Building a new veterinary hospital? Do your financing homework
Managing financing for a new hospital through an extended county approval process didn’t come easy for Dr. Jeff Walcoff, owner of 2012 Veterinary Economics Hospital Design Merit Award Winner Bennett Creek Animal Hospital in Clarksburg, Md. “The zoning and permitting process was eye-opening as to how unfriendly some counties are to small businesses. Those policies, which differed substantially from what we encountered in building out my previous practice in the adjacent County, really created massive additional costs,” he says. The whole process cost twice the amount of money ever expected, according to Dr. Walcoff. And, that’s despite doing his homework.
For starters, he had the project appraised based on the architectural drawings and the engineer’s site design. A small community bank Dr. Walcoff and his wife worked with for years, and helped with his previous practice, financed the construction loan as well as a separate loan for the equipment based on initial estimates. “At first it seemed the amount would be sufficient to fund the construction, but when things got underway, and as more and more unforeseen costs added up, it became apparent there would be a shortfall,” Dr. Walcoff says.
He used up most the money he’d made from selling his previous practice and still needed more. Dr. Walcoff secured another, larger equipment loan from another bank to cover large-ticket equipment items he’d underestimated the first time around. This loan covered such items as the higher quality runs and cages installed in the boarding area.
He understands that he overlooked several items, but many costs represented things he never could have foreseen. “I never dreamed it would cost as much as it did in terms of county fees and professional services,” he says. He had asked around everywhere he could think to check, but never got a compete answer about what costs to include outside of the cost of construction itself. “The goal posts kept moving, so it was difficult to estimate with relative certainty,” he says. “I guess it’s something you can’t possibly know about until you actually build in a particular area, but it would have been helpful to be more prepared for these costs. I’m just lucky I was able to manage these costs with the additional financing and still get the practice I wanted out of it all.”
Another short-term loan helped complete the project. Dr. Walcoff is happy to say that business is growing rapidly, and he’s been able to manage the larger debt so far. Although he tried to get the numbers ahead of time and he had plenty of planning time in the process. Building can be unpredictable and since there is no complete playbook that works for every project, explained Dr. Walcoff, he highly recommends that all future builders do their homework.
“Ask questions of everyone you can,” he says. “Talk to your builder, architect, engineer, consultants, others who have built. Try to get a feel for the fees you’ll incur in your county and the local politics, and keep those costs in mind as you plan your facility.”
Click here to read the whole story behind Bennett Creek Animal Hospital.