Veterinary practices are like people in certain ways—they have identities, personalities, peculiarities and even Facebook
pages. And just as people often outgrow their dwellings, businesses outgrow their physical environments, too. But unlike a
person, a business can't just move into a Hampton Inn if the lease expires. A veterinary practice can't just bunk up with
relatives for a few weeks if the building it lives in sells faster than anticipated.
Therefore, it's vital that veterinary practice owners give due consideration to the logistics of moving to new facilities.
Failure to plan for such a move can mean paying a steep price to landlords, banks, construction professionals and potential
There can also be a big financial sacrifice in lost revenue and lost clients, not to mention what you could spend on inadequate
temporary facilities. And all that stress on the practice owner? That too is a price that can be incredibly high and impossible
So let's look at some fixes to consider when faced with a nightmare situation.
Nightmare No. 1: Construction contracts
Ask most folks who've ever had a building project done and they'll likely tell you the same story: Builders almost always
take longer to complete a project than they predict (or at least than they tell you to expect).
When a construction firm runs behind on your building project, it means you'll probably be paying interest and principal payments
on your construction loan before you can use the space you're paying to have constructed. And the majority of each payment
in the early stages of a typical building loan is interest you won't recover, even if you pay your loan off early.
In the meantime, you'll have to continue operating out of your existing facility. If you're renting, that means making continued
rent payments along with construction loan payments, as well as a land mortgage in some cases.
The fix: Although it's a long shot, you might be able to do what schools, municipalities and other large organizations do, which is
require the builder to post a surety bond. Such bonds are like insurance policies that guarantee the timing and quality of
the construction work. Unfortunately, they're expensive and can cause the price of the project to rise dramatically. But it's
worth checking with your architect about the possibility.
A more realistic option is to insist that your construction contract include a clause indicating that "time is of the essence."
It could be drafted to state that the builder will forego a certain portion of his payment for each day or month the project
runs over the promised completion date.