Good Debt

December 2021 |

Drs. Brooke and Mike Certa of Coastal Animal Clinic haven’t let their student debts stand in the way of becoming practice owners.

When Mike and Brooke graduated from veterinary school they each had about $120,000 in student loans. They both took corporate jobs in the Tampa Bay area and began making payments.

Practice ownership was the furthest thing from Mike’s mind. “I never thought ownership would be a thing I would pursue. I just wanted to be a veterinarian,” he says. But Brooke dreamed of buying a veterinary hospital one day. “I always wanted to own a practice,” she says.

They did just that in 2015 when they got a chance to buy a local independent hospital. First the Certas acquired a 15-year loan to buy the business and a 10-year loan to buy the real estate. The previous owner held a note (and stayed on part-time to ease the transition), and the bank covered the rest.

The Certas renamed the practice Coastal Animal Clinic and got to work. They modernized the equipment, freshened up the décor, updated protocols, increased staff pay, moved from handwritten to electronic record-keeping, and slowly raised their prices to reflect the quality of service. In six years of ownership, they’ve boosted the practice’s profitability, client base and average transaction charge (ATC) and have grown revenue 50%, from $800,000 to $1.2 million. And in February 2021, they opened a second location in Tampa.

Their student debt still isn’t paid off, but to them buying and building an independent practice was far more important. “We’ve always viewed our student debt as ‘good debt,’” says Brooke. “We didn’t focus on having to get it paid off right away, which has allowed us to invest in our business.”

Additionally, buying the practice made it easier to pay down that debt (see box). “Being business owners provides additional income, which has made us feel more comfortable with the amount we still owe,” says Mike.

Several steps made the Certas’ journey to ownership easier, they say:

Consolidating student loans. The first task was consolidating their student debt. “It was in 10 to 15 little chunks from different banks, and the rates were all over the place,” says Mike. They each consolidated their patchwork of loans into a 20-year loan with fixed monthly payments, which they put on autopay. “We definitely put those loans on the back burner,” he adds.

Business learning curve. In their first jobs, they learned as much as they could about the business side of running a veterinary practice, including scheduling, ordering, and understanding Key Performance Indicators (KPIs), and eventually worked their way up to management positions.

Getting help. After the Certas heard about a practice for sale, they hired a veterinary business consultant to walk them through applying for bank loans, valuing the business and coming up with a reasonable offer. “It was overwhelming,” says Mike. “It’s definitely advisable to hire a consultant.”

Financial guidance. As new business owners, the Certas began working with a financial advisor, whose software linked all their accounts and provided an online view of their balance sheet. They particularly liked the dashboard showing their mortgage, loans, bank account, credit cards and insurance policies.

Debt decision. When it came to their student debt, the Certas’ financial advisor laid out 2 options: (1) use extra income from the practice to pay off all their student loans or (2) leave the debt alone and reinvest the extra income into the practice. They decided to invest in the practice. “We’re giving ourselves more cash flow for what we want to do,” says Brooke. “If we’d gone the other direction and paid those student loans off, we wouldn’t have had the opportunity to better the hospital and bring in more income.”

The financial advisors started a savings account for them, then invested a portion of those savings in stocks and mutual bonds. The Certas have used the proceeds to upgrade their equipment (including buying a cold laser and a high-speed dental unit), get the building painted, raise para staff salaries “drastically,” hire managing personnel and support launching their second location.

Comfort Zone

These days, Coastal Animal Clinic’s first location is running smoothly, and the Tampa location is open and ramping up. They’ve paid back the note to the previous owner and are steadily paying down the other loans—including their student loans, which will be fully paid off in 2028.

And, Mike Certa says, he’s grateful that Brooke pushed him to make the leap to independent practice ownership. “Without her I might not have gone this route—it was too big of a mountain for me to tackle,” he says. “But now I can’t imagine working as a veterinarian for someone else.”