Pets mean profit

According to a new survey, animals make more lucrative customers for UK small businesses than people.

by
Last Updated: 31 Aug 2010

The research claims that – of all the nation’s many and varied types of small business – it is vets that make the biggest return on invested capital, at an eye-popping 37%. Bow wow! That’s nearly 10% more than their nearest rivals. There may be a slowdown in large animal work from farmers, traditionally the backbone of the James Herriot business, but it seems that the lucrative small animal trade – domestic pets in other words – is more than making up for it.

One theory for the remarkable returns enjoyed by vets, as put forward by the survey’s author, accountancy information group CCH, is that the rising popularity of pet insurance coupled with advances in veterinary techniques has led to an explosion in demand for expensive treatments for pampered pooches. So owners who a few years ago would have baulked at dropping a tenner on worming tablets and a flea collar are now queuing up to splash thousands on heart surgery, hip replacement and chemotherapy (hopefully not all at the same time) for the special furry somethings in their lives.

Plasterers come in second with a ROIC of 28.3%. No surprises that the trade which inspired Harry Enfield’s Loadsamoney character back in the 80s should still be doing well today, nor that it’s a pretty capital efficient operation. Plasterers, after all, do not have much in the way of overheads – at least if the one favoured by three out of five MT staffers is anything to go by. George (for that is his name) is a craftsman of some skill - and hardly less garrulousness - who doubtless makes a very tidy sum in return for his daily labours. But he drives an impossibly shabby 15 year old Volvo estate whose boot looks like it has been used for mixing bonding coat. How’s that for a fully depreciated asset? What’s more, his wife handles his diary, does the invoicing and the books and even dabbles in debt collection when the need arises. A leaner and more streamlined enterprise would be hard to imagine.

With more traditional businesses - greengrocers, butchers and joiners - making up the rest of the top five (all with better than 20% ROIC), those sectors which aren’t flying high are as surprising as those which are. Anyone who has had to engage the services of a plumber in the last 10 years or so will wonder how on earth they can manage only a distinctly average 17.5% ROIC, given the prices they charge – assuming you can persuade one to take on your job in the first place, that is. Surely pipe, putty and plumber’s tape can’t cost that much? And would you employ a lawyer who makes a smaller return (17%) than a roofer does (18.8%)?

Propping up the bottom of the table are estate agents (no cheers, please) at 16%, decorators and supermarkets at 15.4% apiece, and finally cleaners at a lowly 15.2%. That’s less than half as much as the vets make, and yet they have to make a comparable outlay on rubber gloves. Spooky, huh?

Find this article useful?

Get more great articles like this in your inbox every lunchtime