• LATEST PHARMACY NEWS AND EDITORIAL

    LATEST PHARMACY NEWS AND EDITORIAL

Our latest thoughts and inspirations on buying a pharmacy, starting a pharmacy, and ongoing pharmacy operations

Owen BonDurant, President: Owen is 2nd generation (his Dad is part owner in a 9 store pharmacy chain) in the pharmacy business and has worked in independent pharmacies since before he can remember. He has worked in almost every role a small pharmacy has to offer from cleaning the bathrooms, working as a pharmacy technician, marketing, starting and running a durable medical equipment company and managing employees. Owen graduated from Miami University of Ohio with a degree in marketing and a minor in management information systems (MIS). After graduating he briefly worked for Western and Southern Financial Group before deciding he wanted to return to the pharmacy industry where he started medical equipment business for a chain of 9 independent pharmacies. From there he moved to Chicago and started working for Experian QAS and for the last 7 years has been selling software to major retail organizations along with managing the Midwest sales team. Recently the itch to come back to the pharmacy industry, as it truly is all he knows, and Independent Rx Consulting was born.

Is Starting or Buying a Pharmacy Risky?

I am often asked this question.   My response is always the same.  It depends on you the individual.  Everyone looks at risk differently and everyone has a different definition of what risk is. 

I personally ask myself one question, is working for someone else safe?  Some say yes, you receive a bi-weekly check from a big company that will not fail in my lifetime and if you do a good job they will probably continue to employ you.  However to me the large company is less secure, they can make mistakes, be drastically affected by economy, go out of business or be sold and you lose your job or they have to lay you off to meet stockholder expectations.

On the other hand if you own your own business (especially a pharmacy) you can sell the business and you may be out of a job (you may not as you could work for the company that purchased your business) but at least you receive a reward in the form of money for the sale plus no one can let you go other than your customers.  In addition when you own your own business you can always advance your career, make more money and have more time and this cannot always be controlled while working for someone else.

Entrepreneurship isn’t easy and is not for everyone.  It may however come with the same amount of risk as working for someone else just different kind of risk.
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Purchase a Pharmacy? Don’t forget about the small things after purchase!

Congrats!  You have acquired a pharmacy.  The last 2 weeks of the purchase can be crazy, all the papers, emails and phone calls and you feel relieved that you get to move onto the fun stuff.  But try not to take too big of a break as there is a lot to do.  Below are some of the top things we see forgotten:

1.       Check former owners control substance procedures as they are usually outdated.

2.       Look at labor law posters, are they up to date.

3.       All of your new employees will need to complete Hippa and Fraud Waste and Abuse training even if they were recently completed.

4.       Transfer all the bills (utilities, pharmacy system, etc) into your name.

5.       Change the locks, you do not know who has a key.

6.       Change merchant service bank account information (credit card deposits) to your bank account as soon as possible.
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Buying or Starting Your Second Pharmacy

You own a pharmacy and want to expand to multiple locations.  You think to yourself getting financing will be easy as I have one successful business and already received funding for the first one.  Know this, it isn’t that easy.

Regularly we have owners who have already found their second pharmacy to purchase or have a great start up opportunity but cannot get the project funded.  I am sure you are thinking, they must not have a very good first business.  Wrong!  They have great businesses but either have poor financials that do not reflect how good their businesses are or they have “hidden” cash for taxes purposes.

When expanding your business whether through additional locations or simply getting capital to add a compounding lab the bank looks at your global cash flow inclusive of the new debt.    We see regularly owners maxing their 401k’s, buying robots, giving bonuses, etc and then their cash from year to year looks lower than what it really is and the bank cannot fund the new project.

So remember if your plans include expanding your operation and you will require capital, find a good accountant, get proper financials and when making decisions think about your free cash flow as it is represented on your tax return.
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If you want to own a pharmacy you have to be a sales person!

I go to a lot of pharmacy conferences, read a lot of pharmacy articles, follow all the pharmacy trade blogs/social sites and rarely do I see anything related to sales.  Knowing how to sell can be the difference between having an okay pharmacy and having a great pharmacy.  No longer can you have a great location and simply expect people to walk through your door.  In today’s pharmacy environment you have to create several lines of revenue, retail prescriptions, long term care, compounding, transitions of care, med-sync, MTM’s, immunizations and more.  Gaining this business requires a sales plan.  To have a sales plan you must gain the necessary skills to conduct sales calls. 

I know that most pharmacies are retail businesses but pharmacy is a relationship business and to drive revenue through relationships you have to be able to sell.  I know what you’re thinking, I do not want to be a car salesman.  But salespeople have a bad reputation because the sales people who annoy you they are not selling right.  Below are some resources about selling the right way, hopefully this helps you build relationships and drive more revenue to your pharmacy. 

Books

1.       Solution Selling: The Strongman Process by Ed Wal - https://www.amazon.com/dp/1910563110/ref=wl_it_dp_o_pC_S_ttl?_encoding=UTF8&colid=285HW3RI6Q5E8&coliid=I1HG5VOUIX4DRG

2.       The Greatest Salesman in the World by Og Mandino - https://www.amazon.com/dp/0552682004/ref=wl_it_dp_o_pC_nS_ttl?_encoding=UTF8&colid=285HW3RI6Q5E8&coliid=I3VSM9QV68QM7N

3.       Spin Selling by Neil Rackman - https://www.amazon.com/SPIN-Selling-Neil-Rackham/dp/0070511136/ref=sr_1_7?ie=UTF8&qid=1491759102&sr=8-7&keywords=best+sales+books

Blogs

1.       The Sales Blog - https://thesalesblog.com/

2.       Hubspot Sales Blog - https://blog.hubspot.com/sales#sm.0000e67z0z7wdd1h11htqukg1ou7m

3.       A Sales Guy - http://www.asalesguy.com/
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Buying or Starting a Pharmacy? Look at the Whole Opportunity!

When you venture into owning a business, of course you have to make the decision based on if it is a good financial decision or not.  However sometimes determining if a business venture is financially wise requires one looking at the opportunity as a whole.  Every business is not necessarily right for every person.  For example if you were born, raised and still live in a town you have a much better opportunity to start a pharmacy than someone who lives 60 miles away. 

Other items to consider are:

·         Does the opportunity improve your current pharmacy through staffing, economies of scale or purchasing power?  Or maybe the new opportunity allows you to now service compounding or specialty from your other store?

·         Can you buy the building and stretch the loan over 15 years or 25 years improving cash flow? Or does the building allow you to create another asset that is funded by the pharmacy?

·         Are their doctors or other healthcare referral sources that only you have which can drive significant growth?

·         If buying a pharmacy can you drastically improve the cost of goods sold upon buying?  Or once you take over, will the payroll reduce significantly allowing you to have a more profitable business?

These are just some examples, but remember to analyze the opportunity from all angles as it may not make financial sense but there may be a much larger return hidden in the details.
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