• 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.

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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7 Items to Know Before Starting or Buying a Pharmacy

Consider these points as your explore the idea of being a pharmacy entrepreneur.

1.       Accounting – owning a business requires a basic knowledge of financial statements and how cash flows through a business.  Having this skill will allow you as a new owner to better manage the business.

2.       Management – with a business comes people and people require managing.  Experience with managing people will greatly assist you as an owner.  Pharmacies tend to have 3-6 people in a small space so properly managing expectations and culture can make or break the business.

3.       Your personal financial situation – You should have a good grasp of your monthly expenses and your cash position.  You need this for two reasons, buying or starting a pharmacy will require a cash injection and you need to understand what cash you have available for the investment.  Second an understanding of your monthly personal expenses allows you to gage how long of a period you can go without a salary in case the business needs you to not take a salary.

4.       There are going to be times where you ask yourself, why did I do this? – things are going to happen (robbery, building damage, natural disaster) and cash will get tight at times and it will be stressful.

5.       Understand truly why you want to own a business – I think this is really important because when things like the above happen it keeps you motivated to push through.

6.       Team – you need a team, accountant, attorney, financial advisor and mentor.  Make sure you have these people it will make life so much easier.

7.       It’s not going to be a quick process – everyone going into owning a business believes they will purchase or start a business and it will be profitable and easy to manage within 6-12 months.  The reality is the process will take 3-5 years and you have to be ready to weather that storm.
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Buying a pharmacy is a marathon not a sprint.

I know I know, something about being a marathon not a sprint is the oldest most over used term in business.  The reality is, buying a pharmacy does takes time and if you really think hard about acquiring a pharmacy, this will be very evident.

Whether it is your first pharmacy or your tenth choosing the right acquisition could lead to more personal and financial success than you have ever imagined, but it could also bankrupt you, cause health problems due to stress and ruin relationships. Remember this is a big deal, your house probably cost you between $100,000 and $300,000. A new pharmacy will most likely cost more than $1,000,000 - like owning 4 to 10 houses.  
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Working Capital - the Key to Pharmacy Ownership Success

You have heard the expression CASH IS KING. Nothing could be truer when you buy or start a community pharmacy. Below we have outlined the working capital needs for both starting and buying a pharmacy.

Starting a Pharmacy
The number one reason for a startup pharmacy to fail is not having enough cash in the first couple of years of business. On average in the first 6 months of operation a pharmacy will have approximately $75,000 in expenses per month. Day one you have $0 dollars of revenue. In month one you may have sales of $25,000.
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Don't Forget the Paper Towels When Opening a Pharmacy

Remember the Paper Towels when you start a pharmacy?

You are starting a pharmacy, no starting a business. You have put your life savings into the business, put up your house to secure a loan and you quit your high paying pharmacist job at the chain. As such you have meticulously reviewed every item that needs done, picked an accountant, choose a pharmacy system created a brand, ordered drugs, gained licenses etc, etc. You open the first day spill coffee all over the drop-off counter and have no paper towels to clean it up. You had that feeling in the back of your head that you were forgetting something. That’s because you were and that is okay. It’s the first time you have ever done this. The first time you rode a bike you probably crashed or fell over. It’s hard not to make a mistake the first time you do something because you have no experience.
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