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

Tips for improving your chances of getting financing.

With the poor economic environment over the past few years many people have given up or delayed there dream of owning a pharmacy and probably for good reason as unless you were established or wealthy receiving a loan for any business venture was very difficult. But over the last couple of years the ability to obtain capital has improved and is feasible for just about anyone who really wants it. With that said we wanted to provide a few tips on what you need to have prepared to improve your chances of gaining the financing you need:

1. Skin in the game- financiers want to see that you are able to put up some cash, whether it is money you saved, money from relatives or even transferring your 401k. Companies providing loans want this for a couple of reasons, to see you’re confident in the business plan, if you have something to lose you are more likely to do what it takes to succeed and lastly they want to limit their risk the lower the cash to debt ratio the better the chance of the financier being paid back.

Marketing your new pharmacy!

We hear it a lot, I have no marketing background or experience where do I even begin. Below we have outlined 5 areas to consider when trying to get the word out about your new business or location. We would like to note however this process can be more effective and simplified by hiring a marketing firm. There are a lot of them out there and tend to be fairly inexpensive. We use one for our pharmacies and partner with one in our consulting business.

1. Public Relations - This is the art of using news media contacts to gain publicity for your venture. Often if you reach out to local TV, newspaper, bloggers, etc you can get them to cover your grand opening or any other event. As stated above using a PR or marketing firm will increase the performance of these efforts.

LOCATION, LOCATION, LOCATION - Determining the perfect location for your community pharmacy!

Location is one of the most important factors to the success of a retail pharmacy. It is so important, it at times, can be the sole factor in the success or failure of a retail pharmacy. But how does one know if a particular location is going to breed a sustainable retail business? The answer is, it’s impossible to know for sure if a location is going to thrive, but there are ways to limit the risk of a pharmacy failing due to a poor location

Other Pharmacies – What other pharmacies are within your service area? Having a couple of high volume pharmacies close to your location can actually be a good thing. With very high volume pharmacies there have to be dissatisfied customers which means you have a built in customer base. A lack of pharmacy can be good also as it shows a need but also be cautious and try to find out why there is not a pharmacy there already.

Medical Offices – Look to see how many medical offices are within your service area. Visit these offices ask them if they perceive a need for more personalized care from a community pharmacy.

Is there opportunity for new community pharmacies?

The Community Pharmacy marketplace has been declining for years and that spells opportunity for
young pharmacists and entrepreneurs.

Yes according to yearly studies done by the National Community Pharmacy Association (NCPA) the community pharmacy industry has seen continued decline in both sales, total stores and profit. But as entrepreneurs we always have to ask why?

It is true that some of the above is due to flat prescription volume, a low volume of new none generic drugs, an increased number of generics coming to market, poor reimbursement from PBM's and the increased use of 90 day refills.

Should I start a pharmacy or buy a pharmacy?

Whether you are a first time owner looking to become an entrepreneur or a current owner looking to grow through expansion this is a tough question. We can't give you an exact formula to know which is best but there are a few important items to think about.

1. What is your financial position? - Buying a pharmacy in most cases is more expensive than starting a pharmacy. However buying an established operation typically will result in a faster return on investment and have less cash flow concerns.

2. In your community what are the options?