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

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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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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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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Pharmacies - Are you Compliant with the Affordable Care Act?

Are you compliant with the affordable care act? 

The Affordable Care Act requires employers to provide employees with a notice of the availability of the Health Insurance Marketplace (the “Exchange”) that will be available Jan. 1, 2014. This is a requirement of all employers, regardless of size.

Employers were required to distribute the notice by October 1, 2013. If you have not yet done so, you should discuss it with your financial advisor or insurance agent. There are two model notices (depending on whether or not the employer offers a health plan) which can be found on the Department of Labor website under the “Notice to Employees of Coverage Options” section.
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