• 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 a Pharmacy? Don’t Fumble the Football during the Transition

No matter if you have worked at a pharmacy for 10 years or have never worked there a day, the transition from one owner to another is hard. It is also very important to the success of the business to the new owner.

Many new owners we work with are entrepreneurial, as such have great ideas and they are excited. They want to make changes to improve the business, put new energy into the brand and the employees. All of this is important and should be done but the most important transition strategy is something we call not fumbling the football.

What is this concept? The idea is that in many cases you as the buyer have purchased a business that has operated profitably for many many years, so let it keep doing that at first. Spend a month observing, getting to know the customers that make the pharmacy profitable, get to know and understand the strengths/weaknesses of the staff. This will allow you to really grasp what the business does well and what it does not. Then once acclimated to the business you can focus on the improvement that makes the largest impact to the business!

Seems simple but it is hard to do, so good luck!
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Why Buying a Pharmacy is a Good Financial Investment

People ask us all the time is buying a pharmacy a good investment.  Of course have owned pharmacies and have entire business around consulting pharmacies so we say yes.  But why?  Below we have outlined some reasons:


1.   Return on Investment – as an investor myself I always ask myself what is the return?  And if you buy a pharmacy the return is better than any investment I can find.  I can put $100,000 into buying a pharmacy and in the first year return $100,000 plus gain equity in the business.  If I put $100,000 in the stock market I would at best make $12,000 on that same money, in a bond $3,000, in a savings account $1,000, in real estate $20,000. 

2.  Knowledge – why invest your money into public companies, real estate and other investments when you have no knowledge of these businesses.  I personally have been in pharmacy all my life and that is what I know so shouldn’t that be where I put most of my money?  Same with you as a pharmacist, it is what you know most so shouldn’t you consider putting your money toward a pharmacy?  
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Improving Operating Efficiencies: The Pharmacy Back Office

Check out our CE with NCPA on pharmacy operations.

http://www.ncpanet.org/innovation-center/education-opportunities/ce-webinar
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Operating a Pharmacy is All about 3 Things!

Revenue, Inventory and Payroll.  

We hear regularly from clients, prospects and other owners that it is so hard to run a pharmacy, it is so hard to make money, it is so hard to know what to do, etc.  But in our opinion it is pretty simple, its just 3 things Revenue, Inventory and Payroll.  

In a pharmacy three areas impact profitability, how much revenue the pharmacy has, Inventory (both how much you pay and how much you have on the shelf) and how much payroll you have to support that revenue.  You have to have enough revenue to make money and inventory and payroll make up 90% of your expenses.  

So if you wake up every day, think what can I do to increase revenue, what can I do to lower my cost for inventory and find ways to control the amount of payroll needed you will have a good pharmacy.

Are we over simplifying it, maybe but if you do not have these 3 things figured out you will not have a foundation to improve in any other area, you won't have enough cash to pay staff to implement other improvements, you won't have time to make new decisions, etc.  It all begins with having processes to improve revenue, lower cost of goods and keep payroll controlled.


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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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