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

Thoughts on Notifying the Staff when Buying a Pharmacy

You have done all your due diligence, you have built your business plan, you have signed the purchase agreement, and you are ready to assume ownership of the pharmacy. Now comes a very important step in the process. How do you inform the staff of the sale?

The best way to inform the staff is to have a meeting the evening before or the morning of the transition date. If the owner has not already informed the staff he should be the one to do so at the meeting. He should let them know that he has appreciated their help throughout the years and wanted to be sure to sell the store to someone who could carry on what he has built. By passing up chain store offers the store can continue to operate. He can tell them that that he understands things won’t be exactly the same but he has taken great care to be sure the store is in good hands. Then he should introduce you.

The first thing you should do is thank the owner for the opportunity and let him know you will do everything you can to take care of his “baby”. Let the staff know that pharmacy is a relationship business and there is no way the owner could have been successful without a great staff. And there is no way you will be successful without the great relationships that the staff has with the patients. That is why it is important that everyone will be given an opportunity to continue in their roles. Emphasize, you need great relationships to be successful not only with the patients but also with you.

However it is also important that you do not box yourself in with false promises. Everyone wants you to say “Don’t worry nothing will change” for no one likes change except a wet baby. You want to be reassuring but you must be honest. It is better to say “I won’t stand here today and say that nothing will change because I want our relationship to be built on honesty and I simply cannot make that promise”. Let them know change may or may not come after you spend the next few weeks learning the business and what and who makes it successful. Tell them you want to meet with each of them individually over the next few days and you will ask them what they like about their jobs and what things would they change if they were the owner. Say “I may or may not agree with you but I promise you I will always listen”.

Finally, reassure them that they are an important part of the business and you need their trust and their help. Try to answer broad questions but stay away from individual issues such as what will me schedule be, are you offering the same benefits, etc. Let them know you will address those issues when you meet with them individually.
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Think Bigger when Starting a Pharmacy

I am asked a lot, what is the difference between very successful pharmacy businesses and those that are just okay. My answer is always the owner thinks bigger. Your typical pharmacy is primarily retail and will do traditional marketing, provide the typical services, rely on great service and market to 2 or 3 mile radius. All these are important but the great pharmacies will go big and do things that are uncomfortable. Examples include:

·         Looking at the target market not just as a 2 mile radius but as a 10 or 20 or even 50 mile radius.

·         Seeing the customer as not only the patient walking in the door but also as the prescriber, hospital, facility, pharmaceutical reps, other businesses in the community, etc.

·         Not being afraid to seek out multiple lines of business, compounding, long term care, retail and specialty.

·         Owning multiple pharmacy locations not just in the local area but maybe hours away or even a full state or two away.

·         Creating programs specifically designed for a doctor’s office, hospital or other partner.

·         Focusing on one or two disease states to drive business from a large community of patients.

·         Having a call center to attract and solicit new patients.
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What should be in a Pharmacy Business Plan?

You probably read a lot about if you should even have a business plan or not. We think you should but not like those taught in academia. We have a plan for our businesses every year, they help us have a goal, understand how we are going to execute on that goal and what we need to reach the goal. So if you are starting or buying a pharmacy you should probably have a plan and here are our thoughts on what should be included:

1.       Goals: what are your 1, 2 and/or 5 year goals?

2.       New Customers: How are you going to gain new customers? In a pharmacy you always have to be gaining new customers as people move and pass away and at a minimum you have to replace them.

3.       Customer Retention: How are you going to retain customers? You can spend all this time gaining new customers but if you lose too many all that effort goes to waste.

4.       Products & Services: What products & services are you going to provide?

5.       Personnel: How many people do you need to operate your business and execute on numbers 1, 2, & 3 above?

6.       Tools, Technology & Equipment: What other tools, technology, and equipment do you need to reach our goals and execute your plan?

7.       Operations: how are you and your team going to deliver on the above? What process are good and which if improved will make the largest impact on your goals.
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Starting, Buying or Own a Pharmacy? Read These Books

Every year I set a goal for the number of books I want to read during the course of the year (last year it was 24 and I read 27) and try to ensure at least ¾’s of these books will help us make a positive impact on the pharmacies we own, our consulting practice or our clients. The below list outlines some of my favorites and the lessons learned from each. Hopefully these will help you too.

The E-Myth Revisited by Michael Gerber – this book outlines why individuals with a technical skill who start businesses tend to fail or not grow. This applies directly to the pharmacy industry where pharmacists start pharmacies because that is what they know. In many cases, however they are not as successful as they should be. He outlines what technical professionals “pharmacist” need to know to be business owners within their field. I would highly recommend this to anyone interested in buying or starting a pharmacy and any current owner of a pharmacy.

Ready, Fire, Aim by Michael Materson – what I really like about Michael is he simply outlines what you as the owner or CEO need to do to grow your business and the barriers you will face along the way. For this reason it is the best business book I have read in many years. For me it made it very clear what we need to do to take our businesses to the next stage of growth and what we can do to help our clients grow into extraordinary pharmacies.

The Lean Startup by Eric Ries – Both Eric and Michael Materson take similar approaches to innovation. The concept is to introduce new products and processes quickly and with very little cost. For any business owner, including us, it is difficult to create change in the organization. There are a million reasons, you may not have enough cash, not enough time, your employees are stretched too thin or maybe you are just a new startup. This book will provide you insight and guide you through constant innovation which will lead to profits and growth.

Traction by Gino Wickman – As an entrepreneur and leader every day it is difficult to find time. For me it was always difficult to know what 2 or 3 items I should focus on and how to get our team to focus on them as well. Gino provides the Entrepreneurial Operating System (EOS) and it will allow you to not be overwhelmed, have fun and improve your business.

Bold by Peter Diamandis – this book is about big ideas, some of which seem crazy. But I think it applies to pharmacy today because the industry is changing, being disrupted and we as entrepreneurs within the industry must think differently in order to thrive in the future. Go into this book with an open mind and be prepared to think how could we as a company do something completely different.

Solution Selling by Ed Wal – if you have ever spoken with me or seen any of my other postings about books, this book is always on the list. First Ed, personally taught me much of what I know about how a business works and how to sell to any organization. I consider him a mentor to me and many others. But also it is my opinion (and Michael Materson’s) that as an owner of a business you must also be its number one salesperson. This book will teach you how to sell, follow it, try everything in it and you will sell!
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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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