When you’re just starting to think about pharmacy ownership or you’ve made the decision to become an owner, you have much to consider before you open the doors of your pharmacy business.
Your first steps may include the following:
- Understand the economic landscape that you’re entering into (for example, analyzing financial trends, evaluating your personal financial ability, talking to current independent owners)
- Start thinking like an entrepreneur by gaining a thorough understanding of general business principles; our Business Basics section is a good place to start
- Select a pharmacy location based on such factors as population demographics, local competition, costs of doing business, and so on
- Assemble a team of trusted advisors, including accountants, attorneys, financial advisors and insurance agents
The steps you take at the beginning of this process will go a long way toward determining your success as a pharmacy owner.
Your first decision is location and your second decision is to buy or lease
Choosing to open a new pharmacy or purchase an existing pharmacy is a decision that can be based on a range of criteria, including:
- Physical availability
- Financial options
- Personal interests and goals
Regardless of your situation, talking to others — particularly those who have gone through the process — is extremely helpful. Search out other pharmacists in your county or state who have opened or purchased a pharmacy in the past several years to learn from their experiences and help answer questions you have.
To locate these colleagues, ask one of our Ownership Advisors and contact your state pharmacy association or local pharmacy school for references.
You may also want to consider taking a course on pharmacy ownership, such as the NCPA Ownership Workshop, to learn from experts and talk to other pharmacists who are considering independent pharmacy ownership.
Set your course for long-term success
Among the most important first steps are developing a business plan and financial projections for your pharmacy. Don’t worry if you don’t have all of the answers, know the best format for your business plan, or have clear financial projections. Just start putting your thoughts down on paper.
Your business plan will evolve as long as you are in business, so start now. Elements of your business plan could include the following:
- Financial plans and projections
- Real estate: purchase, lease, build, tenant improvements and so on
- Pharmacy systems
- Initial inventory
- Competitive analysis
- Demographic analysis
- Anticipated competitive advantage: what will differentiate you from the competition?
- Pharmacy offerings, such as diabetic management/counseling, home healthcare, compounding, DME, med sync, disease state management, nutriceuticals and so on
- Front-end offerings, such as cards, gifts, general merchandise and so on
- Contingency plans
- Marketing plan
- Exit strategy
Assemble the team that will help you succeed
No successful pharmacy owner does it all alone. That’s why it’s wise to align yourself with trusted professional advisors who can help you navigate through legal and/or business processes.
Legal counsel: Identify an attorney specializing in commercial and retail businesses, preferably pharmacies. Attorneys have specialties, so make sure your attorney has expertise in helping you start your business. Your attorney will be one of your key business advisors — so take the time and effort to find one who is knowledgeable and experienced, and with whom you can work easily.
Accountant: Identify and consult with a Certified Public Accountant (CPA) who is knowledgeable about different accounting systems, retail bookkeeping, financing, taxes and so on. Your CPA will be another of your key business advisors, so you may want to interview several candidates before making your selection. A CPA specializing in retail business, especially one with current retail pharmacy clients, could be an asset to you. Don’t underestimate the importance of communication with your CPA; select an individual who will communicate fully, freely and patiently with you.
Insurance agent: Find an insurance agent who will identify the various insurance policies and protections you will need in order to minimize your risk. Your insurance agent should also be an advisor to you, just like your attorney and accountant, so make sure he/she understands your business and sets up a program that meets your specific needs.
It is important to have insurance that covers you for traditional business liability, as well as pharmacy malpractice. If your insurance agent isn’t familiar with the unique nature of pharmacy requirements, ask to speak with a pharmacy specialist in the insurance carrier’s home office. You may also check with your state pharmacy association for a referral.
Remember, insurance is your protection from problems both anticipated and unanticipated. Details matter, so understand nuances such as the difference between coverage limits on “claims made” policies versus “occurrence” policies. Some of the policies you are likely to need include:
- Professional liability
- Property and casualty
- Key man insurance
- Life insurance
- Healthcare insurance for you and your employees
- Disability insurance
- Car insurance if you have a delivery vehicle
Where you do business can make all the difference
You’ve probably heard the phrase, “The three most important factors for a business are: location, location, location.” Simply stated, where a business is located has a huge effect on how it performs. With that in mind, we recommend a three-part process that can help guide your location-selection process.
1. Identify opportunities
Identify, analyze and evaluate target locations before selecting your location.
If starting a new pharmacy, identify locations by exploring many opportunities, such as:
- Contacting Chambers of Commerce to learn about opportunities (rural communities looking for a new pharmacy, tax incentives, and so on)
- Contacting pharmacy wholesalers, such as McKesson, to learn about opportunities
- Speaking with commercial real estate agents in the area – Utilize RxOwnership real estate assistance program – JLL.
2. Do your research
Once a location is identified, research the location or pharmacy’s viability through:
- Conducting market and competitive analyses
- Reviewing a demographic survey and projections
- Speaking with local business owners and residents
- Speaking with local physicians and other healthcare providers
3. Negotiate and sign the papers
Once you have identified the location or business, work with your CPA and attorney to structure the deal and bring it to completion.