Key questions would-be pharmacy owners must ask

In the last column (April issue), we examined pharmacy business trends, pharmacy ownership and the future of independent pharmacy. We also discussed the value of personalized pharmacy services and specialized pharmacy services as business development tools and competitive advantages for independent pharmacies. Now let’s turn our attention to some key questions would-be pharmacy owners must ask when deciding whether to open a pharmacy. 1. What type of pharmacy will you be operating? Gone are the days where you could simply set up a pharmacy beside a large corporate chain, charge a lower fee and fill prescriptions faster. To thrive, you need a very clear idea of your pharmacy’s value proposition. How will your pharmacy stand out in this competitive environment? Observe some of the successful pharmacies in your province—what services and niches they are dominating that allow them to be successful? Take some time to think about which specialty areas you could thrive in. Are there unmet needs and under-served patients in your area? It will be tempting to wish to offer all services and products. Resist this urge, unless you are in a rural community with limited competition. Independent pharmacies can’t compete with larger retailers on breadth of offerings. When you have a clear idea of what type of pharmacy you would like to operate, create a business plan with financial projections. If you are unfamiliar with business plans and financial projections, seek help from existing pharmacy owners or pharmacy consultants. Once you understand what type of pharmacy business you want and what products and services you will be offering, decisions as to where your store should be located, the size of your store and advertising strategies are relatively straightforward. 2. Where will your future pharmacy be located? Rural or urban? Rural areas generally have fewer pharmacies per capita, enabling more opportunities to fill niches, specialize and generate revenue. Rent and operating expenses are also generally much lower in rural communities, which gives an owner the potential for a larger frontstore. This allows your pharmacy to be less dependent on prescription revenue. Front-store revenue is often more profitable than prescription revenue. This doesn’t mean that independent pharmacies cannot thrive in major cities which have high operating expenses and rent. It’s just that you must be even tighter on your business plan, competitive advantage and niche. Independent pharmacies in competitive cities tend to be smaller-format stores that are heavily reliant on prescription volume and clinical services and are ideally suited for niche business models with defensible competitive advantages. 3. Are you prepared for ownership? Once the above decisions are made, you need to take a gut check and ask yourself: Am I ready to give up my stable salary and potentially lose money for two years until my pharmacy reaches a financial break-even point? Do I have the required finances to start a new pharmacy or buy an existing pharmacy? Do I qualify for financing? Chat with your bank as well as specialized financing experts. Am I mentally and emotionally prepared to become a pharmacy owner? Ownership is both challenging and rewarding, but it’s not for the faint of heart. I highly recommended that you speak to current pharmacy owners, pharmacy consultants and experienced operators for advice. Pharmacy is a collaborative and collegial environment and these people are often happy to share their experiences. Here are a few people I recommend following and perhaps reaching out to (all active on LinkedIN): Mark Zhou, Jason Cridge, Ray Ali, Amy Oliver, Pavithra Ravi, Dave Reston and Jim Danahy. Bing Wang is legal counsel at Pocketpills Pharmacy. He is a pharmacy owner whose online pharmacy was recently acquired by a public company. Bing also helps healthcare professionals navigate their legal matters through his law firm Meta Law (metalaw.ca). For more content, connect with Bing at linkedin.com/in/bingwang8.

Key questions would-be pharmacy owners must ask

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