Before opening a new pharmacy, there’s plenty of information, questions, and details that should be taken into account. With this article, we’ll provide the tools and knowledge pertaining to starting a pharmacy.
The first question you might ask yourself is how profitable is it to own a pharmacy? The answer is optimistic. A pharmacy’s profit margins are pretty high, with their average gross profit around 22%. Of course, this number is apt to change with variables like state of the market, cost of goods, and individual pharmacy management. But, in general, owning a pharmacy is indeed profitable.
Then, you might ask how do I start a successful pharmacy? It might seem like a big undertaking, and it is. But it isn’t impossible. The key is starting with an end result in mind; this way, you see your path more clearly and can work towards attainable goals. One of the best foundations for opening a profitable pharmacy is determining your target market and finding ways to serve them. Creating a pharmacy brand that’s unique will also help you stand out against competition and, ultimately, bring in better business.
Choosing a location for your pharmacy is a huge player in a successful business model. Larger towns bring the potential for a larger client base, but it also brings the likelihood of other pharmacies in the area. When deciding on a location, here are some things to keep in mind:
● Accessibility/visibility of the site
● Size of the location vs your ideal growth plan
● Previous tenant histories (namely previous pharmacies)
● Proximity of complementary healthcare facilities
Even after considering these three concepts, there’s more to take into account. To follow are six steps of consideration when opening a new pharmacy.
1. Figure out a business plan.
The success of your pharmacy business depends on the roadmap you create - the plan. The contents of that plan should include:
● Executive summary - a summary of the entire business plan, which is what you present to potential investors.
● Description of business - introduce your business as a whole, from branding and target market to location, team, and expenses.
● Description of services - what you offer in the way of retail merchandise, prescriptions, and healthcare services.
● Marketing plan - analysis of your competition, strategies for marketing and sales.
● Financial plan - a summary of potential revenue and expenses, financial sources and upfront costs.
2. Get professional advice.
You don’t have to be an island when you start a business; you’re allowed to ask for help. In fact, things will work out better if you do. By putting together a team of advisors and other professionals in your field, you’ll set yourself up for success.
People to add to your advising team:
● Business accountant/financial advisor
● Insurance agent/real estate agent
● Healthcare business lawyer
● Pharmacy designer
● Industry mentor
3. Get the permits you need.
The pharmacy business takes regulation seriously, which means that you should too. It’s imperative to have the right paperwork in place before your grand opening. The basic requirements of starting a business include registering with the state, applying for a tax number, and opening a business bank account.
It’s always smart to research local permits and regulations in your area in order to familiarize yourself with them. These regulations usually include:
● State permit/license
● Controlled substance registration
● National Council for Prescription Drug Programs number
● Drug Enforcement Agency number
● National Provider Identifier number
4. Hire good people.
A good team cares about your pharmacy’s future and wants the best for your small business. Those experts you gathered for your advisory team? Those are the people who can help find people to make up a perfect team of staff.
You should create an employee manual to keep the rules and values the same across the board. Highlighting your business’s procedures and policies while outlining the job description and pharmacy operations allows potential hires to be as informed as possible.
Putting an organized hiring process in place, one that is used for every new hire, is important. Give assessments that test someone’s skills in communication and teamwork, experience and knowledge, and you’ll soon create a team that works like a well-oiled machine.
5. Finance your business.
There are many different ways to finance your new pharmacy business, and that’s where your financial advisor comes in - they can assist in making the best choice for you. You can choose a traditional bank loan, Small Business Administration funding, or investment sources - but whichever route you go with, backers will want to see:
● Upfront owner investment
● A good credit score
● A plan for sufficient working capital
These things should be outlined in your business plan, so you can easily share the information with those deciding whether or not to fund your business.
6. Get ready for opening.
After everything else is in order, you can start thinking about how you want your business to run day-to-day. Before you cut that ribbon, though, there are a few more things to address:
● Digital tools
○ In a digital age where technology grows each day, having a digital presence is necessary. You can improve your patients’ experience by implementing a pharmacy management system, and engagement solutions like interactive voice response and secure messaging.
● Ordering inventory
○ Until you’ve built a relationship with your wholesalers, it’s smart to start with a sample stock of over-the-counter and prescription drugs and vaccinations.
● Store flow and design
○ Think of what your pharmacy looks like to your patients and work from there. You want to create a layout that caters to them.
● On and offline advertising
○ Accrue customers before your business even opens by promoting in high-traffic areas - digitally and otherwise.
With this information, the process of opening a new pharmacy doesn’t have to be intimidating. If starting your own business is something you’re interested in, it’s possible to take the first step today.
Looking to grow your pharmacy? Zillscript offers Provider Engagement Services. The most tried and true way to increase a pharmacy’s script volume. Schedule a discovery call with a member of our sales team to get started.