What’s one of the crucial mistakes first-time pharmacy owners are making? John Thornett gives his view
Owning a pharmacy is not easy. Why? Because the industry is at a time where retail is under serious pressure (most retail sales we see are going backwards), rents and nasty landlords are a big problem, competition is increasing, and values in a lot of pharmacies are under pressure.
So, if you are keen on investing a lot of money into pharmacy you need to be very careful about what you are doing and be very clear with your strategy. I know this sounds a little bit “Negative Nancy” and doom and gloom however, I cannot stress the importance of being prepared.
Working within the pharmacy industry for over twenty years I have seen some really distressed owners. People who have lost A LOT of money. So, I want to educate first time buyers on how to prevent such situations. Owning a pharmacy can be very rewarding but one must be vigilant and prepared.
I am becoming concerned about first time buyers who are very keen on taking on the first opportunity available but don’t have any clear strategies on how they are going to grow the business.
I believe this is the number one mistake a prospective owner can make. The reality of modern-day pharmacy is it is becoming a difficult industry where more are losing than are gaining. Some have pharmacies that are difficult to sell and unfortunately some are just unsellable.
This is not an outcome any pharmacy owners would ever want. Also, not something many current owners would have thought would have happened when they initially became an owner. Community Pharmacy is changing like many other industries, mine included. So, it defies logic that someone would go and borrow a whole bucket of money to buy a business without any clear strategy.
So, if you are currently looking at buying a pharmacy for the first time you need to be confident about what you are doing. Furthermore, merely saying you are going to service the customers better is not enough.
What you need to consider:
- How are you going to compete?
- How are you going to grow your business?
- Where are the opportunities?
- Where are your threats?
- How do you know which business you should be buying and which you should be bypassing?
A pharmacy buyer in today’s age needs to be intuitive and well informed. You need to have a vision for the community pharmacy of the future. Also, you need a clear understanding of the strategies to achieve that vision.
- Learning the skills of a great leader.
- A good mentor.
- A solid business plan.
- Understanding emotional intelligence.
- Business finance.
- Building a solid team
Lastly, you need to know how you are going to improve the health of your local community. After all isn’t that the whole reason you became a pharmacist in the first place?
You need to understand what pharmacy is a good opportunity that will help achieve your vision, and what ones to avoid.
Number One Tip: Have a team of specialist advisers!
One strategy to ensure you’re making a sound decision is having someone on your side. They will help you through this process of buying a pharmacy. They must be someone who doesn’t have a vested interest. Someone who is just looking after you and doesn’t want to see you make a mistake. Their goal is to help you achieve your vision.
Having a pharmacy specialist accountant, bank panel valuer, tax expert and strategist on your team is essential. An independent party who can help you identify the strengths, opportunities, weaknesses and threats on any potential pharmacy opportunity. They will assist you to gain clarity on the viability on any potential investment.
So, if in 2019 your goal is to purchase a pharmacy keep in mind all the above. However also remember that owning a pharmacy is both a challenging and exciting journey! There will be ups and down but an overall amazing experience.
John Thornett is Director of Peak Strategies, pharmacy specialist accountants