Any new business venture, whether it may be the actual startup of an entirely new pharmacy operation, or simply the addition of a new service line to an already existing business, must begin with a well thought-out business plan. The plan is best developed through a process of careful and thorough consideration of the business’s potential strengths, weaknesses and chances of successfully capturing enough market share to sustain both growth and profitability. To get the most optimal operating results from the very start, plus generate the largest possible return from their investment, the business plan requires both time and effort from the pharmacy owner, who must answer numerous detailed and sometimes difficult questions that will ultimately “frame” the viability and feasibility of the plan. The business plan serves not only as an assessment of the new venture’s feasibility, but additionally serves as both an accounting of the various resources that may be required for the success of the new startup or expansion, and as a tool for measuring the progress along the way. Basically, the business plan is your road map on how best to quickly and efficiently achieve your business’s objectives and ultimately attain your goals.
How Do I Develop My Business Plan?
When initially starting out and “mapping out” your business plan, you must first describe who you are and exactly what it is that you plan on doing. As part of this initial step, the owner should also specify exactly what their business’s USP is (Unique Selling Proposition). In other words, what exactly does your business offer to potential customers that differs from your competition and sets your business apart from the rest of your competitors, resulting in both an increased volume of business, plus ensure customer loyalty and satisfaction.
The next step of the business plan “development process” requires that the owner both identify and quantify several sectors of the local business environment currently existing in each of the possible physical locations that are under consideration for “housing” the business. Some examples of the specific questions that every business owner should be asking include:
- Who are my potential customers and exactly who is my “Target Audience“?
- Did I properly assess the proposed location to determine if it’s the very best possible location that’s available?
- Where do my new customers and clients actually originate? Some examples may include individuals who live &/or work in the local community, referrals, health plans, partnerships, etc. (to list just a few of the numerous possible sources of new customers available to a new business startup).
- Where are your potential new customers currently receiving their care, services and products from?
- Who are my competitors and which ones are more successful than the others? Why are they seeing more success and what exactly are they doing or offering that’s different from the rest of your competition?
- What advantages do my competitors have (services, pricing, convenience, etc.) that I must meet or beat?
- What advantages do I have that perhaps my competitors don’t possess or currently know about?
- What are the potential barriers to “market entry” that may be encountered?Restricted payer plans, access to referral sources, affiliations with hospitals or clinics, represent just a few of the potential barriers that your new venture may be facing.
- How will I encourage my competitor’s customers to switch over to my business? (marketing plan)?For those who have ever participated in a SWOT analysis in the past, the process will resemble that exercise and result in a similar outcome. The goal of both strategic planning techniques is to help a business owner or an organization to identifying their existing Strengths, Weaknesses, Opportunities, and Threats (hence SWOT) that are relevant to their business.
Once the business owner thoroughly describes and/or defines the local market and customer profile, a financial assessment is then necessary to project the total anticipated amount of money that will be required in order to achieve the initiation or launch of the plan. Both the optimistic and the pessimistic projections that are received should be thoroughly assessed to determine the financial reserves that are necessary to have on hand (or have access to) in case there’s any deviation from the anticipated performance, projections and/or initial estimates. A comprehensive financial assessment will also provide the business owner with a realistic view of the viability of the plan, the resources needed, plus provide the metrics to measure the business’s performance by.
A summary of the plan and findings is the last step of the process. This summary provides the pharmacy owner with a detailed timeline, including both expenditures (both those already encountered and those still anticipated) and the dates of the major milestones or event completion dates that can be expected during a pharmacy startup or expansion project. HCC can also present you with details regarding possible exit strategies that may be available to you when you are ready, plus help you to define your future plan for the business.
What are the Basic Considerations for a Pharmacy Startup?
The basic considerations that you will need to focus your attention on when planning to start up a new pharmacy business or expanding your existing pharmacy operation by adding new service lines are listed below. They’re broken down into three (3) categories: Startup Costs, Operating Costs and Cash Flow.
Start Up Costs –
– Facility build out or renovations
– New equipment
Operating Costs –
– Monthly recurring overhead costs
– Staff salaries and benefits
– Professional fees (legal, consulting, accounting, etc.)
Cash Flow –
– Projected revenue growth – includes both dispensing related and service related revenues (examples include MTM, vaccinations, etc.)
– Inventory levels versus availability – this includes the actual costs of maintaining an inventory of legend drugs, over-the-counters (OTC) goods and numerous other patient supplies
– Anticipated margins
– Costs of providing Outstanding Customer Service – this may include ongoing education for your staff, Rx deliveries, special packaging, plus the time for providing patient counseling and other clinical services
– Anticipated Fees – credit card processing, RX switch fees, anticipated DIR fees, etc.
– Projected or anticipated Break Even (BE) Point
– Total spend (start up plus cumulative burn rate) until BE Point
Although the development of a business plan requires significant time and effort, it’s a MUST DO for starting up any new business! It basically provides the “road map” to be followed in preparing for a successful launch of the business and for measuring the operation’s progress over time. If the business owner is seeking external funding such as banks, investors or partners, then a polished business plan is an absolute must!
Who Can Help With My Business Plan?
Healthcare Consultants has assisted scores of pharmacy business owners and managers like yourself in the planning and assessment of both new or expanded business opportunities. We have in-house experienced specialists and experts in all facets of pharmacy operations – retail, small chain, compounding, mail order, specialty, LTC, hospital, ACO, 340B, etc. – that can provide you with all the relevant details on a “granular level” that you need to be successful. We help our clients to “drill down” into the plan’s key aspects to help them get a better understanding of how to achieve their goals, maximize their ROI (return on investment) and reduce unwarranted expenditures during the implementation of the plan’s. In short, both our experience and expertise allows us to provide our clients meaningful insights and industry metrics, resulting in a more realistic and refined business plan.
If you are considering starting a new pharmacy or simply expanding with an additional service line, contact HCC online now or call us today at 800-642-1652 to discuss how we can assist you in both the planning and the implementation that are necessary in meeting your objectives and attaining your goals.