Opening up a new pharmacy business is really not that much different from starting up any other type of retail enterprise. Aside from the regulations and laws inherently involved in a new pharmacy operation, the basic business startup principles still all apply. Having opened up hundreds of new pharmacies at HCC, here are the general retail business guidelines that any entrepreneur should consider as the basics for a successful and profitable endeavor.
On average the owner of an independent retail community pharmacy makes an estimated two-hundred and fifty thousand dollars annually (~ $247,000). Keeping in mind that the independent community pharmacies still hold roughly a thirty percent (30%) share of the overall retail prescription market, one can easily see why so many new drugstores keep being opened up. Yet the entrepreneur must also consider the most recent reports from the National Community Pharmacists Association (NCPA). The NCPA reported that there’s actually been roughly a ten percent (10%) decline since 2001 in the number of independent pharmacies in the United States. According to the NCPA statistics released, there are currently an estimated 22,000 independent community pharmacies versus the 25,000 retail independents operating nationally in 2001. The point is, that while starting up a new pharmacy business can be very rewarding financially, like any other retail business it must be properly planned and executed correctly to wind up as a profitable business investment and venture.
Start With a Written Business Plan
Any successful entrepreneur will tell you that a written business plan is the key to success when starting up a new business of any kind. Basically, your business plan should contain your business goals, the reasons that they are achievable and a detailed plan for reaching them within a certain time-frame. Most entrepreneurs look at a business as they would a map. Would you set out driving a long distance without a map or knowing the fastest and safest route to get to your ultimate destination? Of course not. The same is true for starting up a new pharmacy – outline the fastest and safest route to achieving a profitable operation. Keep in mind, that like the example of the map, your business plan must be flexible and allow for contingencies. As with driving, the roads may be under construction or blocked, so sometimes even the best plan needs some adjustments or modifications made to it. The same holds true with a new pharmacy start-up. Being flexible and prepared to make business adjustments or changes when certain conditions call for them is the key to achieving a profitable venture in the end. Additionally, a solid business plan can greatly assist you in obtaining funding from lenders that you may require.
Location Is the Critical Consideration
As with any retail business, the three most important factors that need consideration are: location, location and location! It is imperative that you first determine who your target market and audience is, and then select a location where they frequently shop for goods and services. Your new pharmacy startup may offer customers the very best of everything – great service, low prices, excellent product selection – but if your target market doesn’t frequent the location that you’ve chosen, you will likely not be open for very long.
Most entrepreneurs view choosing their business’s retail location as they would fishing. To be successful while fishing you must throw your line and bait where the fish are. There’s no use fishing where the type of fish you’re trying to catch don’t swim and eat! The best fishermen put in the time and energy to research the best fishing spots. The same holds true for determining where to start your new pharmacy. Intensive research should be performed before choosing your pharmacy’s location. Economic data such as average family income in a specific zip-code or neighborhood is readily available these days. You may want to consider hiring a professional market research firm to provide you accurate data before you select a location. Additionally, look for retail outlets that are already thriving with business and shoppers. You may have to pay a higher rent, but the rewards and results will be worth it.
Design – Both the Outside and the Inside
Design of both the inside and outside of your new pharmacy can be a major key in the business becoming a successful venture. In order to determine what would be the best possible presentation and appeal for prospective customers, think about forming what marketing companies refer to as “focus groups” before making up your mind. Try and remember that you are not your own target audience and that it’s hard to be objective about your own business. Consider hiring a professional store designer and then enlisting a sampling of people that represent your ideal customer base. You may be shocked to find out that what you had in mind may not be in alignment with the feedback you receive. So be open minded and remember that becoming a profitable business is your goal.
How Much Money Does It Take To Open a Pharmacy?
Your answer will be much clearer after your business plan is written. Obviously you will need to include all of the possible initial startup costs, plus take into consideration such ongoing costs as staffing (if necessary) and marketing. Additionally, a brand new pharmacy takes time to start generating any profit, so a realistic operating budget is a must. Initially acquiring a credit line and researching how best to obtain additional funding should you need it are both highly suggested to do at the very beginning of the start-up process.
Start Marketing Before You’re Open For Business
Don’t make the mistake of waiting until your pharmacy is open to begin the marketing! Have your website and Google Business Listing in place before you actually fill your first prescription. Use direct mail and social media prior to the “Grand Opening” to create a buzz. Additionally, consider some form of an initial promotion to get those curious shoppers to stop by and hopefully become customers of your business.
Enlist the Experts!
You may have already talked with an attorney or accountant, BUT the most important expert of all is a seasoned Pharmacy Consultant on your team. Healthcare Consultants is known as the leader in helping pharmacy owners plan, purchase, setup and staff their pharmacies nationwide. Having opened hundreds of new pharmacies and pharmacy startups, HCC will ensure that all aspects of the business are covered and done right.
If you are truly considering starting up a new pharmacy operation, we strongly urge you to get in touch with us today for a free consultation. We offer you the support of an experienced staff who have been through the process numerous times and know the business inside and out! With over 29 years of experience, Healthcare Consultants Pharmacy Staffing has helped hundreds of business owners (both pharmacists and non-pharmacists alike) establish successful businesses over the years. Contact us now online or call us today at (800) 642-1652 to discuss how we can help you.