Inside: Get organized at the end of this year to prepare for next year.
Between the coronavirus pandemic and the economic distress it brought with it, not many people will be sad to see 2020 in their rearview mirror. Still, at the end of this unusual year, it would be wise to take some time to reflect on your pharmacy’s accomplishments and prepare for the year ahead.
Here are a few steps you can take to end 2020 on a good note and set yourself up for a successful 2021.
Check in with your finances
You’ve ideally been keeping track of your day-to-day finances throughout the year, but the end of the year is a good time to step back and take a look at the big picture.
Look at your balance sheet, income statements, and cash flow statements for the entire year. Compare them to documents from past years to get a sense of how 2020 went.
While you’re looking over these statements, you should also take a moment to measure some important pharmacy metrics like gross profit, payroll expenses as a percentage of sales, and net worth ratio. These kinds of metrics can serve as a litmus test for the overall financial health of your pharmacy.
After taking a long hard look at your financial statements, you should have a few ideas for places you can trim the fat and add efficiencies next year.
Review your goals
The end of the year is the perfect time to look back on all your accomplishments.
Pull out those resolutions you made at the beginning of 2020 — those SMART goals that you were definitely going to get done this year. Hopefully, you haven’t forgotten about them and have been keeping track of your progress throughout the year.
See if you accomplished those resolutions, and celebrate with your team if you did.
If you didn’t accomplish them, dive into why. A worldwide pandemic might have knocked back the progress you were making, or maybe it just wasn’t a realistic goal in the first place.
After you’ve reviewed your goals for 2020, make new ones for 2021. Use what you’ve learned from the progress you did or didn’t make to inform what goals you set this year. Put in place a system for keeping track of them so they don’t catch you off guard when you’re doing your year-end review for 2021.
Reward your staff
For your pharmacy staff, 2020 has been a long, stressful, and unprecedented year. Reward them for getting through it.
While an in-person holiday party isn’t ideal this year, there are still ways you can show your appreciation. A cash bonus or a meaningful holiday gift are nice ways to ring in the new year.
Also be sure to speak with each of your staff members and give them specific, positive feedback to thank them for sticking with the pharmacy this year.
Another way you can show your staff members you appreciate them is to make changes that make their work life more enjoyable.
Maybe adding an employee would help decrease stress in the workplace, or updating your pharmacy software so your staff doesn’t have to spend ages waiting for a program to start up. Small changes to the work environment will boost employee morale (and productivity, too).
Get organized for tax season
As the year closes out, schedule a meeting with your accountant to go over your taxes for the year.
This step is especially important at the end of 2020 because of the many new tax credits, regulations, and other complications introduced by the COVID relief bills. Combined with the recent Tax Cuts and Jobs Act, your taxes will probably look much different than they have in the past.
While it may feel early to be thinking about filing taxes, you don’t want to get off guard when April sneaks up. Get a jump on your taxes to make sure you have everything in order and are able to file a tax return that’s favorable for your pharmacy.
READ NEXT: How Will Covid-19 Relief Affect This Year’s Taxes for Pharmacies?
Count inventory
Take stock of everything you have in stock. If you use a perpetual inventory system, the end of the year is a good time for you to conduct a physical inventory.
A hand-count of your inventory will help you identify shrinkage and expired products. It can also be a good reminder of which products are selling well and which aren’t pulling their weight.
If, during your hand count, you find a product that has accumulated dust while sitting on the shelves, it’s probably a sign that you don’t need to keep so many of that item in stock.
Even with the wisdom that comes from an electronically managed perpetual inventory system, a hand count will help you get in touch with the merchandise on your shelves and make smarter decisions in the future.
Make big purchases
If you have a bit of extra cash burning a hole in your pocket, spend it before the calendar flips over to 2021.
Whether it is new computer hardware, pharmacy robotics, or a new delivery vehicle, not only will the purchase help to set you up for success in the new year, but you’ll also be able to write the cost off on your 2020 taxes, meaning you’ll owe less or get a larger return.
READ NEXT: How to Make the Most of the Cash Sitting in Your Bank
Back up your hard drive
Backing up the contents of your pharmacy computers can be an extremely time-consuming process, so you might put it off throughout the year.
Before the end of 2020, make a point to back up your hard drive. It only takes one major spill or computer crash to lose irreplaceable information about your business. While many pharmacies use physical external hard drives for their backups, if your pharmacy experiences a natural disaster, those could be damaged or lost. An offsite backup system or cloud-based backup might be a safer option.
While you’re backing your computers up at the end of the year, create a schedule to remind you to back up regularly throughout 2020.
Revisit your primary wholesaler relationship
The end of the year is the perfect time to review the most important business relationship you have — your primary wholesaler. That relationship is the largest factor affecting your profit, so it is crucial to review it every year to make sure you’re getting the best cost of goods.
Here are some questions to ask:
- When is the last time you got bids from another wholesaler? When you or your buying group commit to a single wholesaler, you sell yourself short. You remove the most important motivation wholesalers have to get you the best deal: competition. When multiple pharmacies compete to win your business, it drives them to reduce pricing and increase rebate incentives.
- Are your contract incentives as good as other pharmacies are getting? What does your incentive structure look like compared to your peers? If you don’t know, you don’t know how much you’re missing out on in opportunities for larger rebates, and bigger profits.
- Have you maximized your wholesaler rebates? Are you reaching the max incentive tier in every part of your contract arrangement? Wholesaler contacts could be filled with a dozen different incentives that all depend on one another and on your pharmacy’s buying behavior. The difference in your purchasing practices could result in the difference of $166,096 per year for the average pharmacy.
Getting on the right side of all this information can be difficult for any pharmacy owner who is managing the day-to-day operations of a high-intensity business. An experienced buying group like ProfitGuard®, by PBA Health, can take care of everything on the buy-side of your business so you can rest easy knowing you are getting the best wholesaler contract and costs of goods year in and year out. With experience negotiating more than $12.8 billion in wholesaler contracts, ProfitGuard experts know what other pharmacies are getting, can evaluate the quality of your current contract, and guarantee a better contract than you have now.
ProfitGuard is also one of the only GPOs that isn’t tied to a single wholesaler. That means your pharmacy gets bids from multiple wholesalers who compete to win your business, getting you a deal that can’t be matched by a GPO with one wholesaler.
In addition to negotiation and group purchasing services, ProfitGuard provides a proprietary tool to help pharmacies maximize wholesaler rebates and savings on their inventory every day. The tool automatically analyzes every purchase in light of every contract incentive to ensure your purchases result in maximal rebates and savings – giving you the lowest net cost of goods for your pharmacy.
“It’s the industry game changer for the independent pharmacy owner or operator,” says Huy Duong, owner of Dale’s Pharmacy in Colorado. “There’s nothing out there like it on the market.”
In the case that your primary wholesaler doesn’t have what you need, you’ll need a reliable secondary supplier waiting in the wings.
BuyLine®, an NABP-accredited secondary supplier, offers a full line of brands, generics, OTCs, and controls at the lowest prices in the secondary market. In addition to having low list prices, BuyLine also rewards purchases with cash rebates and significant discounts on brands. Earn up to an additional 10% cash rebate on generics and up to WAC -4% on brand.
An Independently Owned Organization Serving Independent Pharmacies
PBA Health is dedicated to helping independent pharmacies reach their full potential on the buy side of their business. The member-owned company serves independent pharmacies with group purchasing services, expert contract negotiations, proprietary purchasing tools, distribution services, and more.
An HDA member, PBA Health operates its own NABP-accredited (formerly VAWD) warehouse with more than 6,000 SKUs, including brands, generics, narcotics CII-CV, cold-storage products, and over-the-counter (OTC) products.
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