Have you checked off all the basics when it comes to building your independent community pharmacy business?
If you want to overcome obstacles and achieve your pharmacy’s goals, you have to get the little things right.
Follow these ten rules for running a successful pharmacy business and stay on the right track.
1. Manage your cash flow
Cash flow is crucial to a sustainable pharmacy business. Know what affects your cash flow, so you have enough money on hand to pay the bills when they need to be paid.
For example, the lag time from when a patient pays her co-pay to when you see your reimbursement in your bank account can affect your cash flow. But, by effectively planning and managing your cash, you’ll still have money available when you need it.
Learn more about cash flow in our cash flow guides.
2. Analyze your data
Data mining refers to analyzing data to find useful information that you can apply to improve your pharmacy, and it’s vital to growing your business.
Tracking and understanding your pharmacy’s data will allow you to make smarter business decisions.
For example, use data to identify your most profitable patients and prescribers, understand your patients’ needs and keep up with front-end purchasing trends. Use your pharmacy computer system and point-of-sale software to run reports.
3. Create (or update) a business plan
Whether you’re opening a new business, starting a new venture, such as a compounding pharmacy, or updating your current business strategy, you need to develop a business plan and financial projections.
Your business plan serves as a road map, outlining how you plan to achieve your financial goals.
As your business evolves, it’s imperative that you track your plan on a regular basis so you can make adjustments when necessary.
The U.S. Small Business Administration (SBA) has great resources to help you develop a business plan for your pharmacy.
4. Understand your margins
It’s no secret that independent community pharmacies run on thin margins.
Net margins on prescriptions are tight due to third party payer and government contracts that in some cases reimburse below acquisition cost, according to the 2016 edition of the NCPA Digest, an annual publication from the National Community Pharmacists Association (NCPA) that profiles the independent community pharmacy market.
And, even though gross margins as a percentage of sales have remained relatively flat at 22 to 24 percent for the last 10 years, below-cost reimbursements and variable direct and indirect remuneration (DIR) fees in Medicare Part D are having a negative effect.
While pharmacy benefit managers (PBMs) effectively control your third party reimbursements, there are still measures you can take to help improve your pharmacy’s margins.
For example, improving your primary wholesaler contract can positively influence your margins. When it’s time to renew your primary wholesaler contract, consider using a contract negotiation service like ProfitGuard by PBA Health to secure your pharmacy with better pricing, rebates and payment terms.
5. Recruit and retain good employees
Finding the right employees to hire, and taking steps to retain good employees, is crucial.
Your employees actively contribute to the success and profitability of your pharmacy.
Create a work culture that talented pharmacists, pharmacy technicians and non-pharmacy employees want to be a part of.
For example, provide onboarding training and continuing education (CE), give performance reviews, offer advancement opportunities and reward employees who work hard.
6. Pay attention to your online presence
Monitor your pharmacy on review websites as well as your social media pages to pay attention to—and respond to—current and potential patients.
Not only can you learn what your pharmacy is doing right, you can also see where you need to make improvements. And, current and potential patients will appreciate that your independent pharmacy cares about what they have to say.
7. Develop a marketing strategy
Many small businesses don’t understand the importance of using marketing to reach new customers and retain current ones.
If your marketing budget is slim, start with these high-impact marketing strategies that won’t break the bank.
Once you learn what type of marketing works best for your pharmacy, you can decide where to put your money to ensure your efforts continue to be successful.
8. Learn from your patients
As an independent community pharmacist, establishing relationships with your patients is key. And, the more you nurture these relationships, the more you’ll learn from them.
If you want your pharmacy to continue to grow, you need to know what works and what doesn’t, whether that’s a service patients aren’t utilizing or a front-end product patients want.
Ask your patients for their opinions so you can continue to make improvements and build a better business.
9. Know your competitors
If you’re going to stay competitive, you have to know everything about the businesses you’re competing with.
For example, think about other independents or national chain pharmacies located near your pharmacy. What is their pricing like? What services are they offering? How are they marketing their businesses?
By understanding this information, you can decide how to position yourself against them and stay competitive.
10. Work toward a higher purpose
For independent pharmacies, this may seem like a no-brainer. Your higher purpose is to help patients by providing the care they need.
The key is to make sure your patients—and your employees—truly believe you’re there to serve this higher purpose, rather than to simply make money.
Demonstrating your passion for what you do will empower your employees to work harder and attract more patients to your pharmacy.
Check out these 10 habits of successful pharmacy owners.
