Inside: An economic recession doesn’t have to spell doom for your independent pharmacy.
It’s official: The United States is in a recession. And while that may strike fear into the hearts of many small business owners, you don’t need to start tightening belts at your independent pharmacy just yet.
In fact, recessions can open up new opportunities for savvy business owners, and your pharmacy even has the potential to expand as the rest of the economy shrinks.
Use these tips to get ahead of the lackluster economy and keep your pharmacy financials growing.
1. Hire the best people
As an individual, high unemployment rates are scary, but as a business, they can work to your advantage. When unemployment is high, that means there are many talented, hardworking people who are looking for a job.
If you play your cards right, you can hire them and create a staff lineup made up of only star players. Review your hiring and training processes to make sure you’re attracting the best candidates and setting them up for success.
To fully take advantage of this, you may have to cut the struggling staff members from your ranks. While it may be difficult to let go of underperforming employees while the economy is shrinking, you need to make sure every dollar you spend on staffing counts.
By replacing stragglers with a more productive and capable new hire, you can make your pharmacy more efficient and profitable during this difficult economic period.
2. Be assertive
When the economy is bad, your inclination is probably to play it safe, but that’s the opposite of what you should be doing. If you want to keep growing during tough times, you need to go on the offensive in order to grow your customer base.
This means paying closer-than-normal attention to what your competitors are doing and figure out how you can do it better. Look at their advertising, visit their stores, and ask your patients about their experiences with those competitors. You may find that the chain pharmacy down the street cuts corners when it comes to customer service, or they’ve recently changed their hours to be less convenient.
When you’ve figured out what advantage you have, publicize it. Let potential patients know that you will be there for them with the services and products they need even when your competitor falls short.
3. Market smart
Of all your expenses, your pharmacy marketing budget may seem expendable during lean times. But now is not the time to stop advertising your business. Even if you are pinching every penny, you can still take advantage of low cost and free digital marketing opportunities like developing an active social media presence.
If you step up your marketing game, your business could get a much-needed boost during economic hard times. Plus, competitors will likely be cutting back on their marketing and advertising spending, so your message will be more likely to get through to potential new patients.
Like businesses, individuals are reassessing many of their financial decisions during a recession, and they are primed to make a change if they think they can get more bang for their buck. If you quit marketing, you won’t be able to take advantage of that restlessness.
4. Improve customer experience
As a small, community business, providing personalized service for your patients has always been your strong suit — but now is the time to step up your game.
There are several ways to improve customer experience during the pandemic-related recession in particular:
- Expand delivery, and consider making it free
- Bring immunizations curbside
- Offer to shop front-end items so patients don’t have to enter the store
- Improve your electronic accessibility, such as e-refills and text reminders
When patients inside the store, patients should feel safe. That means following preventive guidelines like wearing masks, using plexiglass, limiting traffic, and frequently sanitizing.
Your top-notch staff should be attentive, knowledgeable, and trustworthy. Make sure you thank patients for their business so they feel appreciated and remain loyal.
Many families facing hardship during a recession will appreciate you going above and beyond to help them save. For those who may have lost their jobs — and their health insurance — you can conduct medication reviews to eliminate any unnecessary medications.
Let patients know when a cash payment will be cheaper than the co-pay with insurance, and switch them over to generics when possible. You can also point them to manufacturer discounts and assistance programs or offer a payment plan to make their prescription costs more manageable.
While helping patients keep costs doesn’t increase your profits immediately, it will show patients you appreciate them and encourage them to remain loyal. When your existing patients are happy with their experience, they will provide you with invaluable word-of-mouth marketing that can help you grow.
5. Search for good deals
Always be on the lookout for a bargain during an economic downturn. When companies are experiencing sluggish sales, they will be eager to make a deal, which means that you can make upgrades that will help you stay competitive.
Whether it’s a new point-of-sale system, workflow technology that will make your pharmacy more efficient, or cosmetic upgrades that will modernize the look of your pharmacy, watch out for promotional pricing and negotiate when you can.
If you’ve been thinking about expanding to multiple locations or purchasing your current premises, you can snatch up space with a lower mortgage payment during a recession than you would pay during boom times.
6. Focus on fundamentals
Diversifying your services could potentially open up a new revenue stream. But in a shaky economy, if that risk doesn’t pay off, it could damage your pharmacy long-term.
Instead, you can work to make the products and services you already offer shine. Invest in technology that will make your existing workflow more efficient. Reassess your inventory management techniques to make sure you’re stocking up on products that your patients actually want while keeping your holding costs low.
If you offer extra services that aren’t bringing in any cash, it may be time to drop the frills and make your basics the best they can be.
7. Master your cash flow
Now more than ever, you need to have a good command over your cash flow. It’s possible to keep your independent pharmacy growing even if the economy is shrinking, but only so long as you’re able to pay your bills on time.
Establishing a line of credit before things get tight is one of the best ways to ensure you have the funds to pay all your expenses. Other ways to keep cash moving throughout your business include:
- Collecting receivables promptly
- Choosing a POS vendor with a quick conversion rate
- Scheduling staff efficiently
- Using a perpetual inventory management system
By freeing up as much cash as possible, you can focus on the things that keep your business growing.
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 company is a member-owned organization that 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.
