Whether it means expanding into a new niche service or into a new location, growing your pharmacy business opens you up to a lot of opportunities — and a lot of vulnerabilities, too.
To make the most of your expansion, learn from companies that seized on opportunities to grow and turned into long-term successes, but don’t forget the pitfalls of growth that have the potential to bring your pharmacy down.
Zoom: Hire for the long-term
Zoom isn’t even a decade old, but practically everyone in the United States has either used the service or knows what it is.
One of the keys to the company’s quick but stable growth was hiring employees for the long term. “I hate the idea of hiring people who are overqualified,” founder and CEO Eric S. Yuan wrote in Zuora. “If you hire individuals with potential for growth, they’re loyal to your company, will adapt to your company, and are more humble, rather than resting on what they accomplished in the past.”
Hiring for potential has also helped the company create a welcoming and encouraging culture. Yuan said, “I truly want employees who will be able to look back on their work with sweet shared memories of our time at Zoom.”
Chewy.com: Personalization and enthusiasm matter
After the catastrophic failure of Pets.com when the dot-com bubble burst, the online petcare retailer Chewy.com had its work cut out for it. But after 10 years in business, it’s become the go-to retailer for many American pet owners.
They did it by tapping into the enthusiasm people have for their pets. Instead of being an impersonal online retailer, Chewy keeps track of pets’ names and favorite treats. The company sends owners handwritten cards for their pets’ birthdays and holidays. They even send condolence flowers to owners if their pet passes away.
By recognizing what their customers really care about — their pet’s health and happiness — Chewy has been able to capture a loyal and avid fan base.
Netflix: Grow with technology
These days, Netflix is practically ubiquitous, but it looked like a completely different company when it started out in 2000. As a rent-by-mail service, many consumers found the business model confusing, and executives even tried to sell the company to Blockbuster early on.
So, what changed? Technology.
Netflix pivoted its strategy, capitalizing on new technology trends to make their services more convenient for customers. That helped them grow into the powerhouse we know today. After they introduced video streaming, most people forgot about their clunky old business model.
To embrace growth opportunities, don’t be afraid to explore new technologies that could make your pharmacy more appealing to patients.
Sweetgreen: Be flexible
The salad chain Sweetgreen operates on a philosophy of “intimacy at scale,” and a big part of maintaining that intimacy as they grew was being flexible to meet the needs of customers.
“When we first started expanding outside of D.C., we were essentially building the same version of the Sweetgreen restaurant over and over again, focusing purely on adding more locations instead of lasering in on the expectations of the customer,” Sweetgreen co-founder Nathaniel Ru told the First Round Review. “Over time, we’ve discovered the power of modularity, designing our restaurants to embrace change.”
As you grow, your pharmacy might change from the original vision, but that’s okay. If you’re opening a new location, it shouldn’t be a clone of the first practice and instead customized for your new community.
You may have to think a little bit outside the box, but it will ultimately benefit your patients and your business.
The Higher the Climb, the Harder the Fall
Growth isn’t always a good thing. If you don’t think about growth strategically, it can end up being your downfall.
Read on to learn from the stumbling blocks these companies faced while trying to expand their reach so you don’t end up making the same mistakes.
Borders: Taking on too much debt
To compete with their biggest rivals Barnes & Noble, the bookstore chain Borders opened up a lot of new stores. And to do that, they took on a lot of debt.
By the time the company declared bankruptcy, it owed nearly $350 million. Even though it restructured that debt multiple times, it could never get on top of its finances.
If you take on debt to grow your business, be smart about it. Monitor your metrics like your coverage ratio and the quick ratio to ensure that you will be able to cover your interest and liabilities, and make sure you’re investing in services and improvements that will bring a tangible return on investment to your pharmacy.
Wise Acre Frozen Treats: Funding failures
The organic popsicle company Wise Acre Frozen Treats took off quickly — and crashed and burned almost as fast. The problem: cash flow.
“Our business plan indicated that it would be about two years from starting production to making a profit. But one of our biggest problems was that we didn’t raise the money we needed before we hit milestones like getting distribution throughout the East Coast,” Wise Acre CEO Jim Picariello told CBS News.
To ensure you have the funding necessary to grow your business, take proactive steps like opening a line of credit before you hit a cash crunch. Stayon top of your cash flow and build a cash cushion so you can be confident that you will be able to pay the bills that come along with growing.
A Member-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.
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