Opening A Pharmacy? Here’s Where to Start

A guide to staring a pharmacy by pharmacy owners and pharmacy consultants.

In this article we examine the items needed to open a pharmacy. We also discuss some of the common questions we receive from our clients when starting a pharmacy.

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Essential Steps to Open a Pharmacy

Deciding to start your own pharmacy is one of the biggest decisions you will make in your career. Taking the right steps at the start of our journey is key on your initial and future success and not to mention, stress-levels.

We will take a look at some pharmacy start up questions we hear from our clients who are thinking about starting a pharmacy.  For example:

  • Pharmacy Systems
  • Location
  • Construction
  • Inventory
  • Financing/loans
  • Technology
  • Marketing

Questions to ask before you begin

Where are you financially?
Starting a pharmacy isn’t cheap. You can expect to spend $400,000 – $500,000 for a 1000 sq foot pharmacy. This includes construction, initial inventory order, cabinetry, signage, technology, legal etc.. Make sure you are in the right position financially to open your pharmacy. Most pharmacy owners work as a pharmacist before starting their pharmacy. We recommend staying at your job for as long as possible before transitioning to your new pharmacy.

Do you have the patience and stress level that come with starting a pharmacy?
Pharmacies usually take 8-20 months to open from start to finish. Expect to have delays in construction. city permits and when you go to get your insurance contracts. Nothing in the pharmacy world moves fast. It is important to understand that and have patience before you dive into starting your project.

Are you motivated with some marketing skills?
No longer are you just a pharmacist. You are a pharmacy owner and that comes with many different roles. Be prepared to do tasks you have never done in your career. We recommend all owners take a marketing class or have some marketing experience before opening a pharmacy. Do you have great relationships with doctors in your area? Have you ever walked into a prescribers office just to drop off some cookies? Motivational marketing is key to a successful pharmacy.

Location and Market Research is vital

pharmacy location for starting a pharmacyLocation of your pharmacy is tied to the success of your pharmacy. I cannot stress this enough. Your pharmacy location must be thoroughly researched. Many pharmacies fail simply because nobody even knew it existed.

Finding the right location: Look for other pharmacies in the area. Are they independents or large chain pharmacies? Just because there is a CVS in the town doesn’t mean there isn’t opportunity. Large chains have plenty of angry patients that are ready to switch for one reason or another.

Medical offices and prescribers: Look for locations near medical offices and other prescribers. Stop in and ask them if they think the community could use an independent pharmacy in the area.

Be visible with access availability: Try to be near busy intersections with clear visibility of the pharmacy. You want people driving by to clearly see your pharmacy and know that they have options. Also consider LED signage if your city allows it.

Research your target audience: Be sure you understand your community and what services they may need. Some communities can really benefit from services such as free delivery or medication synchronization.  You can easily pull this information online.

Financing options

Starting your pharmacy is going to cost you some money. You need to be able to know how to apply for business loans with banks within the pharmacy industry to get approved. Once you open you will need to speak the language of business. That means understanding your cash flow. Balancing a budget for your pharmacy. Managing expenses and bringing in new revenue to keep your pharmacy breathing.

Obtaining an EIN (Employer Identification Number): Any business needs an EIN to operate a business and hire employees. Be sure to get your EIN from the IRS. You will want to fill out an SS-4 form that you can download from irs.gov

Finding the right bank for your loan: There are few pharmacy specific banks that provide loans to pharmacy owners. The first two off the top of my head are Live Oak Bank and First Financial Bank. These banks know the loan process for a pharmacy start up better than most banks. We recommend you give them a call to discuss a loan for your start up pharmacy.

Don’t expect it to be cheap: As mentioned earlier, you can easily spend at least $400,000 for a small pharmacy. Financiers will request you are willing to add your own cash as well. This tells the loan officer you are serious about your project. Be ready to have your background checked, credit and work history. These banks are dealing with you directly, not a business. 

Be prepared for the future

Have your business plan and documents ready: We recommend you are well prepared and ready to submit any document asked. A business plan will be required. This is a well thought out presentation that includes: Projections, projected revenue, all costs associated with your business, how you will make money and more.  To obtain a business plan we recommend following this guide from the SBA. You may also reach out to pharmacy advice consultants such as Independent Rx Consulting.

Have enough money to get you through a few years: Most pharmacies will not turn a profit the first year or two. You need to account for this in your loan. You will need to have enough money to pay your bills, employees, insurances etc..

Designing Your Pharmacy & Construction

A very fun but expensive project is designing your pharmacy. This includes the layout, construction and all your fixtures. Everyone wants a nice and vibrant looking pharmacy, while not spending a fortune. The trick is to find the right people at the right prices.

Think about your workflow: How will your workflow flow? This is what you need to figure out before you start designing the inside of your pharmacy. Will everyone pass everything to the left, center or right? Will you have an extra data entry station in the back? Where will your point of sale be located? Don’t forget about drive-thru. Most pharmacy workflows are based on the pharmacy software and technology. We will address this later.

Find a general contractor that actually cares: As a pharmacy consultant I personally have worked with many contractors. I can honestly say about 70% of them are overpriced and inefficient. You will want to ask other business owners who they recommend. Another option is to check with the BBB in your area. Consider the contractors relationship with the city. This is often where delays happen. Some city permits are submitted through your general contractor. If your contractor has a good relationship with the city, your process should move along quicker.

Leave a lasting impression to your new patients


pharmacy cabinet design photo of cabinets installed in new pharmacyChoose a cabinet company: There are a few pharmacy specific cabinetry companies. A few that I personally have worked with are Pharmacy Design Services and Pharmacy Design Group. A good cabinet company will work with you to come up with a design that fits your workflow and layout space. Often, these cabinetry companies will visit your pharmacy on-site to get a better idea.

Be ready to expect a hefty price tag for your cabinetry. Most pharmacy cabinet projects are at least $50,000 and easily go above $150,000 for larger pharmacies.

Be sure to comply with ADA and HIPAA: You will want to be sure your pharmacy is compliant and easily accessible for everyone. We recommend following the guidelines from the ADA checklist here. A great read at The Pharmacy Times here talks about why your pharmacy needs to be ADA compliant.

HIPAA guidelines should also be considered. A good cabinet designer will know these guidelines and apply them to your project.

Pharmacy Marketing and Designing Your Brand

Just like any other business, pharmacies need precision marketing to reach new patients and prescribers. Having a good and trustworthy brand will certainly help. Your marketing goal should be to find and keep loyal customers.

Be sure people know you exist, including prescribers. Have unique and customizable services that will benefit your patients. Let’s go over some key details about marketing and designing your brand.

Pharmacy Name and Brand Design: Choosing a pharmacy name is a lot more difficult than most think. You can choose a traditional name or go for a more modern short name. Take a look at our article on choosing a pharmacy name. Once you pick your name be sure to register your domain.

desert life pharmacy logo designDesigning your logo and website: Every pharmacy needs a professional and trustworthy logo and website. We recommend having a professional design your logo and website. Successful pharmacies create and spread brand awareness through professional design. Take a look at some of our logos and websites we have designed for our clients. We would be glad to help you get started with your pharmacy brand.


Marketing for your community

Coming up with a marketing plan for your pharmacy: Before and after you open you will want to have a solid marketing plan. A marketing plan includes different ideas to grow your pharmacy and reach new patients. These can include mailings, social media postings, Google Ads, grand openings and more. Take a look at our marketing plan blog post. A good marketing plan can start a pharmacy off on the right foot. Here are a few ideas for marketing your pharmacy:

  • Services – Delivery, Medication sync, medication packaging, MTMs, vaccines, short wait times, travel health etc..
  • Staff – Promoting your staff is great way to show how genuine your pharmacy is. If you’re in a small community this is very effective.
  • Pricing – Most people think a community pharmacy is more expensive than a large chain pharmacy. Show potential customers it saves to shop local.

Know the community: A great way to market your pharmacy is to be involved in local events. Be sure to check out all local business events in your area, especially related to healthcare. Try to join local city boards and attend meetings in your community. Talk to other business owners to get their perspective on running a business in the community.

Social Media: I’m sure by now you know everyone is on social media. However, did you know you can market on most social media platforms with a small marketing budget?  We advise you to take advantage of this, especially on Facebook. Target a radius around your pharmacy address and keep your page updated weekly with organic fresh content.

Pharmacy app: Think about having an app for your pharmacy. A pharmacy mobile app will provide convenience to your patients. Most pharmacy and IVR systems offer mobile app development.

Technology in pharmacy

Technology is vital to pharmacies. Having the right technology in your pharmacy is very important because your pharmacy revolves around tech. There are many pieces of technology in a pharmacy. For example: Pharmacy systems, automation (robots), workstations, printers, networking devices, IVR systems, internet/phone providers, Point of Sale, delivery routing and more. We invite you to take a look at our Technology Learning Center to learn more about pharmacy technology. Each piece of technology helps shape your pharmacy, lets take a look at some of them.

IVR Systems: An IVR is menu that callers hear when they call into your pharmacy. IVR also allows your patients & prescribers to request refills 24/7. This is very important and many patients and prescriber expect this. Therefore, all pharmacies should have some sort of IVR in their pharmacy.  IVR services can also do outbound notifications. For example, when a script is ready to be picked up. The IVR service can automatically notify the patient. Some IVR services work better with certain pharmacy systems. Here are a list of IVR services:

Pharmacy Hardware: When it comes to computers, printers, scanners, tablets etc.. You have a few options. Purchasing directly from the pharmacy system or buying items yourself. If you decide to purchase directly from your pharmacy system, expect to overpay because their equipment is outdated and overpriced. Pharmacy systems make money off the hardware you purchase from them,

If you are looking to save some money however, purchase the equipment yourself. Often doing this will result in newer equipment at a better price. To make it easier for you, we created a list of the popular hardware in pharmacies. Take a look at our list of hardware and pharmacy networking items to save some cash purchasing items yourself.

Note: Certain items for example, the pharmacy server and POS items we recommend purchasing from the pharmacy system.

Reliability and uptime are key

Phone and Internet: Pharmacies utilize both phone and internet services to operate. You will want to make sure you have a consistent internet and phone connection. A backup internet is always recommended because there will be times your internet goes down. Another item to mention is VOIP phone services. VOIP is newer technology allowing phone calls to go through the internet. VOIP often has much lower prices than traditional phone services.

Be sure you get a good rate on both services. Take a look at our free pharmacy internet and phone search here. We developed this page for pharmacy owners to receive discounted rates from all major phone and internet providers.

Security: A must have in any pharmacy is security. Therefore, we recommend having cameras and alarms in all pharmacies. Most states require an alarm system but cameras are optional. Alarms and cameras these days are controlled and viewed on your smart phone. They don’t cost an arm and a leg anymore. We have partnered with most major alarm companies in the country, feel free to contact us here. We will make sure you are not overpaying and you have the right alarm system.

Pharmacy IT Consultant: As mentioned earlier, IT is critical for pharmacies. You don’t want to get your pharmacy technology wrong. ConfigRX offers a “Start A Pharmacy” package. We handle all of your IT needs for your pharmacy start up and make sure you are not overpaying for anything. ConfigRX comes on-site to your pharmacy to set up your pharmacy. Learn more here

Which Pharmacy Systems should I evaluate?

Choosing the right pharmacy system is a long process full of demos and research. You may be going to pharmacy trade shows and seeing amazing booths and tons of freebies. That’s all great but what really matters is how the software helps you reach your pharmacy goals. Don’t be fooled by flashy new features, do your research and choose the right pharmacy software for your business. Remember, we are also here to help you with choosing a pharmacy system for your pharmacy. Below we take a look at some items to consider when choosing a pharmacy system.

What are your services?: A pharmacy system you choose should have modules for all of your services. For example, if you plan on offering compounding and mailing, be sure your pharmacy software offers great modules for these services. Some pharmacy systems have better modules for certain services than others. We recommend talking to other owners and asking them their opinion.

Spend a week on demos: Take a full week and demo 4-5 different pharmacy systems. Learn and ask questions about each product. Remember to have your workflow in mind and how this software can help make it more efficient.

Learning curve: How long does it take to train a technician or pharmacist on the software? I personally can tell you some systems are so robust it will take you 4-6 months to fully understand. However, some systems you can learn in a few days.

Be sure to include future growth when evaluating

Mobile: Does the pharmacy system offer mobile functionality? Can you access your pharmacy system on a laptop from a health fair or a physicians office while you are working a flu clinic? How about mobile payments at their front door during prescription delivery? Speaking of delivery, some pharmacy systems can actually map your delivery route for you.

What training is available?: Every pharmacy system should offer some sort of training on their system. Some will come on site to your pharmacy while others will offer training over the phone.

Point of Sale system: One aspect of pharmacy software that is always overlooked is the POS system. The pharmacy system should have a clean, straight to the point POS system with great reporting. There are some really terrible POS systems out there, make sure you ask to see the POS system for any software you evaluate.

Which system to choose? Here is a list of some pharmacy systems available for start up community pharmacies. We are available to help you choose which system, feel free to contact us. We are pharmacy owners and have installed and worked on most systems available for independent pharmacies.

Best RXEnterprise RXHBS

Start the hiring process

If you’re at this stage congratulations! You’re almost finished and can open your pharmacy soon. It is important to hire the right employees for your pharmacy. There are rules involved with hiring and you want to make sure you stay within those rules. Get advice on tax forms, government regulations and insurance requirements before you start.

Perhaps you have some experience hiring employees at your previous job, that is great. However, as you may know hiring is an art form. Your first employees should be excited about the start up pharmacy. Lets explore some hiring requirements and tips.

Register with your state labor department: This is a requirement for any employer hiring employees. Once registered you will have to pay state unemployment compensation taxes. Your payment goes to your states compensation fund for unemployment. Check out the Department of Labor’s page for a list of state unemployment insurance tax agencies.

Workers’ Compensation : Another requirement is workers’ comp in most states. This protects workers from on the job injuries.

Setup a payroll system: There are many options when it comes to payroll. Online payroll companies like Paycor and ADP are great options for this.

Patients are an employees priority

Post a job description online: This is always a challenge for most pharmacy owners. You don’t want to forget anything in a job description. Therefore, you should write a detailed job description for your pharmacy. Most independent pharmacy employees wear many hats unlike the large chains, be sure to include as much as possible in your job post. Here is a great guide on writing job descriptions for business owners.

pharmacy technician on pharmacy lineInterview your potential team members: Before you meet the applicant in person have a 10-15 minute phone call. During this call make sure they meet the basic requirements and listen to their phone etiquette. During the in-person interviews be sure to ask the right questions. Ask about their history in pharmacy. What are their strength and weaknesses? Be sure to emphasizes patients come first in community pharmacy.

In the interview process determine if they will be a good fit with you and your team. Making sure employees work good together is probably the most important factor.

You’re not alone in your journey

Are you afraid of where to start? Have questions about financing or budgeting? Wondering how much inventory you will need on your first order? All these questions can be answered with a knowledgeable and experienced pharmacy consultant. There are many available to start up businesses. Be sure to reach out to consultants and other owners who have been in your shoes before.

We here at ConfigRX have helped open over 80 pharmacies. We specialize in technology, design and marketing for pharmacies. If you think you need some help in those areas feel free to check out our “Start A Pharmacy” package here.