Are you thinking of starting a pharmacy? Knowing the requirements to open a pharmacy helps. In this post we discuss the requirements to start a pharmacy and what to expect along the way.
The independent pharmacy world offers a lot of opportunities for pharmacy owners. You can be your own boss. No more 60 hour work weeks for a large pharmacy chain. Actually serve customers and help them take control of their health.
This all sounds great but the truth is..it’s a lot of work to start a pharmacy. No matter what you read, it’s a long journey from start to finish. You will encounter issues along the way. For example: City permits are always a pain. Finding a GC (general contractor) who actually cares about your project. Dealing with your state board of pharmacy, oh and expect a lot of delays.
I personally have been involved in opening over 50 pharmacies across the country. I am writing this article based off of my personal experiences. Remember every state is different and some are easier than others to open a pharmacy.
In this article we will discuss
What to expect and what it takes to start a pharmacy
Starting and operating a pharmacy isn’t as easy as most think. There are many items to consider. No longer are you just verifying scripts, but you are also verifying payroll, marketing, inventory and more. Below are some key traits to have if you are thinking about opening a pharmacy.
Patience: If you don’t have patience, don’t expect to be a pharmacy owner. Everything in the independent pharmacy world requires you to wait. The independent pharmacy world is slow and I like to think it’s about 10 years behind any other industry. From insurance contracts to payment processors to government agencies.. It’s slow. Later in this article I will review the time frame to expect to open a pharmacy and trust me it’s longer than you think or read.
Resilience: As you slowly start to open your pharmacy you will think everyone is against you. From the landlord to the bank. Truth is.. they probably are. Community pharmacies aren’t always successful and they take a lot of resilience and dedication to be successful. I’ve had some clients take things personal and you can’t do that in the business world. If the opportunity between you and the bank or another entity doesn’t work out, move on. It’s not worth the time and effort.
Adaptable: The reason I include this trait as a pharmacy owner is simple, you have to be open to change. Most pharmacies start off as simply a retail pharmacy. Retail pharmacy sometimes isn’t enough. A majority pharmacies end up adding compounding, packaging or even specialty to their pharmacy services. These additional services help increase the pharmacy revenue and keep the ship sailing the first few years.
Developing A Pharmacy Business Plan
Any savvy business owner will create a business plan for their idea. A startup pharmacy needs a solid business plan that clearly defines the business. You will need to present your business plan to investors, banks and others. Your pharmacy business plan should clearly layout your goals for the pharmacy. For example: Most pharmacies business plans include a mission statement about caring for patients by offering free delivery, one on one counseling and more. Pretty much offer something they can’t get at a large chain pharmacy. Separate yourself and give customers a reason to choose you over a chain.
In addition to the overall goals of the pharmacy there are additional items to include in the plan. Some other items to include in your pharmacy business plan:
Services offered: Is your pharmacy more of a retail community pharmacy that focuses on it’s patients? Perhaps you offer in-home or delivery services with home medical items? There are many different services a pharmacy can offer. We suggest finding out what could the community benefit most from by looking at the competition and demographic in the area.
Financing: In this section you will need to state if you are working with a bank, self financing, etc.. You also will need to layout your total budget and banks usually want these items as line items. Be sure to include your building renovations, contractors, cabinets, drug inventory, technology, marketing etc.. These can easily go over $500k+
Marketing: A good marketing plan is a must for any pharmacy. How you will grow your pharmacy is of interest to investors and banks. What is your plan to acquire new patients and keep them? You can include items like direct mail, signage, grand openings, meeting prescribers face to face and more. Marketing is key to growing your pharmacy and you must have a sound marketing plan for your pharmacy to survive.
Location is essential
Location analysis: Here you will specify why you chose your target location and the patients you will serve in the area. This often determines the success of failure of a pharmacy. Location is key, try to be as visible as possible with little to no independents around.
These are just some of the items required in a pharmacy business plan. There are other items to include and you should be as detailed as possible. If you need help creating a pharmacy business plan check out a checklist by NCPA here.
How Long Does It Take To Open A Pharmacy?
Most people start out thinking it will take a few months to open a pharmacy. Reality is it takes 8+ months or even years to open a pharmacy. Be ready to be delayed by landlords, city permits, insurances, state boards, bank loans and more.
A good piece of advice is do not open until you have ALL of your important contracts. The last thing you want is a new customer to come into the pharmacy just to find out you can’t accept his/her insurance. Odds are that customer isn’t coming back.
You can often research to see which insurance is popular in your area. Do everything you can to have this contract before you open.
How much money is needed to open a pharmacy?
A pharmacy startup usually takes around $450k on average. Most of this goes to your building and re-construction costs or rent. Another large chunk will be allocated to your drug inventory. There are some other items including: Technology (pharmacy system, automation, computers, printers, network, phones), Marketing (logo, websites, mailers etc..) Consulting fees, Accounting fees, Cabinetry, Licensing, Legal fees and others.
Using a pharmacy consultant for your startup
Pharmacy consultants are great resources. Consultants have experience opening their own pharmacies or helping others. A pharmacy consultant helps you make accurate business decisions. They should be able to tell their clients to pursue or walk away from opportunities.
Pharmacy consultants offer a variety of services. Including location analysis, inventory management, loan consulting, business plans, market analysis, lease negotiations and more. Consultants can often save their clients thousands through their partners/vendors. Consultants receive better deals from vendors and this deal gets passed along to their clients.
As stated in the first paragraph, opening a pharmacy is hard work. You will have ups and downs before and after you open your pharmacy. It often takes 1-2 years for an independent pharmacy to break even. If you are determined enough and willing to put in the hours your pharmacy can be a success. Keep in mind there are tons of resources at your disposal including books, consultants, blogs, workshops and more.
The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.