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Step 1: Finding the Right Pharmacy

Finding the right pharmacy is like finding a good pair of jeans, it takes a lot of time and persistence, but eventually you will find the perfect fit. In the same vein, if you make a rushed decision – you WILL regret it!

Step 1 outlines the considerations and decisions you must make before purchasing a pharmacy.

“Although I was concerned about the size and price of whatever pharmacy I might buy, what I really wanted to ensure was that I LIKED the business. The business had to fit me, not the other way around.”

Step 2: Pharmacy Business Structures

The way you decide to set up your business is a very important decision. Step 2 outlines the various legal business structures, their advantages, disadvantages and

principles.

In all cases, pharmacy business structures are governed by the requirements of the State or Territory in which they operate.

The same logic applies once we have started to move forward with the decision process. This decision process is iterative and you will find yourself revisiting your assumptions and, often, changing direction somewhat as you work through the whole process. This is not unusual.

In this section the following legal business structures are outlined:

• Sole Trader
• Trust
• Company
• Partnership, including equity partnership and limited equity partnership
• Franchises

Step 3: Key Financial Decisions

The question of the extent of capital required should be considered early in the decision making process when you are considering your business plan, cash flow, budgets and the actual business that you are interested in purchasing. Remember that we mentioned this in Step 1 as ‘What can I afford?’

The main thing to consider is “Do you feel comfortable with the intended capital outlay and the sum you are borrowing?”

You should make these decisions in consultation with your accountant and solicitor. Remember that you need to feel comfortable with the amount of debt you will be carrying and to fully understand the implications of that amount of debt, i.e. the impact it will have on the salary that you are able to draw from the pharmacy, the need for you to match the debt with security and the impact on you if your assets are realised.

Step 4: Buying the Pharmacy: Processes and Checklist

“The whole process of buying the pharmacy was enlightening. There were a few problems to start with and then I took my accountant and solicitor along."

“Next time I would be more aggressive in negotiating better leases and renewals and terms withwholesalers. I doubled the turnover in three years and dealt with some tough issues”

Considerations

• Location
• Market niche
• Lifestyle
• Capital limitation
• Professional goals
• Profitability
• Is the pharmacy Quality Care Accredited?

Undertake preliminary discussions with: banks, wholesalers and pharmacy brokers.

It may be possible for some purchasers to arrange to work with the seller in the pharmacy prior to settlement and after completion of the sale. This gives the purchaser an opportunity to understand the business systems, evaluate staffing arrangements and meet customers.

Step 5: Key Business Decisions

Accountants: What to Look For

Your accountant should be familiar with the industry, its regulation and the legislative requirements surrounding it, and be able to actively participate in the long term planning of a pharmacy and able to adapt systems within the pharmacy to assist in the planning phase.

The State/Territory Branches of the Guild may be able to provide you with a list of reputable suppliers of accounting services.

Information Technology and Business Systems

An overview of the things you will need to know about the pharmacy.

Check what brand/supplier of dispensing POS and EFTPOS system you will be getting. Should they be integrated? Determine what costs will be incurred to do the following?

• Install EFTPOS if none present
• Pay the ongoing maintenance agreements on all systems
• Take over contracts
• Replace dispensing software with your preferred system or that of your wholesaler
• Find out who in the pharmacy knows how all these things work and can instruct you and your staff.

Step 6: Pharmacy Management Skills

“I completed a diploma of small business management. It took 12 months at night and was a great course for general business principles”.

“I believe pharmacists need wider experience in business. Often they concentrate on thedispensing side and leave the business side of buying, seeing reps and  doing the accounts toothers."

“It’s also essential to know how to buy. The retail systems help but they don’t give you that gutfeeling about what the customer wants. You have to feel the shop”

Why Management Skills are Important?

Buying a pharmacy is probably the biggest investment you have made so far in your life. It is usually a much bigger investment than your home. It is not just a commercial investment because it involves much more than money. Owning your own professional practice is an investment in your self-esteem. It must be understood that if your business fails you will lose both financially and emotionally. You may also lose any personal property you own, such as your home. It therefore

makes a lot of sense to do all that you can to be sure your business succeeds.

Being a pharmacy graduate does not guarantee that you have all the skills necessary to run a business. Before you consider buying a pharmacy prepare yourself by participating in the many courses, seminars and conferences available around the country.

Step 7: Resource Information and Links

This section includes extensive links to Pharmacy Industry Organisations, Government Organisations and Professional and Business Organisations.