How healthy is your business? Here’s a convenient way to find out

December 5, 2023

We have worked as pharmacy consultants and transaction advisors for decades, and we’ve owned and operated pharmacies ourselves. So we have some idea of just how busy most pharmacist-owners are. They are usually deeply involved with the day-to-day operation of their stores and dispensaries. They spend a lot of time with their customers and staff. And they are often active in their communities, especially in smaller towns and rural locations. Most pharmacist-owners like it that way, of course, and all that hard work not only pays the bills, but also builds their wealth. Yet even – or especially – when the pharmacy is doing well, all that busyness can have a downside: it can distract an owner from stepping back and looking at the big picture.

Like the proverbial hamster on a wheel, they can get so focused on the many tasks at hand that they don’t ask themselves the important questions, like: How healthy is the business, really? How can it be improved? Where is it going?

Too often, a pharmacist-owner gets around to addressing those issues only after they have put up the pharmacy for sale and a potential buyer starts pointing out all its weaknesses or untapped potential. Or they wake up when a competitor opens down the street and starts eating their lunch. Or when, sometimes after years of healthy profits, business takes a sudden turn for the worse.

Believe us, we understand. Deeply analyzing a business’s health is not only time-consuming, but also requires taking an outsider’s perspective that many pharmacist-owners struggle to achieve. And turning that analysis into actionable insights often requires a level of expertise and industry-wide knowledge that independent pharmacists simply don’t have access to.

Until now.

We’ve developed the Business Health Check-up, a unique offering that helps independent pharmacists measure the performance of their business, identify areas of potential weakness and recommend action items to improve profitability and lower risk.

When conducting a Business Health Check-up, our experienced advisory team will look at every aspect of your company – from financial performance to operations and marketing strategies – and develop a roadmap for ensuring it follows a path to long-term success.

The potential benefits of taking your business “in” for a check-up are significant. For one, it can help boost profits in the here and now – and who doesn’t want a healthier cash flow? In addition, it can identify ways to maximize the value of your pharmacy, making it much more attractive to potential buyers and more lucrative for you when you sell. And perhaps most important of all, the Business Health Check-up can help you assess whether your pharmacy’s value is sufficient to support your retirement goals – and take steps to address any shortcomings.

Here are some of the profit-driving factors our Business Health Check-up analyzes for you:

1. Cost of labour: Are you paying your staff too much, not enough or just about right? We benchmark your wage expenses against industry standards and relevant comparators.
2. Dispensary efficiency: The Business Health Check-up measures and benchmarks dispensary factors like fill times, staffing and inventory to maximize efficiency.
3. Professional services: What’s the right balance between scripts and professional services revenue for your pharmacy? Are you capturing as much services revenue as you should – or are you spending too much time delivering them?
4. Financial performance: How do your pharmacy’s margins, balance sheet and other financial factors stack up against its industry peers? How can you improve them? And how much would your pharmacy be worth if you took it to market?
5. Quality of financial record-keeping: This is often overlooked by pharmacist-owners, but the veracity and thoroughness of your financial records is a key determinant of value in the eyes of a potential buyer.
6. Corporate structure: The structure of your company can impact value and have significant tax implications, particularly if you are preparing to sell. A review of corporate structure can address areas of concern before they turn into problems and can minimize frictional tax effects if and when you decide to sell the business.
7. Commercial terms: Are you making the most of your commercial relationships viz-a-viz generics? Are you accounting for them in the most credible way?
8. Lease issues: The terms of your lease can have a direct impact on the price your pharmacy will demand in the market. A “bad” lease can impair your business’s value or even prevent a successful sale in the future.
9. Inventory: Too much or too little inventory can hurt your bottom line and waste resources (including space). We’ll help you clean it up.
10. Concentration risk: Does most of your revenue come from one or a handful of customers or contracts? What would happen if they were no longer in the picture? We’ll look at your pharmacy’s revenue streams, identify vulnerabilities and suggest ways to address them.
11. Front-store contribution: Many pharmacists feel comfortable driving efficiencies in their dispensaries, but a poorly managed front-of-store can suck up resources, turn off customers and leave revenue on the table.

Those are just a few of the profitability factors our Business Health Check-up analyzes. It’s comprehensive and in-depth, but we’ve made the whole process convenient and affordable – because we know just how busy pharmacist-owners can be.

So, whether you are just starting out, operating a mature business or starting to think about selling, our Business Health Check-up can help you get a handle on the “big picture” for your pharmacy – and your future.