April 7, 2023
In our decades of experience as business transaction advisors helping pharmacist-owners sell their pharmacies, we have found that many have a pretty simple idea of their business. If we were to ask them what the life cycle of their pharmacy is, for instance, they would probably answer something like: “I start it, I run it, and then I sell it.” Well, that’s probably accurate. But if you want to sell a pharmacy in Canada, we think such a bare-bones idea of the pharmacy ownership timeline does not go deep enough.
Selling a pharmacy business successfully – for a good price, in a way that leaves you satisfied and financially secure – requires a different way of thinking than most pharmacist-owners are used to. If you are planning to sell your pharmacy business, we want you to stop thinking about the pharmacy as where you ply your trade and start thinking about it as where you build value.
That might seem like a subtle shift. But it’s a crucial one. It moves your mind away from concentrating solely on the job (although that’s still important) and towards thinking like an entrepreneur who is growing something for their future. And this way of thinking puts a lot more focus on your eventual exit from the business – planning it, doing it, and enjoying life after it.
So what is a better way to think about the life stages of a pharmacy? Here’s how we do it:
We like to order this value-based timeline for owning a pharmacy into these five distinct phases.
In this phase, an owner identifies an opportunity to purchase a retail pharmacy or start up their own business.
When you have made your debt payments and begin to realize excess earnings, you are accumulating wealth and your pharmacy is building value. Your focus is now on continuing to grow and develop the pharmacy business to increase its value even more.
This is arguably the most important phase in a pharmacy life cycle – and, unfortunately, the one that pharmacist-owners most often neglect. The core question: How can you best transition out of ownership and position your pharmacy for sale?
This is the actual transaction phase, where all parties involved (you the seller and the buyer or buyers) negotiate and execute a deal that will lead to a successful sale.
Again, this is a phase pharmacist-owners often don’t pay enough attention to, but it’s vitally important. Exiting a business will probably be the biggest liquidity event of your life, and it raises a host of financial, emotional and lifestyle challenges you need to anticipate and plan for.
You can see that our recommended way of thinking about the evolution of a pharmacy is not just more detailed than “start-operate-sell.” It also laser-focuses on building value and exiting the business.
Thinking about a pharmacy this way should make it clear that you need to put as much or more effort into planning as you do into running the business. Your planning should fall into two general areas.
We will discuss the ins-and-outs of exit planning, sale transactions and strategic wealth planning post-exit in more detail in later posts. But for now, we want to leave you with one clear message:
If you hope to successfully sell your pharmacy, stop thinking only like a pharmacist, and start thinking like a value-building entrepreneur.
Stay tuned to our website to know more!