I’ve inadvertently witnessed hundreds of case studies over the last 20 years or so.
It is not very often, that somebody has access to detailed and accurate financial information over such a long period of time. But I have been in the fortunate position of giving business advice to many pharmacy owners, some I have known over 20 years or more. During the last few decades, I’ve been pleased to have worked with clients either buying their first pharmacy or starting a “greenfield” site. We have been together in tough times (financial pressure, partnership disputes or family law cases, health scares) but also in the happy times (business expansion, marriage, starting their own family, having grandkids, selling their business, retiring, investing money for the future). For me, being a part of this is the satisfying part or my career!
Whilst working alongside these owners, I respect the opportunity to be able to observe how they perform, their strengths and weaknesses. The way they anticipate, create, analyse, procrastinate, react, manage, and implement. I help them when they need it, provide extra input when we feel they could use it, then celebrate the small and big successes along the way. Everything I do is one hundred percent strictly confidential. The integrity of my clients is the main priority at all times, and I don’t share this with anyone! At times I conduct benchmarking projects as the circumstances require, but the results of this are analysed then anonymously shared with our immediate client base.
Typically, the pharmacists I have work with generally operated pharmacies with turnover between $1m and $10m. These were all beneficially owned and operated by individuals or partnerships, some using service trusts and companies. Many were independent, with an increasing number becoming banner group members or at least in some form of buying group. They are located in city, metropolitan, coastal and regional areas.
How do I define success? Well, financial success can be measured objectively extracting the numbers, making comparisons over time, and analysing ratios etc. BUT there is more to it than how much is in your bank account or how strong your balance sheet appears. In my view successful pharmacists:
Maintain their professional integrity. Pharmacy is a serious profession with significant responsibility. Patients/customers trust their pharmacist and their staff to provide accurate advice and compassion. Many customers have frequented the same community pharmacy for decades, which implies their relationship goes much deeper than price alone.
Have financial security and independence. Fundamental is liquidity, being able to pay your bills as they fall due (both business expenses, as well as your personal mortgage, costs of living etc). It is crucial for pharmacists to realise the importance of maintaining a “buffer” so that any unexpected problem can hopefully be absorbed. I read a quote recently along the lines of “if you have a problem, but you have the funds to be able to afford to fix it, then maybe you don’t have that problem”. That doesn’t mean that money is the priority (it isn’t) however if you need to say, urgently repair your home, or require a medical procedure, having the financial ability to organise prompt action can reduce a lot of the stress.
Spend time nurturing their own health. I mentioned stress above, which is one of the common complaints from business owners. Worrying about money, customers, staffing, competitors, inventory, banks etc can take its toll. When things get busy and time is precious, one of the first thing owners often sacrifice is spending time to exercise, eat sensibly and unwind. Ironically, the type of advice a health professional would recommend to their customers is often overlooked by that busy professional! When we feel that we have enough time and also the motivation to “take care” of ourselves, then this opportunity can’t be overstated.
Enjoy happy relationships with family and friends. This is probably the most obvious factor. Often at the beginning of one’s business career we sometimes have to cut corners and make choices as to how we use our time. It seems that we often “burn” those closest to us, rationalising that those close to us will understand how hectic our schedule can become – so they will forgive us in the short term, and the sacrifices will pay off in the end and life will be good. But in some of the cases I have tracked, that wasn’t the case. Relationships failed, friendships and connections were “lost”. The end results, regardless of the financial outcomes, did not seem so “sweet” because there were fewer people to share in it.
In my experience reviewing 20 years of pharmacy case studies, the top 10 ingredients to success are:
- Manage risks competently. Have dreams, be realistic about what you can do, and the timeframe it might take to get there.
- Most successful people are those who “chip away” at success, rather than those who take “one big swing”. The big swing approach leaves you exposed to more outside influences, adding pressure to the equation. Taking one big risk and “betting the farm” on one deal did not pay off, in the vast majority of cases I studied.
- Play to your strengths – know what you are good at and use that potential. Some have suffered massive financial problems, where they were fantastic pharmacists but diversified into another project simultaneously, and inadvertently put their entire wealth on the line. Frequently, the investment was developing real estate. If a hiccup occurs with the property (council, builders, weather, neighbours, funding) the financial pressure can lead to a successful pharmacy business being dragged downwards – so the business suffers, and in worst case made be forced to be sold at a point when it is not performing well.
- Have a medium and long term plan. If you have a rough concept of your “end game” it will make some current decisions so much easier now.
- You need a support group – your spouse, family, friends, business partners and advisors. This is like having your own “board of directors” when you need them.
- Build a great team. This means you can trust your key staff members so that things get done the way you expect. Then show leadership to ensure you demonstrate how you want your intentions implemented. It also means you are able to take holidays from work!
- Learn to delegate. This one observation can make the difference between having a sustainable business with a balance lifestyle, compared to becoming the “control freak” that skids from day to day to the next.
- Lean on specialists when circumstances dictate. This means you need long term relationships with a great accountant, financial planner, lawyer, finance broker, etc.
- Avoid being undercapitalised. If you don’t start a project with enough funds to implement it well, you are leaving yourself exposed to problems and significant financial stress – even bankruptcy. Don’t assume you can just borrow more from the bank when things are tough. Times have changed, bank policies are different, and bank managers have limited authority to approve a deal (especially short term remedies).
- Run a marathon, not a sprint. Hopefully you have a business life that goes for several decades, then hopefully you eventually have many years of retirement. So for the period from graduation to ceasing full time work, this might be 50 years. If you are not enjoying the ride along the way (hoping that the “end game” makes all the sacrifices pay-off) then this is a huge risk. If you find you are having less “good days” and more “bad days” then you really need to take stock and implement some changes.