Week 4 Build or Buy a pharmacy- I think I am going to stand in traffic.
Entering the Pharmacy Business- Do I Build or Buy?
This is week 4 of a 5 week series on Should I Build or Buy a Pharmacy?
Week Four- “I think I am going to stand in traffic” – The disadvantages of starting brand new.
Last week I raised many advantages of a shiny new pharmacy. All things that would bring out the ideas, pride, and dreams that you have had for ages standing behind the counter, following all the company rules that prohibited you from practicing pharmacy the way you were taught. The way you really know your patients would benefit!
Well in this world of good and evil, ying and yang, or for every action there is an equal and opposite reaction, you knew there had to be a down side.
There are disadvantages, and they are significant enough to have some experts say you should always buy an existing business. However if you have read the other 3 parts of this article, you know I am not one subscribe to that singular philosophy. So let’s look at what the disadvantages are.
There are 3 major disadvantages:
You must have some marketing expertise. Building your own good will. Be that personality to win over the new customer so they will tell all their neighbors, excellent rapport with local physicians or a flair for marketing. You will have to get customers in the door, Keep them, and make them want to tell their friends. That is number one.
The second disadvantage is get to break even. We said last week that this is easier. Well that is true, we did. However there are two ways to consider a break even point or two different break even benchmarks. First is ROI and if you are borrowing money, how fast can you get a return on investment so you can pay off your note. That will be quicker in a new start up as the initial capital you must borrow is quite a bit less. But let’s look at the more practical break even point. The one that is really important. When am I bringing in enough money each month to be paying my bills, or better yet- Taking a salary! That is the important question. In our discussion of disadvantages of a new start up. This is the tough one. Unless you have budgeted your money so you are prepared to live for 6 -10 months without a pay check, or you were able to borrow enough capital to carry you through, then you probably haven’t budgeted well enough to overcome the second disadvantage. Will it take this long, hopefully not, and if not, you are ahead of the curve. And smiling.
The third relates to the second but has more to do with psychology, tenacity and determination. There will be times when you will be thinking if anybody is ever going to walk in your pharmacy, did I do the right thing, how long is it going to take?
All these will cross your mind prompting you on certain days to say “I think I am going to stand in traffic” But one thing I stress with our clients who ask us to assist them with their business plans, the first question you must ask yourself before you pick up the first pencil is “ WHAT IS MY WHY’. This is the one area of soul searching that you must spend the most time. Each of us have a different “Why” for some it is money, but for some it is professional achievement or most it is the FAMILY. Once you have the “why” answered, the rest falls into place. And when times get tough, and they always will, you always come back to the “why” for the strength and fortitude to get you through. If your why is strong enough, you will be victorious.
Dean A. Pedalino R.Ph. C.Ph. FASCP
Week Five- “Decisions, Decisions”- How do I know what is right for me?
This is week 4 of a 5 week series on Should I Build or Buy a Pharmacy?
Week Four- “I think I am going to stand in traffic” – The disadvantages of starting brand new.
Last week I raised many advantages of a shiny new pharmacy. All things that would bring out the ideas, pride, and dreams that you have had for ages standing behind the counter, following all the company rules that prohibited you from practicing pharmacy the way you were taught. The way you really know your patients would benefit!
Well in this world of good and evil, ying and yang, or for every action there is an equal and opposite reaction, you knew there had to be a down side.
There are disadvantages, and they are significant enough to have some experts say you should always buy an existing business. However if you have read the other 3 parts of this article, you know I am not one subscribe to that singular philosophy. So let’s look at what the disadvantages are.
There are 3 major disadvantages:
You must have some marketing expertise. Building your own good will. Be that personality to win over the new customer so they will tell all their neighbors, excellent rapport with local physicians or a flair for marketing. You will have to get customers in the door, Keep them, and make them want to tell their friends. That is number one.
The second disadvantage is get to break even. We said last week that this is easier. Well that is true, we did. However there are two ways to consider a break even point or two different break even benchmarks. First is ROI and if you are borrowing money, how fast can you get a return on investment so you can pay off your note. That will be quicker in a new start up as the initial capital you must borrow is quite a bit less. But let’s look at the more practical break even point. The one that is really important. When am I bringing in enough money each month to be paying my bills, or better yet- Taking a salary! That is the important question. In our discussion of disadvantages of a new start up. This is the tough one. Unless you have budgeted your money so you are prepared to live for 6 -10 months without a pay check, or you were able to borrow enough capital to carry you through, then you probably haven’t budgeted well enough to overcome the second disadvantage. Will it take this long, hopefully not, and if not, you are ahead of the curve. And smiling.
The third relates to the second but has more to do with psychology, tenacity and determination. There will be times when you will be thinking if anybody is ever going to walk in your pharmacy, did I do the right thing, how long is it going to take?
All these will cross your mind prompting you on certain days to say “I think I am going to stand in traffic” But one thing I stress with our clients who ask us to assist them with their business plans, the first question you must ask yourself before you pick up the first pencil is “ WHAT IS MY WHY’. This is the one area of soul searching that you must spend the most time. Each of us have a different “Why” for some it is money, but for some it is professional achievement or most it is the FAMILY. Once you have the “why” answered, the rest falls into place. And when times get tough, and they always will, you always come back to the “why” for the strength and fortitude to get you through. If your why is strong enough, you will be victorious.
Dean A. Pedalino R.Ph. C.Ph. FASCP
Week Five- “Decisions, Decisions”- How do I know what is right for me?
Labels: Build a Pharmacy
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