3 Main Pharmacy Finance Pitfalls to Avoid By Independent Pharmacies



A study letter posted in JAMA1 showed that although the number of pharmacies starting in the U.S. was increasing, 1 in 8 pharmacies closed from 2009 to 2015. Many of the closed pharmacies were independent pharmacies.


Let us look at the 3 factors that independent pharmacies should avoid:


1. More Debt Than the Cash Flow Can Support.


It takes time to build up income, and new pharmacy owners must be prepared for a period of 12 to 24 months before the business is ready to break even. Although it does not help to be pessimistic when making projections, being conservative can protect pharmacies from taking up too much debt. eg. if a pharmacy has $800,000 in revenue for one year, the business owner shouldn’t borrow $1,500,000 for the following year.


2. Managing the Pharmacy’s Finances.


A certified public accountant or financial planner will add another line item to the expenses of running a pharmacy and owners may be tempted to either completely skip hiring one or wait until a pharmacy is more established to hire one or both. This places the burden of handling the budget on the pharmacy owner, which could mean long hours spent managing cash flow and less time building the pharmacy and customer base. It is recommended to be part AAPA Advantedge program that can give you access to First Finacial Bank and SRS pharmacy system and many more to support your pharmacy finance.


3. Expanding the Business Without Taking Stock.


Pharmacy owners have to slow down and conduct some self-evaluations. Discern the current financial situation with a small business audit. Not only will the audit show financial safety to any stakeholders, but it can also show room for improvement and strengths. Do market research on the area. Market studies can identify potential competitors, break down the labor market to determine potential labor costs, and determine an excellent place to expand. 

Comments

Post a Comment

Popular posts from this blog

Key Difference Between Independent Pharmacy vs. Chain Pharmacy

Image
On average, patients visit the pharmacy twenty times per year, as opposed to the best 4 visits per year to a primary care physician. With that many visits, and with health on the line, it's essential to select a pharmacy that fits your needs and eliminates headaches. 1. Customer Service  It’s no secret that locally owned companies are much more likely to have excellent customer service, and pharmacies are no exception. Because independent pharmacies are not bound to the same bottom lines as corporate pharmacies, their pharmacists and staff have extra time and energy to deal with customers as individuals rather than numbers. 2. Convenience  Independent pharmacies can be outnumbered in most states, and they'll have tighter hours of operation windows, however, they also have the flexibility and willingness to supply medications to their community members flexibility that chains truly do not have. Of course, not every independent pharmacy will provide free delivery. And you'l...
Read more

5 Things Tiny House Owners Should Know About Tiny Home Insurance

Image
The tiny house movement has gained tremendous popularity among those seeking a simpler, downsized lifestyle or looking to travel in style. However, it's important to understand that even tiny homes require insurance coverage to protect your investment and ensure peace of mind. In this article, we'll explore the various aspects of insurance for tiny homes and what you need to know. 1. The Necessity of Insurance:  While there is still some ambiguity surrounding the legal aspects of insuring tiny homes, there are situations where insurance is a must. Tiny homeowners should consider specific types of coverage, though in some cases, it might not be legally mandated. 2. Categorization of Tiny Homes :  Tiny homes come in various forms, and the insurance requirements can vary based on their classification. If your tiny home is on wheels and you plan to hit the open road, it's essential to obtain vehicle insurance coverage, as mandated by law. Insurance for mobile tiny homes diffe...
Read more