How to Open a Pharmacy — Ultimate guide
How much does it cost to open a pharmacy
One of the most coveted question about starting up your own pharmacy is the initial investment quantity. In order to calculate the cost of opening a pharmacy you have to draw up a business plan which will include all the possible expenses that you will incur into from the very beginning.
Some common disbursements at the start are finding a place to rent for your pharmacy or buy an existing place, reforming or adapting the location to your particular taste and needs, getting the licensing, buying equipment, also provide initial stock to run your pharmacy.
So if you need to know how much does it cost to open your own pharmacy, get ready to invest around $1 million to $2 million dollars, at least for the first year of your business as a neighbourhood pharmacy. It gets more complicated as you advance into your fifth year as a business, as you will probably need to come up with a $10 million investment.
Write a business plan for your pharmacy
After you work out how much is needed to start your pharmacy for the first five years, the next step is to design a complete five years comprehensive business plan. You should start by breaking down all the initial costs such as renting a place, reforming, buying supplies, then add up the ongoing costs of keeping the pharmacy open such as paying the staff, marketing and monthly supplies expenses among others.
It is a well known fact that a newly opened pharmacy runs into many expenses and takes quite a long time to generate a return on profits, the first reason to plan any of the foreseeable expenses in advance. That is why your business plan has to be clear and solid that explicitly stands how much you will make on your pharmacy a month or a day, so you can use it to ask for a loan in order to back up running cost or have an additional line of credit in case you decide to expand your business.
Talking in short your business plan needs to set out your short-term and long-term goals with the closest numbers as possible, including all minor or major income flow details and expenditures. Having your numbers under control is a huge advantage when you encounter unexpected difficulties on the way of keeping your pharmacy open and generating profit. It also gives you a clear vision about the steps you have to take to start your own pharmacy without getting into unnecessary waste of money.
If you have to think of it your business plan is a road map where you can find all the information, even how much you can make a day in your pharmacy. Of course, it takes time and expertise to be able to pull up all this information together, and you might recur to the specialized services such as an attorney, consultancy or an accountant, but it is you who have to decide what you need to open your pharmacy.
The first step to secure your successful opening is to do a thorough research on your competence and establish an extensive marketing plan, that will guarantee your customers will be coming back to you. Allow yourself some space for the unexpected shortcomings and difficulties, which means you have to make constant adjustments in the costs of running a pharmacy, as well the average cost of starting your business.
Find the perfect location
There are two primary choices in terms of location when starting your own pharmacy:
- to buy an already existing pharmacy and rearrange it to fit your target customer or just carry on with the current type of crowd and income;
- the other option is to get a fresh start and buy or lease a location of your choice,reform it and equip according to your marketing plan and needs.
Both options have their obstacles and complications all along the road from the initial cost of starting up a new pharmacy to the point where you have to run your business and keep it generating profit on a daily basis. When you have a clear idea of what your business should look like, and you are certain that it can absorb the daily cost of being open to the public and providing basic medical prescriptions, it is easier to decide whether you want to buy a place and make it your own or rent an existing pharmacy that has been in business for a while.
Whatever your decision should be, keep in mind that location is the crucial point for your future turnover, and it greatly defines how much you need to open a pharmacy. Besides the initial hustle and bustle you will also have to think about your target audience, so to make sure you adjust your services to their common demands in order to generate a higher profit margin with time.
Such considerations might be, offering special discounts, having some fidelity cards, offering extra products for high ticket orders, you might even set up an online shop or provide home delivery services for patients with special needs. All of it should be decided after you studied the location for your new business and got an approximate figure of how much a pharmacy can make a month in the area you are considering to open your business.
If you decide to buy an existing pharmacy it is a good idea to check in specialized associations for a website where you can find all the pharmacies all over the country that are on sale. In this case, having an attorney or any other qualified help is a guarantee that the cost of building your own pharmacy will not be insurmountably high.
Research your market
Having a plausible marketing strategy means knowing both your competitors and your clients in depth. Many pharmacies outsource this task asking for help from marketing agencies, but if you are just starting up your own pharmacy and do not know where to look, you might take the first marketing steps research alone.
First, study your competitors in order to understand how much money you need to run your pharmacy, which includes all the places that have licence to sell medical drugs on retail, for example:
- pharmacy chains that are widespread all over the country;
- primary care centres that offer “one stop” services;
- health and beauty boots;
- some pharmacies located in supermarkets, retail parks or business areas
- online drug stores and mail ordering platform
So if you chose your location wisely, you can secure yourself a profitable spot like those near a medical or a daycare centre, where people would come out with a prescription in their hands and head right into your shop. As it was said before, you might want to diversify your product line as part of your marketing strategy, so people will come back for other health and body care items that do not need a medical prescription.
By offering a wider range of non-prescription products you are also expanding your target audience and attracting more buyers, which will heighten the average cost of running your pharmacy as you will need to acquire more stock. Even though, it is a profitable decision, because it will gradually increase your general return on the investment into supplies in a long run, if you manage your pharmacy business tactfully.
After you settled in and opened your pharmacy to the public and even started to make some profit, you need to upgrade your marketing strategy. At this point you will definitely need professional help, as you will be busy running your business and probably will not be able to understand the entangled world of consumer behaviour, which should be taken into account when you want to take your pharmacy profits to the next level.
Keep your books in order
The final and long-lasting journey when opening your own pharmacy is the accountability or financial management of your business. It is an essential part of your daily routine as a functional pharmacy, because it ensures that your benefits are taken care of.
At first, you may contract an external accountant to keep the books for you and work out how much do you make a month. But once you reach a point where your return is bigger than your initial investment, you will doubtfully be in need of an internal account clerk who would know all ins and outs of your business and would be able to adjust your accountability to your pharmacy real income and outcome cash flow.
Many startups in pharmacy business use a software that helps them to keep their accountability in order, so to make their life easier and keep track of possible investment or extra income opportunities. Besides, having a legit and long term register of your activity is a good proof for possible investors or loan agents that you are a serious partner.