Pharmacy Business Plan case study

Every business start is risky and has many unknown situations to unfold in the future. In particular, this holds when one is working on a pharmacy business plan and has no knowledge of business and financial management.

Executive Summary

The client had a pharmaceutical background. She was aware of the weak management areas of the drugstore she was working in. She knew that there is excellent potential in this particular location and that with some additional investments in the store and professional management would lead to satisfactory performance.

But she lacked the business and financial planning experience and also financial means required for the additional investment. That’s why, after carefully assessing her situation, she decided to hire a professional that had previously developed pharmacy-related business ideas and how could guide her on preparing a preliminary version of a retail pharmacy business plan.

About the Subject

Rina is a young professional Pharmacist, and she has been working for a small pharmacy in her town in the last two years. The owner of the pharmacy has no pharmaceutical background, and she owns several businesses in different sectors. The pharmacy business is not being well profitable for her in comparison to the rest of the companies she owns, and therefore she has decided to sell it.

Rina knows that the unsatisfactory performance of the pharmacy comes as a result of the lack of professional business management and a lack of understanding of the pharmaceutical field. And she is confident that if there is a proper pharmaceutical business plan to be drafted for this particular location, the business will perform very well as there is a real need for a well-supplied drugstore business in her town.

Rina has the pharmaceutical knowledge that the current business owners lack, but does not have at all experience in drafting a pharmacy business plan. She talked to her family and friends about the idea of taking over the Pharmacy business, and all did encourage her to do so, as she is very committed and persistent to her set goals.

The next step taken by Rina was to go and search for an online pharmacy business plan. The online results were endless, but at the same time, useless and not practical to her case. Then she thought of changing approach and not following the previous owner’s mistakes and look for a professional pharmacy business plan. She was looking for a pharmaceutical business plan example that would address all her questions and dilemmas.

Challenges and Objectives

The client had a perfect understanding of the drugs sold at the pharmacy and their primary and side effects. She also would advise clients on how and when to use them, additionally to the Physician’s advice.

But in her last two years of working at the Pharmacy store, she had no responsibility for contacting suppliers, making sure to comply with the state authority’s requirements for business licenses and other financial and tax reports to be submitted.

She also had never thought of other commercial and operational matters that, as an employee, one might neglect. Still, as a business owner — one has to pay attention to and make sure that there is proper planning and that there are minimal deviations from the initial planning.

She was realizing all this when now had found herself on the stage of developing the pharmaceutical business plan example.

Since she had no prior experience in running a business and being overall responsible for every aspect of it, some of the most burning issue on her head were as follows:

The above list was a few of the many issues that the client was seeking answers to. She had experienced herself that lack of proper planning and professional management from the previous owner, and she knew very well how much had that hurt the business. It was crystal clear to her that she needs a piece of expert advice before proceeding further. She required a professional that would develop a pharmacy business plan presentation for her.

How Particular Business Plan/Financial Model (Product) Helped

Several meetings and long discussions took place between the client and the designer of the pharmacy business plan. After addressing all the client’s questions and concerns in re to running the business, the right financial model was developed.

The pharmacy business plan designed for the client could forecast up to 60-months operating, and cash flows with a simple set of assumptions. In other words, the model consists of several components that enabled the client to comprehend much better of critical operational and financial elements of a drugstore business.

Some of the features of the financial and business model were:

Financial statements

Summary

Results

To build the pharmacy business plan sample, we needed several meetings between the client and the consultant. Several adjustments were made to the model to capture all the business industry specifics correctly.

The result was a financial model that offered the client the following information:

A glance of the Financial Statement Summary and therefore enabling a better understanding of the Income Statement, Cash Flow, and Balance Sheet

Core financials, cash flow data, revenue breakdown, profitability forecasts

Schedule of the Loan’s repayments taken for the additional investment

Top revenue where the client could see how much income each product category generates

Top expenses where it was displaced the four most significant expense categories and the rest of the costs as the “other.”

An estimate of the company’s value based on the Discounted Cash Flow method

A comparison of performance indicators in the model and the industry

Visualization and tracking the key financial figures and key performance indicators in the form of charts

Supporting Visuals

Dashboard — that gives a snapshot of the business’s financial viability. It was mapped out from different sections:

1. Currency, denominator & tax — where inputs for such metrics live
2. Debt assumptions — that has the flexibility to input three types of debts and a grant
3. Core inputs that contain three components:

• Average daily traffic after the ramp-up periods for each day of the week
• Traffic growth assumptions in percentage for the next five years
• Customer & Purchases Assumptions such as conversion rate leads to new customers, customers that are repeat customers, number of purchases per month per repeat customer, and number of purchases by year

1. Core financial forecast for the next five years, starting from revenue and then slowly accounting for all the expenses and finally reaching the estimate of cash
2. A breakdown of operating cash flow, investing cash flow and financing cash flow for the next five years
3. Revenue breakdown by category of products for the next five years
4. Profitability trend for the next five years in comparison with revenue, and EBITDA

Top Revenue & Expenses

Based on the business model, the 2019 top revenues for the pharmacy were forecasted to come from Analgesics 27.2%, then followed by Antibiotics, Antiseptics, Antipyretics, and Hormone replacements. All those product categories were foreseen for the next five years to have a positive growth trend.

On the other hand, the main types of counting for in the expenses were salary and wages, tax expenses, advertising, rent, and the rest of them lives in the “other” category expenses.

Tax expenses based on the estimates will see steady growth as that’s linked to the profit generated, and the rest of the cost was forecasted to be stable for the next five years.

Key Performance Indicators

The key performance indicators modeled on the pharmacy business plan were: gross margin, profit margin, wages as a percentage of revenues, average weekly revenue, and average weekly net profit. All the above indicators were of great importance to assess whether the business is performing outperforming or underperforming compared to industry standards.

Future plans

The pharmaceutical business plan example designed made the client very happy. Rina felt that now she has a better understanding of the key elements of financial and business management. Also, she was aware of the main operational and financial metrics for her business.

And all the features above were ready to her with no formulas writing, no formatting, no programming, no charting, and no expensive external consultants.

Call to Action (CTA)

So many opportunities are missed in business because people lack the necessary skills or tools to take advantage of opportunities given to them. Just imagine if people had access to such business models like the one designed for the pharmacy business plan.

The probability of missing significant business opportunities would be much lower, and many more people would be able to realize the dream of having their own business and having access to professional business and financial forecasts at an affordable cost.