Opening an Independent Pharmacy

That way, you’ll fully understand what it will take to operate a new store and you’ll be better prepared if you decide to move forward. While there is a lot of information out there, make sure you’re using a reputable source. We recommend referring to:

• Your State’s Board of Pharmacy.
• National and State Pharmacy Associations/Groups. (We recommend the National Community Pharmacists Association (NCPA)’s Ownership Resources.)
• Other independent pharmacy owners, who have a wealth of real-life experience.
• Third-party consulting firms.

You’ll need to establish a team of experts to help support a variety of business functions for your store, including:

• A lender. Whether you want to buy an existing pharmacy or build one from scratch, opening a new store requires a significant financial investment. Check out LiveOak Bank, a bank dedicated to small businesses, including independent pharmacies.
• A Store Designer. This is critical to ensure your store has an optimal layout. An experienced designer can help you with everything from how to maximize your shelf space and ensure accessibility for patients to organizing things behind your pharmacy counter for increased efficiency.
• An accountant to help manage your business expenses and taxes.
• Legal support and insurance to protect your investment and your liability. Due to the number of unique requirements, we recommend working with attorneys and insurance agents that specialize in or have pharmacy experience.
• A professional network. Connecting with other pharmacy owners and industry leaders is a great way to gain valuable insight and guidance from someone who’s been in your shoes.

To ensure you pick a prime spot, we recommend conducting some market research. When evaluating a potential location, consider factors like:

• Whether there’s a general need or a specific service gap you could fill.
• The number of other pharmacies already servicing the area and how business is going.
• Where your prescriptions would come from. For example, are there enough primary care physicians, specialists, or long-term care facilities nearby to provide a steady stream of scripts?
• Whether the location is easily accessible, including how difficult it would be to find the store, enter the parking lot and the total number of parking spots.
• Whether the space can accommodate your current needs (i.e., the ability to have a drive-thru window and plenty of space for OTC items) and has room for future growth as well. In fact, drive-thru space is one of the most overlooked parts of location-shopping. Before you select a less expensive location without a drive-thru, consider what it may cost you in the long run. After all, the last thing a busy mom wants is to have to get her kid(s) in and out of the car when they’re sick. Same with your elderly patients, who are worried about slipping and falling in bad weather.

Not only do pharmacy owners typically need a minimum of $50,000 to initiate the purchase of the store itself, but additional funds are needed to cover inventory, equipment and more. When all is said and done, owners can expect to spend $500,000 or more to get their pharmacy up and running. Fortunately, there are several financing options available, ranging from traditional bank loans to loans from a Small Business Administration lender, like LiveOak Bank, or wholesaler.

If you’re not sure which option is best for you, meeting with an experienced financial advisor can help.

Start by working with your attorney to determine the type of business classification you will use (sole proprietorship, partnership, limited liability corporation (LLC), ‘C’ corporation or ‘S’ corporation). From there, your attorney will walk you through all the other general start-up and specific pharmacy-related requirements. Then, you can begin filing for the licenses and permits you will need to legally operate your pharmacy, including your:

• State Board of Pharmacy Permit.
• Drug Enforcement Administration (DEA) Number.
• Controlled Substance Registration Number – if applicable.
• National Provider Identifier (NPI) Number.
• National Association of Boards of Pharmacy (NABP) Number.
• Federal and State Tax ID Numbers
• Employer Identification Number (EIN).

Then, your accountant can help you establish your payroll, property, and sales tax accounts. To wrap things up, don’t forget about your insurance policies. You’ll need to establish insurance for the store itself and to protect your liability.

You can work with a Professional Services Administration Organization (PSAO) for PBM and certain government payer agreements to simplify the process and ensure you receive the best possible agreement terms. However, if you want to participate in other networks, like CVS/Caremark, Express Scripts, OptumRx or state Medicaid, you will need to work with each payor directly.

First, select the wholesaler(s) you want to use to keep your shelves stocked. To ensure you select the best wholesaler for your pharmacy, consider:

• Where they are located relative to your store – and their delivery schedule.
• The products they offer, their pricing and any discounts or incentives that may be available.
• Their customer service, billing cycles and payment terms.

Then, think about the types of technology you plan to use to automate your pharmacy’s workflow. Utilizing the right tools, like an integrated pharmacy software and point of sale system, are essential to effectively manage all aspects of your operations. When you’re evaluating a software system, think about the functionality you need now, like inventory management, robot and IVR integrations, and the services you plan to use in the future as well. That way you can select a system that will best fit your needs as you grow. For example, if you plan to offer delivery services, you’ll want to ensure your software has features to streamline deliveries, including shipping integrations. Don’t forget to ask about features that enhance the patient experience as well, like:

• Real-time text messaging.
• Online refill options.
• A Mobile app for patients.
• Patient loyalty programs.

Selecting the right pharmacy management system ensures your pharmacy will operate as efficiently and cost effectively as possible.

The number of staff you will need depends on the size of your store and the services you plan to provide. Before starting the hiring process, you’ll need to create a job description for each role and establish an employee handbook with your policies and procedures. Then, spend some time thinking about the type of culture you want to create. This will help you narrow down your search and select candidates that align with your vision for your pharmacy.

The timing of your hiring is important too. Not only will you need to allow time to conduct interviews, but you’ll need ample time for training as well. Make sure that you have several weeks to get your team trained on each phase of your workflow and the technology being used. This will ensure your staff is fully prepared to handle anything and everything that may come their way on opening day and beyond.

While it will take time to build a loyal customer base, there are things you can do to get your name out there right away. This includes building your online presence, by establishing:

• A Google Business Profile (including photos of your store, OTC products, services offered and sales promotions).
• Pharmacy website.
• Social Media Pages.
• Paid digital and search term advertising (depending on your budget).

Then, start to build a network within your community. Developing relationships with other healthcare providers and businesses in your area can help establish referral sources for prescriptions and patients. Sponsoring local events or offering free health screenings can be an easy, relatively inexpensive way to get your name out in the community as well.

Once you’re open for business, OTC sales promotions can be used to get new customers in the door, and a loyalty program can help be used to encourage them to keep coming back.