Starting a business can be overwhelming, especially for independent pharmacies. Not only do new owners face the same challenges as other small businesses, but they need to navigate many state and federal requirements specific to pharmacies as well. That’s why it’s essential to carefully consider your options and develop a well-thought-out plan before moving forward.
To help, we’ve put together a step-by-step guide for opening an independent pharmacy,
guiding new store owners through the planning process and beyond.
Even if you think you know what it takes to open an independent pharmacy, we always encourage store owners to do some research first to confirm.
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:
No one can manage all aspects of pharmacy ownership alone.
You’ll need to establish a team of experts to help support a variety of business functions for your store, including:
Where to open your pharmacy is one of the most important decisions you’ll make.
To ensure you pick a prime spot, we recommend conducting some market research. When evaluating a potential location, consider factors like:
Once you’ve decided on a location, you will have a better idea of the total financial investment that’s needed.
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.
Now that you have the location and financing figured out, it’s time to start sorting out the legal side of your business.
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:
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.
Next, you will need to establish your health plan agreements, both with PBMs and individual payors.
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.
Before you can open your doors, you’ll need items to sell – and the tools to support your operations.
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:
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:
Selecting the right pharmacy management system ensures your pharmacy will operate as efficiently and cost effectively as possible.
As you prepare to open your pharmacy, you will also need to assemble your team, which can include pharmacists, technicians, and delivery drivers.
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.
Finally, you will need to build awareness about your pharmacy in the community.
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:
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.
