There is no shortage of options for owners looking to impact pharmacy growth. Successful independent pharmacy owners must maintain a balance between growing profits, investing in the business, and managing operational cash flow. This formula is not new. However, in light of significant industry shifts and stringent regulations; the balance is more challenging to achieve. Success is a matter of surrounding yourself with the right team in an environment that will cultivate pharmacy growth. The PDS Super-Conference and premier sponsor Live Oak Bank are the solution partners you need to establish successful programs and unlock capital for your pharmacy.
In an industry where large competitors have unlimited access to funds, and you need capital to implement essential profit programs; where do you start?
Step 1: Know Your Pharmacy Market
Understanding where your profits are coming from is the first step in taking your business to the next level. Passively waiting for the next prescription to walk through the door does not work anymore. The waiting game will not keep you operating at full potential. Actively targeting the most profitable aspects of your business keeps you on top of market conditions and prepared to adjust course in the face of changes.
Step 2: Managing Pharmacy Cash Flow Effectively
Cash is king, we all know it. Your pharmacy should have enough cash flow to reinvest back into your business and employees from marketing to new equipment, all while maintaining salaries and keeping the lights on. Mismanagement of or inattention to cash flow will limit how far you can take your pharmacy. It affects how banks look at you when applying for loans, and your ability to scale successful initiatives.
These are just a few of the tips that we cover with independent pharmacy owners at the Annual PDS Super Conference. Our goal is to provide owners with the tools and solutions to establish a solid foundation, kickstart pharmacy growth, and provide ongoing support you navigate the industry in the coming year.
Live Oak Bank is one of the largest investors in community pharmacies in the industry and has provided nearly $750 million in loans since 2010. They provide funding and packages to address all of your pharmacy needs.
- Quick loan closes – approximately 47 days
- Favorable terms with low-interest rates
- Low equity requirements
As your dedicated solutions partner, Live Oak Bank can assist your pharmacy with everything from facilitating prescription file purchases and software solutions to streamlining improved inventory management. As a major sponsor of #PDS2017 Live Oak Bank will be in attendance, making it the perfect time to stop by their booth and learn more about their loan capabilities, low-interest rates, and equity requirements.
What kind of results can you expect with this shift in thinking? Great question.
Below is a visual aid showing you precisely what you are leaving at the table if you aren’t a PDS Member. These results are real, from real pharmacy owners across the nation.
Ask yourself, do you want to walk away from these profits?
Save your seat for the most important pharmacy conference we have ever held here, where you’ll have a chance to listen to these same PDS members tell you EXACTLY how they generated millions in profits.
Pharmacy Resolution: Use Smarter Tax Strategies
Make 2016 the year that you stop giving the government more money than you have to! When facing financial difficulty, we often think about ways to increase our income, but what about saving more of the money we have already worked so hard to earn? There are countless ways to save money on taxes that you don’t even know exist. That’s why “Use Smarter Tax Strategies” is number three on our list of Top New Year’s Resolutions for Pharmacy Owners in 2016.
Most tax accountants and CPAs use fifteen to twenty strategies when preparing a client’s tax return, but that is not even a fraction of what the tax code allows. When properly documented, more than 400 legal deductions are available to you! It is almost guaranteed that you are paying more taxes than you are required to. If you took advantage of all the deductions available, you could be putting more cash back into your business, a rainy day fund or toward your next family vacation.
The majority of a tax professional’s work occurs in the two to three month period culminating on Tax Day. They may have to prepare several hundred returns in a short period of time, so they often “staff up” with temporary employees and work 80-90 hours each week just to stay afloat. Under those circumstances, they can’t possibly provide you with the level of research and analysis you need to maximize your savings.
Additionally, tax professionals have been deputized by the IRS, which severely penalizes them for submitting returns with questionable or undocumented deductions. This forces them to play it safe, because most clients are unable to provide proper documentation for many types of deductions. Therefore, it is your responsibility to become familiar with the tax strategies that will save you thousands of dollars.
Did you know that you can charge your business to hold meetings in your home up to 14 times each year? This creates a deduction on the corporate or business side while creating income that you do not pay taxes on.
Did you know that you can save thousands of dollars and generate tax-free income by hiring your children? According to the law, you can pay them up to $6,300 each year for things like managing your social media or answering the phones.
Wondering why tax-free dollars are important? If you have a $50,000 expense and you’re in the top tax bracket, it actually costs you $83,000 to spend $50,000 with after-tax money. If you use before-tax money, the same $50,000 expense can be paid for with just $50,000. That’s a savings of $33,000!
At the 2015 PDS Conference, Ernest Nesmith of Tax Savings Professionals wowed the audience with winning tax strategies that could save pharmacy business owners anywhere from three to six figures in one year. Click here to watch his Tax Savings Webinar and learn more about how you can generate tax-free income, uncover hidden deductions and keep more of your hard-earned money.
What other game-changing strategies are you missing? Don’t miss the opportunity to hear from more experts like Ernest and pick up techniques for saving money, earning more cash and improving your business. Join us at the 2016 PDS Conference! This year’s lineup of speakers is exceptional.
As a business owner, imagine you are in the LLC and Corporation club. The club of Corporations and LLC’s can give you great benefits as one of its members.
Running a business is challenging and filled with the chance for big rewards, but if you make a mistake, isn’t it nice to know that the problem stays with the business? Your club membership says that the risk or problem stays with the business and does not affect you. You are not personally liable for any problems that occur in the business.
This is called limited liability
The liability or risk is limited to the assets of the business only. What a great benefit, and you get limited liability just by starting your LLC or corporation!
Just like any club you have ever joined, there are rules the members must follow. Limited liability only applies to club members whose companies are following these rules. In fact more than 90% of all business owners are in violation!
No one gave you a rule book when you started your LLC or corporation. So how do you “act” like one? That’s the problem. Attorneys and IRS auditors know you don’t know the rules. They know you didn’t get a set of instructions, and because you don’t know what to do, they are going to take away your benefits. What are the rules? One of them is to maintain a proper record-keeping practice. You must document, with a resolution, every time your company makes a major decision.
What should you be documenting? Here are just a few major decisions that need to be recorded:
- S Corporation/2553 or 8832
- Equipment Purchases or Leases
- Acceptance of Accountant
- Purchase or lease of Property
- Qualifying to do Business
- Issuance of Dividends/Distributions
- Waiver of Notices to Hold Meetings
We’re willing to bet that some of you didn’t realize these were on the list.
What liability challenges does your business face? Let us know in the comments!
Like any small business, independent pharmacies are always looking for ways to increase profits. As a pharmacy owner, you may be under the assumption that you must obtain new customers to make more money, but that is not necessarily true. Of course, your pharmacy always needs new customers, but remember that your easiest and most predictable source of revenue is right under your nose. It comes from the loyal customers who already know and love your business.
Upselling current customers is a much more cost effective method of increasing income than working to attract brand new patrons. In fact, some estimates report that acquiring a new customer is five to ten times the cost of retaining an existing one. Before you focus on attracting new customers, use these steps to make sure you are maximizing the profitable opportunities that lie within every one of your current patient relationships.
Do not be nervous about the concept of upselling. It is much more than a sales tactic – it is a component of good customer service that helps build deeper patient relationships by delivering better value. For example, when a customer comes to pick up their monthly vitamins, take the opportunity to offer them another brand with a variety of flavors, even if it is more expensive. They will appreciate the personalized recommendation and consider switching if they believe in the added benefit from the upgraded product.
Work Smarter, Not Harder
Maximizing the potential of your existing patients is a surefire way to work smarter, not harder. In the same way, you can use existing data to decide which patients are appropriate candidates for upselling and which drugs to target. Profitability Pathways is a system developed by that encourages your team to tap into existing niches and anticipate needs based on trends. It also focuses on finding ways to convert low-profit opportunities into high-profit customers. You will begin by running reports that determine which products are most profitable, as well as areas you are losing money.
A great way to stay ahead of competitors and bolster profits is to provide a unique service. In particular, you will help customers and yourself by introducing programs that increase efficiency, such as medication synchronization. These types of programs increase customer satisfaction, build relationships and reduce pharmacy workload. You can use the extra time to mine your pharmacy’s database to increase sales
Do you want to learn how to increase sales?
According to recent sales data, the average repeat customer spends a whopping 67 percent more cash than a new one. Following the steps outlined in this article will certainly provide one method for increasing sales, but there are numerous other opportunities for profit. Utilizing the Profitability Pathways designed by Dan Benamoz will ensure that you do not miss out.
When facing major decisions, human nature encourages us to rely on experiences, assumptions and gut instincts to guide our actions. In some cases, this method is perfectly acceptable, but running a pharmacy business requires much more. Making decisions without evaluating solid data is one of the biggest mistakes an independent pharmacy owner can make.
There’s no reason to gamble on your business when the necessary information is at your fingertips. The data you need is already in your pharmacy’s computer system! Taking time to sort through facts is an imperative step to determine what profitable opportunities you’re missing out on. To get started, evaluate these seven areas:
Highest Profit Drugs
Which prescription drugs are bringing in the most money? This one is fairly straightforward. By answering this question, you will know where to focus your energy when it comes to inventory, education, doctor detailing and upselling.
Medications With Best Profit Margins
Certain drugs may actually be extremely profitable when you consider the percentage of mark up. For instance, if Drug X costs $1 from the supplier and you can sell it for $2, you are only making $1 as profit, but it’s a 50% markup. When considering a large amount of the product being sold over time, this may bring you a higher profit than Drug Z that costs you $50 that you can only sell it for $53.
Highest Profit Doctors
When looking at your script history, do you see one physician’s name more than the others? Now that you’ve identified your highest profit drugs, can you tell which doctors are prescribing those drugs the most? Make a concerted effort to network with those physicians. Build those relationships and ask for patient referrals.
Highest Profit Insurers
Is there a particular insurance company that covers or recommends your most profitable drugs? Since not all insurance pays the same dividends, understanding which companies are the most beneficial to you is important. Develop a marketing campaign that will allow you to give special discounts to customers carrying the insurance company that is most profitable for your pharmacy.
Top 20 Drugs Filled
Pull a report on the most popular drugs and make sure to keep them in stock. Make a list of the top 20 most popular prescriptions, along with their higher profit counterparts. Educate your staff on upselling opportunities and keep the top 20 list conveniently located and visible behind the bench.
Margins Over $40
While they may not actually be your most profitable drugs, it’s still important to keep track of any prescription that brings in a lot of money. Keep an eye on drugs with a margin over $40 and promote them when you can. They may move into your highest profit category and you’ll want to be aware when they do.
Daily Loss Report
If you are losing money on a particular product, drug or insurance company, you may want to consider removing it. On the other hand, if that product or service is paired with something popular and profitable, you may benefit from keeping it. Either way, you’ll want to monitor the situation closely.
Running reports in these seven areas will help you make educated decisions based on facts, not guesses. You may find out that your customers are no longer interested in a product you keep in stock or that you’re losing money in an area you imagined to be profitable. Regardless of what these reports tell you, your business is definitely better off if you know how to analyze the metrics and adjust as needed.
Don’t take a gamble on your pharmacy! What are you doing to make sure you capitalize on every opportunity for profitability? If you can’t answer that question clearly and definitively, let us help. Get started immediately by downloading our free eBook 3 Innovative Ways to Compete in the Pharmacy Market
Automating Inventory Management in Your Pharmacy
In today’s competitive environment, running an efficient independent pharmacy means lower costs, higher margins and less stress for all parties involved. Creating efficiency in your pharmacy is a combination of concentrated effort and strategic planning. Where can you find opportunities to become more efficient? Everywhere! Functional areas such as; team training, inventory management and operations planning all represent key opportunities for improved efficiency.
Analyzing where your pharmacy ranksagainst industry benchmarks is one of the first steps you should take in exploring areas of opportunity for added productivity in your pharmacy. Understanding what your competitors are doing to succeed in the market will give you ideas and provide metrics that will help you track your progress as you begin to implementing new procedures.
Once you have an idea about what your competition is up to, take an inventory of your own operations to see where you lag behind and what areas you can improve upon. Here are the key focus areas to improve efficiency:
1. Team Productivity
Having a productive staff means lower refill time and faster order fulfillment. If your employees are slow in fulfilling orders, take a look at schedules to see if there needs to be adjustments made. You may decide to hire an additional technician in order to give your pharmacist breathing room and avoid burnout. After evaluating your team’s productivity, you may also find that some of your staff isn’t well-trained and they don’t yet understand the process. In this case, evaluate each team member’s performance and determine what skills need to be polished and what areas of the business operations require a more experienced team member. Invest in training, so every employee has all the knowledge they need to successfully perform their job.
2. Medication Purchasing
Prescription medications are often one of the most expensive items your pharmacy has to float. Taking advantage of savings from Group Purchasing Organizations is a great way increase buying efficiency. Even efficient pharmacies often generate substantial savings from optimizing their purchasing habits. Here are some strategies that will help you streamline medication purchasing:
- Use longer-term buying to take advantage of lower-cost contracts
- Secure immediate access to newly released generic medications
- Utilize tiered discount programs and target key incentive levels
- Analyze backorder reports and obtain credits for undelivered items
3. Inventory Control Optimization
Improved efficiencies can be found by reducing the time spent managing inventory by controlling and reducing costs, and limiting touch points. The following best practices will improve your inventory process:
- Create a baseline inventory
- Develop minimum and maximum reorder points on prescription medications
- Train buyers on inventory controls like updating min/max levels to avoid stock delays
- Obtain all credits from returned excess products
- Create advanced inventory control system that adjusts drug levels based on patient demand
4. Embrace Automation
Taking advantage of an automated dispensing system has the potential to improve pharmacy efficiency and inventory control, while enhancing patient safety. A system like this can reduce that time that is spent on managing out of stock medications, and allows you to redeploy pharmacy technicians that would otherwise have to refill scripts.
In today’s competitive environment you need to find productivity improvements in all aspects of your pharmacy. Staffing, purchasing, inventory control and automation are the key areas where you can find ways to improve.
Last night I saw something truly frightening on TV. It wasn’t a scary movie or even something terrible on the news. It was actually a commercial. A commercial where a drug company was touting their new program allowing patients to fill their prescriptions online, directly through the manufacturer’s website. One more facet of competition for independent pharmacies already fighting to thrive in an environment where they already face competition at every turn.
Of course, I mulled over this different form of competition all evening, wondering if this will become a major trend and pondering how an independent pharmacy can effectively combat drug manufacturers trying to take a bigger piece of the pie. I tried to think about how many people would actually use a service like that, rather than going to their local pharmacy. I suppose only time will tell whether this is a trend that will catch on or whether it will eventually fizzle out but personally, I think that there are a number of things that give independent pharmacies an edge, not only in this situation, but over box stores, chain grocery store pharmacies and many more forms of competition.
The most successful independent pharmacies that I have had the opportunity to work with seem to embody everything that box stores aren’t. Here are the three top things I notice about some of RMS’ most successful customers.
1) Their patients are more than names on a label
Our customers are extremely busy during the day, so when I speak with pharmacies, I’m always conscious that I’m probably interrupting something. So I definitely don’t mind being put on hold for a while or the pharmacist setting the phone down for a few minutes to handle something else. More often than not, the pharmacist, pharmacy manager or technician will ask me to hold on for a moment, simply to greet a patient that’s come in. I hear them greet the patient by their name, ask how the kids are, or how work is. That personal relationship can help to solidify a customer’s loyalty to your pharmacy and it’s something no one is getting from the box store down the street.
2) They consider their patients overall health as their responsibility
Independent pharmacies are more than just a place to pick up prescriptions. It may be what gets a customer through the door the first time, but it isn’t what makes them stay. Successful pharmacies try to engage their customers to work with them on disease state management and be a part of their healthcare team, rather than assembly line prescription filling. Instead of hold music, I often hear custom greetings, inviting patients to take advantage of programs to better their health such as smoking cessation or weight loss.
3) They use technology to its fullest advantage.
There are vast array of different technology solutions out there to allow pharmacies to achieve their goals. Being aware of and comfortable with new technology options for pharmacy systems, point-of-sale systems, robotics, IVR and more makes sure that your pharmacy stays on the cutting edge and helps you project a modern, professional and efficient image to match the above and beyond service that your pharmacy provides. In 15 years working exclusively with independent and institutional pharmacies, we’ve found that the right technology can make the difference and truly help a pharmacy to thrive.
While these 3 qualities are by no means all-encompassing when it comes to what makes a pharmacy successful, they definitely are a key component of that overall success. What do you think? What helps your pharmacy to flourish with every increasing competition?
Read below for 3 ways you can set your pharmacy up for success with an interesting new niche you could establish in your pharmacy!
- Distinguish your pharmacy from chain stores.
Create an inviting space with well-defined areas for specific product types. Couple this with caring staff that seek out opportunities to help the customer. This pairing will help develop relationships and create repeat customers.
Your products are non-negotiable to a successful retail pharmacy. Using effective, high quality and unique products will create product loyalty. Try offering a combination of well-known big sellers and plenty of unique, reputable products.
Share what you know to help others bring their bodies back into a state of health. Train your staff on this as well as both seasonal and common items and trends.
- Establish yourself as a local healthcare expert.
Creating an image ofauthority and trust in the community is invaluable to your sales and retention efforts. Pharmacy tip: Offer webinars or in-store workshops on specific health topics (i.e. addressing high blood pressure or losing weight). Distribute brochures and flyers on providing information on adjunct or alternative therapies and products is a great way to get more people in the door.A great way to showcase your pharmacy as a local healthcare expert is to amp up your blog activity and distribute a weekly or monthly e-newsletter. Invite customers to subscribe to your blog and use that space to offer healthy tips (i.e., introduce natural medicines and therapies).
- Have a plan and share it with your team.
Developing a plan with your team will help them get on board with the company agenda and make them feel that their voice matters. Once you develop a plan, focus on a different sales goal each month. Training your team to be knowledgeable will give them the tools they need to confidently interact with your customers. Product and health care training opportunities should be provided each month. Then, reward your staff for a job well done!
About the Author:
Natural Creations is an exhibitor at the 2014 PDS conference and distributor of alternative medicines. They produce the highest quality products strictly operating according to cGMPs and made in a safe & controlled environment. Their product line is of USP grade & have a purity of 98-102%.
To speak with a representative, stop by booth #59 at the Independent Pharmacy Business Growth Conference to learn about the alternative medicines available to you, or visit Natural Creations online at www.natural-creations.net.