So you’re ready to start an exciting chapter and purchase a pharmacy business.
But before you start making offers, understand that the process of purchasing a pharmacy is a skill in itself. It involves research, strategy and due diligence.
In this article, I focus on 3 key areas to consider to give you the best chance of securing the pharmacy you’re seeking…
1. When browsing the market, look beyond the figures
It’s easy to fall into the trap of looking at the figures alone. But the truth is, they never tell the full story. By taking the time to visit the pharmacy you’re planning to purchase it’ll give you invaluable insights into its features, condition and the local area. It’s a no-brainer.
Here are some simple ways you can look beyond the figures…
- Visit the store, centre, suburb and competitors as soon as you have the details of a pharmacy you’re interested in. This will give you a sense of the local area – something that can’t always be translated from a computer screen.
- Thoroughly read any commentary or notes provided on the business. Understand the history, why they’re selling and the future outlook.
- Remember, 80% to 85% of community pharmacies turnover is dispensary. So don’t sweat the small stuff. Focus on big ticket items, such as rent and wages.
- Last but not least, back yourself. If you’ve carefully evaluated the pharmacy and think you’ve found a great investment, go for it.
2. Review all available Information
If the information is there, you should use it to your advantage. You can register on AP Group’s website to gain full access to listings, where you’ll be able to review all key reports and core information.
Along with the broker’s summary of the listing, you’ll find several other key pieces of information that will help you understand the pharmacy’s potential. This includes…
- Profit & Loss Reports – These will be as current as possible and include key industry ratios, like rent to sales ratio and wages as a percentage of gross profit.
- Script Analysis Reports – These will report on historical script data from the pharmacy, in a period matching the Profit & Loss Reports.
- Lease Information – Understand the lease schedule, time remaining, lease terms, annual increases and market review dates. This will significantly impact the way you approach your pharmacy business.
- Current Staff Roster – Weigh up the current working conditions, then consider changes you might like to make and the impact this could have on wages. A well-rostered pharmacy is on the right path to profitability.
When you’ve found a pharmacy you’re interested in, start the review process as soon as possible. Time is critical. As the saying goes, over analysis causes paralysis.
3. Making offers with strategy and know the current market conditions
Identifying the right pharmacy is the first challenge. But you’re not out of the woods yet, as it’s equally important to have the right offer strategy when securing a purchase.
In the current market, competition for quality pharmacies is intense and there’s a good chance you’ll be competing with multiple interested parties. Therefore, the importance of strategy comes into play.
Here are a few tips…
- Always know your budget or financial capacity. This will ensure you’re placing the right offers.
- Put your best offer forward. Avoid offering less than you’d be willing to pay, as in the current market, you may not get a second chance.
- If you can, make some of the conditions more favourable to the vendor to make your offer stand above the rest. For example, less time for Due Diligence or Finance Clauses.
By following these tips when browsing the market, reviewing information and making offers – you’ll be well on your way to securing your pharmacy business. It’s a big and exciting commitment, and the more prepared you are for what’s the come, the greater your chance of success.
Put your best foot forward by registering on the AP Group website, and start your journey toward pharmacy ownership.
– Ian Fedrick, Partner and QLD Sales Manager at AP Group
