If you are looking for a medical-related retail business, starting a pharmacy business can be a profitable one for you. Medicines are one of the most essential things which almost all of us need. Therefore, pharmacy as a business is an essential service provider.
A pharmacy business has many aspects as well as needs proper planning and monitoring. You have to do good research and planning before starting your pharmacy Business.
With time, the nature of the pharmacy business has changed quite a lot. For example, herbal and biopharmaceutical medicines in the medical industry as a whole have gained importance. Secondly, with the rise in the senior population, 24-hour access to pharmacies is now essential. Therefore, when you are planning to start your pharmacy business, you have to keep in mind these factors.
Is Pharmacy Business Profitable?
The pharmacy business is profitable without a doubt. Even after offering discounts to your customers, you can get a minimum of 15% profit. Moreover, pharmacies are projected for further growth from 2021 onwards.
The amount of expenditure of people on medicines has also grown steadily in the last decade and this growth trend continues. As per a report from Statista, the spending on medicines has also increased by $ 200 Billion from 2012-2019.
All these factors indicate the high profitability of the pharmacy business.
Can Pharmacy Business be started from Scratch?
Yes, of course. You can start your pharmacy business from a scratch. With proper planning and the right investment as well as management, you are sure to get a good profit. There are different stages one after the other.
Finding location, funding, getting the license, and opening your pharmacy. It’s a long and detailed process, however can always start from scratch.
Pharmacy Business Plan Checklist for Beginners
Find below 14 steps to open a successful pharmacy shop business:
1. Find a Good Location
You have to keep in mind that location is a key factor in the success of your Pharmacy Business. Collect different data and facts about the location of your Pharmacy. You have to find out:
- Whether there are Pharmacies in the neighborhood or not to get an idea of competition
- Check if there are clinics or hospitals nearby to ensure a good flow of customers
- Is the place is located in a convenient location
- The profile and affordability of the people
These factors will give you an idea of business opportunities as well as threat factors. You can also plan to open your Pharmacy at a shopping mall, where a large number of people visit every day.
2. Make a Pharmacy Business Plan
Making a detailed business plan for your pharmacy business is necessary. For this, consult the experts like a Pharmacist, a Finance Expert, a Legal Expert, and if possible the owner of another pharmacy. They will be able to give you effective inputs.
Make a detailed business plan of your pharmacy business which should cover the points like:
- Investment Required
- Target Customers
- Pricing Plan
- Source of Funds
- Stocks & Inventory
- Fixed and Variable Costs
- Marketing and Publicity Plans
The more hard you work on your business plan; your business will be more organized and structured.
3. Name your Business
After the Business Plan, it’s time to choose the name of your pharmacy. Brainstorm the different ideas, take the opinion of others and then finalize the name. Furthermore, remember the pharmacy business has a certain mission and vision. Therefore, choose a suitable and thoughtful name. Don’t take too long to choose the name.
After you finalize the name, get the domain name for your website in the name of your Pharmacy. This is essential because you cannot do without a website. This is because the online purchase of medicines is very common now. In that case, people will need your website to order medicines as well as check availability.
Launch your website along with the pharmacy. Activate the options of online order, home delivery, and online payment.
Get the trademark in your Pharmacy’s name. Also, design a good logo in the name of your Pharmacy.
4. Legalize your Pharmacy Shop
In the next step, give legal status to your Pharmacy Business. Every country and state offers different types of business structures as per requirement.
In the United States, among the different forms of business organizations, LLC is a popular option as it protects personal assets from business ones. Furthermore, register your business for taxes also.
You will also need the EIN or Employer Identification Number for your business.
5. Get the Necessary License and Permits
This is another part of the legalization process. You will need several licenses and permits for your Pharmacy Business both at the federal as well as State Levels. Some of the important licenses are:
- Drug Enforcement Agency Number
- Pharmacy License
- NADP/NCPDP Number
- National Provider Identifier Number or NPI
These are mandatory for your Pharmacy Business. Therefore you have to get them at the earliest. Otherwise, you may get into trouble and pay heavy fines.
6. Get Business Insurance
You will need insurance to protect your Pharmacy from any incidents of natural calamity or accidents. The General Liability Insurance will cover it.
In the case of your Employees, you need Worker’s Compensation Insurance. Additionally, you may also need Commercial Property Insurance, Product Liability Insurance, and Professional Liability Insurance, etc.
You can consult your Legal Expert regarding the types of insurance you need.
7. Open a Business Bank Account
You need to open a Bank Account in the name of your Pharmacy Business. Also, get a Business Credit Card for credit and other facilities.
Hire an efficient and experienced Accountant for maintaining the books of accounts regularly as well as meticulously. Also, use the required software for maintaining accounts.
8. How Much Money is Needed to Start your Pharmacy Business
The pharmacy business is a high-investment Business. However, the returns are also high. The startup cost of starting a pharmacy in the United States is in the range of $ 2-3 Million.
9. How Will You Get the Fund
Since the Pharmacy Business needs high investment, you may not have the whole fund. You can try for a bank loan. With a well-drafted Project Report with good projections and a high return on investments, you can get a loan. Bank or other financial institutions will provide you with 75-80% of the investment required. You have to arrange the rest.
10. What are the Expense Heads to Open a Pharmacy Shop
There are different heads of expense. They include rent or lease of the store, inventory of medicines and other products, salaries and wages, taxes, license fees, etc.
Keep in mind one thing that the Pharmacy starts making a profit after some time, at least 5-6 months. Therefore, you have to make your budget accordingly to sustain during this phase.
11. Your Prospective Customers
Anyone who needs medicines is your customer. You can also supply medicines to nearby medical centers or hospitals. Also, keep provisions for online orders as well as home delivery.
12. How Much Profit can you Make in Pharmacy Business?
As mentioned, your Pharmacy Business is quite a lucrative one, provided it has a good location and a steady flow of customers. You can earn profit from 15% to as high as 30% on prescription drugs. Generic medicines give better profits.
13. What Kinds of Medicines you should Keep
Stocking essential medicine and allied products is the most essential part of opening and running a pharmacy. Apart from prescription medicines, you can keep herbal or natural medicines as they have good demand. You can also keep some retail products like beauty care, child care, and food supplements.
14. How to Earn More Profit
You have to adopt certain marketing strategies to get more profits. You need good planning and an efficient marketing team for that. Here are the different activities that can bring in more profit:
Build Your Brand
Advertise the name of your Pharmacy before it opens. Distribute Flyers and Leaflets announcing the opening of your Pharmacy. This will spread the name of your Pharmacy among more people.
Organize a Grand Opening
Open your Pharmacy with great celebrations. If possible, bring a locally famous person to open your store. He/she may be a celebrity, eminent doctor, or social worker. Invite important persons of the area for the opening ceremony.
Create an Online Presence
Use your website for publicity. Launch the website a little before the opening of the store. Make the website resourceful with the availability of medicines and offer special discounts on online payment.
Create pages in the name of your Pharmacy Business on different Social Networking sites like Instagram, Facebook, Twitter, etc. Share the link to your website there. Don’t forget to update the pages regularly. This will spread the news of your Pharmacy among the users.
Give ads on newspapers, TV, Radio and use colorful banners and hoardings at prominent places of the neighborhood.
Make Cold Calls
Visit the nearby hospitals, clinics, medical centers, assisted living facilities of the adjoining areas and tell them about your Pharmacy. Also, make personal visits to different households in the neighborhood. The sole aim is to spread the name of your Pharmacy.
Maintain Good Customer Relations
This is extremely important. You have to maintain a very good customer relationship for the sake of the goodwill of your Pharmacy. Apart from that, good customer relations will bring them back to your store. You will also get a referral to clients.
Keep good relations with the doctors of the neighborhood for their support.
These are the points of encouragement for you to start your pharmacy business. With good planning and homework, you are sure to succeed in your business.
About the Author: 99businessideas.com led by Rupak Chakrabarty is committed to helping beginners, entrepreneurs, and small business owners in starting, managing, and growing their business. Our aim is to educate the entrepreneur on the various stages of entrepreneurship.