Opening a Start-Up Pharmacy: Your Step-by-Step Process
There are many factors to consider to make your start-up pharmacy successful. Pharmacy CPA, Ollin Sykes, discusses the importance of a business plan and market analysis. This plan should include sales, profit and cash flow projections. Once this is complete, make sure you have an experienced team of advisors including a pharmacy CPA, a pharmacy niche bank and a legal healthcare advisor to guide you through necessary steps when opening a pharmacy.
Is your future pharmacy purchase a wise investment? Review these due diligence questions before making the purchase.
If you prefer to read this content, the video transcript is below.
Ollin: First and foremost, you’ve got to decide what sets you apart and what’s your big idea with respect to the rationale and reason behind you wanting to do this. And obviously market viability, a market analysis, the purchase or leasing of property in location, location, location, becomes critical in this analysis here on the front end.
Obviously, wholesalers can help you a lot with respect to that market viability. That information a lot of times is available to you without a tremendous amount of cost. Clearly something has to be integrated into this entire process. Once you’ve determined that you’re potentially moving forward then obviously developing a business plan becomes critical. Any and all parties that you’re dealing with, the wholesalers, the banks, etc., are going to really want you to nail this down with respect to what that plan is. They’re going to want to see sales, profit, and cash flow projections.
You’ll most likely need to partner with a pharmacy CPA who’s familiar with handling these types of items with a startup pharmacy. Obviously, working through some of the information that’s available on NCPA Ownership Workshop site, and some of the information that is placed out there by some of the experts that work with the Ownership Workshop Academy, is something potentially to consider.
As you begin to get that to a point of comfort, you obviously have to look and secure a substantial and adequate financing which means you’re going to have to add potentially a pharmacy niche bank to your equation. I say pharmacy niche bank because you need a bank that understands pharmacy. It’s not rocket science, but it’s different. And your local banker that you know, that you play golf with, etc., may not have the knowledge of what a PBM is or DIR fee, much less have the right and adequate financing available for you in that transaction. So, I strongly suggest you take the consideration for a pharmacy niche bank.
Honestly, in this process, adding a legal healthcare expert to the process because obviously, an entity is going to have to be set up. You’re going to go through a regulatory phase. You’ll have to get your DEA, NPI, NCPDP, and all your third-party contracts and your PSAO in place once you’ve determined your wholesaler decision, but all that involves, obviously, assistance from your legal healthcare advisor who also would be used to potentially close your financing arrangements with your pharmacy niche lender that you’ve chosen.
Of course, once you have this in place, sometimes this can take 90 days. Sometimes this is six months. Sometimes it’s a year and a half process just depending on all the factors here that are involved. You can then hopefully plan for a grand opening and proceed forward.