The NCPA Pharmacy Ownership Workshop provides valuable insights for both new and existing pharmacy owners.
But what does ownership look like in 2025 and what are some of the major, and expensive mistakes owners can avoid?
In this episode of The Pharmacy Ownership Podcast, Ollin Sykes, CPA, CMA, CITP, and Austin Murray discuss insights from a recent pharmacy ownership workshop, focusing on the importance of avoiding costly mistakes in pharmacy transactions and the need for strategic planning in pharmacy startups.
Tune in to learn more about:
- Mistakes made in the early stages and the long-term financial impacts.
- Lease agreements and how to avoid burning through working capital.
- Securing financing with cash flow forecasting.
- And more!
The Bottom Line Pharmacy Podcast is your regular dose of pharmacy CPA advice to fuel your bottom line, featuring pharmacists, key vendors, and other innovators.
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More Resources on this Topic:
Buying a Pharmacy? Schedule an Appointment with our transition specialist
Resource – Pharmacy Startup Costs: Financing
Resource – Pharmacy Startup Costs: Leases/Facility Planning
If you prefer to read this content, the video transcript is below:
Austin Murray: So, Ollin, you just got back from the Pharmacy Ownership Workshop at the NCPA in DC. Tell us a little bit about, you’ve got a lot of students there that are, some of them are starting pharmacies, some of them are buying and selling pharmacies, and some of them are existing pharmacy owners. But I’d love to hear kind of your thoughts on what was your reflection of the ownership workshop and some of the things that you’re seeing in the buying and selling space in 2025?
Ollin B. Sykes, CPA, CMA, CITP: Okay, well, yeah, it was a really good group of candidates up in the DC area this past weekend. Bonnie and I spoke and appeared on the experts panel and there was a mixture of startups, transitions, and we had a few owners in there as well. And unfortunately, some of those owners were there and should have attended it before they started their stores up. One in particular had started up about six months ago and just had wished he had been there and heard what he was able to hear for the last, this past weekend because he actually has made some mistakes. And that’s the whole idea is regardless of whether they’re doing transitions or startups is to not make those major mistakes that cost them dollars. That’s the point. So, whether it’s needing help from the legal health care perspective, or reviewing contracts, leases, or whether it’s knowing how to set up the correct entity for tax purposes, whether it’s knowing how to handle the accounting, because so many will think, well, they’re going to, they don’t have the funds and they’re going to try to do all this themselves, not reach out to get the team of experts that are available in this field to help them not make those major financial mistakes. And that’s really the central point that was made by just about everybody that spoke at the conference is use the talent that is out there in this industry that can help you not make the major financial mistakes and to get started and set up and transition correctly. But there were obviously a lot of a lot of different opportunities for them to hear from one of the major wholesalers who talked about demographics of picking the right area to excuse me hearing about what they needed to do on the out front situation with Gabe Trahan, one of the leaders in the industry, a retired NCPA expert on out front affairs and store design, which is very important. The technology aspect, which is so critically important now in the industry was covered tremendously by both Hashim out of Milwaukee and Jonathan Marquess out of Georgia who owns about 15 stores. They taught those two sessions and led the candidates through how they had approached that process. And then there was a young lady there from Tampa who had been in the ownership workshop some eight or nine years ago and now had a very successful operation in the Tampa area. Talking about marketing and social media and the impact that social media has had to what she’s doing. So, it was really a conglomeration of all those areas, marketing, legal, regulatory, accounting, tax, transition, just all those areas were covered. It’s a great two-day event. There’s going to be another one coming up here in July, right before the McKesson summer show and I believe that one may be in Nashville, Tennessee. I’m not positive. But then there’s another one going to be this October in the NCPA convention. So, these are given three times a year. It’s a wonderful opportunity. There’s nothing like it in the country. That’s provided by any, anyone in the field that has the wealth of knowledge and experts appearing in one place for two days where anybody going through a transition, a potential store owner looking at either exiting or adding to his foray of stores or someone interested in doing a startup can get as much information as one place is this.
Austin Murray: Now you mentioned it’s all about catching those mistakes beforehand that cost pharmacy owners’ dollars. From a seller’s or from a buyer’s perspective, if I’m buying a pharmacy, what are some of those things that could be costing me dollars when I’m going to purchase a store?
Ollin B. Sykes, CPA, CMA, CITP: Well, just one instance is the lease. We see this very often, is a candidate will enter into a lease transaction for, let’s say, a startup and doesn’t realize that it might take six, nine months, maybe even longer to get all the third-party contracts in place. And while they may get 30 or 60 days rent-free, they really can’t start to adjudicate claims and service all their patients until all those contracts come through. Yet they’re burning through working capital. It’s so critical in a startup situation and even a transition. And they maybe can’t adjudicate claims. So basically they’re out of business. They’re out of business on the front end while they’re burning through the important cash they’ve already borrowed. And the SBA rates are not necessarily inexpensive right now because interest rates are relatively high. And cash is king in this situation. just things like that. In fact, one gentleman that was there from Texas was talking about just that particular issue. He had been open and it had burned through like 90 days of cash and was not able to fill scripts for a couple of major providers that he had patients coming in to assist and he couldn’t do it. And he was already running out of cash. So, I mean, that’s just one instance there of just making sure that you got yourself covered on that lease front. Whether you’re doing, especially in a startup situation where you’ve got to get all your contracts. Now, if you’re doing a transition, you obviously get a power of attorney to transition over to adjudicate claims from the seller while you’re getting your approvals that you still have to get for the four or five largest contracts that are out there, like ESI, CVS Caremark, and some others. But there’s just a couple of examples of how somebody can really make huge mistakes that don’t really know the difference.
Austin Murray: Yeah, that’s huge. I kind of want to go back to that lease problem that you mentioned. What are some ways, some strategies that maybe I can implement to make sure that I’m not burning that capital that I need on a lease like that?
Ollin B. Sykes, CPA, CMA, CITP: Well, A question that always comes up, how much in advance does someone maybe need to reach out to us for assistance? And we say, you know, 18 months out is not too far. Even a year out is not too far. But, you know, when somebody reaches out to us six weeks before they’re getting ready to open the store, they’ve already made these mistakes. They’ve already made choices that they didn’t really necessarily know what they were doing. And if they’re 18 months out, we can make sure they’re setting up the right entity. They get the right federal ID number. They get the right amount of funding. There’s the correct period of time to find the necessary location and do the demographic study that is needed and to get the right lease structured with the right provisions in it, perhaps with the right amount of time while all at the same time they may be working on getting their contracts through their PSAO squared away and getting the other contracts that they cannot get through a PSAO squared away. And then they’re not burning cash, active cash, while they’re doing all these things kind of in the background that while perhaps, they’re still working on their other job and driving revenues. So, I mean, that’s just the case right there. There’s a lot of preparation time that goes into play, especially on a startup.
Austin Murray: It’s all about that revenue planning and getting that revenue planning early and planning out, you know, what is that going to look like over the course of a year and not reaching out to an accountant six weeks before you’re open. Yeah, making sure that you’re planned up front. That’s good.
Ollin B. Sykes, CPA, CMA, CITP: And you know, Austin, one thing that we have done for the NCPA, for the Ownership Workshop Academy, is we have put together some spreadsheets where they can prepare their cashflow forecast and their P&L forecast for like the first three years. Because if they’re going to get outside or third-party financing, that’s pretty much going to be required as part of their business plan, which they can get ChatGPT to help them write that. We have that information freely available to them that we’ve since we’ve been back, we’ve already pushed out three or four of them to candidates that wanted that. But this helps them put together this information. While we can’t do it for them, even if they retain us, we can assist them in that process. If they retain our services and help them through this process, we can do and lead them by hand and be the quarterback of the transaction, whether they’re doing a startup or any type of transition. A common stock situation purchase or an asset purchase. Of course, that’s what we do here each and every day. And we’d be happy to help anybody who has an interest in us doing just that.
Austin Murray: Yeah, so if you’re listening to this and you’re interested in those spreadsheets or in those templates, reach out to us. Email us at [email protected] or you can email Ollin, [email protected] and also in the show notes. So, in the YouTube description and in the podcast description, we’ll have links to our emails as well. You can reach out to us.
Ollin B. Sykes, CPA, CMA, CITP: Yeah, we’d be happy to push that information out to anybody who has an interest in my emails, [email protected] so we’d be happy to push that information out to anybody who listens to this at any time. That will definitely help you, especially if you’re getting SBA 7A financing, hopefully through a pharmacy niche bank who understands pharmacies, which is a whole other topic.
Austin Murray: Yeah, that is another topic. In fact, we’re going to have Greco on soon because some of the SBA rules are changing. So, we’re going to have some updates.
Ollin B. Sykes, CPA, CMA, CITP: Yeah. The major changes, June 1st, in fact, I was reading the details on them just this morning. There are major changes that come down on June 1st.
Austin Murray: Yeah, that’ll be interesting. So well, thanks for jumping on this morning, Ollin. It’s great to hear from you.
Ollin B. Sykes, CPA, CMA, CITP: Absolutely. Yep. Thank you, Austin
