Business Improvement and Preparing your Pharmacy Business for Sale
Pharmacy Appraisal | Pharmacy Review | Pharmacy Sale
Two fabulous new, pharmacy bespoke products have been added to My Pharmacy Appraisal. Designed with Australian retail and community pharmacy in mind, you can now access a Pharmacy Business Plan and a Pharmacy SWOT Analysis & Action Plan Checklist that will guide you on your journey of thinking Critically & Strategically about your pharmacy. Go to the Resource Centre & Pricing Page to learn more!
If you are thinking of selling your pharmacy then you are embarking upon an exciting but also a challenging experience.
The strategy outlined below is designed to be utilised in conjunction with your subscription service as detailed on this website and it has been created to help you prepare and be ready for the challenging sale process and the Due Diligence that will follow a Conditional Offer.
Whether or not you are actually looking to sell now, in the short term or into the future, preparing your pharmacy business for sale is an outstanding procedural process that will reap benefits operationally and at the point of exit. Although the main objective will be to reap the benefits of your investment upon achieving a sale, it is still an enormously worthwhile process to implement in order to achieve operational efficiencies (and thus increased value) over the short to medium term. My Pharmacy Appraisal and it’s ‘Blueprint for Sale Documents’ – the Executive Summary, the Detailed Financial Analysis, and the Roster and Salaries & Wages Sheet will greatly assist with this process.
These documents, together with the ‘Hunt & Gather’ data upgrades provided in our Strategic Partnership with Geotech Information Services, will create the perfect platform to identify deficiencies, build operational improvements, and define Strategic Next Steps.
Additionally, as noted above, My Pharmacy Appraisal has launched two fabulous new, pharmacy bespoke products.
Designed with Australian retail and community pharmacy in mind, you can now access a Pharmacy Business Plan and a Pharmacy SWOT Analysis & Action Plan Checklist that will guide you on your journey of thinking Critically & Strategically about your pharmacy.
Always seek guidance and advice from your accountant and your solicitor as you will need their input not only as you enter a sale process, but as you implement changes over the life cycle of your business investment. When you do eventually look to go to market you can test the market AND SELL your pharmacy by posting the ‘Executive Summary‘ in Anonymous Mode on this site.
We can also recommend some fabulous professionals from our Valued Partners programme to assist you with the complexities of the process.
Initially, diagnose your business and the quality of its earnings, its record keeping and its tenure. Undertake a business health check, review all aspects of your pharmacy, identify areas of shortfall and improvement and consider and identify internal and external risks. In other words, tidy up the business, both physically and in a record keeping sense. Sort out the deadwood and strip the business back to its productive parts thus making the business more efficient. Revitalise and re-energise all components, including, and especially, the staff.
Following diagnosis, enhance your pharmacy business. Start a programme of continual improvement. Check and fix problems by making permanent and measurable improvements. Maximise and demonstrate a genuine EBIT by reviewing costs, reducing or eliminating unnecessary expenditure, renegotiating supplier terms, maximising margins and ensuring stock levels are at industry standards. The activity of systematically examining the business, with staff involved, will generate numerous ideas for productivity gains.
Improve the housekeeping and record keeping of the business. This means getting the record keeping of the business ready for a systematic investigation by a buyer. Be conscious of the fact that a buyer will want to be able to verify and match quoted sales records with EFTPOS records and bank statements. Additionally, ensure all contracts, documents, supplier agreements/statements and lease/sub-lease arrangements are available, are assignable, in order and have tenure. Importantly, ensure all payroll and staff records are up-to-date and in order, particularly staff contracts and PAYG and superannuation obligations – make sure they are accurate and up-to-date.
A really important task is to review the ‘quality’ of the earnings of your pharmacy. What are the sources of income? How important is each sector and what has been done to improve and sustain each critical component – be it retail, dispensary, nursing homes, professional services, or even export sales? How have sales been affected by the impact of high cost, low margin molecules and the 7th CPA, and what are these trend lines looking like moving forward? What are the crucial aspects such as sales per square metre, rent as a percentage of sales and adjusted TEC (Total Employment Cost) as a percentage of GP? Healthy, sustainable sales matched with a sustainable occupancy cost base and a sustainable, productive and efficient roster will help create real value in your pharmacy.
Give serious consideration as to how the business might start to grow without putting undue pressure on management or the resources of the business. Also, what areas of the business might require additional investment to develop assets or competencies further. Often, the key to securing a high value for the business is to ensure that the buyer is able to rapidly exploit the potential acquired with the business. Having a fully documented business plan/process in place for a buyer to quickly scale is going to be an essential part of positioning the business for sale.
The difference between selling out with little notice and preparation and putting in the appropriate time and effort into planning for a sale can be significant. Going through a systematic planning approach can be a highly effective and beneficial approach as it will uncover numerous ways the basic operations of the business can benefit.
Having secured an acceptable Conditional Offer (CO) to purchase your pharmacy you will then find that the most tedious part of the Due Diligence process revolves around the provision of data and documents for review. Generally, check lists (financial & legal) are supplied and ‘data rooms’ established. Additionally, questionnaires are sometimes supplied. It is always important to answer any questions as accurately, responsibly and as quickly as possible as well as upload data and documents for review.
Significant improvement in sale value can be achieved if the right approach and sufficient time is taken to invest in the preparation process.
So remember, always seek professional guidance and advice, undertake a business health check, implement and measure improvements, and ensure all financial, legal, operational and staffing records are accurate, current and provable.
