When even one causes us heartache, you might think the growing number of phone calls we receive from community pharmacists struggling to keep their doors open would lead to despair.

As despair is most often followed by defeat, giving in has never been an option for us or for our clients. For us, rising to the challenge means identifying and addressing what's behind the increase in calls we receive from community pharmacists battling for survival.

Well, the simple fact of the matter is, community pharmacists are waging war against shrinking profit margins. (The NCPA reports a slow, but inexoriable decline in net profits for community pharmacies, down for a high of 4% in 2003 to 2.9% in 2011.)

The external forces attacking profitability are many: along with the usual band of economic assailants attacking all businesses, community pharmacists must face a particularly powerful pack of insurgents let loose by legislative changes and backed by state and federal budget cuts.

The good news (bad as it may sound) is; all community pharmacists face these external foes. The bad news (and it doesn't even remotely sound good!) is; the most desperate calls we receive are from community pharmacists who have not done all they can to wipe out the internal causes of shrinking profit margins.

There are three internal keys to protecting your profit.

1. You need to know where you stand at all times: You must keep your eye on every facet of your business. We had a client tell us she had been selling a particular prescription for six months before realizing she was losing money on every sale. The time when community pharmacists could earn a good living with that level of complaisance is long over.
2. Inventory and staffing can have a substantial effect on your cash flow: You should ask yourself if it make sense to carry a large amount of inventory when most wholesalers offer next day delivery for almost anything you need. (You would likely be surprised at the number of times we speak with pharmacists who do not realize they have too much inventory.) Another thing we frequently see is over staffed pharmacies. Too much staff cuts into profits and can drain the bottom line when sales or margins shrink by a small amount. (The 2012 NCPA Digest reported these averages for 2011: cost of goods sold 77.1%; payroll expenses 13.4%, and; other operating expenses 6.6%. If your numbers are higher than these, you need to take a hard look at why that is so.)
3. Decisions need to be made proactively instead of reactively:  I have personally worked with an owner who did not realize their pharmacy was over staffed until it was too late. In the constantly changing world of pharmacy, it is important to keep an eye on all profitability measures in order to insure this doesn’t happen to you.

This can be an exciting time to own a community pharmacy if you are taking the right steps to insure you will not only survive but flourish in the immediate and distant future. If you do not remember much of anything from this blog post please remember this: not focusing on your profitability can have disastrous consequences for you and your pharmacy.

Where does this wisdom come from?

The content of this blog is inspired and substantiated by our experience helping independent community pharmacists enjoy financial independence during and after their life in pharmacy. When a pharmacist reaches out to us for information and help, we endeavor to give them as much free value as is possible. In addition to providing educational and strategic planning tools (like the Time Management Planner), we invite qualified pharmacists into our formal discovery process.

The first step of the process is completing The Inspired Goals Workshop. This 90-minute session enables us to provide a detailed and personal Inspired Independence Blueprint. The blueprint provides a personalized roadmap for achieving your goals and enables you to fully understand the value of joining The Inspired Independence Program.

If you wish to learn more about any aspect of our work, the free value we offer, or to be considered for The Inspired Goals Workshop, visit our web site at www.waypointus.com or call 843.873.4420 and ask for Ben or Matt Coakley.

At Waypoint Pharmacy Advisors, we take care of you!