When we travel around the country speaking to community pharmacy owners, we are constantly reminded of the misperceptions about the differences between owning and running a pharmacy. For example, we often hear that owners should be compensated because they own the pharmacy (even though they may not work there). We also hear from people that are upset that profits are going to people that never step foot in the pharmacy. The reason for this is there isn't much understanding in the market place about the difference between managerial control and ownership control.
Succession Development (see our previous two blogs) is centered around the idea of and the difference between managerial and ownership control. Clearly understanding the difference can be enlightening because it can allow you to start building a pharmacy that works for you (rather than vice versa) and put your pharmacy in a position to transcend many generations to come.
Let's start first with managerial control. People that work in the pharmacy get paid a paycheck for that work. You get compensated through payroll for the services your perform in the pharmacy. Your compensation may be higher than the other employees because you may handle many of the management responsibilities. Or, you have hired someone to manage the pharmacy and they are compensated accordingly.
Ownership control is, in most cases, the ability to hire, fire, allocate resources, etc. You have this control because you own the pharmacy. You are entitled to the profits of the pharmacy because you have ownership control. Ownership control is essentially the reward for risking your capital in buying/starting and continuing to keep the pharmacy in operation.
As you can see, these are two completely separate things that should be treated accordingly. It can be confusing/divisive if you mix the two controls together (please see the first paragraph).
Once you begin to see them as different things, then you can begin focusing on which of these you want to maintain and which you want to delegate/transfer to someone else. When boiled down, there are essentially only four options. You can maintain both, none, or either one. For example, you can give away managerial control and keep ownership control. You can sell (give away ownership control) and stay on as an employee with managerial control. You can sell and sail off into life after pharmacy (giving away both controls). Or, you can keep both ownership and managerial control for yourself (be an owner-operator).
There is no right or wrong answer for which path you choose. The most important thing is that you and your key advisors understand the difference (and in some rare cases your employees may need to understand this). However, we are starting to hear more and more pharmacy owners wanting to transfer managerial control (day to day management) and still maintain ownership control. This can be a great way to generate income during the sunset years of your life as opposed to selling the pharmacy and living off the proceeds.
If you are interested in maintaining ownership control and giving away all or some of the managerial control, then Succession Development can help you do this. The first step is deciding what role you want to play in the pharmacy in the next few years. Contact us if you would like to discuss this in more detail.
Where does this wisdom come from?
The content of this blog is inspired and verified by our experience helping independent community pharmacists enjoy financial independence inside, outside 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, self-assessment and strategic planning tools, we invite qualified pharmacists into our formal discovery process.
The first step of the process is completing The Inspired Goals Workshop. This complimentary 90-minute session enables us to deliver a detailed and personal Inspired Independence Blueprint. The blueprint provides a 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.
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