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What Not to Do in Your Pharmacy Exit Strategy

Posted by Benjamin Coakley on Wed, May 25, 2016 @ 03:35 PM


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We pride ourselves on the fact that most of the information we post on our various forums is positive. For most people, focusing on the negative drains their energy and can result in burnout. As a business owner, focusing on the negative can cause you to discount new ideas and underestimate your opportunities. Either way, it sets you up for missing the chance to enjoy inspired independence inside, outside and after your life in pharmacy.

As positive as we like to be, there are times when we must write from a negative viewpoint. In this case it’s because we keep seeing the same mistakes being made over and over again. So, instead of sharing the positive and advising you on what works, we want to bring attention to what doesn’t work.

Here is a list of what NOT to do if your goal is to enjoy the fruits of a successful exit strategy. 

  • Waiting too long: This is becoming more common in the past 10 years as the average age of pharmacy owners has increased dramatically. Combined with the struggle to find younger people willing to take the risk to become owners, aging pharmacy owners are becoming more vulnerable to circumstances that lead to an unhappy exit. For example, we are working with several clients that have asked us to get them out of their pharmacies because of health issues. Being forced to sell quickly is limiting their exit options and is highly likely to decrease the amount of money they will get for their pharmacies. Developing and executing sooner rather than later will not only mean a better outcome for you, it will increase the odds your pharmacy remains independent.
  • Having only one option: Most exit strategies are a one and done strategy. Far too many pharmacy owners cannot provide an answer when asked, “What will you do if Plan A doesn’t work out?” This is a big flashing warning sign indicating the pharmacy will likely be sold to a chain because there’s no Plan B. If you want to keep your pharmacy independent, you need to have at least two options.
  • Not writing it down or never looking at it: Many pharmacy owners have an idea of what their exit strategy looks like but they’ve never written it down. And perhaps even worse, those who have a written plan rarely look at it. Your exit strategy is far too important to be documented and kept current by reviewing it regularly. Like most goals, the ones that are achieved are the ones written down and reviewed on a regular basis.
  • Forgetting about contingency planning: As mentioned, we are working with several pharmacy owners that need to transition out of the pharmacy because of health issues. One reason many of them are not going to get what they want is they didn’t create a written contingency plan. A written contingency plan can buy time which in turn gives you a better chance to find a buyer that better fits your values and is willing to pay fairly for the pharmacy. Written contingency plans can keep you pharmacy independent.
  • Not protecting the pharmacy from the loss of key employees: I had a meeting on the morning I wrote this blog with a pharmacy owner who is trying to replace his best employee. This comes two weeks after he told me he could not imagine this employee ever leaving. This is going to set his own plan back at least 12 – 18 months because he has to get a new employee trained to step into this vacated role. If he were to try to sell the pharmacy without the key position filled, then people are most likely going to make lower offers than if the position is filled. Protecting the pharmacy from the loss of key employees (for whatever reason) can increase the odds you exit the pharmacy on your terms.  This has become such an important issue (the number one problem businesses have is finding and keeping great talent), some pharmacy buyers will never entertain the idea of buying your store if you can’t prove there is a high probability the staff will be retained.

Each of these “don’ts” on their own can result in you not fully achieving your goals and leaving legacy you want. Any combination of them can result in catastrophic failure and essentially crush the exit goals you have.

It’s never too soon or too late to address these things. Doing so will allow you to exit on the terms you want (or as close as possible) and help ensure the practice of community pharmacy will continue to the next generation. That is a future I can look forward to seeing.

Click Here to Access  Your Life After Pharmacy Preparation Kit