I’ve collected 10 tips for independent pharmacy owners to increase their profits going into 2021/2022 because no matter how well your pharmacy is doing, it can always do better.
Top 10 Tips to Increase Profits as an Independent Pharmacy Owner
#1 — Track Your Metrics
The first step to leading a more profitable independent pharmacy is auditing your current gross and net profit margins. The average independent gross profit margin is about 22%, but in all reality — leading pharmacies that are thriving — report profit margins of 25% and more.
How can you break down your pharmacy’s profit margins? With two very simple equations.
Gross Profit: If you spend $75,000 on inventory and sell that inventory for 100,000 that equals a $25,000 gain.
25,000/100,000 = 0.25 = 25% gross profit margin.
Net Profit: Take your $25,000 gain and subtract all of your expenses — such as overhead, employee salaries, etc. — for the case of this example let’s assume your expenses add up to $7,000.
25,000–7,000 = 18,000.
18,000/100,000 = 0.18 = 18% net profit.
Without knowing where you are, it’s hard to track the efficacy of strategies that you put in place to increase your overall profit. Try to make it a habit to track your gross and net profit margins on a quarterly basis — and do it thoroughly.
#2 — Invest in Marketing
In 2019 your online footprint will impact your pharmacy sales because attention is the new currency. The more people that know about your pharmacy online, the higher your chances of acquiring new patients.
To get new patients walking through your front door and to build relationships within your community you need to manage social media accounts for your pharmacy.
Facebook and Instagram are the leaders of B2C — business to client — marketing reach. LinkedIn is the leading B2B social media platform and is valuable for building relationships with doctors and nurses for referrals.
Give an opportunity to an intern or hire a social media manager to create and manage your social media footprint.
#3 — Buy Smarter
The foundation of increasing your profits lie in the ability to buy for less and sell for more. The number one way to decrease inventory spending is to get a better deal from your primary wholesaler, but sometimes this is easier said than done.
The second best way to decrease your inventory spending is to leverage resourceful platforms for your secondary and tertiary wholesalers.
Visrex is a free marketplace where you can:
- Shop Wholesalers
- Compare prices
- Order your secondary and tertiary drugs
And is a valuable resource for independent pharmacies to get very competitive prices — that will allow you to buy for less and charge more — thereby increasing your profits.
#4 — Gain High-Profit Patients
Some of your patients are more profitable than others.
Break down which drugs produce the top 25% of your profit — which are likely to be specialty drugs, compounded medications and prescriptions for chronic conditions — and attract patients based on that information via your custom marketing strategy.
Attract patients who suffer from chronic conditions by posting content about how you treat those with cancer, diabetes, heart disease, etc. The more valuable content you give to target audiences, the more you will see them choosing your pharmacy over your competitors.
#5 — Boost Product Sales
A large majority of your profits come from pharmaceutical sales but don’t underestimate how product sales can boost your profit margins.
Place high-end supplements and vitamins at the check out counter so that your employees can suggest for a patient to supplement their medications whenever appropriate.
Also, design your pharmacy in a way that the diabetes supplies area is highlighted.
#6 — Sell More Services
Patient care services are widely offered in thriving pharmacies — which are taking advantage of the short supply of physicians in the current market.
The more services you offer, the more patients walk into your pharmacy. However, try to focus on the most profitable and least time-consuming patient care services such as:
- Veterinary prescriptions
- Diabetes care
#7 — Treat Your Team
Your team is the driving force of your pharmacy. When your team is happy and feels like their work culture is a healthy one, they are much more likely to treat patients with excellent customer service and patient care.
You can’t put an ROI on your team greeting patients with a smile, loving what they do and who they work for. It’s priceless.
#8 — Control Your Inventory
There are lots of expenses related to your inventory that could be getting in the way of your profits. You have to consider costs for shipping, handling, ordering, storing and shortages.
Ask the top three questions related to inventory control:
- What are your ordering costs? — Especially the costs associated with your top 25% drug orders.
- What is it costing you to store these drugs? — Compare storing costs vs the profits.
- What is the cost of a shortage? — Put a strategy together to avoid shortages.
#9 — Stick to a Budget
The leading rule when it comes to operating any business is to create a financial plan/budget and to stick to it. If a meeting with your accountant is overdue, schedule one to analyze your current profit margins vs where you want them to be.
And ask for their sound and expert advice on how you can get there. The more you have your baseline and goals in order, the more likely you are to achieve them.
#10 — Keep Patients Happy
It will cost you far more to acquire a new patient that it does to keep a loyal one. Foster an efficient workflow and put in place processes and programs that keep patients happy — and loyal to your pharmacy over the others in your community.
How can you do this?
- Avoid drug shortages
- Deliver excellent patient care, customer service, and follow-up
- Create loyalty programs that give your most loyal patients incentives to refer their family, friends and to keep coming to your pharmacy.
Please visit us at www.pharmahub.com.ng or email us at [email protected]