In this sequel to the post How to Start a Successful Retail Pharmacy in Nigeria in 7 Steps, I will be sharing with you the basic practices, processes, and interventions that need to be put in place, to increase the chances of success in Retail Pharmacy. In general, starting a business is one thing, and running it is another. As a business owner, you need to work on your business to set it up for success.
“The Only place “SUCCESS” comes before “WORK” is in the dictionary”Vince Lombardi – American Football Coach
Retail Pharmacy is not a get-rich-quick scheme and just like any legitimate business, you need to work it, and diligently so to bring about success.
If you are the business owner and you double as the Superintendent Pharmacist, you will have to, at least at the beginning until the business grows, work both in your business and on your business. What this means is that as a Superintendent Pharmacist on duty, you are an employee working in the business by attending to customers/patients, daily accounting, training of staff, etc.
As a Business Manager, you play different strategic roles to keep the business running smoothly, as well as build it up for growth. You play different roles that are related to forecasting, analytics, market research, partnering, and other strategic decisions making. This is what the working “on” your business bit is about. Check out Working ON your Business vs Working IN your Business.
Highlighted below are some critical strategic and tactical actions that you need to take to increase the chances of success.
1. Make your Retail Pharmacy visible – Physically & Online
Of course, you will agree with me that if you are not visible to potential customers, then you do not have the opportunity to meet people’s needs or create value for them and your business.
A start-up retail pharmacy outlet decided to increase awareness of its presence in the community by sharing fliers to residents within the community. In the process, they found out that a good number of people knew that there was a new business in their location, but didn’t know it was a pharmacy. Why? The signboard was not communicating effectively that it was a pharmacy. The brand name of the pharmacy was more conspicuous than the word “pharmacy”. If you are not one of the big brand pharmacies that are already well known like HealthPlus, MedPlus, etc, do not make that mistake.
Secondly, you need to introduce yourself and your business to other organizations around you. This could be other Small & Medium Enterprises, Schools, the Police, etc.
Thirdly, today’s business is not limited to customers within your immediate geographical location alone. The world is fast becoming a global village and you can reach potential customers within and without your physical location through establishing an online presence. Check out 5 Effective Ways to put your Brick-and-Mortar Business Online for more details.
2. Inventory Management is Key to Success in Retail Pharmacy
To start with, how do you determine what range of products to stock or not? This question is relevant as you need to consider factors such as the socio-economic class of your potential customers, their brand preferences, among other factors. So a pharmacy in a high brow area usually has a different range compared to one in the suburb of a city for example.
This challenge can be addressed in either of two ways. You can take a calculated risk, where you start with a basic inventory and then build on it based on requisitions from customers and patients. Getting a sample inventory from a pre-existing pharmacy within the community is another option that will be my recommended option to reduce the steepness of your learning curve.
Having the right products, at the right time and in the right quantities to meet customer’s/patients’ needs on one hand, and the financial performance needs of the business, on the other hand, is critical. Poor inventory management manifests in form of significant incessant stock-outs and/or overstocking.
Imagine how painful it would be if you are not able to meet the needs of your customers/patients because you do not have the product they need in stock or the frustration that can come from a product sitting on the shelves for months/years unending. The former results in dissatisfied customers and the latter potentially losses from products’ expiry or impacting your cash flow negatively.
The good news is you do not/no longer have to see inventory management as an art, as there are Inventory Management Applications that can support you today in retail pharmacy. These applications, well utilized, can simplify the whole process from procurement to sales and replenishment in such a way that, within acceptable limits, you are not overstocking or understocking.
You can go for system-based or cloud-based inventory management systems. There are pros and cons of using each one which will be shared in detail in a later post. These softwares usually incorporate accounting capabilities in addition to inventory management.
Lastly, they also help to flag soon-to-expire stocks so they can be moved forward preferentially and reduce expiry risk.
3. Maintain Basic Book-keeping Records
How do we measure business progress/success or otherwise, if you do not have basic records of your transactions? This includes your sales, purchases, asset acquisition, expenses, bank deposits, etc. Determination of your financial reports such as break-even point, profit or loss accounts, balance sheet, etc., depends on a proper record of the aforementioned transactions. The basic thing to remember here is that every transaction should have a record.
If you are savvy in accounting, it might be something to keep an eye on especially at the beginning when you do not have the luxury of hiring appropriate human resources. You can transition from here to having a part-time accountant who does monthly accounting for you and then hire one fully when your business is strong enough.
Whether you have an accountant or not, you need to do annual business filing and tax returns to Federal Inland Revenue Service (FIRS), so you will need the services of an auditor to support you in doing it the right way.
Read Book-keeping for Small Businesses for more details
4. Minimize Cash Flow-related Frustration
Simply put, your cash flow statement shows you how liquid your business is to pay for everyday financial obligations. Your cash flow statement gives you an idea of how much cash you are generating mostly from sales (and other means), to meet up with expenses like paying suppliers, paying your utility bills, paying staff salaries, purchase of assets, etc.
You can imagine how frustrating it would be if you are unable to pay your suppliers, for example. It means you probably will find it tough to meet the needs of your customers.
Negative cash flow arises for the following reasons.
- Overstocking – You have your money tied down in appreciable inventory with low turnover
- Low sales or Profit Margin – You are not making enough sales that is commesurate with your purchases and other financial obligations
- You are not maintaining a good balance between your own money (equity) and borrowed money (debt)
- Excessive withdrawals of cash from the business, etc.
Some inventory management applications can give you analytics about fast and slow-moving stocks based on their turnover, hence guiding you on the quantities to procure per time.
5. Develop Standard Operating Procedures
To build a business/retail pharmacy that will operate without your physical presence at some point, you need to standardize the different operations carried out within the pharmacy. This could be related to the sales process, procurement process, stock-taking procedures, cleanliness routines, security procedures, just to mention a few.
To create a unique experience for your customers, for example, you need to be able to reproduce the sales/customer service process in such a way that it differentiates your brand. What this means is that you are not leaving the customer experience to be dependent on the individual variabilities of your employees based on their state of mind, emotional state, or preferential judgment.
The sales SOP could include all procedures ranging from
- greetings and rapport building with customers as they come into the premise, to
- how their prescriptions are handled,
- how, with their consent, you get their contacts for follow-up
- how they are counselled,
- how you upsell or cross-sell relevant complementary products,
- how you follow up with them to ensure they are getting the results expected from their medications, etc.
A new employee playing this role is also trained to deliver value in a reproducible fashion based on the SOPs. For more details on how to build SOPs for your retail pharmacy, check out the book The E-Myth Revisited by Michael E. Gerber.
6. Put security measures in place
Security measures, checks, and balances need to be put in place for three main reasons
- to reduce the propensity or incidence of pilferage by employees
- to discourage unscrupulous “customers” from shoplifting, and
- to prevent occurences of armed robberies.
To handle pilferages, periodic and systematic stock-taking should be put in place.
For shoplifting, this can be minimized by training employees to keep and maintain eye contact with customers as they come in. A common strategy adopted by shoplifters is to get you distracted by making multiple inquiries that keep you from focusing on them.
No matter the size of the retail pharmacy, there should always be more than one employee within the premise so that when one is attending to a patient/customer, the other is keeping an eye on them. Also, consideration can be made for a security check of receipts of payment from customers before they exit the premises.
Security personnel can also be employed to serve during opening and/or closing hours. Most insurance companies will recommend this as part of the terms to insure your business and if there was an incident for which you need to make a claim, the absence of security personnel on the ground limits to a very large extent how much you can claim.
Lastly, it is highly recommended to have CCTV cameras installed in and around your premises. The presence of this security apparatus in itself, makes people with untoward intents think twice.
7. Strive to retain your customers
It is easier to retain an acquired customer/clientele than to acquire new ones. The majority of sales come from repeat purchases from loyal customers who appreciate the value-add from interacting with the retail pharmacy.
There have to be systematic, deliberate, and concerted efforts to keep acquired customers engaged to ensure repeat purchases to the point where they become loyal.
Be proactive about addressing customer complaints to retain their confidence and stay put with you.
In conclusion, and in addition to the seven recommendations above, you also need to be able to respond to changes in the healthcare and business landscapes, to remain competitive.
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