In the world of business, success is a long game. A successful business enjoys sustained streaks of success, not settling for a short-term, flash-in-the-pan moment of triumph.
With that in mind, it’s essential to know how your business succeeds and how you can harness that winning spirit toward other parts of your business. This is where key performance indicators (KPIs) come in.
To run a successful business, you need to know your strengths and why they’re strengths. This is the case in the world of commerce — and it’s what helps the pharmacy industry go round.
KPIs put your independent pharmacy’s health in a clear perspective, informing you on what you’re doing right and where you can improve. Here are some tips on how to enhance your independent pharmacy through financial KPIs.
What is a Financial KPI?
Key performance indicators are a kind of performance measurement that evaluate a business’s success in a particular goal. In other words, KPIs set the verdict as to whether or not a company successfully achieves what it set out to do.
Now ask yourself, “What does your independent pharmacy set out to do?”
The basic answer should be something along the lines of “to provide quality patient care (while generating a profit).”
In business, you need to spend money to make money. Financial KPIs help you put your best foot forward as you make worthwhile investments.
How Should You Pick a Financial KPI?
As we’ve mentioned in previous blogs, the pharmacy industry lies in the unique intersection of healthcare and commerce.
As such, it’s wise to create a baseline that adheres to both the pharmaceutical and the commerce.
Begin with the pharmacy side. Think about your primary objective when first opening your independent pharmacy (or becoming a pharmacist in general).
Come up with a mission statement and a clear call to action that your pharmacy can achieve. It can vary depending on the kind of independent pharmacy you run.
For some independent pharmacies, retaining a strong and loyal customer base is the way to go. For others — namely clinical pharmacists —, you might prefer to have a wide array of clinical services and a large selection of vaccines.
Also, look into your pharmacy’s workflow and productivity. Those clinical services don’t amount to much if the staff isn’t working with exceptional efficiency. Workflow within a pharmacy consists of several moving parts.
How quickly — and effectively — does your pharmacy staff help its patients? How long does it take to fill a prescription? How effectively does your pharmacy weather the rush hour storm?
The more efficient you are on the pharmacy side of things, the clearer the business side becomes. Ensure that you and your pharmacy staff excel in the pharmacy work with quality patient care and exceptional workflow.
Become a well-oiled machine of pharmaceutical and efficiency excellence. Once you establish the criteria for your pharmacy’s success, it’s time to look at the bottom line.
Establish Criteria for Financial Success
Now that you know what makes your independent pharmacy run from a healthcare standpoint, it’s time to open the books — the financial books.
By definition, a business is successful when its revenue outweighs its costs. In other words, generate a profit and you’re in the clear. Several factors determine a business’s success. Not every business has the same criteria for success.
Establish your pharmacy’s financial success to have a clearer roadmap on your path to pharmaceutical and financial excellence.
The Top Kinds of Financial KPIs
One of the most common financial KPIs for business is your cash flow.
A business’s cash flow is the “net balance of cash moving into and out of a business at a specific point in time.”
Your independent pharmacy’s cash flow is a vital financial KPI. It paints a quick but comprehensive picture of your independent pharmacy’s financial health.
Your pharmacy’s cash flow reflects how much profit it’s generating through its operating expenses. A financially sound pharmacy maintains a steady cash flow.
There are several ways to ensure a pharmacy’s financial health, namely a wide array of clinical services and a loyal customer base (see above). These are perfect examples of how the healthcare side of pharmacy directly affects the commercial side.
Spend money, make money. That’s the essence of business. Finding the balance between profit and spending is vital for a business’s success
Operating expenses are another common — and important — financial KPI. The metric for success varies from pharmacy to pharmacy. Your small business will thrive — or falter — depending on its budget.
Your pharmacy’s operating expenses act as a financial skeleton. Everything is shaped around it and will collapse if the foundation is shaky.
Your pharmacy’s operating expenses consist of several things: pharmacy equipment, medications, payroll, lease for the building, insurance, and — last but never least — your pharmacy software system.
Though the industry rightly encourages you to provide services beyond filling prescriptions, it shouldn’t come at the literal expense of your financial health. Innovate when appropriate, and success will come in due time.
Your pharmacy benefits from a stable revenue flow. A steady customer base is a prime example. That being said, stability won’t get you very far on its own.
New patients are the perfect remedy for static revenue. After all, the best way to create a steady customer base is to attract new customers. New customers equal new revenue streams.
New customers will make your existing customer base, and that new revenue stream will let you offer more services to them. The more patients you have, the bigger your cash flow. The bigger your cash flow, the more successful your pharmacy becomes.
Part businessperson, part pharmacist — you’ll be a bona fide pharmaceutical success story in no time.
Financial KPIs act as a financial compass, leading you to your business’s true north. They also give you a way to maximize your profits while still attending to the needs of your patients.
Strive for long-term success with financial KPIs. Through choppy waters or cloudless skies, financial KPIs will remind you of your primary objective as an independent pharmacist.
Strike the balance between healthcare and commerce and the rest will follow.