Pharmacy Software Reviews

How to Open a Pharmacy

As the world of community pharmacy continues to grow and evolve, pharmacists have an exciting opportunity to open up their own practices. Instead of working alongside chains or underneath other professionals, pharmacists can branch out and advance their careers on their own. Whether you are a new graduate, a practicing pharmacist, or a seasoned professional, starting your own pharmacy and becoming a business owner can be a career-changing opportunity. It can grant you independence, give you new responsibilities, and allow you to serve your community, your way. 

The process of actually opening up a pharmacy, though, can seem daunting. With so many steps to take, regulations to meet, and requirements to check off, you may find it difficult to get started. Luckily, our comprehensive guide to opening up a pharmacy can help to simplify the process. We offer step-by-step instructions on what to do and when to do it — providing you with the information and resources you need to build a successful business.

If you are looking to make a powerful move in your career in pharmacy, start here.

Our guide to opening a pharmacy breaks down into 3 overarching phases:

Start with Initial Preparations

1. Do Your Research

2. Get Some Advice

Build the Foundation of Your Business

3. Make a Business Plan

4. Secure Funding

5. Find a Location

6. Get Licensed and Registered

Get Your Pharmacy Up and Running

7. Choose a Pharmacy Software

8. Purchase Supplies and Equipment

9. Hire a Team

10. Market Your Business

11. Open Your Pharmacy

1.

Do Your Research

The first step in undertaking any project is to do your research. Opening up a pharmacy business is no exception, as it requires a thorough understanding of the ins and outs of pharmacy — not just as a clinical setting, but as a business. Before you make any decisions or consider the matter any further, take the time to do some thinking.

First and foremost, decide if starting a pharmacy is the right choice for you. Pharmacy ownership isn’t for everyone, but it may be for you. Ask yourself the following questions to determine if you are prepared to take the next step:

  • Do I have the experience needed to start a pharmacy?
  • Do I have the necessary finances?
  • Am I prepared to handle the business side of pharmacy?
  • How much time do I have to dedicate to it?
  • What resources can I use to help me get started?

Once you feel confident about your answers and are prepared to move forward, do your due diligence in researching the details of owning a pharmacy. Important considerations are start-up costs, anticipated time to open, and expected profits.

While it varies by area, most owners can expect to pay between $400-$600,000 to open a pharmacy. From start to finish, you can expect the process to take 1-2 years. And, despite the high start-up costs and time commitment, you can expect your investment to pay off if you have the right business strategies in place. In fact, the average independent pharmacy sees a profit margin of 21.8% — one of the highest of any industry.

Other matters to research are pharmacy demand in your area, patient demographics, and small business data and trends. Doing your research will give you a better understanding of the industry and how your pharmacy can fit in. To help you get started, read articles online, watch informational videos, and most importantly, talk to current pharmacy owners in your area.

2.

Get Some Advice

Although you are starting an independent pharmacy, it doesn’t have to be an independent effort. Any business venture requires teamwork, so surround yourself with people who can teach you, advise you, and help you as you become a business owner. Consider consulting the following people:

  • Legal advisor — Find an attorney who can explain the rules and regulations of owning a small business (preferably one with experience in health or pharmacy care). Your attorney can help you to establish your pharmacy’s legal status, document your information, and make sure you abide by local ordinances.
  • Financial advisor — Search for an experienced financial advisor who can help you determine how to fund your pharmacy. They can walk you through loans, credit, and payment options.
  • Insurance agent — Your pharmacy will require you to purchase policies and protections, which an insurance agent can walk you through. Ask about general liability coverage, business property coverage, and data compromise coverage.
  • Pharmacy associations — Consider joining a group like the National Community Pharmacy Association (NCPA) or the Community Pharmacy Enhanced Services Network (CPESN) for additional guidance and resources.
  • Other community pharmacists — For personalized advice and mentorship, reach out to other pharmacists in your area. For a wider reach, connect with other pharmacists online and via social media. They can offer you practical advice and wisdom that other resources can’t.
  • Pharmacy consultant — For more in-depth professional advice, hire a pharmacy consultant to help you meet federal and state requirements, get proper licensing and accreditation, and provide individualized solutions for your pharmacy’s needs.

3.

Make a Business Plan

With the help of your advisors, begin to draft a comprehensive business plan. Your business plan should lay the foundation for your pharmacy and help you to establish your long-term trajectory — so give it the necessary time and attention that it deserves. The U.S. Small Business Administration recommends including the following details in your business plan:

  • Executive summary — Your executive summary should briefly explain the building blocks of your pharmacy. Typically, the executive summary includes your mission statement, a description of your products and services, and information about your location and team structure.
  • Company description — The company description allows you to explain the details of your pharmacy at length. It can include the problems your patient base faces, how your pharmacy will solve them, and what unique advantages you bring to the table.
  • Market analysis — The market analysis explains how your pharmacy will fit in (and stand out) among competitors. It zooms in on several issues: your target market, your competition’s strengths and weaknesses, and trends among successful pharmacies.
  • Organization and management — The organization and management section provides a description of how your pharmacy will operate. It considers the structure of your business — whether it will be a sole proprietorship, general proprietorship, a corporation (“S” or “C”), or a limited liability company (LLC). It also explains how your business will be managed by leaders and employees.
  • Service or product line — This section explains the specific goods and services that your pharmacy will offer. Whether it be general services, like prescription dispensing, or specialized services, like compounding, this section lays out what your pharmacy will offer patients.
  • Marketing and sales — The marketing and sales section describes how you plan to attract customers and patients, as well as how you plan to close deals and make a profit. Your strategy should be influenced by your market analysis, reflect the needs of your target market, and fill in competitor gaps.
  • Funding request — If you present your business plan to a bank or other third party for financial support, include a funding request. This section outlines the amount of funding you will need for the next five years, as well as a breakdown of what you will be using that funding for (insurance, salaries, pharmacy software and equipment, etc.)
  • Financial projections — To supplement your funding request, include a report of financial projections for the next five years. Include forecasted income statements, balance sheets, and budgets, being sure to match them to the amount requested.
  • Appendix — The last section of your business plan, the appendix, allows you to provide supplementary information not otherwise included in your plan. It can include legal documents, contracts, credit histories, and letters of reference.

4.

Secure Funding

Starting your own pharmacy is an expensive venture, but it is also a valuable investment. When deciding on how to fund your business, there are several options to choose from. As you consider each option, make sure to consult your team of advisors (particularly your financial advisor) so that you can make the right choice for your pharmacy.

  • Self-funding — Self-funding allows you to leverage your own financial resources, giving you the greatest amount of freedom and independence. Because you aren’t indebted to a third party, you have the ability to make your own decisions and spend your money how you choose. Self-funding can come in several forms: using your savings, asking friends and family members for capital, or tapping into your 401(k). On the other hand, self-funding can be risky — so make sure that you have a plan to prevent financial loss.
  • Investors — Investors can help you kickstart your business with venture capital investments. In exchange for funding, investors hold a share in your pharmacy and play a role in making business decisions. Investor funding reduces the chance for debt but also requires you to relinquish some control. For some pharmacies, investor funding is worth it; for others, it isn’t. Decide what matters to you and your business model.
  • Small business loans — Small business loans are the most common way to fund a pharmacy. Third-party bankers can provide you with the funding you need, without asking you to give up a share of your business. However, loans can be difficult to get approved — so make sure that you have a comprehensive business plan ready to present to the bank. Your business plan should include financial projections, estimated spending, and a detailed plan of how you plan to pay off your debt.

5.

Find a Location

With your financial matters out of the way, turn your attention to finding the right location for your pharmacy. Whether it be a stand-alone store in a small town or a clinic in a big city, picking the right location is essential to running a successful business. With this in mind, you should spend time researching your area, visiting potential sites, and considering which area would best reach your patients. As you start your search, consider the following factors:

  • Demographics — Who lives in the area? Who will be your customer base? Factors like age and socioeconomic standing can help determine if your services are needed in the community and if your pharmacy will be profitable. Pick a location that reaches your target market and that will generate enough traffic to help your business succeed.
  • Physical location — What kind of structure should you have? Depending on your needs, you can open a pharmacy in a variety of places: an independent building, a shop in a strip mall, an office in a medical or professional setting, etc. Choose a location that can easily accommodate your patients and staff, and that gives you room to grow.
  • Visibility and ease of access — Will it be easy to spot and easy to reach? Your location should be situated in a populated area that patients can easily get to. Avoid hidden corners, obstructed views, and heavy construction. Instead, choose a location that will attract a wide range of people — even those that are just passing by.
  • Traffic — Will traffic be an issue? While you should aim to pick a populated place to start your business, too much traffic can be a deterrent. Aim to find a balance: with enough people to notice your pharmacy, but not too many to limit access to it.
  • Competition — Where are your competitors? Although it may seem like a smart decision to stay far from your competitors, experts agree that you should actually pick a location near them. Areas that have several pharmacies nearby already have the demand and traffic necessary to stay in business. When you move in, you simply need to provide better service to get potential customers to switch to you.

6.

Get Licensed and Registered

Before you can open a pharmacy, you will have to complete a fair share of behind-the-scenes work: filling out paperwork, applying for permits, and perhaps most importantly, completing licensing and legal requirements. These requirements can be confusing, so call on your advisors to help walk you through them. Here are just a few that you will have to meet:

Licensing Requirements

  • State pharmacy license — The first step to operating your business is applying for a state pharmacy license. Your state license will grant you all of the rights and responsibilities needed to treat patients. Every state is different, so find out what yours requires.
  • National Provider Identifier (NPI) number — An NPI number, which is granted through the National Plan and Provider Enumeration System (NPPES), is a 10-digit code that is unique to your pharmacy. It is used by the federal government for identification purposes. Apply for yours early in the process of opening your pharmacy.
  • Drug Enforcement Agency (DEA) number — A DEA number allows you to fill prescriptions for patients, and it is used by the federal government for regulation purposes. To be able to dispense drugs, apply for a DEA number as soon as possible.
  • National Council for Prescription Drug Programs (NCPDP) Provider Identification Number —The NCPDP issues 6-digit identifying numbers to pharmacies in order to streamline transactions with third-party providers. A Provider Identification Number is essential to running the billing side of your business — so apply for one soon.
  • Medicare Provider Enrollment  — To treat patients with Medicare, pharmacies must complete Medicare Provider Enrollment. Upon completing enrollment, you will receive a Provider Transaction Access Number (PTAN) to use in your pharmacy.
  • Any additional licensing requirements in your state — Some states require additional licensing before allowing you to open your pharmacy. Consult your state’s requirements to ensure you’ve met them all.

Legal Requirements

  • Employer Identification Number (EIN) — In accordance with the IRS, you must obtain an EIN before you can open your pharmacy. The EIN is a 9-digit number assigned to businesses for the purpose of identification. Apply from the IRS website.
  • Get insurance coverage — To protect your pharmacy from unforeseen circumstances, it is necessary to get insurance. Many types of coverage are available, including general liability, professional liability, and employment practice liability insurance. Talk to your insurance agent to find out which policy is right for you.
  • Get a pharmacy bank account — In order to process direct funds and reimbursements, you must open a pharmacy bank account. Make sure that all of your account information matches that of the EIN.
  • Any additional legal requirements in your state, county, or city — Different areas maintain different business requirements, so contact your local ordinances to make sure that you have completed all of the necessary legal steps.

7.

Choose a Pharmacy Software

The most important piece of technology you can buy is a pharmacy software. Your software system manages every aspect of your business — from patient care to workflow to finances — so it should be as innovative and industry-changing as your new pharmacy. Above all else, your pharmacy software should simplify your work while allowing you to provide the most comprehensive patient care possible. Visit our Comparing Software Page to find out which software is right for you. For more information, read our blog on How to Choose a Pharmacy Software

8.

Purchase Supplies and Equipment

Once you have finalized your pharmacy business plans, picked and purchased your ideal location, and met all of the necessary requirements to start your business, you can begin the hands-on work. When you move into your new pharmacy, begin by buying all of the necessary supplies and equipment to get up and running. Then, move to setting up your store. To help you get started, here are some of the things you should include on your shopping list:

  • Inventory — Most of the supplies in your pharmacy will be prescriptions, so keep an up-to-date inventory of all of the drugs you need. Partner with a wholesaler who can get you discounted rates, flexible payment options, and fast delivery.
  • Equipment — To dispense medications and provide clinical care, you will need to have several pieces of equipment: tablet counting machines, liquid dispensers, autoclaves, mortars and pestles, compounding slabs, and testing equipment are just a few examples. To serve patients on the front end of your pharmacy, you will need equipment like cash registers, credit card processors, printers, and scanners. Automation in your pharmacy is also a great way to increase efficiency.
  • Technology — Most of your pharmacy will run via technology, so be sure to get the fastest and most efficient systems possible. Pieces of technology to consider are an automated dispensing system for easy prescription filling, a mobile app for ordering and inventory, and a point-of-sale system for streamlining transactions. Check what is already included and integrated in your pharmacy software, as well.
  • Furniture and fixtures — Personalize your pharmacy and help your patients feel at home with furniture and fixtures. Taking the extra time to decorate and design your pharmacy will make a difference in setting the right atmosphere.

Once your supplies have been purchased and delivered, set up your store in a way that works for you. Experiment with workflow in the back and decide how to make transactions in the front. Set up your equipment, install your technology, and hang signage to get started. Then, organize your dispensing area, optimize your clinical area, and stock your shelves with the necessary OTC products. However you choose to go about it, make sure that the setup of your pharmacy enables you to work effectively and efficiently.

9.

Hire A Team

One of your final — but most important — tasks is to hire a team of pharmacists, technicians, and other pharmacy staff who can help you create the pharmacy you dream of. To start the process, consider how you want your team to run. Generally, it is best to appoint a pharmacist-in-charge (who can be you, or a hired professional), along with pharmacists, technicians, and clerks. Think about how many team members you want in your pharmacy, how much you are willing to pay them, and how you can attract them to the positions.

Once you decide to start hiring, let the community know: list openings on job-hunting sites like LinkedIn, Indeed, and Glassdoor; advertise on social media; contact local pharmacy schools; and spread the word in your day-to-day conversations with other professionals. 

When interviewing candidates for the job, don’t just look at their education and experience — but consider their knowledge, their warmth, and their passion for advancing the field of pharmacy. In addition, think about how they will fit in with your pharmacy, interact with your patients, and help you fulfill the mission you have set for your business. Ask the following questions to help you decide:

  • What does community pharmacy mean to you?
  • What is your strategy for treating patients?
  • What is the biggest challenge pharmacists face?
  • Where do you see the future of pharmacy?
  • What sets you apart from other candidates?

As you put together your team, make sure to set aside proper time for training: generally, starting several weeks before you open offers time for new staff to get to know you, your pharmacy, and your expectations. During training, make time to connect with your team and strengthen your pharmacy from the inside out. It will make a difference.

10.

Market Your Business

With all of the decisions made, the details decided, and the team assembled, your final step before opening up your pharmacy is marketing to your community. In this final step, your job is to spread the word about your up-and-coming business, get the conversation going, and make potential customers excited about the future. As you work to create buzz around your business, try incorporating a few marketing tips:

  • Use traditional advertising methods — Consider purchasing billboards, putting out signs, and sending out flyers that promote your pharmacy. This is one of the best ways to advertise to your local community, without added stress or hassle.
  • Use social media — In the digital age, social media is a powerful tool to market and grow your business. Take your pharmacy to the next level by creating accounts on your favorite platforms. Post routinely, engage with followers, and promote your business accordingly. As you gain traction online, you will gain customers in real life.
  • Make a website — In addition to marketing on social media, you can advertise your pharmacy online by making a website. Almost all small businesses, including pharmacies, need a website — so kickstart the effort before your pharmacy even opens. It will help future patients learn more about you and what you can offer them.
  • Use local directories — Online directories are a powerful way to help people in your community find you. Simply add your pharmacy to a directory of pharmacies in your area, along with a bit of basic information, so that patients know where to find you. One of the most widely used examples of this is a Google My Business profile.
  • Talk to people — Get into your community and have conversations with the people around you. The main advantage of community pharmacy is being able to receive personalized care, so give your (future) patients a dose of it by talking to them, getting to know them, and showing them how your pharmacy can benefit them.

11.

Open Your Pharmacy

After many months (or even years) of hard work, your pharmacy is finally ready to open. Congratulations! Take the time to recognize your accomplishments and celebrate with your team — and then get ready for opening day. For best results, host both a soft opening and a grand opening. 

Soft Opening

To work out any kinks in your system, and to ensure that your grand opening runs as smoothly as possible, first plan a soft opening. This opening should happen several weeks before you officially open your door to customers. For your soft opening, invite a few patients — including family, friends, and other community members — into your pharmacy to test things out.

Operate your pharmacy as you plan to in the coming weeks: fill prescriptions, offer clinical services, and sell OTC products. Give your patients time to get to know you, your team, and your services. Give advice, answer questions, and most importantly, ask for feedback. Use the suggestions that customers give you to help prepare for your official opening.

Grand Opening

The final step is also the most exciting one: opening your doors. On the day of your grand opening, be excited and be enthusiastic — at long last, you have reached your goals and achieved your dream. Your grand opening is a celebration, so treat it like one: buy snacks and refreshments, bring in live music, and set out games and activities for your patients to enjoy.

Up to this point, you have done your fair share of preparation: preparing your business, preparing your team, and preparing your customers. Now, though, it is time to prepare yourself to be an owner. For your patients, prepare to give high-quality, personalized care. For your team, prepare to offer leadership and encouragement. And, for yourself, prepare to have the day — and run the pharmacy — you have always imagined.