Buying a retail pharmacy is an expensive proposition any way you look at it, whether you're buying an existing pharmacy, building one from the ground up, or taking an existing building and remodeling it into a new drugstore. Deciding which route to take toward retail pharmacy ownership is one of the first steps you'll want to take. You'll then want to consider funding.
For most would-be owners, ready cash to complete the entire project will not be available, and some type of financing will need to be arranged. According to an informative article found at The Honest Apothecary, the main problem facing pharmacy owners at the beginning is under-capitalization. Speaking as a Senior Loan Officer at Live Oak Bank, the third largest bank in the country for SBA loans, Ed Webman states that the average pharmacy loan size nationwide is about $300,000. According to Ed, this is barely enough money for an initial setup and will leave little or no money for daily operating expenses, including staff salaries.
For his lending operation, which specializes in retail pharmacy financing, the average loan size is $1.3 million for a store acquisition and $500,000 for the financing of a new store project. The idea is to provide full funding right at the start in order to give the new pharmacy owner the best chance of achieving success in their operation.
What makes Ed Webman different from most loan officers is the fact that he's a third-generation pharmacist who, at one time in his career, was operating 36 different pharmacies at one time. He knows the business inside and out and, unlike most typical bank loan officers, knows what it takes to get a pharmacy up and running.
Bottom Line Costs
According to research completed at Texas Tech University School of Pharmacy for a report detailing the typical startup costs for a retail pharmacy, a new owner will need access to somewhere between $882,352 to $1,764,705. This amount may be slightly lower in some places and is dependent upon actual store location.
Typically, the most expensive method for obtaining pharmacy ownership is to buy an already existing store, although if the business exists in a leased facility, it will be less up front to get into than if building ownership is part of the initial deal. Some advantages that come with the purchase of an already existing business is that established customers are already patronizing the store, existing staff may be willing to continue to work there, all the products will already be on the shelves and ready to sell, and relationships with vendors and wholesalers will already be established. A viable alternative is to go with a pharmacy franchising operation and pay for their brand name and expertise in helping you set up your business.
Dealing With the Sticker Shock
Although one of the least expensive ways of buying a drugstore is to start from scratch by remodeling an existing storefront, here the sticker shock may seem more apparent as you add each item or system into the store environment. Take, for example, store shelving and fixtures. Good-quality units are definitely not cheap to purchase, but in the long run, it will be well worth the additional expense since these items will be with you for many years to come.
Doing things right the first time will help save money and future headaches. Hiring a professional pharmacy design firm is the best way to make sure your bases are covered and your project turns out a success. Here's to a bright future!