By Mike Jaczko & Max Beairsto
This is the final installment of our four part series of articles relating to what drives value in your pharmacy business and practice. Review other articles in the series here: part 1, part 2 and part 3.
#9: Facility, decorum and equipment condition
Although some buyers in the market focus almost entirely on numbers in their approach, it is important that you pay attention to the physical appearance and condition of your facility and equipment. This factor extends beyond the shelves, ceiling and floor, to the tidiness and cleanliness of work areas and your staff. Missteps can unintentionally leave an impression with the buyer that your internal workings and documentation are in similar disrepair. Ensure that you are investing in staff uniforms that are both department and position appropriate, and are fashionable. Use of name tags identifying positions such as registered pharmacy technician, clerk or even pharmacist provides a professional image to the patient or customer and removes any uncertainty in the customer’s mind.
Some owners become velocitized by their store and forget to view it through the eyes of their patients and customers. Removing clutter from the front of the store, clearing windows of material that blocks people from seeing in is important—as is removing those fossilized pieces of tape that invariably get missed. Fresh paint is an inexpensive way to create a professional new look, and do not forget to look up to see if the lights and ceiling are clean and free from danglers.
On a similar vein, the buyer will not discount your store based on what they perceive will be the capital cost of mending what has been neglected. In our first article in the series discussing growth and scalability, we noted that your facility should lead the buyer to believe that your business is scalable. Cluttered, packed and shoddy merchandising will discourage customers from exploring your aisles. Your dust-free shelves should impress upon buyers and customers alike that your product is fresh, clean and current.
#10: Audit risk reduction
We sound like a broken record when we mention risk, but it is risk mitigation that ultimately increases your value. This last driver of value is not entirely unique to pharmacy but is one notion that is overlooked by many buyers and sellers.
Audit risk comes in many forms: narcotic, third-party payer, tax and now, in some jurisdictions, in the form of professional service provision audits. We encourage you to create—or re-visit—your narcotic tracking procedures and documentation protocols for short-fill duration prescription authorizations. You should ensure you adequately document patient encounters when providing professional services and finally, in conjunction with your accountant, you need to assess your business for tax audit risk liabilities.
Mike Jaczko, BSc Phm, CIM® is a pharmacist by background, is a portfolio manager and partner of KJ Harrison, a Toronto-based private investment management firm serving individuals and families across Canada. For more information, email: firstname.lastname@example.org.
Max Beairsto, B.Sc. Pharm., MBA, CVA is a certified valuation analyst and business intermediary with Enterprise Valuators, an Edmonton-based valuation and business sales advisory firm. Their Pharmacy Edge division assists pharmacy entrepreneurs across the country needing transactional and valuation advice. For more information, email: email@example.com