#phuturist

I have lately been thinking about what has or has not been successful with my businesses and others that I have followed - not just pharmacy. I have owned four pharmacies now, sold three and am looking at buying another soon. How have I done it? Rich daddy - ahh no. By thinking outside the box - sometimes. By being in the game and not sitting on the fence - hell yes.

The first caveat I would suggest for young pharmacists wanting to compete with every other pharmacist who wants to own a community pharmacy is that you need a love of your profession and desire to get your hands dirty.

You won't get a Ferrari or a new house in the first year that you take over

You will work your arse off, usually for less money than you made as a salaried pharmacist

You will have ups and you will have downs

You will have to work weekends and late nights - sometimes in the business and sometimes on the business

The thing that will keep you going will be your desire and a love/affection for what you do as a professional. If you are doing it with the short term view of simply making money or buying yourself a wage - then stick with your current job or re-train. You will suck at being an owner.

Too often I hear young pharmacists telling me that it is too hard to buy into a pharmacy, but when I ask them if they have spoken to their boss or the owner about a partnership or taking the business over - they all say no, I haven't had that conversation, or if they have, it is usually without a plan in mind.

People need to know that you want it. They are not mind readers and are probably busy with their own stuff to worry about yours.

Don't wait to be asked, it rarely happens.

My group, Capital Chemist, has been good to me. They have supported me and allowed me to do things I thought I never would - they also took a few hits for me along the way. But first I had to put up my hand and say I wanted the responsibility. Ignorance is bliss when you are young, I bought my first two pharmacies within 6 months of each other - I had left the army and set out traveling and after a period of almost 3 years traveling around the world and making my chops in hospitals, large chains in the UK and working for various pharmacy organisations - I bit the bullet and approached the local pharmacist about selling her shop - the local pharmacy in my suburb.

I bought my first shop for a little over $300,000 - at the time strip pharmacies had a 22% capitalisation rate, so it was delivering about $66,000 in net profit a year. I had to come up with a plan to purchase it because I had done my maths (highly recommended BEFORE you commit to it) and found that the $50,000 I had scraped together by working my arse off in the preceding 7 years was not going to provide enough capital and cash flow for my first few months of trading - let alone convince the bank that a loan was in order, or cover my opening stock, wages and so on.

So what did I do?

I sat outside the pharmacy (near my parents house and where I was spongeing off my Dad after returning from my trip) and contemplated what I wanted. I had a burgeoning career as a clinical pharmacist at the local hospital but apart from the stimulation of being clinically relevant - I found it boring - no offence to hospital pharmacy, it is a great career but just not for me. I knew the area as I had grown up there, I also knew the pharmacist (who was also the local leader of the government) who had owned the pharmacy for the time that I had grown up there. Apart from my analytical assessment of the pharmacy - I liked the area, knew my potential patients personally and wanted to get my hands dirty working in business.

So I did some more in depth research. I annoyed the local shop keepers about what the local conditions were like - really like - and to verify counted their customers over a day and estimated their purchases. What was the business outlook. Was there growth, if so how much, if not why not. Then I came across something interesting - something that hadn't come to light in the research period of a month or more - the manager of the shop wanted to retire. His timeline was pretty soon and I knew that the owner wouldn't step back into the business and live pharmacists at the time were hard to come by.

It was my chance, my leverage.

I spoke to the manager and asked if he had spoken to the owner about leaving (to ensure I didn't breach a confidence) and made sure it was OK for me to speak about it. He had, and it was - so I called the owner and arranged a catch up.

Before we caught up I had hatched a cunning plan (Baldrick style) and went about lining up the bits that would hopefully make my pitch, and it was a pitch, compelling.

She and I met for a coffee and I asked her if I could lay out a plan. She said sure, go for it, but there was an air of "whatever".

I asked her for vendor finance.That is, she would be the bank.

She and I would draw up a finance contract, using a third party and agree to the terms including interest (we used the 90 day bank bill rate) and when I would roll over the loan to a bank or other financier and pay out the loan. The vendor finance would be principle and interest (to give her some small upside while waiting for the lump sum payout) and I had 3 years to complete the full transaction. I had also arranged insurance to make sure that if I got hit by a bus, or was a crap manager, her risk was massively minimised as the loan amount would be paid out in full.

Once I had finished with my pitch I could tell she was a little apprehensive - but the ace in the hole was the manager's pending retirement. I had amortised the risk to being almost negligible, defined her exit and allowed a moderate cash flow over the 3 years to sweeten the deal, but a cashflow that wouldn't cripple me.

The deal was done that day with a handshake. I had secured my first pharmacy, not by my Dad mortgaging the family home, not by me having to enter some moral hazard or using some other nefarious means. I had thought a little outside the box and found a tipping point.

I can hear a lot of people who might read this saying "Right time!". "Right place". "Unique circumstances!". Really it was using up good old shoe leather making sure I knew everything I could possibly know, doing my research and obviously a little bit of luck. However, the key was finding the solution to the loan problem - the other stuff merely allowed the pitch to develop and me to have the keys to a deal.

The point is that none of this would have happened if I didn't get in the game. It seems easier to sit back and say it is all too hard, or point to the successful person and say they must know or have something you don't.I could have gone back to the hospital monday and spent the next 3 or 5 years saving up more money for the dream - but of course the dream would have moved on at CPI or more during that time...