The best time to start was yesterday. The next best time to start is NOW.
The first 9 months of 2020 weren’t exactly what we all planned for. If you are like me, many of your KPI goals have gone out the window. I remember at the beginning of the year, all the chatter around this was going to be an incredible year because all of the holidays landed on weekends (Hello! Friday Valentine’s Day, and Saturday Halloween), and it was an Olympic year. There was just going to be something magical about 2020. We all know it didn’t quite go like we wanted it to.
Perhaps you had big plans to start compounding, hire a marketer, teach some patient classes, or start weight loss consulting or one of another thousand ideas. Consequently, those all got sidetracked as the world grew a pandemic, and you became front-line heroes. So, let’s START OVER!
October Is The New January
I am declaring October is the new January here and now. Time to set your KPI goals, then make a plan, so you can kick a$$ and grow your pharmacy into your dream business. DiversifyRx is here to help you get the knowledge you need and access to the best resources from around the industry, all for free. Not free just for now, or free until the end of the year, but free forever. Most importantly, the whole team here at DiversifyRx is committed to helping you reach your goals.
What Are Your KPI Goals?
Not sure what you need to focus on? You are not alone. Every day, I hear from pharmacy owners that they aren’t sure how to prioritize all of the changes they know need to happen.
Confession Time – I Am A Data Nerd
I love numbers. I love comparing my numbers to other owners’ numbers. And most importantly, I love seeing my numbers improve. Let’s face it, it’s hard to stay on top of these numbers regularly, even for a number nerd like me. I use a sophisticated yet easy to maintain spreadsheet to keep track of my numbers and KPI goals. I am currently cleaning this file up to share it with you and post it in our Facebook group page. To be notified when it’s ready, visit the group page and request to join. After being accepted, you will get notifications from the group, including when I have uploaded this file. That’s it.
Knowing your KPIs and how they compare to where you want to be will allow you to make smarter, smaller KPI goals that will lead you to your ultimate goal. For instance, if you have cash flow worries, there are several KPIs you should be tracking and improving, such as inventory turns, payroll ratio, and days of cash on hand. With the soon-to-be-released spreadsheet, you wouldn’t have to know this. You could just select cash flow, and you will see the most critical KPIs for cash flow, and then you can focus on improving those.
A Few Of My Favorite KPIs Right Now
I have been relentlessly focused on cash flow and improving margins lately. Here are just a few KPIs you can begin to track in your pharmacy.
- Inventory Turns
- Goal: 20 or more
- Calculate: Annualized COGS divided by your current inventory value
- Average Gross Profit Per Script
- Goal: High as you can, minimum $16 and ideally $22 or higher
- Calculate: Total gross margin dollars divided by number of scripts
- Expense Ratio
- Goal: low as you can without sacrificing services, < 18%
- Calculate: Total expense dollars divided by total revenue dollars
- Net Income Percentage
- Goal: high as you can, > 5%
- Calculate: Total net income dollars divided by total revenue dollars
Persevere, My Friend, You Can Make It Better
Most importantly, once you have your goal, share it!
Let your team know.
Let your friends know.
Let your family know.
Let your fellow pharmacy owners know.
Let your dog know.
Seriously, tell everyone.
Why? For accountability, support, and shortcuts. By putting your KPI goals out there, you will be creating a support structure that will keep you on track. Similarly, you can buddy up with a pharmacy owner to have weekly calls with one another to go over your KPI goal progress. This can be business changing. Heck! Life-changing.
Moreover, you are not the only pharmacy owner that has the same goals. There are thousands of us out there. Someone had done it before and failed and succeeded. Learn from them. Find out what worked, what didn’t work, and how you can avoid falling into the same potholes.
Discover Some Support Groups
One of the best places to find support from fellow pharmacy owners is on Facebook. I am sure that is not what Zuckerberg had in mind, but it sure is great for learning from others. Here are just a few fabulous groups that you can join to start building that support structure.
- Independent Pharmacy Owners Learning From Each Other
- Independent Pharmacy Accounting Forum
- Independent Pharmacy Owners
To find other groups, just go to Facebook and search in groups with keywords such as pharmacy, independent pharmacy, or pharmacy marketing. Creating accountability and support can be the difference between succeeding or struggling.
Join me in declaring October the new January and set your resolutions and start fresh. Shed the memory of the last several months and take the steps now so you can have a thriving, profitable, less-stressful pharmacy.
To learn what other pharmacies are doing to diversify their revenue into service-based (non-PBM!) clinical revenue, be sure to read our 3 Easy Strategies To Grow Your Clinical Revenue Blog.