It is quite a significant moment when you give the next generation of pharmacists the opportunity to get into business ownership. I don’t think anyone would forget their first opportunity many years ago. It is the start of the next exciting journey in their career. As the senior partner, you get the privilege and honour of mentoring them, and imparting your knowledge that has led you to being successful.
The reasons for bringing on a business partner can be varied, but the common reasons are:
You need help running the business.
You want to take a step back and slow down.
You want to introduce new skill sets and new ideas into business.
You have opportunities to buy or start another pharmacy and need someone to help.
You already own multiple pharmacies and are struggling to manage them properly.
You have an excellent pharmacist manager who you want to “lock in”.
Owning a second pharmacy can be tough for just one owner. One pharmacy is okay when you are working there and have full knowledge of every intricate detail. Plus, you are “only” managing 5, 10, 15 or so team members.
When you have multiple stores, you don’t have the same capacity to control everything like you can with one. And all of a sudden, you have double the number of team to manage, double the admin, double the responsibility, double the issues, double the stress, and only being half as effective as before. It is not easy, so bringing in a partner is the logical decision to make.
If you are thinking of bringing in a partner, I have highlighted some issues you need to consider…
Is the pie big enough to divide up? The pie must be big enough to make it worthwhile. No pharmacist wants to have the responsibility, long hours, debt, and stress of running a business only to make the same, or less, than a pharmacist employee.
This is a common mistake. You don’t really need a partner. You just need more capable senior staff members. If the business is not producing significant profit, then find, train, and pay for better senior team members.
2. Internal Partner Recruitment - Your search for a partner begins years before you are wanting one. Talent identification is a critical skill as an owner. You need to have an eye open for those pharmacists who may “have what it takes” to be a good owner.
Identifying those talented individuals, mentoring, growing and keeping them, should be a prime focus of your ownership and leadership. Always have an eye open for the best So, when an opportunity presents itself, you have the capacity to pounce.
3. External Partner Recruitment – If you don’t have anyone in the team who is capable, or who wants to be a pharmacy owner, then obviously the search for an external person becomes the focus. This has a fair degree of risk attached to it. A marriage without a courtship.
Business partnerships can be difficult at the best of times, so this avenue can be particularly risky. Clearly you need to have a good period of time of working with the new pharmacist to see if you can both get on with each other, before you commit. At least 6 months. It gives the pharmacist the chance to understand you, the team and the business better, as well as understand where the opportunities for growth are.
It gives you the chance to see what this person is like, what their inherent leadership style is like, are they trainable, and do they have to requisite skill set you desire in an owner. Give it time and do not rush the process. I would also suggest you take the pharmacist through an apprenticeship, which leads me to my next point.
4. Business Owner Apprenticeships – Whether you are recruiting a partner internally, or externally, I would suggest you take the pharmacist through an ownership apprenticeship. Put them in the position, with the authority, with the decision-making powers and responsibilities to see how they perform. Show them the KPI’s they are accountable for. An employee-employer relationship is potentially more easily breakable than a partnership. I have seen this done with a few clients and it works well. They need to demonstrate their leadership qualities, to manage a team, manage customers and manage a store.
5. Expectations – Be clear with the new partner what the expectations are. Noting business ownership is 7 days a week, 24 hours day. A sick day or holiday is still an “on duty” day. It is not a 9 to 5 job and then you switch off.
Make sure you both are clear about what is expected of both parties. Who is responsible for what? An example of this could be for working partners in regional settings. It could be an expectation that as a working partner they are required to reside in the town. What happens if they then decide to relocate? It creates significant issues for the business.
6. Succession Planning & Goal Alignment – If you have both decided to go into partnership together, it is important you are both clear about what your future goals are. Issues like family, childhood education, health, retirement, and future equity changes. It is clear both partners discuss and express their own individual goals.
For example, the junior partner doesn’t necessarily want to stay on a minor percentage forever. The senior partner will also want to extract their equity out of the business at some stage as well. What are the timing points for the junior partner to acquire more? How will the business value be determined at the time?
7. Other Succession Events – What if a partner is mentally or physically incapacitated? What if a partner is convicted of a criminal offense? What if a partner passes away? What if a partner is no longer allowed to practice as a pharmacist? These are significant events, which need discussion early on and agree what the process will be.
With careful thought, bringing in a partner is an exciting time for everyone. It is a great honour to be able to mentor and guide a pharmacist making their first entry into business ownership. The focus of course must be on business success and protecting the business.
Peak is happy to assist you in this process. Pharmacy partnership and succession is a focus for our business.
If you would like to learn more about our Pharmacy Succession Program please click here or book an appointment with John below.
