In recent months, we have seen a lot of activity in pharmacy ownership changes. Some of these have been outright purchases but the majority of these have been partnership buy-ins. Our last few blogs have had a strong focus on partnerships from the perspective of the existing owner. Today this blog is going to focus on the incoming partner and the emotional roller coaster of the first stages of buying a business.
You might ask yourself why is this important? October is Mental Health Awareness month and buying a business is certainly one of those lifechanging events that can have a big impact on you and your family.
Our personal experiences as mentors and as business owners means we know how real this is. We have lived through these issues and seen other people face these challenges too.
The stress and pressure of business ownership can lead to problems at home.
In our experience, people don’t predict or plan for this enough. Preparing for this impact doesn’t appear in a business plan, but we say it should!
The key is to prepare yourself and your support network as you don’t want to be surprised.
The effect of owning a business may be positive, negative or neutral, but those relationships will change.
First off, well done for taking the first step and making the mental decision to consider buying a business. Not everyone has the stomach for running their own business, but there comes a time in your career where you question the possibility of owning a business. While a traditional job can also be quite challenging, it’s structured and predictable. You can plan your life around a regular pay cheque, regular hours and holidays. On the other hand, some people need the freedom of business ownership. It’s more of an adventure. There’s risk, adversity, and the chance of enormous financial gains – or nothing at all.
Not every pharmacist is going to be a business owner, certainly not every pharmacist WANTS to be a business owner and that’s ok; however, being in the right frame of mind when you take that leap of faith is very important. The initial choice to purchase is largely motivated by the emotional desire to better your circumstances.
Clients often know they want to buy a business and while everyone has their individual reasons. What we can’t stress enough is that buying a business is a delicate balance between logic and emotion.
Buying a business, whether 5% or 100% is not going to be easy. As you go along the journey of buying and then running a business, you are going to feel like you are taking a hit from every direction and the more issues you face, you will get better at riding this emotional rollercoaster of business ownership.
How you deal with the ups and downs of this rollercoaster will define your ownership journey and determine how much fun the ride will be.
You can have the best advisors (accountants, lawyers, financiers etc) within your A team and they will be extremely supportive. However, more times than not, it is your support network (significant other and family) that will be there in the good times but also the dark times. Don’t forget they are usually the reason you are considering this journey and they should be involved in this journey at every stage.
All too often, we have seen pharmacists go through the process of considering ownership, meeting their A team, making an offer and the sale falling through at the last minute because the support network doesn’t understand the mechanics of the transaction, the financing arrangements, or the viability of the business.
One of the critical steps to the process, in our experience, is to involve your support network in all the conversations relating to the purchase.
At Peak we like to have an initial meeting with the buyer and their support network. For us, as much as the numbers are important, what is even more important is understanding the motivation for the buyers. Often times, this meeting opens the eyes of the support network to understand the reasons themselves (it is surprising how much we assume our networks know why we do things).
The questions raised by the support network may seem insulting – a question of your judgement. However, they may force you to consider issues which you hadn’t thought of yet, which are critical to your family and the goals you are working toward.
The next step is to undertake a feasibility analysis, this should be done in consultation with the buyer and their support network. Clients often know they want to buy a business, while everyone has their individual reasons, certainly controlling your own destiny, making more money, having the opportunity to improve your quality of life, and helping others, are just a few of the common reasons. These are all things that most people hope to achieve but what they don’t know is:
What is the right percentage to buy in?
How much can they borrow?
What security do they require?
What deposit do they need?
What will their cashflow be like once they become an owner?
What does it take to make the switch from employee to owner?
What does it mean to be a partner?
Is this the right business to buy?
Is this the right partner to buy in with?
By undertaking the feasibility analysis, we can begin to provide some guidance and some answers to our buyers. The feasibility is also important to ensure that clients understand that going into business at the right percentage should result in an improvement to their lifestyle and overall financial growth over time. It is important for us to make sure our clients are armed and mentally ready to take on the role of business owner.
When we have got past this stage, the hard work begins to coordinate all the moving parts of the transaction to get to the settlement date.
Once you have settled your partnership purchase, the need for your support network does not stop. I’m not going to sugar coat it - business ownership is hard. It takes blood, sweat and tears and not always in that order. Even when you get to the point of thinking things are going ok something will come along to make you feel like you’re back to square one. So, having a plan for your mental health is just as important as the financial plan!
From my own experience, your support network is going to be critical here, they are the first ones that will feel the benefits of all your successes, equally they will be the first ones to bear the brunt of the tough days. It is all too easy to shut down with your network and bottle in your worries. Please don’t! Please reach out to your A team to get some help. It’s definitely a lot easier said than done, I agree but absolutely essential to your personal and financial success.
For those who may have started their journey into pharmacy partnership and are feeling the pressure both financially and emotionally, our team are here to help.
Our Mastermind program not only addresses the financial side of the business but we have a strong focus on lifestyle. We help you to create systems and procedures that allow you to have the lifestyle you want for yourself and your family.
Learn more about Mastermind here.
Written by Priya Narsing.
