Dealing with numbers and figures are inevitable for every business in trade especially in pharmacy. At the end of the day, the bottom line figure is what that matters and determines the continuity/survival of a business. Everyone knows they need to improve their bottom line and see an increasing trend from year to year, but how do you do it? How do you know which areas you need to work on? The answers are all in your numbers, figures and in short your financial system. Being a pharmacy owner you are very busy and sometimes under tremendous amount of stress. Taking the time to actually understand financial data can become a very low priority on the list. Yes, you have engaged a bookkeeper/accountant to do the work. However, do you actually understand the data and what it’s telling you? Have you exploited this data to the fullest and used it to make sound business decisions? Does your bookkeeper or accountant actually understand the data and pharmacy to be able to provide you with the feedback you need? Have you asked enough questions about the accounts? At the end of the day you are the one that’s making business decisions, not your bookkeeper/accountant.
At Peak Strategies we look after many pharmacy accounts across WA. With this experience I see owners who are more proactive about their accounts and have more understanding of their numbers. Which mean they constantly outperform the ones who aren’t. You have heard us say before, good data results in good decisions. One very obvious reason is that star performers have good financial systems in place. This allows them to collect timely, quality data, perform meaningful analysis, and make sound business decisions.
So what’s the essence of a good financial system?
Collects good quality data
Rubbish in is rubbish out, so the quality of the data is vital. A good financial system should have mechanisms in place to verify the quality, validity and ensure the right data collected. The last thing you want is to make business decisions based on incorrect data.
The data collected is industry specific
Every industry is different and the financial accounts and system in place should be tailored specifically to that industry. There is many data specifics for the pharmacy industry. The specifics include script numbers, dispensary vs. retail sales and profit and so on. These should be collected and reported separately so proper analysis can be performed.
Measuring business performance
A good financial system will tell you how well your business is ACTUALLY performing, eliminating irrelevant information such as personal expenses. It will highlight good and poor performance areas so you’ll know what works well and what needs more work.
Analysing business cash flow
Cash flow is very important for pharmacy operation and is one of the key areas a many pharmacy owners are struggling with. Having a good financial system will allow you to be a bit more proactive about your accounts and future planning. In turn you will find ways to better monitor, and improve cash flow.
Analysing market trend and industry benchmarking
Accounts are prepared and presented in a way which allows comparison with the industry so you can constantly review how well your pharmacy is performing against industry benchmarks. It is vital you understand how you are performing against your peers. It is also vital you understand what areas you are lacking and to be able to talk to someone who understands your industry.
Business advices & Decision making
The person preparing your accounts on a day to day basis should be very experienced in your industry. They should have the necessary skills and expertise to run a sound financial system. This is so they can give you timely feedback on your business performance and provide advice on how to improve your business financially. This will form the basis for you to make sound decisions, knowing it’s backed up by quality data and advice from an expert.
If your current system in place tick all the points above, keep up the good work and continue to seek improvement. If not, are you doing accounts just for the sake of doing it?Maybe now it’s the time for you to make the change and be more proactive about it. We can help you implement proper sound financial systems that are accurate and efficient. We are extremely passionate about the pharmacy industry.