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Business Trends

What’s my pharmacy worth?

What’s my pharmacy Worth?

What affects the value of my pharmacy?

As Pharmacy Accountants Miami, we have been preparing valuations of and answering the question, What’s my pharmacy worth? This is valuable information for pharmacies to be used when buying, selling and financing pharmacies. Even though each pharmacy business is unique, the concepts of a pharmacy valuation (What’s my pharmacy worth?) are similar.

As Pharmacy Accountants, we determine What’s my pharmacy worth? using one of several methods. Most commonly, valuations are determined by applying a multiple (a capitalisation rate) to the adjusted annual profit of the pharmacy.

A Capitalisation Rate is the desired rate of return that profit represents to the purchase price required to buy a pharmacy. It is best understood by the following formula:

Capitalisation Rate % = Annual Net Profit / Cost (or value) x 100

So the higher the value of a pharmacy, the lower the Capitalisation Rate % will be on the same Annual Net Profit.

Often it is easier to understand Capitalisation Rate % and how it determines a business value by converting it to its equivalent multiple of annual profit. This can be obtained by applying the following formula:

Cost (or value) = 100 / Capitalisation Rate % x Annual Net Profit

So a Capitalisation Rate of 20% = a Multiple of Annual Net Profit of 5 times. For example, valuing a business with a Capitalisation Rate of 20% of Annual Net Profit will determine a business value equal to 5 times its annual profit.

There are many factors which affect the Capitalization Rate and therefore What’s my pharmacy worth?. These include:

  • Demographics
  • Size
  • Location
  • Potential for growth
  • Competition
  • Proximity to Doctors
  • Opening hours
  • Staffing
  • Lease
  • Fit out

Demographics

The location of the pharmacy determines who your customers are and how often they shop at your business. Changing demographics can also affect the potential for growth in the business. For example, new housing subdivisions mean new people moving to your catchment area which should lead to increased sales.

Size

The turnover of the pharmacy can impact on its value, particularly as there are certain fixed costs of running an average sized pharmacy. The concept of economies of scale can be applied to a pharmacy business whereby the ratio of running costs (lease, utilities, wages, insurance etc) to gross turnover impact on the business’ value.

Location

The location of a pharmacy typically defines its type as either a medical centre pharmacy, shopping centre pharmacy or stand alone pharmacy. In each situation, the location and therefore the type of pharmacy is taken into consideration when valuing the business.

Potential for growth

In addition to the impact that location and changing demographics might have on a business, growth might be achieved through active measures such as training staff in retail selling, stocking products to suit customer demographics, such as mobility products, or employing specialist staff to service your market, such as a naturopath or baby nurse.

Competition

The concept of competition when determining What’s my pharmacy worth? goes further than identifying the number of competing pharmacies located within a given radius.

Competition must also take into account the number and type of businesses that are located near the pharmacy which also stock product lines that are not pharmacy specific.

Proximity to doctors

The proximity of a pharmacy to doctors can add value to a pharmacy. By being located beside a doctor’s practice or medical centre, a pharmacy can expect a significant number of patients to frequent their business. A pharmacy that is instead located even a block or two away from a medical practice will find customers will use other pharmacies for a variety of reasons.

Opening hours

A pharmacy’s opening hours can impact on its value in a number of ways. A pharmacy that has the same profit as another but has fewer opening hours is likely to have a higher value.

Staffing

The staff of a pharmacy affects the value of a pharmacy in several ways. They are essential for the business to open each day and operate. They also contribute to one of the larger cash outlays for the business. As a consequence, pharmacies that are overstaffed for both their size and turnover will find their value affected.

Lease

The lease is one of the most crucial factors on the valuation of a pharmacy business. The ability to continue to trade from your current premises is very important. Leases with significant periods until their expiration are more favourable to both banks and purchasers.

Leases with short timeframes until expiration add uncertainty to the pharmacy’s ability to renegotiate a new lease with suitable conditions. There are substantial costs involved in moving a pharmacy and so this needs to be factored into any value, if applicable.

Build out

The age and quality of a shop’s fit out is also an impacting factor. Old and tired fit outs mean that potentially in the short term funds will be required to redo the interior of the shop. Potential purchasers will consider this when assessing the value of a pharmacy.

 

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Business Trends

Pharmacy Accountants Miami

Pharmacy Accountants Miami

As a Pharmacy Accountants Miami, we serve an integral part of the community, providing detailed health and medicinal advice to the general public. Their health and well being are in your hands, so it is incredibly important that your business is equipped with all the necessary resources, products and amenities they need in order to fulfil your role and position. That’s why you need pharmacy accounting specialist and at Pharmacy Accountants Miami we have 25+ years of experience.

Why choose Pharmacy Accountants Miami

Whether you are an individual dispensary, a branch or belong to a multi-shop business, our committed team of specialist Pharmacy Accountants Miami can assist you in your business management, so you can focus on what matters most: supplying the public with the best possible healthcare service available.

At Pharmacy Accountants Miami we pride ourselves on taking a keen interest in you, and indeed your working environment and your future expansion potential too.

For this reason you can feel confident that our Pharmacy Accountants Miami will always keep you abreast of all the latest industry trends, government regulations and consumer demands to make your business stronger and more profitable.

We are pleased to be able to offer you the following services:

  • Strategic planning and budgeting
  • Benchmark your results against the industry and historical financials and statistics
  • Tax and superannuation planning (to help minimise and manage your tax)
  • Best options to capitalise on your current circumstances
  • Financing and purchasing a pharmacy
  • Interpreting industry and government agreements
  • Implementing P.O.S
  • Profit/loss reports
  • VAT
  • Payroll
  • Succession planning (including partnership structures)

As a small business, your pharmacy is exposed to many liabilities and taxing responsibilities. However, our Pharmacy Accountants Miami can quickly help alleviate this pressure, enabling you to focus on growing your business or even making the transition from pharmacy manager to company owner.

For many years now our Pharmacy Accountants Miami expertise has enabled us to harness the latest industry trends and integrate them into all our client relationships, and we can do the same for your business too.

 

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Business Trends

Pharmacy Accountants: What it takes to start your own business

Pharmacy Accountants: What it takes to start your own business

Pharmacy Accountants who think they want to launch their own business should not proceed unless they have a clear vision of their Pharmacy Accounting Firm’s purpose and a thorough understanding of what it really means to become an entrepreneur.

Those were among the main points made by a panel of Pharmacy Accountants Miami-turned-entrepreneurs during a round-table discussion recently at the AICPA’s E.D.G.E. Conference in Orlando, Fla. Speaking to an audience of young Pharmacy Accounting CPAs, the panel members emphasized that entrepreneurship is an extremely difficult endeavor that requires passion, persistence, and the right people in the right roles, starting at the top.

“Just because you’re a CPA doesn’t mean that you can run a firm that does Pharmacy Accounting work,” said Jason Blumer, CPA/CITP, managing shareholder of Blumer & Associates, a South Carolina-based Pharmacy Accountants Firm that provides Pharmacy Accounting and consulting services to “creative clients.”

During their discussion, the panelists covered a number of entrepreneurial pros, cons, and lessons learned. Here are the highlights, broken up by topic:

 A Pharmacy Accountant is a Business Owner First

Management and other Pharmacy Accountants Miami Firms looking to start their own company need to understand that entrepreneurs are business owners first and that they will do very little, if any, actual Pharmacy Accounting in their new role, the panelists said.

“Entrepreneurs get paid for what you own, what you do, and the risks you take,” said W. Michael Hsu, CPA, founder, and CEO of Florida-based DeepSky, an outsourced Bookkeeping Services Miami department for entrepreneurial companies with annual revenue of between $1 million and $10 million. “If you want to just do a job, you should go work for someone else.”

Or as Blumer put it: “If you love to do auditing, then don’t start your own company.”

Those who do start their own Bookkeeping Services Miami will need to hire others to perform the frontline work. Scott Price, CPA, managing director of A-lign CPAs, a Florida-based firm that specializes in Service Organization Control (SOC) audits, hired a Pharmacy Accountant from Ernst & Young to handle his firm’s methodology for doing audits.

“I’m not the best CPA in our firm or our best technician,” said Price, a former Arthur Andersen employee who founded his first company, SAS 70 Solutions, when Arthur Andersen went out of business in 2002. Price sold SAS 70 Solutions in 2009. Align is Price’s second entrepreneurial venture focused on auditing financial, information technology, and other controls at service providers such as data centers.

“I get excited about what we’re doing in the business,” Price said. “I love to inspire employees.”

For starters, a purpose

Entrepreneurs need more than excitement and inspiration to make their business work. The panelists emphasized the importance of having a well-defined niche and clear goals for their businesses.

Blumer, for example, said he wants the consulting work and business advice provided by his firm to “change people’s lives.” Hsu spoke of the need for Pharmacy Accountant to learn the language of business so they can translate their technical knowledge into advice business owners can use to grow their companies. Price established the first CPA firm in Miami in the niche he occupies now.

Of course, finding your niche is easier said than done. It took Hsu two years to find that his passion was working with entrepreneurs. Round-table moderator Donny Shimamoto, CPA/CITP, CGMA, founder and managing director of Hawaii-based consulting firm IntrapriseTechKnowlogies, said he believes that Pharmacy Accountants Miami can pursue their niche in their current jobs before looking to launch a company, though Blumer and Price expressed skepticism, with Blumer saying that it’s hard to pursue your own path in someone else’s company. Price said that it’s easy for people to use their current job as a crutch that keeps them from getting their business off the ground.

Hsu, who quit his job and drained his savings to start DeepSky, said prospective entrepreneurs might be better served to keep their current jobs, especially if they have a family to support, and work on building their company at night.

“You can do a lot of work from 7 p.m. to 2 a.m.,” said Hsu, who called night hours an ideal time to register a company, meet with other entrepreneurs, and get ready to open a business.

Struggle, stress, and support

Whatever the approach to launching the business, prospective entrepreneurs must be prepared for sacrifice and struggle. Price and Shimamoto, for example, both sold their houses to either start or grow their businesses. Hsu didn’t take a salary for nearly two years.

“Being an entrepreneur is harder than being a CPA,” Blumer said. “You screw up a lot more.”

For many, launching a business is a crusade that consumes enormous amounts of time and energy while exposing entrepreneurs to financial, mental, and emotional stresses.

“If you want work/life balance, don’t start a company,” Hsu said.

Those considering a foray into the entrepreneurial realm should seek out business owners, whether in CEO groups or individually, who can provide advice and encouragement.

“Starting a CPA firm in Miami is hard,” Blumer said. “You need a coach.”

A mentor told Hsu that his company shouldn’t be his life; it should make his life better. Entrepreneurs must prioritize family, friends, and other relationships and activities that provide rejuvenation and relaxation—not an easy task when you are under pressure to meet payroll.

“There is a lot of responsibility when employees are depending on you,” Price said. “But you have to set priorities.”

One way Price has done that is to construct barriers between his home life and his work life. For example, he never travels on Tuesday nights. On those nights, he will be home with this family. “No exceptions,” he said.

Employee essentials

All of the panelists emphasized the importance of employing the right people. To do that, entrepreneurs must be willing to hire people smarter than them, Price said.

“I want to be the dumbest guy in the firm,” he said. “I want to hire smart people, an all-star team.”

To do that, employers must have a system for finding the right people. Blumer’s hiring process is designed to identify self-starters who will thrive in the results-only work environment (ROWE) he has established at Blumer & Associates. His employees all work remotely and are not required to work a set schedule or fill out a time sheet. It’s the results that matter, he said, not the time worked.

That sentiment is shared by Hsu and Price, whose firms also do not track employees’ time.

“We hire adults,” Price said. “They understand they need to get the job done.”

Still, entrepreneurs must accept that not everyone is as driven as they are, Price said. Instead, business owners should strive to learn what their employees enjoy—and excel at—doing. Management should talk to employees about their goals, both at work and in their personal lives.

“If they want to learn guitar, ask how that’s going,” Price said. “That builds rapport.”

Strong relationships can help entrepreneurs place workers in the roles most beneficial to the business and to each employee. Employers then can design reward and compensation structures that work best for each employee, Price said.

For example, Hsu said, flexible schedules, work/life balance, and corporate purposes are emerging as major motivators among younger members of the workforce.

“Employees are willing to work less for less pay,” Hsu said. “They learn extremely fast and want to know how the firm is changing the world.”

These younger, idealistic workers are merging into a melting pot of people who hold a variety of views on what they value in their professional lives. Employers must recognize those differences and adjust their policies accordingly, Hsu said.

“Not everyone wants to be managed the same way,” Hsu said. “ROWE works for some employees, but others want their hand held and to work 9 to 5. There’s nothing wrong with that.”

Blumer, meanwhile, takes a different approach. He demands that his employees believe in the firm’s mission and mindset. To accomplish that, his firm relies on an intense hiring process that can last as long as three months. The goal, Blumer said, is to “weed out” job candidates not suited for the Blumer culture.

“If you want an entrepreneurial CPA firm in Miami, you need to hire the right people,” Blumer said.

 

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Accounting

A Simple Business Plan for Small Business Accountants Miami

A Simple Business Plan for Small Business Accountants Miami

It’s doubtful that no two words in a Small Business Accountants Miami vocabulary are procrastinated over more than these two: “Business Planning”.

This simple phrase can conjure up visions of being hunkered down over a desk trying to justify, forecast, number-crunch and ultimately wrestle with the current state of your Accountants Miami Firm compared with where you want it to be five or ten years down the line.

But the business planning process doesn’t have to start and end this way.

If you really want to succeed at lets say a Accountants Miami Firm, as in life, planning should be part of everything you do, and, it never stops.

Just think about the simple act of hitting the road to attend a business meeting across state. You may not be conscious of this fact, but you have already undertaken a series of planning steps and adopted precautionary measures to ensure you arrive at your destination safely and on time.

Over time, this might mean you have invested in a number of available GPS navigation tools, roadside support options, and insurance policies, that will help you plan for each car journey and prepare for the obstacles that you may encounter on the way.

For many Accountants Miami, start-ups and other entrepreneurs – the business planning process isn’t actually a whole lot different. And, while it’s unlikely that you would start a car journey with an encyclopedic-sized travel plan at your side, neither is it absolutely necessary to have a 100 page business plan to steer your Small Business Accounting Business towards its long term goals.

Keep it Simple Stupid (KISS)

Whether you are a Accountants Miami, a home-based business, or have your sights set on Main Street, you want to ensure you scale your plan to your business needs. This includes understanding your market, having a clear view of your capital needs, your budget and cash flow, and, just as you would when you get behind the wheel, list some basic assumptions about where your Accountants Miami is now and where you want it to go, and of course, what is it going to take to get you there.

For a Accountants Miami or home-based business, this might be as simple as having a goal to expand you client base from two to six by the end of the year, and having a plan to do so. The plan might include networking, building up a referral base, creating a professional web site and starting a blog.  And as your business grows, your plans and benchmarks will grow accordingly.

Break Up Your Plan into Mini-Plans

While a strategic business plan is essential, you also need to break up the planning process across the different functions of your business. You need “mini plans” for all areas of you business, that you visit monthly, if not weekly.