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Common Questions

Common Questions

There’s a lot to consider when starting your own pharmacy – so we outlined these 10 steps to help prepare you for the journey. After a quick overview of some common questions, we’ll get into our detailed step-by-step guide on How to Open a Pharmacy.

Who is Ownership For?
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How long does it take to open a pharmacy?
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How much does it cost to open a pharmacy?
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How do pharmacies make money?
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Your target market will determine which additional services or specialty products you choose to offer. See Market Research for more information on determining your customer base.

How to Open a Pharmacy

Your Step-by-Step Guide

Step 1

Step 1

Consult Advisors & Mentors

Illustration of Pharmacist working with counselor

As an entrepreneur, you are in business for yourself, not by yourself. It is important to talk to industry professionals and seek wisdom from those who have already started their own pharmacy.

Now is the time to consult (and possibly hire) the following professionals:

  • Accountant / Financial Advisor
  • Insurance Agent
  • Legal Counsel
  • Industry Mentors & Thought Leaders
  • Established Pharmacy Owners

Step 2

Step 2

Research and Planning

Illustration of pharmacist doing research on computer

If you fail to plan, you plan to fail. Is it still a cliché if it’s true?

Adequate research and a detailed plan are necessary to start your own business. Unfortunately, there is no crystal ball to tell you whether your investment will pay off. It is your responsibility to ensure that your pharmacy will be profitable and beneficial to your community.

Those dedicated enough to perform their due diligence look at several indicators of success -

Market Research

In order to serve your customers, you have to know who they are and where to find them. Conducting market research uncovers several consumer insights including demographics, psychographics, traffic patterns, and more. When looking at potential neighborhoods, consider the healthcare needs of the residents. Are you servicing an older community?
Or perhaps one with an abundance of new families and children? Differentiate your store by specializing in your community’s needs, whether it be geriatrics, pediatrics, pregnancy, sports health, active lifestyle, etc. Remember, big chains already sell to everyone. How can you serve your community?

Positioning

Market research will help you determine your best location options.

Below are a few questions to guide the direction of your research:

  • Are there other pharmacies around?
  • Is there a sufficient prescription base in this area?
  • Is this area heavily trafficked?
  • Does this specific location provide visibility and accessibility?
  • Is this location the appropriate size to both operate and grow?

Financial Projections

Revenues, expenses, and free cash flow projections are the first glimpse into your pharmacy’s financial health. If you do not have a solid background in accounting, we highly recommend consulting an accountant for these projections.

Opening a pharmacy will cost on average $400,000 to $600,000.

You must realistically determine how you will obtain that financial capital using one or a combination of the following options:

  • Personal Investment
  • Financing
  • Partnership

Keep in mind that it may take several months after opening your doors to begin generating profit. Liquidity is key in your first year of business to ensure you do not run into any cash flow problems.

Create a Business Plan:

Your business plan should include enough detail for readers to capture the entire scope of your business, but concise enough to read in one sitting. Refer to the U.S. Small Business Administration for more guidance in writing your business plan.

Executive Summary
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Business Description
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Competitive Analysis
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Market Strategies
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Operation and Management Plans
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Financial Projections
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Appendix
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Step 3

Step 3

Legal and Operational Requirements

Illustration of elements symbolizing legal requirements

Choosing the type of business structure you want for your pharmacy depends on the amount of legal liability you desire, tax liability, and how much you are willing to spend on ongoing costs of formation and administration, according to Entrepreneur. There are four common types of companies you can classify your pharmacy as:

Sole Proprietorship
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General Partnership
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Corporation ("S" or "C")
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Limited Liability Company (LLC)
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Legal requirements will vary by state and by business structure, but the following are general guidelines to ensure smooth operations. For more information, visit Harbor Compliance Pharmacy Licensing or search requirements from your state’s Board of Pharmacy. Researching legal requirements is an important step in learning how to open a pharmacy, and you want to ensure that you have everything properly set-up before opening your business.

Licenses

  • State Board of Pharmacy Permit
  • Drug Enforcement Administration (DEA) Number
  • National Provider Identifier (NPI) Number
  • National Association of Boards of Pharmacy (NABP) Number
  • Employer Identification Number (EIN)

Taxes

Before you begin operations, contact your federal, state, and local taxing authorities to set up the following accounts:

  • Federal Tax ID Number
  • State Tax ID Number
  • Payroll Tax Account
  • Property Tax Accounts
  • Sales Tax Accounts

Insurance

Insurance protects your pharmacy from liability in the event of a lawsuit. It is also necessary in order to engage in most contracts and practice agreements. Contact your local insurance broker to create a policy that is best for your pharmacy.

Health Plan Agreements

Developing both public and private health plan agreements ensure that your pharmacy is competitive and accessible to the community. Consider joining a Professional Services Administration Organization to better negotiate the terms of these contracts.

Step 4

Step 4

Obtain a Business Bank Account & Startup Capital

Illustration of bank and money

Mark BonDurant of Independent Rx Consulting has coached dozens of independent pharmacies through this process, and he notes a few realities of the financial aspect of ownership:

  • Pharmacies can be a large financial risk, so acquiring a loan from a bank may be difficult. (View PioneerRx approved financing partners)
  • It typically costs $400,000 – $600,000 to open your own pharmacy.
  • The average monthly operating expenses for a pharmacy total around $30,000. As a new pharmacy establishes itself, it may not be able to fill enough volume to pay the operating costs each month. This requires patience as your client base expands.

Ready to Open a Pharmacy?

Step 5

Step 5

Select and Design Store

Illustration of pharmacist designing and setting up his store

Choose Your Location

Great amounts of research will go into selecting the perfect store location, whether you choose to rent, buy, or build. Visibility and accessibility of the store will be critical to ensure you get the most amount of traffic possible. You may consider setting up shop near a large chain pharmacy- take advantage of the extensive research they have done to identify the optimal locations. Also, you may have the opportunity to attract some of their customers and show what unique services you have to offer.

Once you have made your decision, it is now time to make the financial transaction and officially call the store your own. Make sure that you have all of the proper licenses and insurance required for owning or leasing property.

Design and Layout

Designing the inside of your store is almost as important as selecting the physical location. Depending on the location you choose, you may have a lot of input or you may have no freedom to make design changes.

Optimize Your Workflow

  • Cut out any unnecessary steps in the workflow
  • Make sure that your staff can work comfortably behind the counter, yet still keep everything within easy reach
  • Allocate a space for each of the stations in your workflow
  • Keep in mind any additional services you may need space to incorporate, such as a drive-through window

Strengthen Your Front End  

  • Develop an easily navigable space and inviting atmosphere- you want your customers to feel at home
  • Visit other pharmacies and take note of which front end products are grouped together, how people walk through the store (for aisle positioning), and the use of window and aisle displays
  • Create a front end experience that  promotes impulse purchases and welcomes patients to the pharmacy counter
  • Build a layout that is ADA compliant
  • Take this to the next level by creating a universal design. This is a technique that creates a space that can be used to the greatest possible extent by the most diverse amount of people. All components are chosen to be the least restrictive option and reduce the need for any special modifications. Building your store with universal design in mind will give you the most beneficial space possible, and refrain from excluding any of your customers.

Step 6

Step 6

Hire and Train Employees

Illustration of pharmacist training employees on a table

Build the Right Team

Hiring the right employees is an investment in the success of your business. It is important to establish a well-thought-out hiring process from the beginning and be consistent in your search. By picking and training the best team from the start, you can prevent a high turnover rate and retain your employees.

Write an employee manual that outlines both job descriptions and your pharmacy’s values, policies, and procedures. Because you are starting from scratch, you have the exciting privilege of creating your own company culture. You want to find people who will thrive in that culture. Beyond initial qualifications, look for candidates who share your values and passion for independent pharmacy. These individuals are responsible for your store’s success by engaging the community and turning them into loyal customers.

The size of your pharmacy will determine the number of individuals you hire. At the very minimum, you need to have a Licensed Pharmacist and Technician at your store. You may decide to hire more than one of each initially or in the future.

Empower Your Team

Once you have selected your team, lead them through a detailed training process that outlines a clear task hierarchy. Make sure to touch on ongoing tasks that can be done when the main work is finished- this will increase efficiency by making sure your staff is always keeping busy. Keep in mind that training is not a “one-time” event. You should be continuously educating your staff and refreshing their skills to stay up-to-date.

Taking time for open, two-way communication about each individual’s performance will make your staff feel appreciated and also give them pointers on how to improve. Establishing trust and creating an environment where your staff is comfortable asking questions will go a long way towards empowering your team. A good tactic to consider is continuous performance management intead of the typical annual review which leaves gaps in feedback.

Motivate your employees even further by challenging and rewarding them. If they have been chosen as a part of your team, they will have the passion to actually make a difference in the community. Keeping an encouraging work environment that promotes growth will instill the right values and set your team up for success.

Step 7

Step 7

Purchase Inventory and Supplies

Illustration of boxes and pills on a counter top

Starting your own pharmacy is just like buying your first home – once you purchase it, you need to get everything that goes inside. This can seem overwhelming, but connecting with the right partners and resources will make your life easier and provide you with the best options for your pharmacy.

Medications

Your partnership with your wholesaler will directly affect your profitability. Building a strong relationship will go a long way in ensuring a stable, reliable inventory. When choosing a wholesaler, think about their proximity to your store, delivery schedules, and billing cycles. Other factors to consider are cost, customer service, products available for sale, and any discounts/incentives they may offer. If you join a PSAO, they typically provide guidance and contracting services to help you select a wholesaler that best fits your pharmacy’s needs.

Sometimes it may be necessary for a pharmacy to rely on multiple wholesalers. This could be due to price changes or availability of items. With PioneerRx, the software is equipped to automatically compare providers and manage inventory orders based on the current information available.

Technology

"I think we're at the beginning of a revitalization for community pharmacy...and what we need in our software vendor is someone that has no boundaries in what they can help us accomplish...And PioneerRx fits that mold."
— Thad Schumacher
PioneerRx User

Having the right tools and technology in your pharmacy allows you to innovate your workflow, gain loyal customers, and allocate time and resources efficiently. When opening a new independent pharmacy and selecting your pharmacy management system, it is vital to find a system that will grow with you. Think about where you see your business 5, 10, 15 years down the road. Will your pharmacy system be able to keep up? Make sure to also consider what features are included vs. what are add-ons. Are you going to spend even more money buying all the necessities for your system?

PioneerRx pharmacy software is the #1 software chosen by independent pharmacists to open their new stores with. Let us show you our passion for saving and revitalizing independent pharmacy and explore our full list of pharmacy features.

To further optimize your pharmacy system, you may decide to incorporate additional technology. Our mobile apps give you the flexibility to bring your workstation with you anywhere in the pharmacy – or outside of the pharmacy! Choose from valuable additions like HIPAA-Compliant 2-Way Messaging, Mobile Refills, Patient Counseling, Mobile Delivery, Drive-Thru, and Mobile Inventory. PioneerRx also partners with around 70 technology vendors to provide products that integrate seamlessly with our software. From automation to inventory to IVR and more, we connect you with the tools you need to take your pharmacy to the next level.

Step 8

Step 8

Marketing

Illustration of computer and bullhorn with graphs

Every small business budget, no matter how limited, needs a line for marketing. Loyal customers are formed through trust, and how can customers trust you if they don’t know you exist? Your marketing effort will slowly build over time, but there are a few key areas to start thinking about from the start:

Build Your Online Presence

When you are trying to find out more about a business, where do you usually start? Most people immediately look online to find a website with more information. In today’s market, having a website is crucial for becoming a key contender in the competition. Again, this can start off very simple and progressively expand alongside your growing business.  You may also consider utilizing social media platforms such as Facebook, Twitter, and Instagram. Getting the word out there and creating a brand image will establish your pharmacy’s credibility and outreach potential. Make sure that your branding is easily recognizable and cohesive across all platforms.

Provide Value

As an independent pharmacy, you already have the potential for a niche value that can set you apart from the typical chain pharmacies. However, this value is worthless if people do not know about it. Many patients are simply unaware of the unique services that a community pharmacy can offer them. From the start, you need to assess your local competition and differentiate your pharmacy’s services from the others in your area. Then make those services known- don’t be afraid to be proud of your work! Make it a point to also strengthen your personal touch. Build meaningful relationships with your customers that will foster loyalty and allow you to better serve them.

Get Involved

Paid advertising is important, but community engagement is key to starting an independent pharmacy. Talk to other independent businesses in your area and build relationships with healthcare providers and professionals. Forming a strong network will tie you into what is going on in your community and give insights on how to best operate your business. Find opportunities to participate in local events and get to know potential customers. You should also consider getting involved in local government boards or joining pharmacy organizations.

Offer Incentives

Once you have proved your value to potential customers, incentives are a good way to transform them into long-term customers. Offering discounts, having a referral rewards program, and providing free routine health screenings are all ways your pharmacy can show customers you care while still growing your business. Referrals will expand your customer reach and boost credibility, and free screenings can guide participants to fill any resulting prescriptions at your store. This is your chance to impress them! Every store’s marketing strategy will be unique – so use these tips as a guideline to creating the best plan for your pharmacy.

Step 9

Step 9

Soft Opening

Illustration of female pharmacist taking care of a customer

After countless hours of planning and preparation – you are ready to open your doors!

Well, sort of.

About a month before your open date, conduct a soft opening for only a few customers. Inevitably, there will be hiccups when opening your pharmacy. Soft openings act as a grace period for staff to master their routines and to ensure that all processes are working smoothly. Soft openings allow you to tackle road bumps immediately with only a few patients, rather than delaying a lengthening line of customers. This period of time allows you to focus on details and last minute tasks so that your grand opening is polished and successful. In preparation for the big day, make sure you spread the word so people are aware of when the grand opening will be. Also, work on building relationships with other local businesses and potential customers so you have a network before opening your doors.

Remember: What makes your pharmacy unique? What do you have to offer to your community? Keep this in mind when promoting your opening.

Step 10

Step 10

Grand Opening

Illustration of pharmacist opening doors of his pharmacy

You did it! You are about to see all of the rewards from your hard work!

Opening your pharmacy’s doors for business is an exciting day for you and your staff. Make it an exciting day for your new customers, as well!Host fun events for your entire community to see what your new business is all about.

  • Invite your mayor and local media to a ribbon cutting ceremony.
  • Serve treats catered by local restaurants and bakeries.
  • Have performances by local bands and musical groups.
  • Offer incentives such as prize giveaways or free health screenings.

Do anything that you can to attract your target market and show your community that you have arrived.
A first impression is a lasting impression, and this is your pharmacy’s first chance to spark lasting relationships within your community.

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Get Inspired.

Get Inspired

Before opening your own pharmacy, you need to establish your “why”. What will drive you and motivate you every day?

Fuel your passion for pharmacy by learning from a variety of enthusiastic, trailblazing leaders in the independent pharmacy industry. These pharmacy professionals and business owners have found their niche and succeeded in bringing their visions to life. Now it’s your turn.

Find these featured leaders - and more - on our Pharmacy Leaders page.

A colorful astronaut holding a blue flag

Explore Pharmacy Leaders

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