Managing costs and finances
Noel Wicks, NPA Board Member and owner of Right Medicine pharmacy, shares his top tips for managing costs in your business
Information is critical to understanding whatâ€™s going on in your business and thereâ€™s an array of accounting software available which means you can really have your finger on the pulse. This doesnâ€™t have to cost a lot. Your accountants can help to formulate a package whereby you can get access to the information quickly and frequently.
You should be looking at monthly management of accounts. Itâ€™s not enough to just get the information though. Make the time to go through this, line by line to really know your numbers. Over a period of time, you will start to see patterns in the way that your business works and the impact of the money you spend.
Turnover is one of the key drivers in your business. Each month, look at your turnover and think about what you could do to improve it. This can include marketing your business or working with other healthcare professionals such as GP practices, clinics or care homes. Make sure that youâ€™re making the most out of your footfall. Pharmacy has a great array of things to offer people but you need to be tuned into what people may need. This could also include looking at private services that your local market might be willing to pay for.
In my pharmacy, we offer travel clinics because people value the convenience and accessibility.
Anything you do to increase turnover should be done in a cost effective way. Look for actions that donâ€™t require big outlays in cost.
Profit isnâ€™t a dirty word. There are traditional ways of looking at profit, for example making sure you get the best deal from your purchasing. Using IT solutions for buying medicines has been particularly useful in driving our gross profit upwards. They provide consistent results and remove some of the errors that can creep in when individuals in the pharmacy make choices around purchasing.
Itâ€™s easy to get dragged into things that are high turnover but potentially low profit. When youâ€™re thinking of doing something new, ask yourself: is it profitable and is it the most valuable use of my time?
To manage costs, go back to your information. Look at costs you can control such as wages, locum bills and utilities. Question whether youâ€™re getting the best deal. It takes time to phone around but thereâ€™s a significant amount of money to save by doing this.
Have a spring clean of your direct debits. Look at everything coming out and think: do I really need this?
The largest overhead will be rent and rates. If you have three or five years left on a lease, you may have an opportunity to negotiate. Landlords are keen to lock into longer terms as commercial properties are not moving as quickly as they have done previously.
For me, this is what itâ€™s all about. Our staff are often just as passionate about the business and frequently have better insight. Tap into their knowledge. They will be your biggest advocates.
Set objectives and aims and have targets and key performance indicators. Share these with the team â€“ celebrate when you reach them and encourage them when you fall short.
This is an extract from a presentation given at an NPA conference held in May. NPA members can view
the complete presentation at npa.co.uk/meeting-the- challenge. Members can also access new business resources at npa.co.uk/business-pack.
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