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The Head Pharmacist has worked as a pharmacist in the area for a long time, including at the small pharmacy in the medical clinic near the hospital where many doctors have their offices. As such, he is well positioned to make contacts with those doctors in order to build the reputation of our pharmacy. Financial Plan

The financial plan will begin with the income statement. There are two main revenue streams, being retail and pharmacy. A third revenue stream within Pharmacy will be the online ordering, whereby customers can order over the Web and have their drugs ready for pick-up, or for delivery via the courier of their choice. Such revenue will be attributed to Pharmacy, and retail products will not be included in these orders.

With respect to costs, labor costs are expected to reflect the staffing levels. While there will be as many as 20 staff members, there will only be 12 FTEs. These are broken down as a General Manager, and Assistant General Manager, a Head Pharmacist, a Pharmacist, a Retail Manager, and 7 FTES for staff members. There will likely be two full-time staff members and the remainder will be part-time shift workers to cover evenings, weekends and busy periods. In general, labor costs are expected to average $9 per hour for the retail staff, and a total budget has been set at $220,000 for the five managerial roles, with the Head Pharmacist as the highest-paid.

There are a number of types of supplies that are required, mainly for startup. These include computers, shelving, furnishings, equipment for the lunch room and some equipment such as a blood pressure machine. There also needs to be a secure "vault" area where drugs will be stored overnight, and a security system will need to be installed. Security will comprise the bulk of the startup supply costs, and the total is expected to be around $75,000. Inventory will be valued initially at $200,000, including both pharmaceutical inventory and retail. Most of the inventory value will be in the pharmacy.

The pharmacy will require around 4000 square feet of space, with 2500 of those in front and 1500 for supplies, break room and the office. The pharmacy itself will be relatively small, around 800 square feet, with the rest dedicated to the retail section of the store. We have located a space...

It is expected that the space will cost a total of $3,000 per month, net of all fees and associated costs. There are no special equipment costs other than what was outlined above. The pro forma income statement for the first year, based on inventory turnover of 6 times, is as follows:
Pharmacy

Pro Forma Income Statement

Revenue

$1,200,000

Cost of Goods Sold

$700,000

Gross Profit

$500,000

Operating Costs

Salaries, Wages & Benefits

$351,040

Rent and Supplies

$42,000

Insurance, Utilities

$12,000

Operating Profit

$94,960

Tax Expense

$33,236

Net Profit

$61,724

The initial start-up costs will include the cost of inventory and some costs associated with shelving and setting up the store. It is not expected that these costs will be recouped in the first year. However, if profits increase then it is not unreasonable that the balance sheet will look positive by the end of year two. It is expected that the owner, who is also the general manager, is going to be the lead financer and will primarily finance the pharmacy with equity. A credit line will be established with a local bank, in case there is a need for any emergency credit. It is not expected, however, that such credit facilities will be required.

Works Cited:

ACCP. (2008). The definition of clinical pharmacy. Pharmacotherapy. Vol 28 (6) 816-817.

Fein, a. (2006) How pharmacists view Wal-Mart's pricing strategy. Drug Channels. Retrieved November 12, 2012 from http://www.drugchannels.net/2006/10/how-pharmacists-view-wal-marts-pricing.html

Hellinger, F. (1995). Any-willing-provider and freedom-of-choice laws: An economic assessment. Health Affairs. Vol. 14 (4) 297-302.

Miles, M. (2011). A research note on market creation in the pharmaceutical industry. The Journal of Business Research. Vol. 64 (7) 723-727.

NetMBA. (2010). The marketing mix. NetMBA. Retrieved November 12, 2012 from http://www.netmba.com/marketing/mix/

General Manager

Head Pharmacist

Retail Manager

Assistant General Manager

Sources used in this document:
Works Cited:

ACCP. (2008). The definition of clinical pharmacy. Pharmacotherapy. Vol 28 (6) 816-817.

Fein, a. (2006) How pharmacists view Wal-Mart's pricing strategy. Drug Channels. Retrieved November 12, 2012 from http://www.drugchannels.net/2006/10/how-pharmacists-view-wal-marts-pricing.html

Hellinger, F. (1995). Any-willing-provider and freedom-of-choice laws: An economic assessment. Health Affairs. Vol. 14 (4) 297-302.

Miles, M. (2011). A research note on market creation in the pharmaceutical industry. The Journal of Business Research. Vol. 64 (7) 723-727.
NetMBA. (2010). The marketing mix. NetMBA. Retrieved November 12, 2012 from http://www.netmba.com/marketing/mix/
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