Six essential checks to keep your pharmacy financially fit

Sponsored Content 

By Paul O’Sullivan, Chief Financial Officer,
Independent Pharmacies Australia (IPA).

With 15 years’ experience in pharmacy, I’ve seen what separates successful pharmacies from those that just survive. Staying financially fit means regularly reviewing six key areas of your business:

1. Sales Diversification
   Relying solely on scripts is risky. Government reforms, GP relocations, or new discounters can slash revenue overnight. Think more like a retailer.  Offer vaccinations, NDIS support, sleep clinics, and other community-based services. The more income streams, the more resilient your pharmacy becomes.
2. Gross Profit
   Sales are important, but margins matter more. Know your customers and stock accordingly. Use tools like Buy It Right to improve purchasing and stock turns. Avoid discounting by aligning your products with your customers’ needs.
3. Lease Management
   Your lease is one of your biggest fixed costs. Poor terms can erode profitability. Always negotiate with expert help, especially at renewal or change of control. Benchmark rent against broader retail, not just pharmacy.
4. Wages & Staffing
   Labour is your most controllable cost. Match roles to pay and avoid overstaffing. Consider not replacing departing staff if roles can be absorbed. Track on-costs and check payroll tax grouping across your legal structures. Good accounting firms can advise on compliance matters, so you don’t accumulate a large tax debt.
5. Cashflow & Drawings
   Your balance sheet reveals the full financial picture. Watch drawings, loans, and retained earnings. Refinance, reduce inventory, and manage claims carefully. Don’t let stronger stores carry underperformers.
6. Risk Management
   What if your biggest income stream vanished? Plan for disruption. Don’t tie personal assets to business risk. Tighten working capital and act early if conditions shift.

These checks help you build a business that’s financially stable, operationally strong and ready for whatever comes next. Talk to a team member at IPA about how we can simplify managing your pharmacy and streamline your workflow.