There are a number of decisions you must make before opening your own pharmacy, but none are more important than choosing the perfect location! The adage “Location, Location, Location” has never been truer than when you are opening a new business. You must carefully asses the city, the neighborhood, the potential storefront, the competition, and many more factors before finalizing a location for your pharmacy.
The search for the property starts with narrowing down the city in which you want to serve. The size and demographics of a city can dictate the services you provide at your pharmacy. Larger cities offer a more expansive demography allowing you to offer more niche services such as compounding and senior care programs. On the other hand, you will be facing more competition from national chains and other pharmacy entrepreneurs in your area. Whether you provide traditional, complementary, or alternative medicines will largely depend on the demographics of your chosen location. The age, gender, ethnicity, family size, income, education level, and attitude of your potential patients can dramatically affect the type of services you offer.
Patient demographics aside, you must consider the mix of prescribers in your target area to see if they will help support the type of pharmacy you want to open. The number and variety of practices around your site will help determine the mix of services you offer your patients. The prescribers’ receptiveness to a new pharmacy and potential new services goes a long way toward making your pharmacy successful.
Once you have narrowed down the general area for your pharmacy, the next step is choosing the actual site for your store. Stop and consider whether you will be leasing or purchasing the site for your pharmacy. This is a huge consideration and one which we can spend a long time discussing, however, we will leave this subject for the future (information on this subject is available at “Buying vs. Leasing Commercial Real Estate” and “The Pros & Cons of Leasing vs. Owning”). Either way, a real estate agent may be helpful in locating sites that fit your budget, space, distance, zoning and other requirements. Competition from national chains and other independents in the area should be considered before finalizing a location. Even if a site seems perfect, don’t get too attached until you have visited a number of other locations and weighed their pros and cons before reaching a final decision. Keep one or two locations as back-up in case your first choice becomes unavailable or you are not successful in negotiating a lease. See SBA’s “Tips for Choosing Your Business Location” and “10 Things to Consider When Choosing a Location for Your Business” for some suggestions on this subject.
Assuming you have decided on leasing the site for your pharmacy and you have finalized the location, the next step is to negotiate the lease agreement. A real estate agent or a lawyer specializing in commercial leases may be helpful in negotiating a lease. If you are using a real estate agent make sure they are representing you and not the lessor in the negotiations. Leasing considerations include:
- The rental rate and terms such as:
- Common area maintenance,
- Responsibility for maintenance of heating and air conditioning,
- Responsibility for building repair and maintenance,
- Flat rates vs. rates tied to sales,
- Length of lease and dates and amount of rate increases, if any, and
- Renewal options.
- Remodeling allowances usually offered in the form of a reduction or free rental rates for the build-out period of your pharmacy.
- Expansion options should your business needs grow beyond its current location.
- Traffic flow and availability of parking on site.
- Technology considerations such as availability of cable or high speed modem and multiple phone lines.
Your pharmacy’s location deserves careful consideration. I have seen pharmacies fail in locations that seemed perfect for a retail business but not suitable for a pharmacy. Be careful, consider every option and evaluate every factor. Your success or failure depends on this choice, so take your time to make sure the location is right for your pharmacy.