Many current and aspiring pharmacy owners are asking right now whether or not they should buy a pharmacy in the current market.
To answer this question, there are many factors to consider.
At the end of the day, the answer will vary significantly based on the goals and objectives of each and every individual investor.
Today we present 3 of the key factors to consider (see part two tomorrow for 3 more key factors):
1. Return on Investment
Ultimately the reason why anyone invests is to achieve return on your money and grow your wealth. The return achieved on an individual pharmacy can vary significantly depending on the characteristics of the business itself, as well as, the management competency of the ownership or management group.
Therefore each opportunity should be considered on a case by case basis. However, in general, the long term historical average return rates for pharmacies are well above the averages achieved in the property or share markets, or indeed cash. It is important to remember when assessing return from any investment to consider the annual return plus any capital growth.
When assessing any investment, it is also critical to assess the risk level associated with the investment.
Any investor should consider firstly if they are comfortable with the level of risk of the investment and secondly ensure that the return achieved from the investment is commensurate with the risk level.
There are many risks to consider when buying a business including financial risk, location or competition risk and operational risk. When buying a pharmacy, there are some specific key risk factors to assess, including the risk of any Government and regulatory changes.
There are many factors affecting the current pharmacy market, which may impact on your decision to buy a pharmacy now or perhaps hold off.
Overall, the market is performing quite well, but this varies significantly by size and location of the pharmacy. For example, smaller pharmacies in metropolitan locations are currently in very high demand and often sell at a premium.
Therefore it is important to understand the market for the particular type and size of pharmacy you are looking to buy.
When considering your timing to buy a pharmacy it is also important to remember that finding the ‘right’ pharmacy can take a considerable amount of time, depending on the characteristics for the type of business you are looking for. Therefore, best to get started in the search to buy earlier rather than later.
Part 2 of this article will be in Pharmacy News tomorrow
If you have any questions about buying a pharmacy or the current pharmacy market, feel free to contact one of our brokers at Attain on 1300 ATTAIN (288 246). We look forward to assisting you with any questions and assisting in finding an opportunity that suits your requirements!