Outsourcing Can Help Grow Your Pharmacy Business
Business and Operations
Outsourcing Can Fill Skill Gaps, Save Time and Be Cost-Effective
Being your own boss is a benefit of owning a pharmacy, but if you also try to be the bookkeeper, marketer and computer technician, then you may find little time to be a pharmacist or lead your business. The reality: you don’t have the time or expertise to fill every role in your pharmacy, and you may not have the budget to add staff.
To grow your business, sometimes you must let go, says business consultant Jerry Osteryoung, professor of entrepreneurship emeritus at Florida State University. Focus on the core part of your business and consider outsourcing tasks that require specialized knowledge or skills outside your areas of expertise, and work that is repetitive.
Examples of Tasks to Consider Outsourcing
- Accounting
- Bookkeeping
- Handyman
- HR services
- IT services
- Legal
- Marketing & public relations
- Payroll
- Snow removal
- Training
“Pharmacists need to know that they are not a failure if they need to hire expertise,” said Liz Tiefenthaler, president of Pharm Fresh Media, which offers marketing solutions to independent pharmacies. Outsourcing isn’t just for big businesses. Automatic Data Processing Inc. serves 625,000 small businesses, with an average of just seven employees, said Jeremy Dyer, ADP’s director of franchises and affiliations. The biggest category is businesses with just one or two employees.
Even if you already have someone doing the work, outsourcing can protect your business from upheaval. Often business owners call companies like ADP because of an unexpected disruption, such as when a bookkeeper quits or the owner must be away for an extended absence.
When to Outsource
A cost-benefit analysis will reveal whether you should contract with someone else for a service to your business. Consider these factors:
- Expertise. Do you or any employee have the necessary knowledge? Sure, a teenage clerk may be a social media whiz, but that doesn’t mean she knows how to use social media to effectively and appropriately market your business. If no one in your pharmacy has the necessary skills, consider whether it would be worthwhile to pay for training or engage someone with that knowledge.
- Time. How much time will it take someone in your pharmacy to do the work? What is the cost of that time? Even a task that takes just 5 hours per week adds up to 260 hours a year. “That’s a tremendous amount of time annually that pharmacy owners can use to grow their business,” Dyer noted.
- Money. Weigh both the potential costs and gains. For example, if you make a payroll mistake, that could cost you hundreds or thousands of dollars in penalties, and better marketing could pay for itself by generating more revenue.
While the hourly rate for an outsourced service may seem high, Osteryoung noted, it can be less expensive than adding someone to your payroll. In addition, you may be able to outsource work to someone with better skills and knowledge than you could afford to hire.
(Tip: Check out possible discounts through memberships in pharmacy associations and business groups, such as the Chamber of Commerce. Health Marts receive discounts through the Health Mart Purchasing Advantage program.)
“A lot of people don’t realize how inexpensive it is to outsource their payroll,” Dyer said. When he quotes a price, often the business owner thinks the amount would be per employee, but it is the total.
And, in most cases, a pharmacy needs to bring in just four new customers in a year to cover the annual costs of his marketing services, said Carl Britton Jr., president of In Their Face Marketing, which works with independent pharmacies across the country.
To get started, research the different services available and the benefits you can gain. For example, payroll is just the hub of several services ADP offers, including HR management, time and attendance solutions, benefits administration, and more. Even at the basic level of service, clients receive access to HR employment law specialists to answer questions, and the ADP workers’ compensation Pay-by-Pay Premium Payment Program can help manage cash flow, by possibly eliminating upfront premium deposits.
Find the Right Provider
Before you decide to hand over a key function of your business to someone else, conduct due diligence, Osteryoung said. Of course a business will give you names of people who will provide good references, but check with other clients of that business as well. Use your network to ensure the people you hire have a solid reputation.
“Ask hard questions,” Britton recommended. Determine how well they understand the particular concerns of your business. For example, ask, “What proportion of your clients are in pharmacy or healthcare fields?”
Look beyond the price of a service to understand what you will receive. “Cost is not everything,” Dyer said. “Not all solutions are equal.” Check what options are available from each potential provider.
Ultimately, whether you are delegating work to an employee or contracting for a service, Britton said, you need to ask, “Do you trust your reputation to that person?”
Then start slowly. “Do a little bit, and see how it goes,” Osteryoung advised. Use a service provider for one small project, or sign a short-term contract with specific benchmarks. That will show whether the provider can deliver what you expect.
How to Work Together
For outsourcing to succeed, don’t sign a contract and forget about it. Follow these guidelines:
- Communicate regularly. Before you start, determine how you will stay in touch. You don’t want to hire someone to redesign your website and not hear anything for a month, Britton said. He emails his clients each week with a status update. ADP’s products are designed to be “set it and forget it,” Dyer said, but ADP offers business owners a range of options for receiving information.
- Trust their expertise. If you have invested the time in selecting excellent service providers, respect that these people have just as much expertise in their area as you do in pharmacy. Let them educate you. “Be open-minded,” said sales and marketing consultant Tara Jacobsen, owner of Marketing Artfully. For example, while you may be convinced that Facebook is the key to advertising your pharmacy, a marketing expert can explain the importance of other avenues too.
- Educate yourself. Even though you are hiring an expert, you still need to know enough about the subject to make informed decisions and to judge whether your provider is making good recommendations, Osteryoung said. Ask other business owners in your network about their experiences, concerns, and successes. When you are weighing options, ask, “What should I be concerned about?”
The hardest part of outsourcing may be letting go of your need to control everything. Remember, you have hired an expert to free up your time to focus on what you do best. If you insist on reviewing every decision, you can become a bottleneck, Jacobsen warned.
One option: Choose a trusted employee to oversee each outsourcing relationship. Ask that employee to investigate potential vendors and services, and to make a recommendation. You can maintain some control, but you don’t have to be involved in every detail.
Tips as you grow: Look to renegotiate prices as your volume increases. Most outsourcing companies offer prices so that companies with more volume pay less per transaction. So, as your volume grows, revisit your business arrangements and see if your suppliers can provide even better prices.
Also, even if outsourcing a service makes sense now, that might not always be true. Periodically review whether you are receiving the best value for your money. As your business grows, Osteryoung said, it might become more cost-effective to hire someone in-house than to outsource.
What advice do you have for other pharmacy owners about outsourcing? Share your comments below.