Do you ever find yourself staring at your business’ balance sheet and wondering what it all means? If so, you’re certainly not alone!
As an owner, knowing what the numbers represent and what they tell you, allows you to drive smart business decisions, become financially literate and sleep at night knowing your position.
2023 financial year has got some head winds that may impact pharmacy trading performance going forward. Keep in mind here that 2022 bought many pharmacies additional revenue streams for Covid Vaccinations and RAT sales. Potentially many of those customers were new to your store and bought other things when they were there. Without as stronger need for RAT’s and Covid Vaccinations are customer numbers likely to drop off? This issue has been raised with me a few times with owners.
The growth in GP$ from covid related services and products is undeniable. But, as we head into the 2023 financial year we have to take the rose tinted covid glasses off and realise this income is not forever. The covid pot of gold under the pharmacy rainbow is not a never ending solution and it has already begun to dry up as we look at recent reports.
As we say goodbye to the covid storm it is not all doom and gloom. It is just about re-evaluating your strategy. It is time to tighten the belt and focus energy where you will see future profits. In community pharmacy this means making the most of your health services and community relationships.
Whilst the day to day has been difficult, the growth pharmacies have seen has been significant. As we close out the financial year and we assist clients in estimating their tax position as a result of the growth they have experienced, one of the most common questions we get from clients is why doesn’t my cash position reflect these profits I now have to pay tax on?
When two or more people are coming together to buy a pharmacy, we have a bit more freedom of choice about what legal entity we choose. However, if a partner is being admitted into an existing pharmacy business, the incoming partner is restricted to the legal entity the current owner has. Meaning the incoming partner is either buying shares in the company, units in a unit trust, or is in partnership with the other owner. However, it is important that we carefully consider some critical issues.
