At a tender age of 50+ (now that I have been here for a few years, ‘50’ is the new ‘40’ okay!), I have recently bounded off for the ‘executive health check’. After 2 ½ hours of testing, sampling, hitting the tread mill etc., I (and my wife) am pleased to report that all is well. All the vital signs are in good shape and no alarm bells are ringing.
Personal fitness has never been as big a priority with people as it is today. Even if it is to look cool in the latest gear as you pound the pavement or tread mill, most people are into some regime of personal fitness. And if you aren’t, then people do wonder if you are serious about life and living. I have to say, the accountant in me wishes that business owners would take their business fitness just as seriously. It seems to be okay for businesses to operate without partnership agreements for the partners, shareholder agreements, business plans, budgets, cash flow forecasts, KPI benchmarking etc. If you don’t ‘take care of business’, then it will head in the wrong direction and by the time you think about doing something about it, it may be too late to bring it back on track.
How do you check the pulse?
Most owners have their own way of keeping tabs on what is going on. At a basic level, owners will track activity – script numbers, customer numbers and sales this year vs. last year. At a high level, certainly these numbers will give you some indication of what is happening. If script numbers and customer numbers are not growing, then we have a fundamental problem. Perhaps we have some stiff competition in the market place and we are doing something horribly wrong. At a simple level, whatever marketing we might be doing or whatever our offer is in the store, it needs an immediate shake up if we are returning zero or negative growth.
Most owners have for many years compared sales this year to sales for the same period last year. With the ever-changing PBS values this might not quite give you a like-for-like revenue comparison. And with bigger investments and more constant investment being made into the business, a comparison to last year is no longer the Holy Grail. You need more of a handle on what is going on today.
Time to upgrade the check-up
With the changing times, ongoing price disclosure, continued savings targets from the government and ‘health departments’ in supermarkets to name a few issues, it’s time to upgrade the health check which you run over your pharmacy. And I also just mentioned the make-over that pharmacy businesses are commonly undergoing. This in itself changes the focus of a business and means you need to have your eye on more relevant performance information.
Owners should set out to build a health check process that builds on the strategic decisions being made in each particular pharmacy. This means you tailor the dashboard that will tell you what is going on in each pharmacy. Because each pharmacy will have different issues that are being addressed, or different goals that are being pursued, then it makes sense to ensure your health check is focused on the right issues.
Further to that, once the dashboard is in place, make sure it is regularly reviewed to consider whether some measures should drop off and others come on. Business improvement is an ongoing cycle. Once you have nailed something, you move onto the next process.
Tailor your data feedback
When setting up your ongoing business health check or dashboard, you should sit back and brainstorm just what the business focus is at the moment. If you have set down a strategic plan these items should be obvious. Some examples of what might be on the health check this month are as follows:
- You are trying to build your connection with the community and so have re-launched your DAA service. The aim is to increase your DAA’s under service by 10 customers per week.
- You have reviewed the performance of S2 and S3 categories and believe that they need more space. You increase the lineal metres by 20%. Have the sales in these categories improved?
- You have reviewed your staff roster and believe that the average sale can be increased by putting on a dispensary technician, reducing your part time retail staff and employing another pharmacist. This will enable pharmacists to rotate onto the retail floor and engage with the customers. You expect to lift average sale.
With each of these strategies, there is an accompanying KPI that can be tracked and which should form part of your dashboard or ongoing health check. To ensure you are not looking at too many numbers it might mean you drop off some others for a short time.
Improve your business health outcomes
By building a dashboard for your pharmacy that is relevant to the things you wish to focus on, it means you can constantly measure the success of your business strategy. It means you can immediately track the impact of new changes or improve old ones. There is always a staple set of KPI’s that will generally always be on the list, but if you take some time and customise the list every few months, this will breathe life into this management tool and hopefully keep the team more focused.
Making the health check effective doesn’t take a lot of effort. It mainly takes the commitment to time to think a little about what needs to be measured and improved. Usually a collaboration session with you and your adviser can get things moving and set up a process for easy monitoring. So, go on, book in for a business health check today and live longer and happier.