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Executive Summary
Pharmaplus is a pharmacy store that specializes in selling prescriptions at lower prices. Our approach to making pharmaceutical products more affordable for our Oklahoma-based customers has given us a favorable reputation.
Vinita is the 5th poorest area in Oklahoma, so it's important to us that we give our customers access to a wide range of pharmaceutical products.
Reducing our operating costs, investing profusely in marketing, and buying in bulk has made it possible for us to build a thriving pharmacy store in a relatively short amount of time.
Our primary mission is to go beyond just selling the best pharmaceuticals in the market. Instead, we're looking to make our products widely accessible to lower-income earners. There is certainly a need. ⅒th of the adult population in the US can't afford their prescribed medication. Our mission is not completely philanthropic, however. It's also a strategy to beat our competition.
The pharmacy business is notoriously difficult to succeed in. What sets us apart and has contributed to our success is our strong social media presence. We’ve got more followers than any other pharmacy in a 100-mile radius, with 19,100 followers. To add to that, we've recruited a highly sought-after communications manager who studied at Berkeley.
We've also made environmental friendliness an integral part of our brand. Pharmaceuticals can have an adverse effect on wildlife. There is strong evidence to suggest that medicine is contaminating water on every continent, as well. So we try our very best to stock products that have a low or moderate rate of pollution.
We're a forward-thinking pharmacy store with ambitions of opening multiple branches across the country. We still consider ourselves a small business, but we believe we could reach greater heights.
With a total investment of $1,324,617, we would like to open three more stores in Okemah, Anadarko, and Seminole, which are also relatively low-income areas. This will help us establish ourselves as Oklahoma’s most philanthropic pharmacy, which is an integral part of our brand.
Pharmaplus is seeking $1,324,617 in growth capital ($674,617 of equity and a $650,000 bank loan) to fund the new stores, stock, marketing, and staffing.
Financial highlights:
| Metric | Year 1 | Year 2 | Year 3 |
|---|---|---|---|
| Revenue | $5,742,380 | $7,235,400 | $9,187,960 |
| Gross margin | 25.3% | 25.3% | 25.8% |
| Net profit / (loss) | $49,248 | $30,196 | $103,103 |
Company Overview
Pharmaplus is an independent community pharmacy operating as an LLC. Based in Vinita, Oklahoma, Pharmaplus was established to make prescription medicines affordable for lower-income customers.
Mission: To deliver exceptional value to our customers through expertise, reliability, and a commitment to continuous improvement.
Business objectives:
| Period | Target |
|---|---|
| Year 1 | Open the first new store and stay profitable |
| Year 2 | Expand service offering, grow revenue by 26%, hire additional staff |
| Year 3 | Establish market position, target new geographic or demographic segments |
Pharmaplus was founded by Dave McGregor, Steve Wayne, and Bridgette May in 2015. Steve is the acting CEO, whereas Dave and Bridgette are the board of directors. They each share a 33.3% stake in the business and give the remaining 0.1% to charity.
Pharmaplus is registered as an LLC in the state of Oklahoma.
Since we started the business, we’ve always focused on offering the best prices in town. We also train our staff to deliver unforgettable client experiences in-store.
When we first started, we stocked almost every pharmaceutical product we thought our clients might want. These days, we focus on sourcing top-drawer products that are environmentally friendly.
As time went on, we decided to diversify our product offering by stocking fitness equipment and supplements. The fitness aspect of our business has increased our sales by 10.8% since we implemented that concept in our store.
We pride ourselves on our ability to deliver affordable and relevant products by drawing on our sizable workforce, extensive network of trusted vendors, and highly skilled pharmacists.
Needless to say, we face strong competition from other Oklahoma pharmacies. This is why we run a 24/7 service with telephonic and online consultants in case of medical emergencies.
Yet another thing that sets our business apart is that we received an award from Grantwatch for our dedication to making pharmaceutical products more accessible for low-income earners.
Market & Customer Analysis
The pharmacy market is both vibrant and volatile, and the industry is expected to keep growing steadily through 2030.
Needless to say, there is countless competition in this industry, many of which are global pharmacy chain stores. This includes brands such as Walmart, CVS Health Corp, and Cardinal Health.
Our company needed to conduct countless competitor analyses to remain competitive in the industry. We’ve established that offering pharmaceutical products at reduced prices is the most important factor for standing out in this crowded market. Mail orders and e-commerce have also helped us establish ourselves as a convenient and innovative pharmacy.
When conducting our market analysis, we found that inventory is far more affordable in Canada compared to the U.S. We have also built relationships with suppliers in Nigeria, South Africa, and Peru. The logistics are complicated and costly in these countries, but bulk purchases save us up to 28% per purchase.
Most customers in the market are already well informed about the products they're looking for, so far less effort goes into convincing customers to make a purchase. However, we do our best to share information about the benefits of various products as well as all allergens and potential side effects. This information is also available in each product’s packaging.
We blend our deep knowledge of the pharmacy market with a thorough understanding of who our customers and competitors are. Our team also makes use of key metrics to help us take advantage of market conditions. These include website page views, social media engagement, and customer reviews.
The biggest market trend that we're keeping an eye on is automation. Recent developments in technology have helped introduce what is known as ‘pharmacy robots.’ These robots are expensive, to say the least. However, they're extremely efficient at identifying errors and filling prescriptions.
Point of care testing (POCT) is another major market trend that we've been keeping an eye on. Diagnosing illnesses such as HIV, diabetes, and migraines has never been quicker and easier. Offering this service will put us ahead in both the local and global industry.
Customer analysis:
Pharmaplus’ main customers live in the area of Vinita. It's known across the U.S. that Vinita is one of the lower-income areas in the state of Oklahoma. The average salary in Vinita is $16.35 per hour. Additionally, the minimum wage is $7.25. This is the main reason we prioritize affordable prices for our customers. They quite simply wouldn't be able to afford premium rates.
Based on our studies, our average customer earns between $24,000 and $54,000 annually. Ensuring that our prices are lower than our competitors will help us secure them as long-term customers.
Our online and mail-order customers could be based just about anywhere. We've received orders as far out as Brazil and Guatemala. What we've learned is that customers who live in remote areas are in the market for a wide range of pharmaceutical products.
A lack of access to the products that they need has allowed us to have them as customers.
The customer segment that we prioritize is that of individuals who pay for products directly. Insurance companies tend to delay payments, which results in cash flow problems. Focusing on cash-only consumers has helped us manage our financial planning and customer acquisition strategies.
Just about everyone is on social media these days. In fact, 61% of people are on social media. Needless to say, we use social media to send our marketing messages to our target market.
Research shows that at least 66% of U.S. adults use prescription drugs, which means there's a sizable market for them. With the growth in population, this figure is only bound to improve. As the price of pharmaceutical products increases, we believe we’ll continue to have a strong customer base for years to come.
Walk-in customers make up 49% of our customer base. Online and mail-order sales make up the bulk of our base at 51%.
Competitor analysis:
| Competitor | Strengths | Weaknesses |
|---|---|---|
| CVS Pharmacy | Established brand, wide reach | Higher price point, less personalised |
| Walgreens | Strong marketing, national presence | Generic offering, less specialist focus |
| Rite Aid | Competitive pricing | Standardised, less tailored service |
Pharmaplus’ competitive edge: Specialist expertise, personalized service, and a clear focus on the underserved segment of the market set us apart from the established players listed above.
SWOT analysis:
| Positive | Negative | |
|---|---|---|
| Internal | Strengths: Specialist expertise; experienced founder; strong client relationships; differentiated positioning | Weaknesses: Limited brand recognition as a new entrant; single location; reliance on founder capacity in early years |
| External | Opportunities: Growing market demand; underserved niche segments; digital marketing reach; referral network growth | Threats: Established competitors with greater resources; economic downturn reducing discretionary spend; regulatory changes |
Sales & Marketing Plan
Pharmaplus aims to keep the business profitable while the new stores open. Currently, we are at -1.8% in regards to our revenue compared to the previous year. We attribute this to our investment in broadening our management team, our increased marketing budget, and stocking new products.
We will achieve this through various strategies such as the introduction of loyalty cards, redesigning our online store, and continuing to improve our customer service.
We’re also especially interested in investing in automation technology that will make issuing prescriptions easier and quicker. We believe this will increase sales as customers with a fast-paced lifestyle will appreciate a ‘quick check-out’ pharmacy.
Building a loyal customer base will prove difficult if we fail to stock the correct products. In this industry, if a pharmacy doesn't have what the customer wants, they'll simply go somewhere else. That's why we've focused on having a fully stocked dispensary all year round. This is the cornerstone of our sales strategy.
Giving our sales team and in-store agents incentives for meeting sales goals will also help us satisfy customers and meet our KPIs.
We’ve estimated that opening more branches in Oklahoma and applying our operational strategy will result in a 26% increase in sales. This is based on the opportunity that exists in the cities of Seminole and Anadarko, the areas where we're looking to open pharmaceutical outlets.
Additional marketing notes:
Pharmaplus' marketing strategy is to promote the idea of being the most pocket-friendly pharmacy in all of Oklahoma.
We've increased our marketing spend by 21.2%, and we've also got a bona fide marketing genius on our team. Julia Rice is a Berkeley graduate who got on board simply because she has a deep belief in our vision to make pharmaceutical products more accessible.
She has developed various strategies to help us meet our marketing goals and subsequently increase sales. Social media marketing has been a crucial part of our marketing strategy. We learned that 77% of businesses are on social media, and 4.95 billion people use social media. This makes investing in social media marketing a no-brainer.
In just 2 years, we've grown from 3,210 followers across all platforms to 19,100. We also outsourced our advertising campaigns to STP Designers, which is one of the best graphics design companies in all of Oklahoma. Placing these advertisements in top Oklahoma-based magazines such as Oklahoma Today, Oklahoma Living, and Metro Family has helped us build our brand, as well.
Additionally, we've also improved our website's user experience to create the perception that ordering pharmaceutical products online can be a swift process. This is not a marketing strategy per se, but it will enable us to build long-lasting relationships with our customers.
Another aspect we've added to our website is creating a blog that specifically shares information about what products solve different health issues. This makes it easier for people to learn about how to diagnose different medical problems. This will inform and educate our direct customers, and it will also create an avenue for word-of-mouth marketing.
Operating Plan
The day-to-day tasks below are assigned to named staff, each with a deadline:
- Phillip Dwight (Marketing), ongoing: maintain our 6.7% growth on social media and grow our email list by 348 subscribers.
- Percy Vasquez (Sales), July 18th and August 22nd respectively: conduct sales training for staff, then write up the sales strategy for the year to come.
- Freddie Jones (Pharmacy), July 1st: draft an operating plan for the next 6 months and update all regulatory requirements for the next 2 years.
- June Hillary (Assistant Accountant), October 18th: draft a financial forecast, compile a financial plan for our next financial year and draw up a list of investors to approach.
- Hugo O’Connor (Dispatch), ongoing: maintain all safety standards when dispatching and receiving products.
- Kelly Finnegan (Customer service clerk), April 5th: resolve all customer complaints and problems in collaboration with the customer service team.
Management Team
We've prioritized the quality of our management team on all levels. By investing in high-quality individuals who have experience in executive positions, we've managed to take advantage of multiple opportunities in this complicated and competitive industry.
As mentioned earlier, Julia Rice is the star of our company and by far the most decorated team member in management. She's worked for McDonald's and Acer as a marketing manager and continues to help us reach new heights in traditional and digital media.
Steve Wayne is the CEO of Pharmaplus. He has been with the company from the very start and initially invested in starting the business with his two partners. He graduated in business management in 2003 from Oakland University in Rochester. Beyond his experience in business, he's a big motivator for our team and helps drive us towards success daily.
Mary Lucas is our customer service manager. She oversees the training of all customer service staff and ensures that any major customer complaints are dealt with swiftly. Her commitment and passion for customer service have won over the affection of thousands of customers who still shop with us today. The people she has trained have also gained a world of information in this role.
Andrew Clarke is our Sales Manager. He’s responsible for developing sales strategies for Pharmaplus. He works closely with Julia Rice on our marketing strategies to convert customers. He, like Steve Wayne, holds a bachelor's degree in business management.
Lesley Prince studied accounting at Lincoln University. As our acting Finance Manager, he ensures that we honor our budgets and prepares the financially related documents that are necessary for our business to run smoothly. This includes cash flow statements and profit and loss statements. He also actively seeks out potential investors who have the financial capacity to help us meet our goals.
Another important part of our business is our Pharmacy Manager, Dwight Forster. He's the go-to person for all matters that require in-depth knowledge of pharmaceutical matters. He is a qualified pharmacist with a degree from Merritt College. He also had a stint working for Walmart as a pharmacist, where he gained the majority of his experience.
Financial Plan
Projected Profit or Loss Statement (in USD):
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Sales | $5,742,380 | $7,235,400 | $9,187,960 |
| Direct Cost of Sales | $4,289,560 | $5,404,840 | $6,817,470 |
| Total Cost of Sales | $4,289,560 | $5,404,840 | $6,817,470 |
| Gross Margin | $1,452,820 | $1,830,560 | $2,370,490 |
| Gross Margin % | 25.3% | 25.3% | 25.8% |
| Operating Expenses | |||
| Sales and Marketing Expenses | |||
| Sales and Marketing Payroll | $126,000 | $130,400 | $135,000 |
| Advertising/Promotion | $96,400 | $118,700 | $141,300 |
| Other Sales and Marketing Expenses | $17,800 | $21,600 | $25,900 |
| Total Sales and Marketing Expenses | $240,200 | $270,700 | $302,200 |
| General and Administrative Expenses | |||
| General and Administrative Payroll | $689,000 | $873,000 | $1,121,000 |
| Depreciation | $75,460 | $111,140 | $147,980 |
| Dues and Subscriptions | $6,200 | $7,400 | $8,600 |
| Professional Fees | $38,400 | $41,800 | $45,600 |
| Rent | $67,200 | $108,700 | $151,400 |
| Software Purchases | $41,800 | $58,300 | $74,600 |
| Insurance | $26,300 | $36,800 | $47,200 |
| Telephone and Internet Access | $14,100 | $18,600 | $23,400 |
| Utilities | $34,200 | $51,600 | $69,300 |
| Miscellaneous | $46,300 | $61,200 | $77,800 |
| Payroll Taxes | $69,275 | $85,289 | $106,760 |
| Total General and Administrative Expenses | $1,108,235 | $1,453,829 | $1,873,640 |
| Total Operating Expenses | $1,348,435 | $1,724,529 | $2,175,840 |
| Profit Before Interest and Taxes | $104,385 | $106,031 | $194,650 |
| EBITDA | $179,845 | $217,171 | $342,630 |
| Interest Expense | $39,585 | $66,300 | $58,988 |
| Taxes Incurred | $15,552 | $9,535 | $32,559 |
| Net Profit | $49,248 | $30,196 | $103,103 |
| Net Profit/Sales | 0.9% | 0.4% | 1.1% |
Projected Cash Flow Statement (in USD):
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Cash Received | |||
| Cash from Operations | |||
| Cash Sales | $2,009,833 | $2,532,390 | $3,215,786 |
| Cash from Receivables | $3,641,428 | $4,628,359 | $5,874,546 |
| Subtotal Cash from Operations | $5,651,261 | $7,160,749 | $9,090,332 |
| Additional Cash Received | |||
| New Long-term Liabilities | $650,000 | $0 | $0 |
| New Investment Received | $674,617 | $0 | $0 |
| Subtotal Cash Received | $6,975,878 | $7,160,749 | $9,090,332 |
| Expenditures | |||
| Expenditures from Operations | |||
| Cash Spending | $884,275 | $1,088,689 | $1,362,760 |
| Bill Payments | $4,600,136 | $5,905,273 | $7,449,874 |
| Subtotal Spent on Operations | $5,484,411 | $6,993,962 | $8,812,634 |
| Additional Cash Spent | |||
| Long-term Liabilities Principal Repayment | $30,000 | $72,000 | $78,000 |
| Purchase Other Current Assets | $174,000 | $200,000 | $180,000 |
| Purchase Long-term Assets | $342,600 | $356,800 | $368,400 |
| Subtotal Cash Spent | $6,031,011 | $7,622,762 | $9,439,034 |
| Net Cash Flow | $944,867 | ($462,013) | ($348,702) |
| Cash Balance | $1,158,867 | $696,854 | $348,152 |
Projected Balance Sheet (in USD):
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Assets | |||
| Current Assets | |||
| Cash | $1,158,867 | $696,854 | $348,152 |
| Accounts Receivable | $287,119 | $361,770 | $459,398 |
| Inventory and Other Current Assets | $560,000 | $760,000 | $940,000 |
| Total Current Assets | $2,005,986 | $1,818,624 | $1,747,550 |
| Long-term Assets | |||
| Long-term Assets | $754,600 | $1,111,400 | $1,479,800 |
| Accumulated Depreciation | ($313,460) | ($424,600) | ($572,580) |
| Total Long-term Assets | $441,140 | $686,800 | $907,220 |
| Total Assets | $2,447,126 | $2,505,424 | $2,654,770 |
| Liabilities and Capital | |||
| Current Liabilities | |||
| Accounts Payable | $374,261 | $474,363 | $598,606 |
| Subtotal Current Liabilities | $374,261 | $474,363 | $598,606 |
| Long-term Liabilities | $716,000 | $644,000 | $566,000 |
| Total Liabilities | $1,090,261 | $1,118,363 | $1,164,606 |
| Paid-in Capital | $974,617 | $974,617 | $974,617 |
| Retained Earnings | $333,000 | $382,248 | $412,444 |
| Earnings | $49,248 | $30,196 | $103,103 |
| Total Capital | $1,356,865 | $1,387,061 | $1,490,164 |
| Total Liabilities and Capital | $2,447,126 | $2,505,424 | $2,654,770 |
| Net Worth | $1,356,865 | $1,387,061 | $1,490,164 |
3-year profit & loss projection:
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $5,742,380 | $7,235,400 | $9,187,960 |
| Cost of medicines and products | $4,289,560 | $5,404,840 | $6,817,470 |
| Gross profit | $1,452,820 | $1,830,560 | $2,370,490 |
| Gross margin | 25.3% | 25.3% | 25.8% |
| Salaries and wages | $815,000 | $1,003,400 | $1,256,000 |
| Marketing and advertising | $114,200 | $140,300 | $167,200 |
| Rent and utilities | $101,400 | $160,300 | $220,700 |
| Other operating costs | $317,835 | $420,529 | $531,940 |
| Total operating expenses | $1,348,435 | $1,724,529 | $2,175,840 |
| Interest and income tax | $55,137 | $75,835 | $91,547 |
| Net profit / (loss) | $49,248 | $30,196 | $103,103 |
Break-even analysis:
- Estimated monthly fixed costs: $112,400
- Monthly revenue required to break even: $444,300
- Projected Year 1 revenue of about $478,500 a month is above this level.
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