Business Plan Sample Pharmacy

Sample Business Plan, Sample Pharmacy 1

Sample Business Plan. Sample Pharmacy

Sample Business Plan. Sample Pharmacy Written by Vinil Ramdev +91-90040-84813, [email protected], www.startupgrowthexpert.com

This business plan is only a sample. The name of the actual business and the owners have been changed for confidentiality reasons. For business plan services, email [email protected].


Table of contents Executive Summary 1.0 Objectives 1.01 Mission 1.02 Keys to success 2.0 Company summary 2.01 Company ownership 2.02 Past performance table 2.03 Company locations and facilities 2.04 Sales literature 3.0 Product and service summary 3.01 Product and service description 3.02 Competitive comparison 3.03 Fulfillment 3.04 Technology 3.05 Future products and services 4.0 Market Analysis Summary 4.01 Market analysis table 4.02 Market segmentation 4.03 Target market segmentation 4.04 Market needs 4.05 Market trends 4.06 Market growth 5.0 Service business analysis 5.01 Industry participants 5.02 Distribution patterns 5.03 Competition and buying 5.04 Main competitors 5.05 Value proposition 6.0 Sales strategy 6.01 Pricing strategy 6.02 Promotion strategy 6.03 Sales forecast table 6.04 Explain Sales forecast 6.05 Sales program 7.0 Marketing plan This business plan is only a sample. The name of the actual business and the owners have been changed for confidentiality reasons. For business plan services, email [email protected].


7.01 Strengths 7.02 Weaknesses 7.03 Opportunities 7.04 Threats 7.05 SWOT analysis 7.06 Competitive edge 7.07 Positioning statement 7.08 Strategy pyramid 7.11 Distribution strategy 7.12 Strategic alliances 7.13 Milestones table 7.14 Milestones explanation 8.0 Web plan summary 8.01 Website marketing strategy 8.02 Development requirements 9.0 Management summary 9.01 Organizational chart 9.02 Organizational structure 9.03 Management team 9.04 Management team gaps 10.0 General assumptions table 10.01 Profit and loss table 10.02 Projected profit explanation 10.03 Break-even analysis table 10.04 Break-even analysis explanation 10.05 Benchmarks chart 10.06 Key financial indicators 11.0 Cash flow table 11.01 Projected cash flow explanation 11.02 Balance sheet table 11.03 Balance sheet explanation 12.0 Financial plan summary 12.01 Long-term plan 12.02 Valuation 12.03 Investment offering 12.04 Use of funds 12.05 Use of funds explanation 12.06 Payback 12.07 Ratios table A. Appendix B. Sources This business plan is only a sample. The name of the actual business and the owners have been changed for confidentiality reasons. For business plan services, email [email protected].


Executive Summary Sample Pharmacy is in the retail pharmacy business. It is located in Bangalore, India. Sample Pharmacy presently owns 3 retail outlets in B angalore, India.

Sample Pharmacy’s primary products are prescription medicines. Sample Pharmacy is positioned as a premium pharmacy that caters to the upscale clientele. Customers shop from sample Pharmacy for the following reasons: Knowledgeable pharmacist Availability of medications 'WOW factor' - Fun, Service & Refreshing Ambience Sample Pharmacy is founded by experienced entrepreneurs who have passion and skill for business. Revenues of Sample Pharmacy is expected t o grow at 3.6 times in the fiscal year 2008. Sample Pharmacy’s purpose is to create a vision in the hearts and minds of its community as a company that cares about the welfare of its employees, the quality of its products and se rvices, and the honesty and integrity of its business relationships.

1.0 Objectives Break even by March 31, 2008 EBIDTA in excess of Rs I0 Lakhs for the FY ending March 2009 EBIDTA in excess of Rs 20 Lakhs for the FY ending March 2010 EBIDTA in excess of Rs 30 Lakhs for the FY ending March 2011 1.01 Mission

Sample pharmacy is in the retail pharmacy business. Sample Pharmacy’s vision is to provide its customers with a great store ambience, hygiene, good assortment of merchandise, great service and convenience.

Sample Pharmacy’s purpose is to create a vision in the hearts and minds of its community as a company that cares about the welfare of its employees, the quality of its products and se rvices, and the honesty and integrity of its business relationships.

Sample Pharmacy’s ideal team member is humble, respectful, customer centered (has the needs of the customer in mind), has integrity, honesty & a high moral code and sets the highest standards of excellence in his endeavors. This business plan is only a sample. The name of the actual business and the owners have been changed for confidentiality reasons. For business plan services, email [email protected].


Sample Pharmacy’s customers buy from them because their staff members welcome them with a beautiful smile, greet them by saying "Good Morning", "Thank You", "Welcome" and help them in making an informed decision. Besides Sample Pharmacy’s customers like Sample Pharmacy’s store ambience & hygiene, service, product availability and trust t he quality of Sample Pharmacy’s products. 1.02 Keys to success The keys to Sample Pharmacy’s success are: 1. Good Customer Service 2. Inventory Management 3. Effective Operations

2.0 Company summary Sample Pharmacy is a company incorporated in December 2005. The core business of Sample Pharmacy is pharmacy retail. 2.01 Company ownership Sample Pharmacy is a privately held company with majority of its shares held by its Founder and Chairman NAME WITHHELD . 2.02 Past performance table FY 2007 Sales Gross Margin Gross Margin Operating Expenses Inventory Turnover

Rs 3,139,121 Rs 533,650 17.00% Rs 2,500,000 3.76

Balance Sheet FY 2007 Current Assets Cash Inventory Other Current Assets Total Current Assets

Rs 308,375 Rs 1,387,725 Rs 1,123,045 Rs 2,819,145

Long-term Assets Long-term Assets Total Long-term Assets

Rs 3,525,054 Rs 3,525,054



Total Assets

Rs 6,344,199

Current Liabilities Other Current Liabilities (Interest free) Total Current Liabilities

Rs 270,400 Rs 270,400

Long-term Liabilities Total Liabilities

Rs 2,950,000 Rs 3,220,400

Paid-in Capital Earnings Total Capital

Rs 5,000,000 (Rs 1,876,201) Rs 3,123,799

Total Capital and Liabilities

Rs 6,344,199

Other Inputs Payment Days

7

2.03 Company locations and facilities Head Office: GF 2, 301.11 Mezzanine Floor, Mosque Rd. Frazer Town, Bangalore 560005 Sample Pharmacy Store Locations: Store 1: GF 2, 301.11 Pentagon Complex, Mosque Rd. Fraze r Town Bangalore 560005 Sample Pharmacy’s Frazer Town location was the first location opened by Sample Pharmacy. The Frazer Town location opened for business on May 14, 2006. Store 2: #150/4, Bearing No 86/1, New Tippasandra Main Road, HAL 3rd stage, Bangalore 560075. Sample Pharmacy’s Tippasandra location is the second location opened by Sample Pharmacy . It opened on May 14, 2006 shortly after the opening of store 1. Store 3: Esteem Plaza, #359/20, 13th main road, S adashivnagar, Bangalore 560080. Sample Pharmacy’s sadashivnagar location opened on May 22, 2006. All Sample Pharmacy’s locations are leased premises. Sample Pharmacy store s range in square footage from 120 sq. ft. - 430 sq. ft. 2.04 Sales literature

Sample Pharmacy’s sales flyer will present a very pr ofessional image of its business. It will be designed by a good graphic designer. This business plan is only a sample. The name of the actual business and the owners have been changed for confidentiality reasons. For business plan services, email [email protected].


The objective of the sales flyer and sales brochure is to present a very professional image of our business and position ourselves as a trusted business. This sales flyer will be part of its marketing program where it will be used as newspaper inserts and distribute it to our g eographic target.

3.0 Product and service summary Sample Pharmacy will sell prescription medications and OTC medications primarily through its retail outlets. Sample Pharmacy’s primary focus will be prescription medications and OTC medications. However Sample Pharmacy may carry a range of toiletries and daily use items like shampoos, conditioners and other skin and hair care items. 3.01 Product and service description

Sample Pharmacy’s primary business will come from prescription medications and OTC medications. The price range will be at the maximum retail price (i.e. suggestive retail price). Sample P harmacy will also evaluate other revenue streams like advertising and selling shelf space. 3.02 Competitive comparison Sample Pharmacy will position itself as a premium pharmacy that cater s to the upscale clientele. The top three reasons customers shop from sample pharmacy is: Knowledgeable pharmacist Availability of medications 'WOW factor' - Fun, Service & Refreshing Ambience 3.03 Fulfillment Sample Pharmacy plans on buying products directly from distributors. Distribution is a major concern for Sample Pharmacy. Lot of prescription medication distributors do not supply to or ganized retailers as the chemist association in the city wants to t hwart the competition from organized retailers. However, Sample Pharmacy can go to the physical location of the distributors and buy products directly from their counter. However, there are distributors who do supply to Sample Pharmacy at their place of business. 3.04 Technology Today, a lot of good retail businesses use technology to m anage their business better. The first area of concern is the Point Of Sale (POS) software. A good Point Of Sale (POS) software allows the user to serve his customers quickly. It allows the user to obtain specific reports like VAT returns, category & sub-category sales, customer databases w ith customer information, purchases made by the customer for a particular period, prescriptions of the customer and average ticket price per customer. This business plan is only a sample. The name of the actual business and the owners have been changed for confidentiality reasons. For business plan services, email [email protected].


Preferably Sample Pharmacy would like the customer re lationship software to be integrated with the POS software. The customer relationship software should tell what customers are buying and will use statistical analysis to tell what they will buy next. It should also have the names, addresses and contact information of customers. It should make it easy to profile and segregate customers based on certain demographic parameters. If it can profile customers on psychographic factors, that's even better . 3.05 Future products and services Sample Pharmacy is evaluating selling products online. Sample Pharmacy may prepare a separate business plan for the online retail business when decides to go ahead with the project.

4.0 Market Analysis Summary The entire volume of business for prescription medicines and over-the-counter m edications is about Rs 1 lakh per day in Frazer town (2 km radius around our store), Rs 2.85 lakhs per day in Tippasandara (1 km radius around our store), and Rs 1.93 lakhs per day in sadashivnagar (2 km radius around our store). This is got by calculating the entire sales of all the pharmacies put together. Sample Pharmacy did a market research through its internal team to determine the results. This also includes a small percentage of personal care products. Sample Pharmacy will do a market survey that gives information about the 3 greatest fears and three benefits that customers face when the y buy from a pharmacy. Sample Pharmacy will focus on diabetic patients in and around its two km radius. According to information from sources on the internet and the Deccan Herald - the local newspaper, there are at least 500,000 diabetic patients in Bangalore. Sample Pharmacy will need to do another market research that tells them how many diabetic patients are there in its geographic target market.

Sample Pharmacy’s target market focus will be: 2 Km geographic radius High & Mid income prospects Diabetic Patients Young mothers and women between the ages of 26 - 45 4.01 Market segmentation Sample Pharmacy will initially target the following 3 segments: 1. The modern women & young mother - Women between the ages of 26-45 2. Diabetic Patients 3. Incidental shoppers 4.02 Target market segmentation



According to a survey done by Sample Pharmacy, it found that there are at least 4 gynecologists and/or pediatricians in the 2 km radius of each of our locations. This shows that there are substantial amount of women who use these services and therefore have a need for medications. If it is estimated that there are 20 footfalls per day in each of these clinics, then that is about 80-100 customers per day in this segment alone. Focusing on women (with children) will help other categories of products like skin care, hair care & baby care as well. According to a local newspaper source on the internet, the entire city of Bangalore has about 500,000 diabetic patients. Sample Pharmacy assumes that there is a good chance that a sizable amount of diabetic patients live in its geographic target. Sample Pharmacy is fairly certain about sadashivnagar where there are about 3 diabetic clinics. However, Thippasandra and Frazer town are locations where market research should help Sample Pharmacy.

Sample Pharmacy’s third market segment is the other c ategory. These are incidental and convenience shoppers who live in the neighborhood. Sample Pharmacy will not go after them consciously. Sample Pharmacy’s main focus will be on the first two groups: The Modern Women & Diabetics. 4.03 Market needs The three basic needs (according to Sample Pharmacy) that buyers look for in a pharmacy is: Safety of medications Hygiene Availability of medications Knowledgeable pharmacist Sample Pharmacy plans on doing market research t hat will either agree or disagree with its opinion. The research should talk about the needs o f each segment i.e Women (gynecology), pediatric, Diabetic and Cardiac 4.04 Market trends Today, there are not many players in the organized retail pharmacy market. Most of the pharmacies are owned by independent mom & pop operations. However things are changing now. Lot of big players are entering the market. Huge companies get into the ret ail sector and start multiple store chains. And they bypass the supply chain by buying directly from stockiest or even the manufacturer. They cut out the distributor and thus can pass on the benefit to the customer by offering a 10 -15% discount. However it's difficult for the independent retailer to offer such discounts as these margins go to the distributor. Another trend that is happening is that a lot of companies are trying to sell consumer goods like shampoos, soaps and others through retail pharmacies. The reason for doing t hat is because consumers tend to trust pharmacists more than departmental stores and because pharmacies are more hygienic. This trend was spotted by an article in the financial times. This business plan is only a sample. The name of the actual business and the owners have been changed for confidentiality reasons. For business plan services, email [email protected].


4.05 Market growth The pharmacy market in India is gr owing at about 9% annually. At the moment, in our current geographic targets the total volume of business is about R s 400,000 per day. i.e Frazer Town = Rs 93,000; Tippasandara = Rs 265,000; Sadashivnagar = Rs 129,000. Sample Pharmacy expects this growth to be in proportionate to the national growth.

5.0 Service business analysis

Sample Pharmacy’s business fits into 3 industries; one is the retail industry that is valued at 180 billion dollars, the pharmaceutical industry that is valued at approximately 93 billion dollars and the personal care market at 3.7 billion dollars. However, Sample Pharmacy’s core business will come from diabetics in its immediate 2 km radius. According to a dietician in the I ndian Bureau of Marketing and research, the diabetic market in India in valued at $100 million or Rs 500 Crores. Sample Pharmacy’s immediate 2 km radius should have at least 1000 diabetics that spend Rs 1000 per month. That comes up to Rs 1 m illion in monthly sales. Sample Pharmacy also plans on targeting women and children. The r eason for this is that there are sizable gaenocologists and pediatrics in the area. The retail pharmacy industry is dominated by many independent retailers, it is fairly unorganized at the moment. There are a few organized players like Trust, Subiksha, Apollo and LifeKen. The Reliance Group, India's largest conglomerate is planning on getting into t he retail sector shortly. This should increase competition in the retail sector. 5.01 Industry participants The pharmacy retail industry is made up of many small independent retailers or mom & pops. The industry is fairly unorganized. In each of Sample Pharmacy’s locations, there are at least 10 pharmacies in the two kilometer radius that compete with Sample Pharmacy There are very few regional and national chains. Among the regional chains, Lifeken pharma, Trust, Apollo & Subiksha are some of the major players. Most of the pharmacies do not offer discounts, however subiksha offers a 10% discount on all medications & a newly launched pharmacy chain ayurvadulu offers a 4% discount to all customers and 14% discount to senior citizens. Although they offer a discount, their pharmacies are not very clean and hygienic. 5.02 Distribution patterns In prescription medications, the supply chain goes from the manufacturer to the stockists to the distributor and then to the retailer. In FMCG products, the products are sold from the manufacturer to the distributor and then to the retailer.



However, the reliance group, one of the largest conglomerates in India is planning on acquiring many of distributors and consolidating the industry. They plan on being a national distributor. This should level the playing field as many of the independent re tailers have a chemist association that boycotts distributors for supplying to organized retailers. Therefore, many distributors are reluctant to supply to organized retailers. Since Sample Pharmacy is an organized retailer, the problem of boycott is taken care by consolidation from the reliance group. 5.03 Competition and buying Most customers buy medications & toiletries from places that ar e close to their homes. Most business is generated through word of mouth. Multi-Chain stores like lifeken, apollo and trust don't really have great advertising campaigns. Their business is primarily through word of mouth. There are some other customers who buy specialty medicines from specialty pharmacies like c ash pharmacy in Bangalore. 5.04 Main competitors

The following are some of Sample Pharmacy’s main competitors: 1. Surana Medicals, Frazer Town: Been in the market for a long time, the awareness about the store, location, established base of regular customers, fairly organized store are some of his strenghts. No real good customer service, no organized brand identity and no active marketing plan are some o f his weaknesses. 2. Balaji Medicals, Sadashivnagar: Been in the market for a long time, good awareness about t he store, established base of regular customers, good availability of medicines are some of his strenghts. Poor customer service, poor presentation of the store are some of his weaknesses. 3. Medicine House, CMH road: Highly visible location close to a major hospital, good inventory of medicines and experienced staff are some o f his strengths. Below average work culture, delays to customer requests are some of his weaknesses. 4. Prakash Medicals, 80 ft road: Highly visible location, huge inventory of products and exper ienced staff are some of his strenghts. Delays in customer requests and unorganization are some of his weaknesses. This clearly shows that there is a big opportunity in the retail pharmacy market for a re ally well organized, customer oriented and hygienic pharmacy. 5.05 Value proposition

Sample Pharmacy’s value proposition is knowledgeable pharmacist, availability of medicines and 'wow factor' - fun, service and refreshing ambience.

6.0 Sales strategy



Most of Sample Pharmacy’s sales will come from its retail outlets. Each sales associate will be trained to be a customer relationship associate using our sales processes modeled after Rick Segel's and Br ian Tracy's sales methods. Home deliveries will be made to customers for extra convenience. Sample Pharmacy will use soft suggestive selling techniques to increase our average ticket size (ATS). A database of customers with demographic information about what they buy and when they buy have to be maintained. Most likely Sample Pharmacy will use salesforce.com as our database vendor. 6.01 Pricing strategy

Most of Sample Pharmacy’s prices will be manufacturer suggested prices. Moreover, it is ha rd to charge higher prices for the same product and the same brand. However, Sample Pharmacy should have a mark-down section in its stores, that way Sample Pharmacy can offer a discount on some products. This will ensure that products sell faster than normal, build traffic, have customers come back to its stores more often and develop a perception among customers that our pricing is competitive. 6.02 Promotion strategy The following will be Sample Pharmacy’s promotion strategy for the fiscal year 2007-08. 1. An awareness campaign throughout the year by farming its geographic target 2. One launch event or anniversary celebration per year 3. Two health camps per store per year. 4. One charity event per year. 5. Two contests per year. 6. 22 Q&A answer ads in Frazer times, 4 profile ads per year (one every quarter), 1 sale ad per year. 7. 1 sale per store per year. 8. Direct mailers to diabetics, genecology, c ardiac, pediatric and dermatology patients every quarter i.e. 4 times a year. 9. Direct mailers of birthday cards with a g ift coupon every month. 10. Market research (internal) twice a year. 11. Market research through an external agency, if required, once a year. 12. One Diwali promotion a year. 13. One Christmas and New Year promotion per year. 14. Listing on Just dial 15. Listing on the Yellow Pages 16. Implementation will be measured by filling up the pre and post promotion form. 6.03 Sales forecast table FY 2008 Prescription Medications FMCG

Rs 8,912,198 Rs 5,800,333



Total Sales

Rs 14,712,531

Direct Cost of Sales Cost of goods sold PM Cost of goods sold FMCG Subtotal Direct Cost of Sales

Rs 7,397,124 Rs 4,814,277 Rs 12,211,401

6.04 Sales forecast explanation Sample Pharmacy expects sales to be 60% medicines and 40% FMCG. Sample Pharmacy believes sales will increase to average sale of Rs 30,000 per day per store by the end of the fiscal year 2007-08. Sample Pharmacy expects its sales to increase by 15% on average every month during the fiscal year 2007-08. In the fiscal year 2008-09, Sample Pharmacy expects sales to increase by Rs 14,000 on average every month for prescription medicines and Rs 10,000 on average for FMCG products. 6.05 Sales program All Sample Pharmacy sales associates will be extremely presentable. They will wear uniforms at all times of work and present a consistent and professional image of the company. They will be trained in its sales processes. Every new hire has to be trained in its sales process before they get involved in any interaction with the customer.

7.0 Marketing plan Sample Pharmacy marketing strategy is to improve the image of its company by improving the quality of its ads and its communication materials. Sample Pharmacy realizes t hat its business cards, envelopes and letterheads are tools to promote its business. Therefore Sample Pharmacy will get them designed by a good graphic designer thus presenting a classy upscale image of its business. It’s sensory package has to be upscale & exciting. The store interiors & store front should not have anything that is printed from it’s computer on an A4 sheet or cut in pieces of paper as this makes its business look extremely unprofessional. All communication material has to be finished up by a good professional designer to give its business a strong professional image Store staff have to always wear uniforms and present a professional image of the business. The core value proposition of Sample Pharmacy is knowledgeable staff, availability of medicines and the 'wow' factor - service, fun & refreshing ambience. 7.01 Strengths Good ambience: Our stores are very nicely designed & soothing music is played in the background to provide our customers a great shopping experience.



Continuous improvement: We constantly strive to improve ourselves & get better at what we do all the time. 7.02 Weaknesses Owners are still climbing the retail learning curve Certain operational weaknesses as the operations manual is still being developed Cash flows are uncertain, since the last 10 months All stores are not as professional as they nee d to be, employees need to wear uniforms, the store displays need to be much more clearly organized There are certain missed accountabilities Marketing needs to be more active, we have to have solid promotions strategy, solid researc h methods, spread the word and be we ll known in our communities. 7.03 Opportunities

The retail pharmacy industry is fairly unorganized. Most pharmacies in Sample Pharmacy’s com munities are fairly unorganized, unhygienic and lack good customer service. There is a great opportunity for a pharmacy to provide good service in a hygienic & dynamic atmosphere. 7.04 Threats Emerging Competition from organized retailers; Reliance, India's largest conglomerate plans on venturing into the pharmacy retail space. And there are also rumors that other organized retailers may follow suit. Possible price ceiling by government regulation: Since me dicines are important to the community at large, the government may have a price ceiling on the pricing of medicines. 7.05 SWOT analysis

Sample Pharmacy’s strengths include our wonderful store ambience and continuous learning attitude of its organization. Some of its weaknesses is that customer service needs to get better, Sample Pharmacy needs to get better people and Sample Pharmacy needs to have m uch more active marketing and promotion activities. Sample Pharmacy’s opportunities are that there are not that many organized players in the market an d the competitors are nothing special. Sample Pharmacy’s threats are that there is such a big gap for an organized retailer that it seems attractive for large retailers to enter the market. However, Sample Pharmacy does believe it can beat anybody of any size if it focuses on being the best. 7.06 Competitive edge

Sample Pharmacy’s competitive edge is the trust we generate among our customers by positioning ourselves as a world class pharmacy. Also, the design of Sample Pharmacy’s stores and the ambience give Sample Pharmacy a distinct competitive edge with our competition. 7.07 Positioning statement This business plan is only a sample. The name of the actual business and the owners have been changed for confidentiality reasons. For business plan services, email [email protected].


For the person who has a need for medications in its geographic target, who is usually between the age of 25-45 with middle to upper-middle class income. Unlike, many mom and pop operations, who's pharmacies are cluttered, dusty and c ustomer service is poor to non-existent, S ample Pharmacy operated pharmacies are organized, hygienic, have a great atmosphere and are positioned in a m anner where people trust the quality of its products. 7.08 Strategy pyramid

Sample Pharmacy’s main strategy is to position itself as a pharmacy that can be trusted. This is done by portraying a professional image where all e mployees wear a uniform and the store is neatly organized. Providing good customer service where staff welcome them with a beautiful smile and even carry customer's bag to the car. Sample Pharmacy will use consultative selling and relationship selling methods to position itself as a pharmacy that customers trust. All Sample Pharmacy communication materials will be professionally designed by exceptionally good graphic designers to portray a strong image of its business. Position ourselves as experts in our field Sample Pharmacy will have banners in front of its stores that have a punch line that says "Pre scription medicines is our specialty." Sample Pharmacy will have flyers giving a brief description of its business and its staff will distribute these flyers to its geographic target. Sample Pharmacy will have a small 3 page brochure giving a brief desc ription about its business. 7.09 Distribution strategy

Sample Pharmacy’s distribution strategy will be mainly through its retail outlets. Sample Pharmacy will also offer home delivery of medicines as this will be convenient for its customers. 7.10 Strategic alliances It may be beneficial to have tie-ups with doctors and clinics around the area where doctors give Sample Pharmacy customers a discount. This should help the doctors as this will bring t hem more customers and will help Sample Pharmacy customers as this will give them benefits to shop at Sample Pharmacy stores. It also brings Sample Pharmacy closer to doctors as this will help Sample Pharmacy promote its business in their clinics. It may also be beneficial to have tie-ups with other brands where they give us coupons and other incentives for customers to purchase their products. Sample Pharmacy is still developing plans for comarketing programs with its vendors.

8.0 Web plan summary This business plan is only a sample. The name of the actual business and the owners have been changed for confidentiality reasons. For business plan services, email [email protected].


Initially, Sample Pharmacy will not sell products online however Sample Pharmacy may sell products online at a later period which is undecided. Sample Pharmacy will however have a discussion board, groups, events and articles that c hange on a frequent basis, this will keep its customers coming back and involved in the website. 8.01 Website marketing strategy Section omitted

8.02 Development requirements Section omitted

9.0 Management summary

Sample Pharmacy’s philosophy is to hire people who are humble and have a quest for excellence. For Sample Pharmacy to be successful, Sample Pharmacy should be ext remely organized. Sample Pharmacy will need solid sales people with excellent salesmanship skills, A great manager who can motivate and discipline these sales people and a good solid marketing manager. Sample Pharmacy will have to prepare ve ry clear job descriptions and clear position statements where every person is aware of what results he or she is responsible for. Sample P harmacy will have to have a list of requirements for every position when they interview him so that they make good hiring decisions. 9.01 Organizational chart Section ommited

9.02 Organizational structure

Sample Pharmacy’s organizational structure will have one managing director, one accounts department that is outsourced, one operations manager t hat will handle store operations. At the store level we will have 8 pharmacists and 3 housekeepers. The pharmacist’s shifts will be scheduled in a manner such that there will 2 pharmacists during peak times. 9.03 Management team Section omitted

9.04 Management team gaps Section omitted

10.0 General assumptions table



General Assumptions

FY08

FY09

FY10

Current Interest Rate Long-term Interest Rate Tax Rate Other

14% 14% 33%

14% 14% 33%

14% 14% 33%

10.01 Profit and loss table Pro Forma Profit and Loss FY 2008

FY 2009

FY 2010

FY 2011

FY 2012

Sales

Rs14,712,531

Rs29,550,232

Rs32,800,757

Rs36,408,840

Rs40,413,813

Direct Costs of Goods

Rs12,211,401

Rs24,526,692

Rs26,896,621

Rs29,855,249

Rs33,139,327

Franchise fee

Rs294,251

Rs591,005

Rs656,015

Rs728,177

Rs808,276

------------

------------

------------

------------

------------

Cost of Goods Sold

Rs12,505,651

Rs25,117,697

Rs27,552,636

Rs30,583,426

Rs33,947,603

Gross Margin

Rs2,206,880

Rs4,432,535

Rs5,248,121

Rs5,825,414

Rs6,466,210

Gross Margin %

15.00%

15.00%

16.00%

16.00%

16.00%

Sales and Marketing Payroll

Rs0

Rs120,000

Rs132,000

Rs145,200

Rs159,720

Total marketing expenses

Rs349,992

Rs360,000

Rs360,000

Rs360,000

Rs360,000

Other Sales and Marketing Expenses

Rs0

Rs0

Rs0

Rs0

Rs0

------------

------------

------------

------------

------------

Total Sales and Marketing Expenses

Rs349,992

Rs480,000

Rs492,000

Rs505,200

Rs519,720

Sales and Marketing %

2.38%

1.62%

1.50%

1.39%

1.29%

General and Administrative Payroll

Rs1,160,000

Rs1,030,800

Rs1,138,000

Rs1,266,000

Rs1,392,100

Depreciation

Rs240,000

Rs300,000

Rs315,000

Rs330,750

Rs347,288

Rent

Rs780,000

Rs819,000

Rs859,950

Rs902,948

Rs948,095

Printing & Stationary

Rs30,000

Rs30,000

Rs31,500

Rs33,075

Rs34,729

Postage

Rs6,000

Rs6,000

Rs6,300

Rs6,615

Rs6,946

Payroll Taxes

Rs12,000

Rs12,000

Rs217,950

Rs240,503

Rs263,037

Office expenses

Rs6,000

Rs6,000

Rs6,300

Rs6,615

Rs6,946

Outlet maintenance

Rs27,600

Rs27,600

Rs28,980

Rs30,429

Rs31,950

Owners association fees

Rs54,000

Rs56,700

Rs59,535

Rs62,512

Rs65,637

Telephone

Rs108,000

Rs113,400

Rs119,070

Rs125,024

Rs131,275

Electricity

Rs132,000

Rs132,660

Rs139,293

Rs146,258

Rs153,571

Professional fees

Rs180,000

Rs198,000

Rs207,900

Rs218,295

Rs229,210

Operating Expenses Sales and Marketing Expenses

General and Administrative Expenses



Legal fees

Rs84,000

Rs92,400

Rs97,020

Rs101,871

Rs106,965

Travel & conveyance

Rs7,200

Rs8,400

Rs8,820

Rs9,261

Rs9,724

Bank charges

Rs91,992

Rs91,992

Rs96,592

Rs101,421

Rs106,492

Staff welfare

Rs30,000

Rs31,800

Rs33,390

Rs35,060

Rs36,812

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------------

------------

------------

------------

Total General and Administrative Expenses

Rs2,948,792

Rs2,956,752

Rs3,365,600

Rs3,616,635

Rs3,870,775

General and Administrative %

20.04%

10.01%

10.26%

9.93%

9.58%

Other Payroll

Rs153,000

Rs168,000

Rs183,000

Rs192,150

Rs201,757

Consultants

Rs12,000

Rs12,000

Rs12,600

Rs13,230

Rs13,892

Other Expenses

Rs0

Rs0

Rs0

Rs0

Rs0

------------

------------

------------

------------

------------

Total Other Expenses

Rs165,000

Rs180,000

Rs195,600

Rs205,380

Rs215,649

Other %

1.12%

0.61%

0.60%

0.56%

0.53%

------------

------------

------------

------------

Total Operating Expenses

Rs3,463,784

Rs3,616,752

Rs4,053,200

Rs4,327,215

Rs4,606,144

Profit Before Interest and Taxes

(Rs1,256,904)

Rs815,783

Rs1,194,922

Rs1,498,200

Rs1,860,066

EBITDA

(Rs1,016,904)

Rs1,115,783

Rs1,509,922

Rs1,828,950

Rs2,207,354

Interest Expense

Rs579,246

Rs417,275

Rs548,678

Rs505,989

Rs456,914

Taxes Incurred

Rs0

Rs119,552

Rs213,261

Rs327,430

Rs463,040

Advertising

Rs74,000

Rs120,000

Rs126,000

Rs132,300

Rs138,915

Licensing sadashivnagar

Rs126,500

Rs143,750

Rs150,938

Rs158,484

Rs166,409

Total Other Income

Rs200,500

Rs263,750

Rs276,938

Rs290,784

Rs305,324

Net Other Income

Rs200,500

Rs263,750

Rs276,938

Rs290,784

Rs305,324

Net Profit

(Rs1,635,650)

Rs542,705

Rs709,921

Rs955,566

Rs1,245,436

Net Profit/Sales

-11.12%

1.84%

2.16%

2.62%

3.08%

Other Expenses:

------------

Other Income

10.02 Projected profit explanation Sample Pharmacy is expected to achieve profitability in about two years from opening. i.e. Profitability is expected in the fiscal year 2009. This is due to its high overhead costs and high rentals in certain locations. 10.03 Break-even analysis table Monthly Revenue Break-even

Rs 1,697,933

Assumptions This business plan is only a sample. The name of the actual business and the owners have been changed for confidentiality reasons. For business plan services, email [email protected].


Average Percentage Variable Cost 83% Estimated monthly fixed cost Rs 288,649 10.04 Break even explanation Sample Pharmacy predicts that its break e ven to be about 18,00,000 in sales per month. After calculating income from advertising and licensing its sadashivnagar outlet, Sample Pharmacy predicts that its break even will come down to Rs 17,00,000 per month. Sample Pharmacy predicts that it will break even by March 31, 2009. 10.05 Benchmarks chart Section ommited

10.06 Key financial indicators Sample Pharmacy is expected to grow at around 3.6 times in the fiscal year 2007. This is mainly due to higher marketing budgets, effective marketing and effective sales training. Sample Pharmacy’s gross margin is expected to be between 14% - 17%. Sample Pharmacy’s inventory turnover is expected to be 12 to 15 turns per year. Sample Pharmacy does not plan to sell on credit.

11.0 Cash flow table Pro Forma Cash Flow FY 2008

FY 2009

FY 2010

FY 2011

FY 2012

Cash Sales

Rs14,712,531

Rs29,550,232

Rs32,800,757

Rs36,408,840

Rs40,413,813

Cash from Receivables

Rs0

Rs0

Rs0

Rs0

Rs0

Subtotal Cash from Operations

Rs14,712,531

Rs29,550,232

Rs32,800,757

Rs36,408,840

Rs40,413,813

Rs200,500

Rs263,750

Rs276,938

Rs290,784

Rs305,324

Rs1,177,002

Rs2,364,019

Rs2,624,061

Rs2,912,707

Rs3,233,105

New Current Borrowing

Rs0

Rs0

Rs0

Rs0

Rs0

New Other Liabilities (interest-free)

Rs0

Rs0

Rs0

Rs0

Rs0

New Long-term Liabilities

Rs1,500,000

Rs0

Rs0

Rs0

Rs0

Sales of Other Current Assets

Rs0

Rs0

Rs0

Rs0

Rs0

Sales of Long-term Assets

Rs0

Rs0

Rs0

Rs0

Rs0

New Investment Received

Rs0

Rs0

Rs0

Rs0

Rs0

Subtotal Cash Received

Rs17,590,033

Rs32,178,000

Rs35,701,755

Rs39,612,332

Rs43,952,241

Cash Received

Cash from Operations

Additional Cash Received Non Operating (Other) Income Sales Tax, VAT, HST/GST Received

8.00%



Expenditures

Expenditures from Operations Cash Spending

Rs1,313,000

Rs1,318,800

Rs1,453,000

Rs1,603,350

Rs1,753,577

Bill Payments

Rs14,552,977

Rs28,375,508

Rs30,706,949

Rs34,007,668

Rs37,592,855

Subtotal Spent on Operations

Rs15,865,977

Rs29,694,308

Rs32,159,949

Rs35,611,018

Rs39,346,432

Non Operating (Other) Expense

Rs0

Rs0

Rs0

Rs0

Rs0

Sales Tax, VAT, HST/GST Paid Out

Rs1,177,002

Rs2,364,019

Rs0

Rs0

Rs0

Principal Repayment of Current Borrowing

Rs0

Rs0

Rs0

Rs0

Rs0

Other Liabilities Principal Repayment

Rs0

Rs0

Rs0

Rs0

Rs0

Long-term Liabilities Principal Repayment

Rs152,636

Rs236,140

Rs284,198

Rs325,642

Rs375,423

Purchase Other Current Assets

Rs70,500

Rs0

Rs0

Rs0

Rs0

Purchase Long-term Assets

Rs0

Rs0

Rs0

Rs0

Rs0

Dividends

Rs0

Rs0

Rs0

Rs0

Rs0

Subtotal Cash Spent

Rs17,266,116

Rs32,294,467

Rs32,444,147

Rs35,936,660

Rs39,721,855

Net Cash Flow

Rs323,918

(Rs116,467)

Rs3,257,609

Rs3,675,672

Rs4,230,386

Cash Balance

Rs632,293

Rs515,826

Rs3,773,434

Rs7,449,106

Rs11,679,492

Additional Cash Spent

11.02 Projected cash flow explanation Paid-up capital + Loan from the director = Rs 73,60,000 approx. The business will need about Rs 15,00,000 to fund its working capital requirements. The business expects positive cash flow from the month of December 2008 onwards. 11.03 Balance sheet table Pro Forma Balance Sheet FY 2008

FY 2009

FY 2010

FY 2011

FY 2012

Cash

Rs632,293

Rs515,826

Rs3,773,434

Rs7,449,106

Rs11,679,492

Accounts Receivable

Rs0

Rs0

Rs0

Rs0

Rs0

Inventory

Rs1,391,653

Rs2,157,591

Rs2,366,071

Rs2,626,339

Rs2,915,237

Other Current Assets

Rs1,193,545

Rs1,193,545

Rs1,193,545

Rs1,193,545

Rs1,193,545

Total Current Assets

Rs3,217,490

Rs3,866,962

Rs7,333,051

Rs11,268,990

Rs15,788,274

Rs3,525,054

Rs3,525,054

Rs3,525,054

Rs3,525,054

Rs3,525,054

Assets

Current Assets

Long-term Assets Long-term Assets



Accumulated Depreciation

Rs240,000

Rs540,000

Rs855,000

Rs1,185,750

Rs1,533,038

Total Long-term Assets

Rs3,285,054

Rs2,985,054

Rs2,670,054

Rs2,339,304

Rs1,992,017

Total Assets

Rs6,502,544

Rs6,852,016

Rs10,003,105

Rs13,608,294

Rs17,780,290

Accounts Payable

Rs446,632

Rs489,538

Rs590,843

Rs653,402

Rs722,280

Current Borrowing

Rs0

Rs0

Rs0

Rs0

Rs0

Other Current Liabilities

Rs270,400

Rs270,400

Rs2,894,461

Rs5,807,168

Rs9,040,273

Subtotal Current Liabilities

Rs717,032

Rs759,938

Rs3,485,304

Rs6,460,569

Rs9,762,553

Long-term Liabilities

Rs4,297,364

Rs4,061,224

Rs3,777,026

Rs3,451,384

Rs3,075,961

Total Liabilities

Rs5,014,396

Rs4,821,162

Rs7,262,330

Rs9,911,953

Rs12,838,514

Paid-in Capital

Rs5,000,000

Rs5,000,000

Rs5,000,000

Rs5,000,000

Rs5,000,000

Retained Earnings

(Rs1,876,201)

(Rs3,511,851)

(Rs2,969,146)

(Rs2,259,225)

(Rs1,303,659)

Earnings

(Rs1,635,650)

Rs542,705

Rs709,921

Rs955,566

Rs1,245,436

Total Capital

Rs1,488,149

Rs2,030,854

Rs2,740,775

Rs3,696,341

Rs4,941,776

Total Liabilities and Capital

Rs6,502,544

Rs6,852,016

Rs10,003,105

Rs13,608,294

Rs17,780,290

Net Worth

Rs1,488,149

Rs2,030,854

Rs2,740,775

Rs3,696,341

Rs4,941,776

Liabilities and Capital

Current Liabilities

11.04 Balance sheet explanation

Sample Pharmacy’s projected financial statements show that it will not have difficulty meeting its debt obligations as long as it meets its objectives. S ample Pharmacy has taken a fairly conservative approach to its financial planning. The business will see an increase in net wor th from 2009 onwards.

12.0 Financial plan summary

Sample Pharmacy’s goal is to break even much faster than what it has forecasted in its financial plan. Sample Pharmacy plans on raising Rs 40 lakhs in e quity. Part of the capital will be used to finance its operating expenses and the remaining will be ke pt as cash reserves that may be used to pay off existing debt, acquire other businesses and/or generate additional revenue streams. 12.01 Long-term plan

Sample Pharmacy’s growth in FY 2008 is expected to be 3.68 times from its previous year. In FY 2009 Sample Pharmacy expects 100% growth in revenues and the fiscal years 2010, 2011 and 2012 sales is expected to grow at about 11%. 12.02 Valuation This business plan is only a sample. The name of the actual business and the owners have been changed for confidentiality reasons. For business plan services, email [email protected].


Sample Pharmacy has valued its company at Rs 90, 00,000. New issues of its stock is priced at 2.5 times the face value. 12.03 Investment offering At this point Sample Pharmacy may ge t in investors who invest Rs 40 lakhs into the company for about 25 - 30% of the total capital structure. Sample Pharmacy would ideally prefer 1 to 4 investors. The price of the shares is very nominally priced at 2.5 times the face value. 12.04 Use of funds Working capital Rs 1,500,000 Cash reserves (for acquisitions or debt) Rs 2,500,000 Total Rs 4,000,000 12.05 Use of funds explanation About Rs 15,00,000 will be used for working capital purposes. We will have some additional funds as cash reserves to retire existing debt or for acquisitions, capital improvements or other opportunities that may come up. 12.06 Payback Sample Pharmacy does not plan on paying its investors any dividends. Sample Pharmacy ’s philosophy is to reinvest the money back into t he business and increase shareholder value. Sample Pharmacy plans on a management buyout by 2012 at 3 times the original investment of the investor. This buyout will be financed by internal accruals, provided there are enough cash reserves. Sample Pharmacy predicts it will have cash r eserves to buy back 50% of the shares. 12.07 Ratios table Ratio Analysis Sales Growth

FY 2008 368.68%

FY 2009 100.85%

FY 2010 11.00%

FY 2011 11.00%

FY 2012 11.00%

Percent of Total Assets Accounts Receivable Inventory Other Current Assets Total Current Assets Long-term Assets Total Assets

0.00% 21.40% 18.36% 49.48% 50.52% 100.00%

0.00% 31.49% 17.42% 56.44% 43.56% 100.00%

0.00% 23.65% 11.93% 73.31% 26.69% 100.00%

0.00% 19.30% 8.77% 82.81% 17.19% 100.00%

0.00% 16.40% 6.71% 88.80% 11.20% 100.00%

11.03% 66.09% 77.11% 22.89%

11.09% 59.27% 70.36% 29.64%

34.84% 37.76% 72.60% 27.40%

47.48% 25.36% 72.84% 27.16%

54.91% 17.30% 72.21% 27.79%

Current Liabilities Long-term Liabilities Total Liabilities Net Worth



Percent of Sales Sales Gross Margin Selling, General & Administrative Expenses Advertising Expenses Profit Before Interest and Taxes

100.00% 15.00% 26.12% 2.38% -8.54%

100.00% 15.00% 13.16% 1.22% 2.76%

100.00% 16.00% 13.84% 1.10% 3.64%

100.00% 16.00% 13.38% 0.99% 4.11%

100.00% 16.00% 12.92% 0.89% 4.60%

Main Ratios Current Quick Total Debt to Total Assets Pre-tax Return on Net Worth Pre-tax Return on Assets

4.49 2.55 77.11% -123.38% -28.24%

5.09 2.25 70.36% 19.62% 5.82%

2.1 1.43 72.60% 23.58% 6.46%

1.74 1.34 72.84% 26.84% 7.29%

1.62 1.32 72.21% 28.39% 7.89%

Additional Ratios Net Profit Margin Return on Equity

-11.12% -109.91%

1.84% 26.72%

2.16% 25.90%

2.62% 25.85%

3.08% 25.20%

0 0 8.65 33.58 6 2.26

0 0 13.82 58.05 6 4.31

0 0 11.89 52.14 6 3.28

0 0 11.96 52.14 7 2.68

0 0 11.96 52.14 7 2.27

3.37 0.14

2.37 0.16

2.65 0.48

2.68 0.65

2.6 0.76

Rs2,500,459 -2.17

Rs3,107,024 1.96

Rs3,847,747 2.18

Rs4,808,421 2.96

Rs6,025,721 4.07

0.44 11% 2.55 9.89 0

0.23 11% 2.25 14.55 0

0.3 35% 1.43 11.97 0

0.37 47% 1.34 9.85 0

0.44 55% 1.32 8.18 0

Activity Ratios Accounts Receivable Turnover Collection Days Inventory Turnover Accounts Payable Turnover Payment Days Total Asset Turnover Debt Ratios Debt to Net Worth Current Liab. to Liab. Liquidity Ratios Net Working Capital Interest Coverage Additional Ratios Assets to Sales Current Debt/Total Assets Acid Test Sales/Net Worth Dividend Payout



Appendix Section Ommitted

Usually includes entrepreneur resumes and profiles. And market research information.



Sources Section omitted.




Business Plan Sample Pharmacy

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