Opening a pharmacy can be an immensely exciting time. You’ll have the independence to build a business that serves your community whilst creating your own financial future.

However, while it can be exciting, it can be difficult to know where to start. At RA Accountants, we are experts in helping pharmacists at every stage of their journey. We help pharmacists from start-up to growth to succession.

Based on our experience as specialist accountants for pharmacists, we have created a comprehensive guide that outlines the key considerations you’ll need to make when opening a pharmacy.

Our guide will cover:

• Your pharmacy business plan
• Buying an existing pharmacy vs building from scratch
• How to raise finance for your pharmacy
• Choosing the right location
• Legal and regulatory requirements
• Managing your pharmacy’s finances
• Understanding the opportunities and risks

Create a Business Plan for Your New Pharmacy

One of the first steps you’ll need to make is to develop a comprehensive business plan. A business plan serves as a roadmap for your pharmacy, outlining your goals and the business strategies needed to achieve them.

A good business plan for opening a pharmacy should include:

• Business Goals: Clearly defined objectives for your practice
• Target Market Analysis: Research into who your target customers are, including demographics and their pharmaceutical needs
• Market Strategy: An outline of how your business will meet your target market’s needs
• Competitor Analysis: A complete analysis of your competitors and how you’ll differentiate yourself
• Sales and Marketing Tactics: A plan of your sales and marketing tactics to attract and retain customers
• Financial Projections: A breakdown of your current and projected finances

Thinking through these issues will not only help you think more clearly about the steps you will need to follow – but it can also increase your likelihood of growing faster. One study suggests that start-ups with a business plan grow 30% faster than those without a plan.

The important thing to remember is your business plan is not a static document. As you learn more or situations change, you can come back to your business plan and update it.

Buying an Existing Pharmacy vs Building from Scratch

A crucial early decision you’ll need to make is whether to buy an existing pharmacy or start from scratch (a greenfield pharmacy). There is no right answer to this question – the best option will depend on your personal circumstances.

Key considerations include:

• Upfront Investment: In both cases, substantial upfront investment is required. When acquiring an existing pharmacy, you’ll have a fully equipped business from the start. When setting up a new pharmacy, you’ll be able to tailor the layout and processes exactly to your needs.
• Cash Flow: An established pharmacy will have existing cash flow from day one. This can make your revenue more predictable and provide a quicker return on investment. However, a new pharmacy might have greater potential for growth over the long-term.
• Customer Base: An existing pharmacy will have an established customer base for you to build upon. A new pharmacy will require you to build your customer base from scratch, often requiring greater marketing investment upfront.
• Staff: When acquiring a pharmacy, staff might already be in place and familiar with all the processes. This can be beneficial, but you might also inherit staff issues or embedded cultures that are hard to change. With a new pharmacy, you’ll be hiring and training staff fresh.

Carry Out Due Diligence

If you’re buying an existing pharmacy, performing thorough due diligence is crucial to ensure you’re making a sound investment. You need to assess the financial health of the pharmacy, its customer base, supplier contracts, and the condition of assets. This process helps uncover potential risks or hidden costs and provides clarity on expected return on investment.

There are different ways to acquire a business, typically through an asset purchase or share purchase. Each option has its own tax and legal implications that you’ll need to consider carefully.

If you do need to carry out due diligence, a specialist pharmacy accountant, such as RA Accountants, can prove invaluable. They will guide you through the process and act as your ‘dream team’ in coordinating all the relevant advisors needed – such as your legal team and your bank.

How to Raise Finance for Your Pharmacy

To work out your sources of finance, you’ll need to first think about how much you’ll need in start-up costs. This can be a very difficult process as it can be hard to predict in advance all the costs required in setting up a new venture.

Common costs to open a pharmacy include:

• Stock and inventory
• Rent and deposit
• IT and point of sale equipment
• Staff salaries and costs
• Store fitting and renovations
• Licenses and association fees
• Professional indemnity insurance
• Marketing costs

Talk early to an accountant experienced in working with pharmacies, as their help can be invaluable in developing a fully costed business plan.

Common sources of finance for opening a pharmacy are:

• Personal Savings: This can be money you have saved up yourself, or money from friends and family. However, it is very difficult for an individual to save up adequate funds to completely finance a new pharmacy, but a large sum will be essential for the typical 10-20% deposit you’ll need to take out a loan.
• Bank Loans: The most common way to finance a new pharmacy is through a loan from a bank. You’ll need to pass the bank’s due diligence requirements, so a good business record, a well thought out business plan, and a good relationship with your bank manager are all extremely beneficial when sourcing finance.
• Partnership: If you are unable to raise enough finance by yourself, then going into partnership with one or more partners can be a great way to raise enough capital. Each partner’s financial contributions can help raise a larger deposit, potentially leading to lower interest repayments on loans.

In reality, it is very rare for someone to have enough personal savings alone to be able to buy a pharmacy outright. Most people will use a mix of the finance sources above.

If you have any concerns, seeking professional advice from financial experts is a wise course of action. They’ll be able to help you work out the pros and cons of each finance source and help you develop a plan that is right for you.

Choosing the Right Location

Your location decision will determine your catchment area and customer base. The demographics and competition in your area will influence everything from the services you focus on to your marketing approach and chances of success.

Key factors to consider:

• Local Demographics: Don’t just review the number of people in your catchment area, but also the wider demographic data. Are there lots of families who would benefit from family pharmacy services? Is the area full of elderly residents who might need specialist medication management?
• Competition: Consider what existing competition looks like and why. The presence of competition isn’t necessarily negative if you plan to focus on different services. However, if the market is oversaturated, you might want to look elsewhere.
• Local Development Plans: Look at any upcoming developments. Future residential or commercial developments can rapidly change an area’s demographics, creating new customer bases where none existed before.
• Accessibility: Consider parking availability, public transport links, and accessibility for elderly or disabled customers who might form a significant part of your customer base.

All this information should feed back into your business plan to inform what your pharmacy will look like and how it will serve your community. All this information can then be fed back into your business plan to inform what your pharmacy will look like.

To help you pick a location, the Office National Statistics provide a wide range of open sources for reviewing the demographics of an area. These include:

• Income estimates: see figure 1 on the webpage
• Household composition: see figure 3 on the webpage

On top of this, free tools, such as datadaptive, place these datasets into a more digestible format. For example, you can use datadaptive population density tool to work out how many people live within a specific radius and then overlay with this with the demographic data from the ONS.

As people are highly tied in how far they are willing to travel for pharmacy services, this is often a powerful way of figuring out how many potential clients you could attract. You can then use an AI tool (such as Le Chat or Claude) to review how many competitors are also operating in this catchment.

Top tip: In rural areas, areas where pharmacies are rare or where driving is more prevalent, you can expand the distance people are willing to travel to work out your practice catchment zone. While in urban and highly competitive areas you might choose to reduce distance radius.

Once you have this raw data you can take a few locations and use some basic metrics to measure each locations potential. The end result might look like the below:

In the example above (using three real locations), we can see that although site A has the highest mean average income and highest percentage of population with a greater demand for pharmacy services (the elderly and children), it also has the highest ratio of pharmacies per resident already. Meanwhile sites B & C have similar ratios of population to pharmacies. We can further overlay this with our local knowledge that Site C has a large student population due to its proximity to a major university.

This means while all the sites might be able to support another pharmacy – we might change the services we focus on based on the needs of the local areas. With site A you might focus on services tailored to children, the elderly and discretionary extra purchases. While, with site C you might have a greater focus on contraception and sexual health.

Once, you have narrowed down sites, you can then carry out more detailed analysis by counting footfall (the number of people per hour who walk past a specific location) and even parking availability.

In most cases, when choosing the location of your first pharmacy it always best to choose somewhere you know. This local knowledge can give you the edge in choosing the perfect location for your business.

Another consideration for particularly ambitious pharmacy professional is to even think ahead and consider where you would like to place subsequent sites.  When opening a second or third site, you’ll now be splitting your time between multiple locations so proximity can be an important factor in ensuring you are able to stay on top of the management of multiple locations.

Apply for Licenses and Permits

In order to open your pharmacy, you will need a license from the General Pharmaceutical Council (GPhC). Without this, you will not be able to operate as a pharmacy. The information needed to apply can be found on the Registering a pharmacy premises page of the GPhC website.

To dispense National Health Service (NHS) prescriptions and offer NHS contract pharmaceutical services, you also need to submit a market entry application on the NHS Business Services Authority website.

Additional requirements include:

• Business Registration: You need to decide on your business structure (sole trader, partnership, or limited company)
• PAYE & Pension Schemes: If employing staff, you’ll need to set up PAYE for tax deductions and provide pension schemes
• Professional Indemnity Insurance: Essential for protecting your business and meeting regulatory requirements

You’ll No Longer Just Be a Pharmacist

When you set up a pharmacy, you’ll no longer just be working as a pharmacist – you’ll have all the responsibilities and tasks of a business owner. This can be an immensely exciting and satisfying challenge, but also requires adapting to new roles.

Key areas you’ll need to manage: 

• Staff Management: You’ll be responsible for recruiting, training, and managing a team. This includes ensuring they’re properly trained not just in pharmaceutical procedures but also in customer service and regulatory compliance.
• Customer Experience: Building and maintaining relationships with your customer base becomes crucial. This involves everything from efficient prescription processing to providing additional health services that add value to your community.
• Marketing and Growth: Unlike working as an employed pharmacist, you’ll need to actively attract and retain customers. This might involve building relationships with local GP practices, offering additional services, or engaging with your community.
• Financial Management: An important part of running a pharmacy will be keeping on top of the financial aspects of your business. You will have to look after your accounts, VAT, cashflow, payroll, and other compliance matters. When opening multiple pharmacies, these tasks can quickly build up – eating up lots of time that could be spent running your business.

Luckily, it is possible to outsource or automate some of these financial tasks. If you need advice on how to automate these tasks, we recommend speaking to your accountant who will be able to support you. A specialist pharmacy accountant will also be able to set you up with cloud accounting software – such as Xero. This software will give you real-time access to your financial data, meaning you always know exactly what your financial position is.

If you are looking on ways to grown your pharmacy take a look at our article on the KPIs all pharmacy owners should track. Or, watch our pharmacy accountancy specialists discuss their top KPIs below:

Consider the Opportunities and Risks

Before opening a new pharmacy, it is important to consider that like every business venture, there is always an element of risk. It is always important to map out the costs involved and the level of exposure you are taking on.

Key opportunities include:

• Building a sustainable business that serves your community
• Potential for growth through additional services
• Independence and control over your professional practice
• Long-term financial security through business ownership

Key risks to consider:

• Significant upfront investment requirements
• Ongoing regulatory compliance responsibilities
• Competition from online pharmacies and large chains
• Changes in NHS funding or pharmaceutical regulations

Talking to a specialist accountant in the pharmacy sector can help you understand the financial risks and opportunities involved and develop strategies to mitigate potential challenges.

Ready to Start Your Pharmacy Journey?

Opening a pharmacy requires careful planning, adequate financing, and understanding of both the pharmaceutical and business landscapes. With proper preparation and expert guidance, you can build a successful pharmacy that serves your community whilst achieving your professional and financial goals.

RA Accountants are specialists in offering accountancy services to pharmacy businesses. We offer a complimentary, initial online consultation to discuss your personal circumstances and to see how we can help.

Get in touch to book your appointment today.

This article was originally published in October 2023. We have updated the content in 2025 to reflect changes in the pharmacy sector and add additional useful content.

These articles are for guidance only and professional advice should be obtained before acting on any information contained in them. No responsibility can be accepted for loss occasioned howsoever to any person as a result of action taken or refrained from as a result of reading.