August 17, 2022
Many pharmacy owners don’t realise that they don’t own the digital assets in their pharmacy business. Treating digital assets as though they were brick-and-mortar assets unlocks growth potential in your pharmacy.
Technically, digital assets are just digital files that your pharmacy has the right to use.
Like any asset, digital assets’ value is comprised of two major factors. Both the labour it takes to create (what it is), but also the value it generates (what it does).
The Pharmacy2U website, as an example, is more valuable than most pharmacy websites.
One aspect of that value is the investment in both the time and skill that it took to build a website capable of both attracting and managing the business that it does. Let’s say, for argument’s sake, it cost £50k in labour for the business to build that website.
That value is limited. There is only so much money can buy when it comes to websites. Eventually, the money you invest will have diminishing returns from what you get from the website. If it came to selling Pharmacy2U, if the website had just sat there unused, it still has a lot of potential value, but it’s only worth the £50k it cost to pay for it. So it would count towards the value of the business. But it wouldn’t really increase it. That only counts for anything when you invest in your own assets, they didn’t rent Software as a Service (SaaS). But that’s where we arrive at the second aspect of value.
The secondary value has a much vaster potential. And that value is how much business is driven through and by the website. This value incorporates the fact that when you Google “online pharmacy”, from pretty much anywhere in the UK, the website shows up in 3rd position.
It’s hard to calculate exactly how much that’s all worth. But even just on the 500,000 items that the website helps to drive, Pharmacy2U’s website could easily be valued at £1,000,000.
Take an email marketing list. There is some inherent potential value in having a list of email addresses. But there’s potential, and then there’s actual value. Actual value is in the reports that show you regularly achieve high levels of engagement and sales through that marketing list.
And the important thing is, if you don’t own that data...that value is not yours to give.
The same argument of actual vs potential value is true of so many cheap pharmacy websites out there. There’s a lot of promise, a lot of potential. Many software-as-a-service options have the ability to sell products online. But in reality, the web design is dated, the user experience is shocking, and there is no chance that people would opt to shop there over basically any other alternative, of which there are plenty, online.
It’s like having a car that doesn’t have an engine and the steering wheel doesn’t work. So many people get websites for their pharmacy business just because they hear they should have one. But just having a website doesn’t actually accomplish anything. Just like owning a car without an engine. Sure, you get to say you have a car…but what’s the point? If a website doesn’t work as a website should…why are you paying for it?
Understanding what distinguishes a good website from a bad one is the key to understanding why you would pay more.
If you’re renting a van for a restaurant’s delivery service, you can’t include the van as part of the sale if you decide to sell your restaurant.
Paying for Netflix doesn’t mean you have 1000’s of films in your collection. You have access to 1,000’s of films in their collection. If Netflix closes down, or decides to change their prices, or any one of a number of things it can do as a business, you’re left in the lurch.
The software you’re paying for on a subscription basis does not belong to you. As soon as you stop paying for it, the ability to use it, and the data, are gone. You should be extremely cautious of your pharmacy business being overly reliant on third parties. Be the master of your own destiny.
If you’re selling your pharmacy, or plan to one day, understanding these concepts is a really key way to quickly increase the value of your business. Underperforming businesses don’t command high prices. Returning for a moment to the house analogy, if a house needs a lot of work doing, you’re not going to pay as much for it.
If you were going to buy a business, you’d want to understand how it generates business, so you can continue operations successfully. The reality is that pharmacies without digital assets struggle to demonstrate the potential for new business. They might rely on knowledge, relationships or networks that will disappear with them.
Having a robust digital ecosystem is one of the most reliable ways of demonstrating future value to a potential buyer. And that separates you from a lot of other pharmacy businesses out there at the moment. Which means you can raise your asking price.
Have any further questions about how to increase the value of your pharmacy with digital assets? You can get in touch with us on the Pharmacy Mentor Contact Page, or book in for a conversation with our team using our Calendly booking calendar.
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Guest Blog Provided by:
Pharmacy Mentor
pharmacymentor.com
