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How to Overcome the Challenges of Running a Family-Owned Pharmacy

How to Overcome the Challenges of Running a Family-Owned Pharmacy by Elements magazine |

July 2, 2018

Inside: A family-owned pharmacy faces unique business challenges. Learn the common problems and how to overcome them.

Independent pharmacies often feel like family. But many actually are.

And, family-owned businesses offer real advantages.

Some of the advantages are personal. You get to work with people you know and love. You get to experience shared ownership and accomplishment. And, you get to do things your way. No dealing with outside investors or partners with different values. And, many patients love to shop local at businesses in their community.

Some of the advantages are professional. On average, family businesses tend to outperform their competitors.

According to research from the Conway Center for Family Business and the Harvard Business Review, family-owned businesses:


“When family business owners are largely stewards of their business—who want to grow and pass their company into the next generation and take only affordable dividends from the business—management is able to focus on customers, quality, and long-term growth,” John A. Davis, faculty chair of the Families in Business program at Harvard Business School, wrote in the Harvard Business Review.

6 Challenges of Running a Family-Owned Pharmacy Business

But just as a family-owned pharmacy has unique benefits, it also has unique challenges.

Understanding the challenges will help you address them before they harm your business.

1. Favoritism

When you work with family members, it’s hard to treat them the same as every other staff member.

But non-family staff notice when you treat family staff differently.

They get discouraged when family members with less merit take their jobs. A reliable pharmacy tech probably won’t stick around after she loses a management position to your newly graduated daughter.

And, if non-family employees don’t see an opportunity to advance in the company, you’ll experience high turnover rates.

Non-family staff will also notice when family staff isn’t held to the same quality standards. In a family-owned pharmacy, you might give your son more leeway for mistakes without realizing it, for example.

But if you employ people outside your family, find a balance between keeping the business in the family and treating all staff equally.

That applies to compensation, hours, and benefits. One strategy to ensure fair compensation is to pay everyone, family members included, what the open market pays for their position.

Create policies for your business that you’ll follow no matter your relation to employees. Policies will help you stay consistent even when you’re tempted to show natural favoritism to your loved ones.

2. Generational differences

Conflicts often arise when established owners start to share ownership with younger family members.

Younger members may bring their own ideas shaped by their generations’ culture and new trends. Often, that means they want to make changes to the business even if the business is currently successful. The owner, who’s been running the business for decades, may resist changes.

William Lauder, chairman of the $7 billion family-owned company Estee Lauder, told the University of Pennsylvania, “[Older family members might say,] ‘When I was your age, I did this or that.’ The ability to say, ‘Gee, you know, I’m not so certain that might work right now,’ isn’t so easy.”

Although generational gaps can create conflict, they can also create growth. According to the Conway Center for Family Business, the environment for innovation in family businesses improves when more generations of the owning family are actively involved in the business.

Which means both sides of the generation gap should stay open to the other’s ideas. Make sure to fully listen to and consider ideas before turning them away.

Even if you don’t see eye-to-eye, it’s important to disagree respectfully and professionally. A disagreement between a father and son can easily grow personal more quickly than a disagreement between two non-related professionals.

3. Personal issues become professional issues

It’s difficult to separate home life from work in a family-owned pharmacy.

Weekend conflicts carry over into the workplace on Monday. Unaddressed, serious personal issues surface during trivial work disagreements. Etc. It’s hard to break free from normal habits of family disagreement when you’re in the workplace.

On the flip side, good personal relationships can also influence business decisions. Imagine celebrating a fun birthday with your son in the evening and then trying to objectively evaluate his poor marketing plan with him in the morning.

In the worst case, severe conflict within families can rupture a family-owned pharmacy business. For example, an incredibly successful gelato shop in Vancouver sold its stores after a family feud between the co-stakeholders, a wife and husband. Even after making nearly $4 million per year, the company couldn’t overcome the family issues to continue managing the business.

Try these strategies to keep personal and professional lives separate:


4. Lack of formal structure

A family-owned pharmacy can suffer from a lack of organizational structure. This includes the absence of official policies, processes, and documentation. Or, it may not enforce established policies.

Policies and documentation may seem unnecessary if you run a small pharmacy composed entirely of family members. You don’t need to document that your son defied you at work, right? After all, you don’t report to a higher organization, investors, or a board of directors.

But a lack of policies and clearly defined structure can result in complacent employees and unresolvable conflict. It leads to inconsistent performance and enforcement.

Even if your pharmacy only employs family members, create formal policies and structures. And stick to them.

5. Hiring family members without the right skills

At some point, you may want to give a job to a family member who needs one. In fact, many family business owners feel pressure to do so.

For example, imagine your niece is out of a job and needs one to get by.

Sometimes hiring a family member out kindness or obligation can result in having an employee without the proper skill set.

And when it becomes clear the family member can’t perform her role, you’ll have a hard time letting her go.

This situation can hurt your business and make recovering difficult. And it can lower workplace morale if you have non-family employees.

Before hiring family members, make sure they can contribute in a meaningful way to your business.

6. Creating a succession plan

Nearly half of family business owners have no succession plan in place. And only 30 percent will successfully transition to the next generation.

Succession planning is hard work. And it’s likely to produce serious conflict when multiple family members want to inherit ownership. So, many small business owners put it off.

But the sooner you put a plan in place, the more likely you are to succeed. If necessary, hire outside counsel to help mediate the process. You may need an objective viewpoint for such an emotionally charged task.

Maximize the benefits and minimize the challenges of your family-owned pharmacy business.


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