The Challenge

I’ve known Peter and Grant for over 25 years. Peter’s a businessman, great with numbers, who took over his father’s pharmacy business. Grant, on the other hand, went out of his way to serve his local community. ‘Look after your customers,’ he said, ‘and they’ll look after you.’ As business partners with five stores in Adelaide, they were a real odd couple. Despite their differing philosophies, they were both passionate about their profession. This probably explains their success, which came against the odds—because they had two massive problems staring them in the face.

The discount pharmacies were coming in hard and fast, stealing market share, driving down prices and margins. Worse, they were changing customer perceptions. Their low cost, low value approach threatened the traditional pharmacy model. 

I ran the numbers for Grant and Peter. They told a compelling story. Chasing prices all the way to the bottom would not work. We had to make the high price, high value, community-based model work for their business.

But we had a second problem. Their business was weighed down by four junior partners. While Peter and Grant had 60% of the voting rights, the juniors were holding the business back. Some of them were down in the weeds, looking after the bookkeeping or working in-store. They lacked the vision needed to guide the business through these challenging times.

I went to Grant and Peter. ‘This is not going anywhere,’ I told them. ‘These four partners are killing you.’

The Solution

We bought out the juniors. That might sound messy, but it wasn’t. Grant and Peter did their groundwork. They set out their long-term business strategy, so the juniors knew where they stood. When it came time to finance the buy-out, Grant and Peter had all the data they needed to back their vision. The bank didn’t baulk.

No one likes being told they’re redundant, and no one likes being the bearer of bad news. Were there some bruised egos? Of course. Did any of the juniors try to leverage some extra cash? They wouldn’t be human if they didn’t. But in the end, the buy-out was just a business decision. For Plympton Pharmacy to succeed, it was the only feasible option.

The Result

Tamara and I looked after the backroom details—the bookkeeping and tax planning—freeing up more time for Grant and Peter. They focussed on strategy—how to beat the discount kings while building Plympton’s reputation and profitability. Did they succeed? Absolutely. They took the group profit from somewhere between $400,000 and $500,000  to $1,400,000 in a couple of years. This added $5 million to the valuation of the business! Something they couldn’t have achieved while carrying so much excess baggage.

© Evan Bulmer