The pharmacy sector is dominated by family businesses which are the powerhouses of the global economy. Two-thirds of businesses in the UK are family-owned (4.7 million) and they generate over a quarter of the UK’s GDP and 70% of annual GDP globally.
While all businesses are impacted by accelerating technology and the need for innovation, family-run pharmacies have to think about its impact on generational transfer because they need to find the family members with the skills to lead the business in an accelerating global economy. Succession planning can be challenging.
Facebook, Instagram or other social media have transformed traditional business practices, so families need to make the business attractive to the younger generation to succeed.
The next generation, also need to feel connected to the family business. Attitudes are shifting. Members of this connected generation may not want to just follow the well-trodden path into the family business – there are more opportunities out there for them rather than just following in mum and dad’s footsteps.
The very nature of a family business with succession from generation to generation would appear at odds with the digital age: where the time taken to build a successful business is measured in years, not decades or generations.
This overlooks the importance of family businesses to the economies of this new world, and their ability to adapt. It is easy to forget that many such businesses have already survived, and prospered, in times of major change and continue to do so.
As a leading legal advisor to family businesses, we undertook a thought leadership project researching UK and international family businesses and their advisors. Our report The Connected Generation: Rebooting family business succession for the digital age has removed the stereotype that technology is only the remit of the ‘next generation.’
Many of those we talked to, from both the older and younger generations, emphasised the importance of taking the time out to think long and strategically – and to learn from the shared experiences of others who have trodden the same ground and succeeded.
The accelerated pace of change brought about by technology is requiring a professionalising of businesses at an early stage, and more emphasis on the right structure and governance as well as succession.
Family businesses must do two things to innovate and for successful transition:
- Be more collaborative and open so that the next generation feel they can make a difference and test their ideas
- Create a framework to introduce next generation leaders to the business and manage the complex legal and emotional issues involved in transition.
For pharmacies, the current digital challenges and promotion of the skills of the next generation include:
- The rise of online pharmacies. Many prescriptions are received electronically from GP surgeries, dispensed and delivered to the patient. These have disrupted traditional supply models, where premium locations (such as within or close to a GP surgery or on a busy high street) at a high rent or premium may become less attractive to the business.
- Engaging with local patients. Many pharmacists have traditionally worked in the dispensary and relied on customer loyalty through key location and excellent patient care to maintain and build dispensing figures. Cuts in pharmacy funding and government pressure for pharmacists to perform a more clinical function will require new ways of promoting the pharmacy and its services to the local community. Using online information and databases to assess the specific health needs of local patients and tailoring the services offered by the pharmacy to meet those needs is also required.
- The development of mobile internet technology to improve patient health outcomes and build brand loyalty, for example through apps which provide health and lifestyle advice or remind patients when to take tablets.
- The automation of dispensing with discussions around allowing large scale hub and spoke dispensing models.
We have produced a comprehensive guide – Connecting generations: a guide for entrepreneurs and family businesses – which examines the legal and governance issues faced by family businesses at different stages of their development and with a practical focus on the seven key challenges our clients’ face around succession planning:
Our five tips to bringing in the next generation to your family pharmacy business:
- Teach them by example when they are young and pay them to work in the business at weekends and on holidays.
- Send them on a ‘next gen’ course to teach them relevant leadership and entrepreneurial skills.
- Listen to their passions and identify ways they can express them in the context of the business; and see if the business can adapt.
- Ask them to help you solve a technology-related problem or run a social media campaign; and give them ownership of it.
- If they say they don’t want to join the business now, avoid ultimatums; and encourage them to keep an open mind about where they might fit in the business later.
This article was first published by Pharmacy Business.