Business Masterclass with Anthony Yap - video transcript
This is a transcript from Anthony Yap's talk at Brisbane City Council's Lord Mayor's Business Forum on 7 May 2014 at Banyo. He shares his story of building a successful business through good times and when faced with challenges.
In order to succeed, your desire for success must exceed your fear of failure. I thought that quote was really relevant tonight, because when I first started my first store, the one thing that I wanted more than anything was to succeed and the fear of failure was something that I did not even consider and so started the Good Price story, with just one store and one full time employee. I never thought that over the next 13 years that that story would take me to over 40 stores across six states and over 700 employees.
Good evening ladies and gentlemen, my name is Anthony Yap and I'm the managing director and founder of Good Price Pharmacy Warehouse. It is my pleasure to be here with you tonight to share with you my story, from getting my first store through the ups and downs of my career to create Good Price Pharmacy to what it is today.
So my career in pharmacy started in '98 when I finished my degree at the University of Queensland. In '99 I registered as a pharmacist and in 2000 I was appointed the manager of the Terry White Chemist at Aspley. Now this year I spent trying to learn as much as I could, trying to be a good pharmacist, trying to be a good manager, trying to be a good stock controller and pretty much everything in between. But the one thing that I took out, I knew from that point on I was passionate about business and I was passionate about pharmacy.
The other thing I took out from working under a big chain was the importance of systems and procedures, having good systems and procedures is absolutely imperative, so that what happens in one store happens across the network of stores so that you get consistency. It is one thing that is absolutely essential: have the right systems and protocols, get your store running efficiently and profitably before you even think of trying to expand.
In 2001 I decided I needed to go out on my own. So one day, as it happened, coming back from work, I popped into the pharmacy just around the corner from where I used to live. I introduced myself to the pharmacist, told him I was a young pharmacist, wanting to find my first business and asked him if he wanted to sell his business to me. And surprisingly, he said yep, I'm at that age, I want to sell my business, but unfortunately I promised to sell that business to somebody else. I didn't take no for an answer, so I persisted. So from that day on, I went to that store every night after work and talked to that pharmacist, help him dispense scripts, help him close up and two weeks' later I asked him again, Leon, I want to buy this store, what is it going to take.
He thought about it for a minute, he said, $370,000. I know the store's not worth $370,000, but that is what I need to retire. So I took that home, thought about it and came back the next day, which was a Friday afternoon and I said to him, Leon, I'm going to offer you the full price, $370,000, but you're going to have to give me an answer by Monday. So that weekend, being the honourable guy he was, he spent trying to track this pharmacist down who he'd promised to sell his pharmacy to; tracked him down to in a wedding in India.
He said, look I've got this guy, he's offered me the full price, I promised that I was going to sell you the store, you can still have it if you match that price. Thankfully for me, he declined. So 2001 I purchased my first store, $370,000, $50,000 deposit and a wholesaler guarantee. So all we did there was we implemented simple systems and procedures, we concentrated on things like pricing, merchandising things, advertising and within the first year, we had that store revalued at $1.2 million. So we created this huge amount of equity which was going to give us the ability to expand.
But six months after purchasing that first store, we'd already found our second store. So we found the store in Zillmere, it's a suburb on the north side of Brisbane, so it was one of three pharmacies in a little strip. The smallest pharmacy there was owned by a Robert Good and a Robert Price, so the name Good Price Pharmacy was born. So in 2001 we purchased the Good Price Pharmacy at Zillmere for $120,000 and we moved that pharmacy across the road into the biggest medical centre in the strip. So from a turnover of $300,000 to a turnover just under $1 million in its first year, that too was almost an immediate success.
We went on 12 months later to purchase the Albion Day Night Pharmacy. So we purchased that store for $340,000 and 18 months later, we sold that for $800,000, so a nice tidy profit. But the biggest opportunity for us came in between all this. So in 2003 I identified a bulky goods location in the south side suburb of Cannon Hill. So by this time, after having three stores, I'd pretty much travelled Australia. I'd seen all the major pharmacies in Australia, I'd looked at every retail model and what sort of resonated with me was this new concept called big box retail. So it was nothing new. Bunnings were doing it in hardware, JB HI-FI was doing it in consumer electronics and I thought, well why can't we take that idea and merge that into pharmacy? Having the biggest range and the lowest price I'm sure would resonate with consumers.
So in 2003 we opened our first Good Price Pharmacy Warehouse and that too was almost an instant success. The big box model is traditionally like several times the size of a normal pharmacy. We run on an everyday low pricing strategy with a broader range of products, we have an aggressive marketing strategy and we have a real strong focus on good systems and procedures. And from that day, from opening that first store, I knew that this model was the model that was going to take pharmacy into the future. I knew that if we were going to compete against the established players, we had to do something different, we had to do something unique, we had to do something innovative for our industry and this big box model was all of the above.
But in 2004, I faced one of my biggest challenges. So we were negotiating for a site on Logan Road in the suburb of Mt Gravatt. We won the lease to the old Harvey Norman site and we were pretty chuffed because it was a great location. But little did we know that the people that we bid out were the biggest independent owners of pharmacies in Australia and they weren't too impressed. So what they did was they paid the furniture store two doors down from us to relocate and they were going to open their big box model two doors down from us within one week of our grand opening.
Now a meeting was called between a business partner and I - we were 26 years old at the time - and four of the biggest independent pharmacy owners in Australia. Now just the thought of that was intimidating in itself, but nothing was going to prepare me for what was going to happen. So for the next hour in this meeting I was told how $3 million was getting put aside so that we would bleed to death, so we would serve as an example to the rest of the pharmacy industry not to compete.
Now we were faced with two options: we were to close down and lose half a million dollars, or do we actually stand and fight and potentially suffer a slow painful demise. Now I can still remember standing out at our location at 12 midnight, Hanh was there, looking at our site and looking at their site, their site being markedly better, because the problem for us was that customers had to drive past their door to get to us.
So I was thinking, this is not a good situation to be in. So we had a few stores, they had a chain of about 50 or 60 stores; it was not a fair fight. But that is where we made a decision, to stand and open up and I think that is what I consider one of my career-defining moments. We decided to take belief in ourselves, to take belief in our model and stand up and fight.
Ten years on, that store is still there and that serves to us as a constant reminder that we were able to compete with the best and that spurred on our expansion plans. We knew that when we faced this competition we had to evolve our systems and procedures faster than what we would do by ourselves, simply to survive.
So after this, we continued to expand through Queensland, through New South Wales until in 2007 we hit our second major setback. So in 2007 the original four partners of Good Price Pharmacy decided to go their separate ways and it wasn't an amicable split. So for any of you who have undergone a partnership dissolution, it is the most soul destroying thing you could ever go through. Just the thought of going, waking up each morning, talking to solicitors, accountants, advisors, barristers, it's not something that's pretty. But luckily for us, by 16 June 2008, the partnership dissolution was resolved and Hanh and I walked away with the brand and all the stores and our ex-partners walked away with a huge lump sum payout.
Now the lesson that I learnt from that was that if you ever go into partnership, most important thing is to have a really good partnership agreement with a very clearly explained exit strategy. Because it doesn't matter how good friends you are when you start, it doesn't matter how closely your visions are aligned to each other, there will come a time where your priorities will change. There will come a time where people want different things and that one piece of advice could potentially save you millions of dollars.
But the thing that the dissolution enabled us to do was that we did not expand for one whole year. That gave us the time to develop our systems and our procedures, so when that dissolution was complete, we hit the ground running: five stores in five months to bring it over 15. We've spanned across six states. By 2009, we were ready for our next phase of expansion and that was franchising.
The capital intensive nature of pharmacies was always going to prohibit our brand growth, so franchising was the next logical step. What we could do is we could leverage the equity the franchisees had, we would access areas which otherwise would be financially unviable for us to do ourselves. And what we would give in exchange is we would give them proven systems and procedures to build a profitable business that would be sustainable into the future. But with the expansion plans, with franchising, we realised that we had to improve our infrastructure, we had to improve the support that we gave to the stores. So we set out about getting the right people. We knew at this stage we needed to get some external expertise.
So we got some external expertise in to help reorganise our head office. We reorganised our head office into six departments: HR, finance, IT, category management, business development and marketing. So each of those units were tasked with developing their own systems and procedures to improve efficiency, reduce costs and improve profitability for the stores. Each of those heads were accountable.
So the story so far is, okay, we started with just one store and one full time employee. We have over 40 stores across six states, over 700 employees, we've had double digit growth for the last 12 years and we have an annual turnover probably approaching $250 million. People often ask me, though, what do I think are the key ingredients to success. And when I look back at the journey, I think about three things. I think about passion, I think about persistence and I think about people. I think you've got to be passionate about what you do because it makes that so much easier. If you're not passionate in your job, well then you're probably in the wrong profession.
You've got to be persistent. Never give up because things never happen to a plan, but if you continue to persist, you've got that greater chance of making it happen. But most importantly, people. Surround yourself with great people with the same vision and the same commitment that you have, that have skills that complement your own.
We took a very, very simple idea of big box retail, having the biggest range, having the lowest price and what our team has done is build a brand that has played a small role in revolutionising the way pharmacy in Australia is practised today and for that I am extremely proud. Our next challenge is to find the next innovation, the next unique thing that will take pharmacy to tomorrow.
Thank you everyone.
Go back to the Growing your Business - Business Masterclass videos.