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Manage and Operate a Generic Drugstore

Home HR and Career Articles Manage and Operate a Generic Drugstore


Manage and Operate a Generic Drugstore
Generic drugstores have sprouted in almost every street corner, with some generic chains now
spending millions advertising on prime time televisionan indicator that they have large profits
to spend. All of this point to generic medicine as a booming business.

But before you put up your own generic drugstore, you must learn what differentiates it from the
usual drugstore. Its strategy is focused on selling mainly generic medicines, although it can also
carry branded items.

From the viewpoint of a small or medium scale entrepreneur, a generic drugstore is far more
attractive than the normal drugstore. The capital needed for a generic store is just a fraction of
what is necessary for a full line store because generic medicines are much cheaper than their
branded counterparts. You can start a generic drugstore for around half a million pesos.

Another advantage of generic drugstores are the high profit margins. Mark-ups of one hundred
percent and more are common, unlike the usual five to ten percent mark-up on popular branded
medicine.

Even if you are not a pharmacist, you can own a drugstore, since you can just hire the services of
a licensed pharmacist. To those who are planning to start a generic drugstore from scratch
instead of buying a franchise, here are some tips on how to operate one:

Get an excellent location. Medicine is usually bought where it is most convenient. Although a
generic drugstore can survive on lesser sales because of the higher margins, you must not forget
that branded medicines are far more popular. A good location is critical to get sufficient sales.

Source generics directly, but branded items through wholesalers. The nearer you are to
the source, the cheaper the price. Unfortunately, branded medicine is very expensive and there
are minimum amounts needed to purchase from the main distributor. If you are just starting, it
would be better to get branded medicine from loose stocks from a wholesaler even if they are
slightly more expensive, in order to lessen your investment.

Get a Point of Sale System. Do not be left behind by technology. Trying to manage your
inventory and purchases with a manual system will leave you with too little time to focus on
other aspects of the business. With the help of additional modules, a good POS will also help
monitor your personnel, automate your accounting and other functions.

Have your store designed by a professional. A well-designed store is not only attractive to
customers, but also the layout should be functional. The cost of renovation should also be
considered.

Study the ideal product assortment. You must have the right product mix. To attract
customers you must carry some branded medicines and other products, but the bulk of the profit
will really come from the generics. In purchasing branded medicine, stock up only the popular
over-the-counter items.

Plan your pricing strategically. A great deal of your profits will come from how well you do
your pricing. You must be able to maintain a high profit margin on your generic items. However,
you must do this while maintaining an image of reasonable prices. The well-known branded items
must be priced competitively.

Generic drugstores are very popular nowadays due to the growing demand for affordable
medicine, but operating them is not simple. You can opt to buy a franchise or you can start a
generic drugstore yourself. If you want to save on capital or simply want more profits by starting
your own drugstore, it would be best to attend a seminar first to see if it is really for you.

BusinessCoach, Inc., a leading business seminar provider, will conduct a seminar on this venture.
Click here to view details of the seminar: How to Start a Drugstore Business

How to Start a Pharmacy


Medicine is one of the basic needs of every society. This explains why drugstores continue to
flourish in sales despite the economic crisis. In the Philippines, for instance, the market for
pharmaceuticals is over P110 billion.

You will notice, too, that drugstores nowadays are not exclusive to medicines but have expanded
to selling health and hygiene products, as well.

If youre one of those who are interested in starting a pharmacy business, here are the simplified
procedures for an easy take-off:

1. CAPITAL. It is possible to start with only Php 100,000 if you own the location and if renovation
would be minimal. But, this amount will only be sufficient if you will stock mostly on generic
drugs. In most cases, the minimum start up requirement will be at least Php 300,000 for a small
drugstore.

2. STOCKS. Plan the product assortment you will be carrying. What other items besides medicine
will you be stocking? This will depend on your marketing strategy and capital available. Take note
that branded medicines have very low margins. You get most of your profit from generic
medicines where the mark up is extremely high.

3. LOCATION. Invest time and money in selecting the best location for your business. This should
be where there is a high pedestrian traffic. Observe the location for at least one week and walk
around the neighborhood to get more information. The legal minimum area requirement is 15
square meters.

4. REGISTRATION. If plan to set up a single proprietorship, register with the Department of Trade
and Industry. For corporations, register with the Securities and Exchange Commission.

5. STAFF. You must then hire a licensed pharmacist as this is one of the FDA requirements before
you can even apply for a license with them. Among the facilities that will be checked is that you
must have a sink with water source. It would be best if you hire sales clerks that already have
extensive experience in a drugstore. Remember that you are selling products that may cause
serious injury if improperly dispensed.

6. CLEARANCE. Apply for a barangay clearance before going to the city or municipal hall for the
mayors permit. Apply for certificate of registration and other permits from the BIR. You may then
use printed receipts or POS (point of sale system). Having a POS is recommended because you
can easily track your inventory and purchases besides other critical control functions.
7. SUPPLIERS. Scout for the best suppliers not only in terms of price but also in reputation and
support. For a start up, it is recommended that you first use the services of a wholesaler for most
items instead of going to a direct supplier. This is because wholesalers allow you to buy a portion
of a box instead of forcing you to buy an entire box which is very costly and may take too long to
sell. in Metro Manila, there are several reputable wholesalers in Divisoria who also deliver to the
provinces.

It would be best if you hire sales clerks that already have extensive experience in a drugstore.
Remember that you are selling products that may cause serious injury if improperly dispensed.

Want to know more about this promising business? BusinessCoach, Inc. conducts seminars on
how to start and operate your own drugstore.

How to Open a Drug Store


Five Parts:Conducting Market ResearchFinancing Your Drug StoreStaffing Your Drug StorePreparing Your Drug Store to

OpenMarketing Your Drug StoreCommunity Q&A

Owning a drug store can be a rewarding and profitable endeavor for someone who wants to
provide a valuable service to a community. However, opening an independent pharmacy is a
challenging process. There is market research to do, financial arrangements to make, licenses to
get, staff to hire, and much more. Before trying to open a drug store, make sure you educate
yourself extensively on what this will entail.

1. 1
Decide whether you will build a new pharmacy or buy an existing one.
When opening an independent pharmacy, you have two choices: either build one
from scratch or buy an existing one. There are different opinions on which option is
better. Each choice has unique challenges and advantages that you should weigh
[1]
carefully before making a decision.

o Buying an existing pharmacy. With this option, you'll get a pharmacy


that has already been established and has a consumer base. You may also be
able to keep some of the staff that worked in the previous pharmacy, which
will save time searching for employees later. However, it will most likely be
more expensive to buy an existing pharmacy. You'll have to get a bigger loan,
find more investors, and wait longer before you start turning a profit from
your business.
o Building a new pharmacy. This option is often cheaper than buying an
existing business. With fewer financial arrangements to worry about, you can
open the store faster. However, you'll be starting from scratch with
customers, so earning a profit may take longer. You'll have to advertise
extensively, preferably before your store opens, to make sure you have
enough customers to keep your business afloat. It may take a while before
enough people know your store to give you a consistent profit margin.

1. 2
Analyze the local community. This will give you an idea of what sort of services
your pharmacy should offer to set it apart from others. Spend some time talking to
local residents about their healthcare needs. This way, you'll see if the local
population has any unique needs that your drug store can cater to. By tailoring your
services to the local community, you can successfully compete with chain stores
that don't offer specialized services. Government agencies or chambers of
commerce can often provide this type of information.[2]

o Determine demographic information that may affect your business. For


instance, if the neighborhood has a large elderly population, you may want to
consider catering towards geriatric needs.
o Look at the economic state of the neighborhood. If the area is
economically depressed, you'll have to keep your prices low to attract
customers. This will also help determine the cost of owning a business in the
area. If the area is affluent you may be able to charge more money, but you'll
also probably pay more in rent, taxes, fees, etc.
o Pay special attention to if an independent pharmacy recently closed in
the area. If you can, investigate why it closed. You can find out what mistakes
this owner made that you can avoid, or it may be a sign to avoid an area
altogether.

1. 3
Decide on a location for your pharmacy. One of the most important aspects to
any successful business is location. When investigating a location, there are
numerous things you'll want to keep in mind.

o What is the competition in the area? If there are several chain


pharmacies within a few blocks, you'll have a tough time building your
business. It isn't impossible, however. Independent pharmacies can compete
with chains if they offer better service or a higher level of expertise than
these competitors. You will, however, have to work much harder to build a
successful pharmacy if there are chains close by.
o Is the area visible? Will people walking or driving by be able to notice
your pharmacy? This is crucial for when you are just starting out, so you'll
want to pick an area that is visible to the local population.
o Look for nearby businesses. Office buildings and businesses are not
only a potential source of customers, but also an indication if the area is good
for business. Large chains like McDonald's usually conduct extensive research
on a location before opening. If there are some of these nearby, it means
other businesses have marked this as a profitable area.
o Consider the accessibility of your store. It would be good if you had
room for a parking lot or there was abundant street parking. Since many of
your customers may be elderly, you'll also want an area without stairs or long
walks. Do not forget to consider accessibility for those with disabilities as
well. The Americans with Disabilities Act (ADA) website can provide additional
information.

4
Talk to other businessmen and independent pharmacists. Running a small
business is always challenging. It can be both reassuring and informative to talk to
others who have been in your position. Meet with other businessmen and
independent pharmacists and ask if they have any advice to offer. While
independent pharmacists in your immediate area might not be willing to share
secrets, you can join national organizations and talk with other professionals, who
are not in competition with you, and get valuable advice. [3]Click here for a list of
national pharmacy organizations that you can join.
1. 1
Find an accountant. A good accountant is crucial for a small business' success.
Acquiring the capital to start a business and managing the business' finances will be
a challenge, so you'll need someone who is experienced to guide you through the
process. An accountant not only helps you with taxes and balances your books- he
will also be your financial adviser and counsel you on business decisions. Therefore,
you'll want to hire someone you can trust. There are many things to consider when
looking for an accountant.[4]

o A personal referral is usually the best way to find a reliable accountant.


Ask other local small business owners who their accountants are and if
they're satisfied with their work. You could also see if your local Chamber of
Commerce hosts networking events for small business owners where you
could connect with potential accountants.
o Schedule an appointment with potential accountants. Most
accountants will offer a free introductory meeting for potential clients. When
you compile a list of candidates, meet with them and discuss their experience
and qualifications to see if they would be a good fit for your business.
o Find out if a candidate has experience working with a small business
and in the medical field. Small businesses and pharmacies have unique
needs, and you'll want someone who has worked with small businesses and
pharmacies or other businesses in the medical field before and understands
how they work

1. 2
Develop a business plan. Before obtaining a loan or finding investors, you'll need
to develop a plan for your business. You will then present this plan to potential
investors to attract capital to start your business. With the help of your accountant
and any other financial/legal advisers you may have, draw up a plan for opening
and growing your business. A good business plan should at least do the following. [5]
[6]
o A description of the service your business will offer. Does something
set you apart from other drug stores? Will you cater to a specific niche?
Investors will want to see this description to determine if your business will
offer the kind of service to make it profitable.
o A projection for the profitability of your business. What are projected
annual earnings for your business? How long will it take for you to begin
earning a profit? Where will your business be in the next few years? Long-
term calculations are important to show investors that they will earn a profit if
they provide you with the necessary capital.
o A full breakdown of your costs. Exactly how much capital do you need
to open this store? Include rent, legal fees, advertising costs, renovations,
and anything else that will go into opening your store. Also include an
amount needed for day-to-day operations. Pharmacies typically take several
weeks to get money from insurance companies for the prescriptions they sell,
so you'll need money to cover your expenses until you receive this revenue.
o The money you've already acquired or will be putting down yourself.
Investors and banks will usually want to see that you've put down money
yourself for the business. This can vary, but it is usually around 20%.

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3
Apply for a loan from the bank. Bank loans can cover a few months to few years
of your pharmacy expenses, depending on the type of loan. Present your business
plan to your bank while applying for a loan. A well-drawn out business plan will
demonstrate to the bank that your drug store will be a sound investment, and it will
be willing to grant you a loan. Also remember that the bank will probably ask more
questions about the business in addition to what is in the business plan, so be
prepared to fully explain the business and your own finances. [7]

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4
Find private investors. In addition to bank loans, you can find private investors to
cover the opening and operating costs of your business. These can either be friends
or family, or other business owners interested in diversifying their portfolios. Present
your business plan to these potential investors to demonstrate that your pharmacy
will bring them a profit.

o In your agreement with investors, be sure to define exactly what your


relationship to them will be. Are they just providing a loan that will be paid
back with interest, or are they actually buying into your business? Make sure
you are both clear on what your relationship will be if they provide you with
capital to avoid any problems in the future. It would help to draw up a
contract and have it notarized to make your agreement official and legally
binding.

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5
Insure your pharmacy. Like with all businesses, you'll need to insure your drug
store to prevent financial loss for yourself. Some insurance, like theft and fire, are
standard for small businesses. Others, like professional liability insurance, is more
unique. Be sure to talk to your accountant, an insurance agent, and perhaps a
lawyer to find out what kinds of insurance you'll need for your business.
Part 3

Staffing Your Drug Store

1.

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1
Write a manual for employees. Running a small business can be unpredictable.
It's therefore very important to have procedures in place so your employees will
respond appropriately to the numerous situations they might experience. Require all
new employees to read the manual as part of their training. This will ensure that all
your staff are familiar with the store's policies and procedures.

o Include the proper way to interact with customers in your manual.


Keeping your customers happy is your main concern when starting a small
business, so you should make certain all your employees are friendly and
helpful.
o Also include what is inappropriate behavior. Make clear what sort of
activities are grounds for a warning and which ones are grounds for
termination. That way if you have to resort to firing someone, you can say
that this was all clearly spelled out in the manual.

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2
Investigate all staff before hiring them. No matter how good you are at multi-
tasking, you'll need a great staff in your pharmacy to help make it successful. Take
care in hiring all of your employees, from pharmacists to cashiers. Perform
background checks, interview them, and make sure they are all up to the task. A
single bad employee can give your store a bad reputation, which will hurt your
business.[8][9]

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3
Hire a pharmacist. All pharmacies need a licensed pharmacist on staff during
open hours. If you're planning on starting a pharmacy, perhaps you are a
pharmacist and will be performing that task. If this is the case, you should still have
a few backup pharmacists to call in case you get sick or need a day off. As the
business owner, you also have to concentrate on making the business successful.
Sometimes this means taking a step back from pharmacy duties and managing the
business at large.

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4
Hire pharmacy technicians. Techs help pharmacists by counting pills, typing out
prescriptions, and making phone calls. While techs usually don't need to have
special qualifications, some pharmacies prefer to hire pharmacy students for these
jobs because they are acquainted with drugs and pharmacy management. Try
advertising at nearby pharmacy schools if you're looking for good techs. Usually a
pharmacy has two techs on duty at all times, although if your store gets busy you
may need more.

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5
Hire cashiers. Usually drug stores have both a pharmacy and a convenience store
that sells household items (usually called the "front"). If this is the case, you should
have two cashiers, one for the pharmacy and one for the front. This way your lines
won't get backed up and you'll keep everything running smoothly.

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6
Hire stock workers. These workers make sure the shelves are neat and well-
stocked, and the store is clean. They are very important because an untidy store will
drive away customers. For smaller stores, usually having only one stock worker on
duty at a time will do, but larger stores will probably need more to keep everything
tidy.

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7
Hire managers. If your store is small enough, you might be able to oversee the
pharmacy and the front by yourself. For a larger store, however, you'll have to
delegate duties. Managers oversee the employees and activities of their given area.
They also help with insurance, billing, accounting, and other office tasks. If your
store is large, you might need two managers, one to oversee the pharmacy and one
to oversee the front. That way they can report to you and keep you updated on
what goes on in the entire store.

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8
Hire security if necessary. Unfortunately, pharmacies are becoming targets for
robberies because of the drugs they carry. For this reason, it may be a good idea to
have a security guard on duty who can help prevent robberies and keep the store
safe.
Part 4

Preparing Your Drug Store to Open

1.

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1
Acquire all the necessary equipment for your business. You'll need at least
the following to make your drug store ready to open. This is only a suggested list,
and you'll likely find that you need other items to get your store ready. [10]

o Computers and all the necessary software.


o Cash registers.
o Phones and phone lines.
o Good-quality chairs for waiting areas. Make sure these chairs have arm
rests so elderly or disabled patients can get up easily.
o Inventory for the front of the store, like paper towels, OTC drugs and
products, food, cleaning supplies, and anything else you'd like to sell.
o Vials and pill bottles for the pharmacy.

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2
Set up your store effectively. The store's layout is important for making
customers want to shop with you. A cluttered store with a poor layout will drive
away customers, which will hurt or even sink your business. Keep the following
guidelines in mind when designing your floor plan. [11]
o Have a cash register by the front door so customers can check out and
then leave conveniently.
o Keep all pharmacy-related activities behind a counter in the back of the
store. This will ensure that pharmacy staff can work efficiently, and is also
important for safety.
o Make aisles wide enough for wheelchairs and people with disabilities to
easily travel down.
o Designate an area for counseling. Your drug store should have a
private area where pharmacists and techs can counsel patients on their
medications. In some locations, this is even a law. Ideally this should be back
by the pharmacy, so your pharmacist doesn't have to travel far from his post
to counsel a patient.
o Organize aisles by product and hang signs above aisles indicating
which products are there. This will help customers find what they need
quickly and ensure they leave happy.

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3
Set up a security system. All businesses need security in place to keep
employees safe and protect your financial investment. You should look into
surveillance cameras, alarms, grates for windows, and a safe to help thwart
robberies.

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4
Get all the licenses, permits, and certifications necessary for opening.
These certifications vary depending on the location of your pharmacy, so you'll have
to consult local laws to ensure that you are meeting all necessary qualifications. It
would be helpful to consult a lawyer who is familiar with the laws for your industry
[12]
to make sure you are getting all the paperwork you need.
o For example, in the United States, a state pharmacy license. Each state
has a board of pharmacy that evaluates pharmacies and grants licenses.
Contact your state's board of pharmacy to get this certification. Sometimes
the state board of pharmacy will also want to inspect your pharmacy before it
opens, so stay in contact with this office to make sure you are complying with
all laws.
o An additional requirement in the United States is a DEA number. The
Drug Enforcement Agency regulates the sale of narcotics, so you will have to
register with this agency for permission to do so. Contact your local DEA
office to get federal certification.

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5
Open your pharmacy before your "grand opening." Any new business will
have a few bugs that have to get worked out- your drug store will be no exception.
Therefore, it is a good idea to have some time before the official grand opening to
work out the kinks.

o If you have a big flood of customers on your grand opening and you
experience problems, you and your staff can easily be overwhelmed. If
service suffers because of it, your store could get a bad reputation right from
the start.
o To avoid big problems, open your doors one or two months before your
actual grand opening. This will help you work out any kinks in your system
with only a few customers to deal with. That way, you can make sure
everything runs smoothly on your grand opening.
Part 5

Marketing Your Drug Store

1.

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1
Market your store before it opens. You'll want to make sure that by your
opening day, everyone in the community knows about your store. There are many
ways you can advertise your business before your grand opening.

o Hang a large "Coming Soon" banner outside your store to pedestrians


and drivers will know that a business will open soon, and take out an ad in
the "Coming Soon" section of your local newspapers.
o Send out circulars in the mail or place them on houses manually. These
flyers should describe your business and the services you will offer. It would
also be good to include some opening day sales to attract customers.
o Use social media. Start a social media page for your business. Share it
on your own personal page and ask friends, family, and staff to do the same.
With enough shares, you can get a lot of free advertising.

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2
Sponsor a large celebration for your grand opening. When your store is all set
up and you've worked out any problems in your system, announce to your local
community that you've officially opened. Contact local news outlets and see if they
will cover the event. Also see if the mayor or another local politician will partake in a
ribbon-cutting ceremony- this will attract the press and a lot of community
attention. With a big grand opening event, you can ensure that the entire
community will know about your store opening.

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3
Join local community organizations. Pharmacists and other small business
owners are often active in their local communities. This helps expose both them and
their businesses to the public and helps profits. See if there are any events at local
schools, parks, religious institutions, and civic associations. Stay active in your local
community to have your business recognized.[13]

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26.jpg/aid1359563-728px-Open-a-Drug-Store-Step-26.jpg" width="728"
height="546" class="whcdn">

4
Partner with other medical professionals in the area. Referrals from doctors
can be a great way to grow your consumer base. If there is a doctor's office nearby,
go in and introduce yourself. Ask if the doctor would mind you leaving a few
business cards or circulars in his office. If you make a good impression and
demonstrate that you're a health professional who cares about your patients, he
may start referring his patients to you.[14]

Community Q&A

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What is the minimum size shop needed for a retail pharmacy?

wikiHow Contributor

This is regulated by law in your region or country.

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How can I buy medicines for my new store?

wikiHow Contributor

Contact another drug store owner and ask him about his suppliers.

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Can a pharmacist treat patients?

wikiHow Contributor

No, but they can discuss medicine interactions.

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What qualifications are needed for opening a new medical store?

wikiHow Contributor

The minimum qualification for opening a pharmacy is that you need to be a


registered pharmacist within the region.

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Unanswered Questions

What qualifications are needed for opening a new medical store?

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Tips
Join professional organizations and associations to stay abreast of new
developments in the industry.

Consider using a staffing agency if you're having difficulties finding qualified


staff.

Warnings
One of the biggest reasons for pharmacies failing is under-capitalization. Be
sure to come up with a very good estimate of what your day-to-day costs will
be when asking for a loan. Otherwise, you could end up short and have to
declare bankruptcy.

Never open a drug store without having sufficient insurance coverage.

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Sources and Citations


1. http://smartretailingrx.com/buying-selling-pharmacy/starting-a-pharmacy/

2. http://www.rxownership.com/first_steps_Start-ups.html

3. http://www.cardinal.com/us/en/essential-insights/qas/EI-QandA-
SageAdviceFromPharmacists

Show more... (11)

Article Info
Categories: Buying & Forming a Business | Medication and Medical Equipment

In other languages:

Espaol: abrir una farmacia, Portugus: Abrir uma Farmcia, : , Italiano: Aprire
una Farmacia

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696 reviews

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Co-authors: 12

Updated: 6 weeks ago

Views: 212,806

"Thanks for this educational article, especially in the area of business proposals. I have not
really given thought to it before now."..." more - Rachel Ibeji

Very helpful, a lot of my questions were answered. I'm more comfortable taking the next step. -
Mark David

This is so helpful to me. Thank you. Thank you so much. - Raju Kadem

Very educational, thank you so much. - Tonia Nwani

Very good and informative. Thanks. - Sudhir Uttam

Very helpful for the new store. - Masud Rana

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