As long as people continue to live, grow and fall sick, there will always be an encouraging demand for medical commodities. Have it in mind that these commodities are necessary to both doctors and other medical professionals to enable them to treat patients.
Note that a good number of medical commodities are sourced from niche companies that specialize in a certain type of product. While there are many large medical commodity companies all over the United States, it is still very possible for independent businesses to find success in this industry.
With market size expected to attain $160 Billion by 2025, boasting of a CAGR of 7.2 percent, this is a business to really consider. You can set yourself up for success by getting to understand the ins and outs of the industry and your local market.
Steps on How to Start a Medical Commodities Business
Table of Content
Conduct Market Research
Truth be told, extensive market research is a very crucial component of starting any business, and a major part of this is learning about your local competitors. A good number of medical commodity businesses in the United States offer thousands of items for professional use, from exam gloves to feeding tubes. Some also specialize in home-care items such as bedpans, canes, medical beds, and home diagnostic tests.
When starting this business, you must narrow your target market to a precise niche, based on your research of available opportunities in your region and market gaps that the competition isn’t filling. The medical industry is very large, therefore you must have a full knowledge of the aspect of the industry you intend to focus on. From there, other things will surely follow suit.
a. Who is your target audience?
For most medical commodities businesses, the target audience includes;
- Hospitals
- Medical clinics
- Nursing homes and retirement homes
- Veterinary clinics
- Nursing services and agencies
b. Is Medical Commodities Business a Profitable Business?
Yes, the medical commodities business is very profitable, and with an increase in the world population over the last decade, the industry is still primed for continued growth.
c. Are There Existing Niches in the Industry?
Have it in mind that there are numerous approaches willing entrepreneurs can leverage in terms of medical commodities sales. These approaches include;
- A retail store that sells medical commodities
- An online medical commodities store
- Independent sales consultant for manufacturers
- Equipment manufacturer
- Product distribution
d. Who are the Major Competitors?
- Baxter International
- Boston Scientific
- Johnson & Johnson
- AmerisourceBergen
- Henry Schein
- Cardinal Health
- Medline Industries
- Stryker
- McKesson
- Medtronic
- Cardinal health
e. Are There County or State Regulations or Zoning Laws for Medical Commodities Business?
Yes, regulations and zoning laws in the United States tend to differ from state to state and from one county to another. Owing to that, it is recommended that you contact your state’s public health department or medical board to find out if you are expected to be licensed to sell the types of medical commodities you’re interested in selling.
f. Is There a Franchise for Medical Commodities Business?
- The vital dent franchise: $512,500 – $797,000
- My eyelab: $209,150 to $462,400
- Zounds: $150,000 – $200,000
- Amplifon hearing aid centers: $74,000 – $219,500
- Medichair: $350,000
- Dental fix: $83,000 to $225,000
- 101 mobility: $113,560 to $205,830
- Silver cross: $105,100 to $137,100
- Pharmaconic: $251,750 – $409,900
- Mobility city: $128,900 – $281,800
- Miracle-ear: $119,000 – $352,500
- The medicine shoppe pharmacy: $74,300 – $253,400
- The dentist’s choice: $55,400 – $59,500
- Benzer pharmacy: $157,810 – $304,110
- Pearle vision: $415,520 – $644,260
- Atlas medic: $50,000
- Medstock: $54,450 to $67,450
g. What Do You Need to Start a Medical Commodities Business?
- Extensive Research
- DBA
- Reliable Supplier
- Required Licenses and Permits
- Ecommerce Marketplace or Platforms
- Marketing and Customer Acquisition Plan
- EIN (Employer Identification Number) / Federal Tax ID Number
Choose a Memorable Business Name
- Direct Health Equipment
- Prime Medical Commodities
- Nelson Pharmaceuticals
- Full Option Medicals
- Confluence Medical Supplier
- St Andrews Medical Supplies
- 24/7 Health Inc.
- Pure Soul
- Capital Equipment Shop
- Quik Medical Suppliers
- Express Delivery
- Alfred Medical Stores
- Albany Medical Distributors
- Heartbeat Industries
- Clean Earth Medicals
- Golden Gate Medical Supplies
- Venus Medical
- Health First Medical Supplies
- Uptown Medical Inc.
- Blue Line Health Care Co.
Register your Business
a. What Type of Business Structure is Best for Medical Commodities Business?
When starting a medical commodities business, you have to decide whether you want to operate as a Limited Liability Corporation (LLC), C-Corporation, or S-Corporation. Note that the type of business structure you choose will definitely affect how you’re taxed, what fees you need to pay, whether or not you need to raise capital and more.
Howbeit, in most cases, an LLC remains the best option especially since it gives you some personal protection in case your business encounters any issues or is subjected to lawsuits.
b. List Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Select a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
c. What Type of License is Needed to Open a Medical Commodities Business?
- General Business License
- Zonal Permits
- Seller’s permit
- Sales tax license
- Home occupation permit
d. What Type of Certification is Needed to Open a Medical Commodities Business?
- Biomedical Equipment Technology Certificate
- Medical Equipment Technician Certification
- Reliable Medical Supply Accreditation and Certifications
- Medical Business Office Professional Certificate
- Certified Sales Professional (CSP)
- Certified Medical Office Manager (CMOM)
- Nationally Certified Medical Office Assistant (NCMOA)
e. What Documents are Needed to Open a Medical Commodities Business
- Sales and tax permit
- Resale permit
- Assumed name certificate
- Employer Identification Number
- Operating agreement
- Insurance
f. Do You Need a Trademark, Copyright, or Patent?
Note that you might not need to file for intellectual property protection/trademark especially since you can manage this business without having to challenge anyone for using your company’s intellectual properties in any way. Nevertheless, if you are eager to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can consider filing for intellectual property protection with the USPTO.
Do your Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Medical Commodities Business?
The cost of starting a medical commodities business will depend on your business concept, inventory, and if you choose to rent or lease a storefront. Have it in mind that your storefront, along with inventory, licensing and insurance, promotional materials, and a website will average around $15,000 for a small medical commodities business.
Initial start-up costs to open a medium-sized business will amount to almost $200,000, while a bigger medical commodities business will cost over $450,000 to start.
b. What are the Cost Involved?
- Storefront property rent: $3,500
- Shop décor: $5,000
- Utilities: $1,000
- Building improvements and remodeling: $950
- POS system: $1,200
- LLC & corporations registration: $500
- Small business insurance: $2,000
- Permit and license fees: $700
- Lawyer fees: $1,500
- Upfront costs for inventory: $5,000
- Inventory storage: $5,000
- File hosting service: $299
- Email marketing tool: $100
- Accounting & invoicing software: $50
c. What Factors Determine the Cost of Opening a Medical Commodities Business?
- Business license and permits
- Business structure and registration
- Insurance
- Rent, renovation, and furnishing of the store
- Inventory
- Number of employees
- Advertising and marketing plan
- Miscellaneous
d. Do You Need to Build a Facility?
In this modern age, you don’t necessarily need a storefront or a facility to start and run a successful medical commodities business. Whether you’re selling medical commodities to hospitals or consumers, you can even do it from home.
However, if your business plan includes a storefront, then getting a suitable location should be one of your top priorities. Note that average retail showrooms are approximately 1,500 square feet, with an additional 500 to 1,000 square feet for storage, etc.
According to industry reports, the most lucrative locations are in strip malls or shopping centers that are close to medical offices and hospitals. You should also lease a facility that is temperature-controlled to store your inventory. Note that your storage facility will need to be clean and free of dust to prevent your supplies from becoming contaminated.
e. What are the Ongoing Expenses for Running a Medical Commodities Business?
- Marketing expenses
- Rent
- Insurance
- Legal expenses
- Accounting
- Utilities
- Inventory
- Payroll expenses
f. What is the Average Salary of your Staff?
- Chief Executive Officer – $64,000
- Quality Assurance Manager – $45,000
- Human Resources and Admin Manager $44,000
- Purchasing Manager – $39,000
- Sales and Marketing Team – $37,000
- Accountant – $37,000
- Store Manager – $36,000
- Delivery Driver – $33,000
- Customer Service Executives – $28,000
g. How Do You Get Funding to Start a Medical Commodities Business
Note that your medical commodities financing options will vary depending on your business size and startup costs and, each option also has its own benefits and drawbacks. Nonetheless, here are options to consider;
- Bootstrapping
- Small business loan
- Investors
- Crowd-funding
- Government grants
- Venture capital
Write a Business Plan
a. Executive Summary
Full Option Medicals is a medical commodities company that is established to procure, sell and supply a wide range of medical equipment and supplies. Our inventory at Full Option Medicals will include life support equipment, medical laboratory equipment, diagnostic equipment, treatment equipment, and durable medical equipment.
We believe that these are broad categories made up of lots of other subcategories and we intend to differentiate ourselves by adding value through our distribution strategy and channels.
b. Products and Service
Full Option Medicals will procure and offer a long list of medical commodities that include;
- Hospital beds
- Manual and electric wheelchairs
- Mobility assistive equipment (like canes, walkers, and crutches)
- Traction equipment
- Oxygen ventilators and concentrators
- Pressure mattresses
- Breast pumps
- Insulin pumps
- Patient lifts
- Nebulizer
- Kidney machines
- Bili lights & blankets
- Stationary& portable oxygen tanks etc.
c. Mission Statement
At Full Option Medicals, our mission is to make available a vast range of medical commodities from top manufacturers. Note that all our medical supplies will be sourced from reputable manufacturers and supplied to a wide range of medical facilities and personnel.
Vision Statement
Our vision at Full Option Medicals is to provide reliable medical products and tools to healthcare facilities and personnel to help manage the needs of various patients.
d. Goals and Objectives
- To attain our sales growth targets by month six and by end of year one.
- To grow our company contracted sales team to nine field clinical sales reps by month eight and to 22 field clinical sales reps by year three.
- To reach net profit in year one, increasing in year two, by containing costs and meeting sales goals.
- To maintain 90-day customer satisfaction survey results at 98% or higher.
e. Organizational Structure
- Chief Executive Officer
- Quality Assurance Manager
- Human Resources and Admin Manager
- Sales and Marketing Team
- Accountant
- Purchasing Manager
- Store Manager
- Delivery Driver
- Customer Service Executives
Marketing Plan
a. SWOT Analysis
Strength
- Reliable suppliers
- Strong brand portfolio
- Strong dealer community
- High level of customer satisfaction
Weaknesses
- Financial planning is not done properly and efficiently
- Need more investment in new technologies
- Untested marketing plan
Opportunities
- Decreasing cost of transportation because of lower shipping prices
- Competitor vulnerabilities
- Lack of dominant competition
- Regular supply of innovative products
Threats
- Competitors have superior access to channels of distribution
- Economic shifts
- Loss of key staff or associates
- New or increased competition
- Shifts in market demand or referral sources
b. How Do Medical Commodities Businesses Make Money?
Have it in mind that a medical commodities business will generate revenue from each sold item, with a 45-55% markup on inventory. A good number of these businesses choose to expand their services to include delivery for a nominal fee.
c. Payment Options
- Payment via bank transfer
- Payment via credit cards
- Payment via online bank transfer
- Payment via check
- Payment via mobile money transfer
- Payment via bank draft
d. Sales & Advertising Strategies
- Advertise the medical commodities business on local directory listings
- Send introductory letters to businesses in the healthcare industry to create awareness about the medical commodities business
- Advertise the business on social media platforms such as Facebook, Twitter, and Instagram.
- Design a simple search engine optimized website to boost online presence and rank higher in search engine results
- Advertise the medical commodities business on local print and broadcast channels such as radio, television, and newspapers
- Encourage word of mouth marketing
- Get doctors’ attention with pay-per-click (PPC) advertising
- Reach physicians as they search with search engine optimization
Financial Projection
a. How Much Should You Charge for your product/Service?
Note that the prices of medical commodities vary, depending upon the item. A walker can cost around $25 to $250, and a hospital bed will cost around $1,500. Businesses in this sector are always advised to research what the competition is charging and set their prices accordingly
b. How Much Profit Do Medical Commodities Business Owners Make a Year?
This will surely vary from one business to another, especially since entrepreneurs in this business leverage several formulas in determining annual revenue. One benchmark is gross sales generated per employee, which averages $140,000/employee in this industry.
Another formula is to multiply the facility’s square footage by $800 per square foot per year. Note that with these numbers and minimal ongoing costs, businesses in this industry break-even before the end of the first year – making up to $400,000 in profit after the third year.
c. What Factors Determine the Amount of Profit to Be Made?
- Supplier
- Business Size
- Marketing and Customer Retention Strategies
- Investment
- Business Agreements
d. What is the Profit Margin of a Medical Commodities Business?
In this line of business, your business profits will more or less depend on the price point of the items the business sells, its volume, the different sales price, location, and business mark-ups. Irrespective of all these factors, the gross profit margin for the medical equipment and supplies industry averages 12.1%.
e. What is the Sales Forecast?
- First Fiscal Year (FY1): $192,000
- Second Fiscal Year (FY2): $440,000
- Third Fiscal Year (FY3): $1,134,000
Set Up your Shop
a. How Do You Choose a Perfect Location for Medical Commodities Business
Factors to consider when choosing a suitable location for a medical commodities business include;
- Supply Chain
- Demographics
- Basic Infrastructures
- Closeness to the market
- Distributive channel
- Competitors
b. What State and City are Best to Open a Medical Commodities Business?
- Austin, Texas
- Philadelphia, Pennsylvania
- Columbus, Ohio
- Houston, Texas
- Cincinnati, Ohio
- Pittsburgh, Pennsylvania
- San Antonio, Texas.
c. What Equipment is Needed to Operate?
In this line of business, there are no special technologies or equipment required to run this type of business. However, you will need Point of Sales (POS) Machines, shelves, and software applications. In addition, you will also need computers/laptops, an internet facility, a telephone, a fax machine, and office furniture (chairs, tables, and shelves) amongst others and all these can be gotten as fairly used.
Hire Employees
When you first start a medical commodities business, you should be able to manage the business on your own. But as the business grows, you will need additional help. Note that your staff should be honest and compassionate, boasting strong communication skills and vast industry knowledge.
Launch the Business Proper
You have to understand that a medical commodities business is a retail business and your primary role is to take care of your customers. Owing to that, make the process as seamless as possible, ensuring they walk away satisfied.
Hold an internal launch event to build enthusiasm and commitment to the launch within the company. Have it in mind that a successful launch can yield new markets, provide access to new customers, and increase business with existing suppliers.
a. What Makes a Medical Commodities Business Successful?
- A comprehensive line of innovative, top-quality products.
- Clinical support to healthcare facilities.
- Close relationships with key decision-makers in the industry, and with key administrators and clinicians at the facility level.
- Choose a good location and shop facility to launch the business
- Ensure to be deliberate with your marketing sales approach
- Encourage the use of word of mouth to promote your wig store
- Leverage on all available online and offline platforms to promote your wig store
b. What Happens During a Typical Day at a Medical Commodities Business?
A medical commodities business is also considered a retail business, and that entails that customer care and interaction will have to be an utmost priority. Note that sourcing inventory, changing displays, and re-stocking shelves will be a part of your day-to-day activities.
Aside from cultivating good customer relationships, you and your staff will also have to network within the community and establish concrete relationships with supply manufacturers. Also note that staying on top of emerging trends, comparative pricing, and educating the public on your findings will have to be a very fundamental part of your business-building strategy.
c. What Skills and Experience Do You Need to Build a Medical Commodities Business?
- Empathy
- Determination
- Resourcefulness
- Time Management Skills
- Adaptability Skills
- Accounting Skills
- Creativity Skills
- Strategy Skills
- Customer Service Skills
- Sales Skills