A medical supply company is a business that purchases medical and surgical equipment, instruments, and supplies, stores these items at distribution centers, and delivers these products to medical practitioners, clinics, hospitals, etc.
Recent data made available online shows that the global medical supplies market was worth USD 80 billion in the year 2019 and it is projected to reach USD 95.04 billion by 2026 with a CAGR of 13.5% between 2022 and 2026. Interestingly, the United States is a major player in the global medical market worth $85 billion according to industry analysts, and the United States is home to nearly 11,000 medical supply companies.
Steps on How to Start a Medical Supply
Table of Content
Conduct Market Research
The first step in the market research process for your medical supply business is to develop market-based research questions in line with your overall business goal and objective.
In this regard, you should source for information that will help you maximize your business, give you reliable information of what your potential market will be looking out for from a medical supply business, the product and brands that people will be able to spend a premium on and also to help you operate your medical supply business with less stress.
a. Who is the Target Market for Medical Supply Business?
Your target demographics should include Hospitals, Medical laboratories, Medical colleges, Dental clinics, etc.
b. Is Medical Supply Business a Profitable Business?
- Hospitals
- Medical laboratories
- Medical colleges
- Dental clinics
- Optical center
- Botox clinics
- Medical device retailers
- Healthcare centers
- Medical Research institutes
- Veterinary clinics.
c. Are There Existing Niches in the Industry?
Yes, there are existing niches when it comes to the medical supply business, and here are some of them;
- Brick and mortars medical supply business
- Online medical supply business
d. Who are the Major Competitors?
- Abbott Laboratories
- AmerisourceBergen
- McKesson
- Henry Schein
- Cardinal Health
- Medline Industries
- Carex Health Brands, Inc.
- Drive DeVilbiss Healthcare.
- NOVA Medical Products.
- Kaye Products, Inc.
- Medtronic PLC.
- General Electric Company
- Danaher Corporation
- Boston Scientific Corporation
- Johnson & Johnson
- Varian Medical Systems Inc.
- Philips
- Siemens Healthineers
- Stryker
- 3M Health Care
e. Are There County or State Regulations or Zoning Laws for Medical Supply Business?
Note that in the United States, the FDA’s Center for Devices and Radiological Health (CDRH) is tasked with regulating firms who manufacture, repackage, re-label, and/or import medical devices sold in the United States. Also, the FDA’s CDRH regulates radiation-emitting electronic products (medical and non-medical) such as lasers, x-ray systems, ultrasound equipment, microwave ovens, and color televisions.
In addition to that, it is important to state that in the United States, government agencies and departments routinely grant variances to rules and regulations. Often, you only have to fill out a short form. In other cases, your request may have to be publicly heard before your city council, zoning board, or other body. Please check with your zoning or planning department to find out what options are available to you.
f. Is There a Franchise for Medical Supply Business?
Yes, there are franchise opportunities for the medical supply business. Here are some of them;
- Auxo Medical, LLC.
- BioPed Footcare Centers
- Medicap Pharmacies Incorporated
- MEDIchair Ltd.
- OsteoStrong
- Sonus Hearing Care
g. What Do You Need to Start a Medical Supply Business?
- A Feasibility Report
- Business and Marketing Plans
- Business Licenses and Permits
- A Good Shop Facility
- EIN (Employer Identification Number)/Federal Tax ID Number.
- A Corporate Bank Account
- Suppliers of Medical Equipment, Equipment, and Supplies
- Employees
- Distribution Trucks and Vans
- Startup and Working Capital
Memorable Medical Supply Business Names
- Forty Cent© Medical Supplies, Inc.
- MT Technologies® Medical Supplies and More, LLC
- Mike and Co© Medical Supplies, Inc.
- Medic Solutions® Medical Supplies, Inc.
- The Expats™ Medical Supplies, Inc.
- TD Engineering™ Medical Supplies, LLC.
- San Tamils© Medical Supplies, LLC
- Sheen Global® Medical Supplies, Inc.
- Lance Bowline© Medical Supplies, Inc.
- Wana Bros© Medical Supplies, Inc.
- Mili Cent® Medical Supplies, Inc.
- Cletus McPherson® Medical Supplies, LLC
- Stretch® Medical Supplies, Inc.
- Value Base® Medical Supplies, Inc.
- Garry Holmes® Medical Supplies USA LLC.
- Emmy Allen® Medical Supplies, Inc.
- Denis Palermo® Medical Supplies USA LLC
- Fahrenheit ® Medical Supplies, LLC
- Star Engineering® Medical Supplies USA LLC
- Brent Jones® Medical Supplies USA LLC.
Register Your Business
a. What Type of Business Structure is Best for Medical Supply Business?
Although there are several options when it comes to the business structure for a medical supply business, the one that most players in this line of business consider is an LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits.
Please note that an LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below.
b. Steps to Form an LLC
- Choose a Name for Your LLC.
- File Articles of Organization.
- Choose a registered agent.
- Decide on member vs. manager management.
- Create an LLC operating agreement.
- Comply with other tax and regulatory requirements.
- File annual reports.
c. What Type of License is Needed to Open a Medical Supply Business?
- General Business License
- Seller’s Permit
- Fire and Safety Permit (Fire certificates)
- Federal Export Licenses
- Zonal Permits
- Signage Permit
- State Occupational Licenses
- Operational State Facility Inspections (Building Permits)
d. What Type of Certification is Needed to Open a Medical Supply Business?
- Certified Healthcare Supply Chain Analyst (CHSCA)
- Healthcare Supply Chain Certification.
e. What Documents are Needed to Open a Medical Supply Business?
- DBA
- EIN
- Business and liability insurance
- Federal Tax Payer’s ID
- Dealer License and Surety Bonds
- State Permit and Building Approval
- Certificate of Incorporation
- Business License
- Business Plan
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Online Terms of Use
- Online Privacy Policy Document
- Contract Document
- Company Bylaws
- Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?
If you are considering starting a medical supply business, usually you may not have any need to file for intellectual property protection or trademark. This is so because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
Cost Analysis and Budgeting
a. How Much Does It Cost to Start a Medical Supply Business?
When it comes to starting a medical supply business, the startup costs vary and it could range from $100,000 to over a million dollars. This is because the startup inventory is on the high side.
b. What are the Costs Involved in Starting a Medical Supply Business?
- Business Registration Fees – $750.
- Legal expenses for obtaining licenses and permits – $3,300.
- Marketing, Branding and Promotions – $2,000.
- Business Consultant Fee – $2,500.
- Insurance – $12,400.
- Rent/Lease – $150,000.
- Other start-up expenses include commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($1,800).
- Operational Cost (salaries of employees, payments of bills et al) – $130,000
- Start-up Inventory – $1 million
- Store Equipment (cash register, security, ventilation, signage) – $1,750
- Furnishing and equipping the warehouse facility – $20,000
- Website: $600
- Opening party: $3,000
- Miscellaneous: $5,000
c. What Factors Determine the Cost of Opening a Medical Supply Business?
- The size of the medical supply business
- The choice of location
- The required licenses and permits
- The type of medical supply business
- The types and brands of medical supplies to be retailed in the store
- The cost of hiring and paying a business consultant and attorney
- The cost for branding, promotion, and marketing of the medical supply business
- The cost for furnishing and equipping the medical supply facility
- The cost for insurance policy covers
- The cost for registering the business
- Source of your supplies and ongoing expenses
- Cost of recruiting and training your staff
- The cost for the purchase and customizing of uniforms
- The cost for the grand opening of the medical supply business.
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?
Actually, it is not compulsory to build a new facility for your medical supply business, but if you have the required finance, it will pay you to build your own facility (warehouse and shop). The truth is that building or reconstructing a facility for your medical supply business will help you come up with a facility that will perfectly fit into your overall business goals and vision.
e. What are the Ongoing Expenses of a Medical Supply Business?
- Rent and lease
- Supplies and inventory
- Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
- Insurance
- Marketing cost
- Distribution trucks and vans maintenance
- Salaries of employees
f. What is the Average Salary of your Staff?
- Chief Executive Officer (President) – $120,000 Per Year
- Human Resources and Amin Manager – $60,000 Per Year
- Warehouse Manager – $55,000 Per Year
- Merchandise Manager – $50,000 Per Year
- Sales and Marketing Manager – $45,000 Per Year
- Accountants (Cashiers) – $45,000 Per Year
- Sales Agents – $35,000 Per Year
- Customer Services Executive – $35,000 Per Year
- Truck and Van Drivers – $30,000 Per Year
g. How Do You Get Funding to Start a Medical Supply Business?
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for a loan from your bank/banks
- Pitching your business idea and applying for business grants and seed funding from the government, donor organizations, and angel investors
- Source for soft loans from your family members and your friends.
a. Executive Summary
Mili Cent® Medical Supplies, Inc. is a standard medical supply business that will be based in Los Angeles – California, USA. We have been able to secure a corner piece location where we intend to launch our first medical supply store before venturing out to open chains of medical supply stores all across major cities in the United States of America.
b. Products and Service
- Non-electronic medical, surgical, dental, and veterinary instruments and apparatus
- Surgical appliances
- Surgical instruments
- Dental instruments and supplies
- Hospital beds and other specialized hospital furniture
- Personal safety equipment
c. Mission Statement
Our mission is to build a highly successful medical supply business that will grow from one store to different locations all around key cities in the United States of America. We want to become a one-stop medical supply shop.
Vision Statement
Our vision as a medical supply business is to become the number one choice in Los Angeles – California and also to be amongst the top 2 leading medical supply stores in the State of California before our 10th anniversary.
d. Goals and Objectives
The goals and objectives of a medical supply business are to provide a distribution channel and retail outlet where organizations can order a wide range of medical supplies from different manufacturers both from the United States of America and from other countries.
Organizational Structure
- Chief Executive Officer (President)
- Human Resources and Amin Manager
- Warehouse Manager
- Merchandise Manager
- Sales and Marketing Manager
- Accountants (Cashiers)
- Sales Agents
- Customer Services Executive
- Truck and Van Drivers
Marketing Plan
a. SWOT Analysis
Strength:
- Ideal location for a medical supply business
- Highly experienced and qualified employees and management
- Access to finance from business partners
- Access to some of the leading medical device and equipment manufacturers nationally and internationally.
Weakness:
- Financial Constraints
- A new business that will be competing with well-established medical supply companies.
- Inability to retain our highly experienced and qualified employees longer than we want.
Opportunities:
- A rise in the demand for medical supplies due to the increasing number of new medical and dental practitioners, clinics and hospitals et al within our target market location.
- Online market, new services, new technology, and of course the opening of new markets.
Threat:
- The arrival of new medical supply companies or even medical device and equipment manufacturers within our market space
- Unfavorable government policy and regulations.
- Steady wage expenses
- Economic uncertainty
- Liability problems
- The FDA’s Center for Devices and Radiological Health (CDRH) could change its regulatory status and decide to enforce strict regulations that can strangulate new businesses like ours.
b. How Do Medical Supply Business Make Money?
Medical supply businesses make money from selling;
- Nonelectronic medical, surgical, dental, and veterinary instruments and apparatus
- Surgical appliances
- Surgical instruments
- Dental instruments and supplies
- Hospital beds and other specialized hospital furniture
- Personal safety equipment.
c. Payment Options
- Payment via bank transfer
- Payment with cash
- 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
- Place adverts on both print (newspapers and medical-related magazines) and electronic media platforms
- Sponsor relevant events and programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your products
- Install your Bill Boards in strategic locations all around your city or state
- Distribute your fliers and handbills in target areas
- List your medical supply business in local directories/yellow pages
- Advertise your medical supply business on your official website and employ strategies that will help you pull traffic to the site.
- Position your Flexi Banners at strategic positions in the location where your medical supply business is located.
- Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are well branded with your company logo et al.
Financial Projection
a. How Much Should You Charge for your Product/Service?
There is no fixed price when it comes to medical equipment and supplies; the supply is usually based on the commission stipulated by the equipment manufacturing company.
b. How Much Profit Do Medical Supply Business Owners Make a Year?
It depends, but an available report shows that at a minimum, online or in-store, a medical supply business owner should net from $80,000 to $150,000 annually. The amount you make in a physical location can be tied to where you are – in a big city location you can make from $100,000 to $300,000 annually. You can make as much as a medical supply business with online sales.
c. What Factors Determine the Amount of Profit to Be Made?
- The capacity of the medical supply business
- The types and brands of medical supplies retailed in the shop
- The location the medical supply business is covering (online or strictly brick and mortar)
- The management style of the medical supply business
- The business approach of the medical supply business
- The advertising and marketing strategies adopted by the medical supply business.
- The number of years the medical supply business is in business
d. What is the Profit Margin of a Medical Supply Business Product/Service?
The gross profit margin for the medical equipment and supplies industry averages 12.1%, according to data from CSImarket.com.
e. What is the Sales Forecast?
Below is the sales forecast for a medical supply business. It is based on the location of the business and other factors as it relates to such startups in the United States;
- First Fiscal Year (FY1): $1 million
- Second Fiscal Year (FY2): $2.2 million
- Third Fiscal Year (FY3): $3 million
Set Up your Shop
a. How Do You Choose a Perfect Location for Medical Supply Business?
- The demography of the location as it relates to the number of hospitals and other medical facilities
- The demand for medical supplies in the location
- The purchasing power of businesses and the residence of the location
- Accessibility of the location
- The number of medical supply businesses and other outlets that retail medical supplies in the location
- The local laws and regulations in the community/state
- Traffic, parking and security et al
b. What State and City are Best to Open a Medical Supply Business?
- Las Vegas, Nevada
- Los Angeles, California
- Chicago, Illinois
- Boston, Massachusetts
- Silver Spring, Maryland
- Rowland Heights, California
- Portland, Oregon
- New York City, New York
- Atlanta, Georgia
- Dallas, Texas
c. What Equipment is Needed to Operate a Medical Supply Business?
- Receipt issuing machine, POS, and related software apps.
- Distribution trucks and vans
Hire Employees
When it comes to hiring employees for a standard medical supply business, you should make plans to hire a competent chief executive officer (owner), warehouse manager, merchandise manager, accountant (cashier), sales boys, and sales girls (van drivers).
Launch the Business Proper
You can choose to do a soft opening party for your medical supply business or you can go for a grand opening party. The bottom line is that with a proper launching of the medical supply business, you will be able to officially inform people in your city that your medical supply business is open for business.
a. What Makes a Medical Supply Business Successful?
- Choose a good location to launch the business
- Partner with leading medical device and equipment manufacturers
- Make sure your warehouse is stocked with different brands and types of medical supplies
- Be deliberate with your marketing sales approach
- Encourage the use of word of mouth to promote your medical supply business
- Leverage on all available online and offline platforms to promote your medical supply business
b. What Happens During a Typical Day at a Medical Supply Business?
- The business is open for the day’s work
- Stocks are taken for the day in the warehouse
- Customer’s orders are taken, processed and they are delivered to them
- Cashier collect’s cash and reconcile account for the day
- Administrative duties are carried out
- The store or warehouse is restocked when required.
- The business is closed for the day.
c. What Skills and Experience Do You Need to Build a Medical Supply Business?
- Customer services skills
- Interpersonal skill
- Accounting and bookkeeping skills
- Business management skills
- Bargaining and bidding skill
- Work experience in a medical supply business environment
- Experience in managing people
- Experience in business administration