Starting a medical supply business can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful medical supply business.
Importantly, a critical step in starting a medical supply business is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start a Medical Supply Business:
- Choose the Name for Your Medical Supply Business
- Develop Your Medical Supply Business Plan
- Choose the Legal Structure for Your Medical Supply Business
- Secure Startup Funding for Your Medical Supply Business (If Needed)
- Secure a Location for Your Business
- Register Your Medical Supply Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Medical Supply Business
- Buy or Lease the Right Medical Supply Business Equipment
- Develop YourMedical Supply Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Medical Supply Business
- Open for Business
1. Choose the Name for Your Medical Supply Business
The first step to starting a medical supply business is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your own medical supply business:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your medical supply business.
2. Develop Your Medical Supply Business Plan
One of the most important steps in starting a medical supply business is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your medical supply business.
- Company Overview – this section tells the reader about the history of your medical supply business and what type of medical business you operate. For example, are you a medical equipment retailer, wholesale distributor, or online medical supply store?
- Industry Analysis – here you will document key information about the health care industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your medical supply business? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What are the startup costs?
- How much does a medical supply business make?/li>
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Medical Supply Business
Next you need to choose a legal business structure for your medical supplies business and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the owner of the medical equipment business and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a medical supply business together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a medical supply business include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a medical supply business is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your medical supply business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Medical Supply Business (If Needed)
In developing your medical supply business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a medical supply business to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a medical supply business that they believe has high potential for growth.
5. Secure a Location for Your Business
There are a few things to consider when looking for a location for your medical equipment business. First, you’ll want to make sure the location is accessible and convenient for your customers. You’ll also need to have enough space to store your inventory and equipment. Finally, it’s important to find a location that is affordable.
6. Register Your Medical Supply Business with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your medical supply business’ name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your medical supply business to help you separate personal and business expenses.
You can either apply for a business credit card through your bank or apply for one through a credit card company.
When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
You will need a business license, a permit to operate as a medical supply business, and a permit to sell medical supplies. You may also need a sales tax permit. Check with your local business licensing office to find out what licenses and permits are required in your area.
10. Get Business Insurance for Your Medical Supply Business
The type of insurance you need to operate a medical supply business depends on the scope of the operation.
Some business insurance policies you should consider for your medical supply business include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Auto insurance: If a vehicle is used in your business, this type of insurance will cover if a vehicle is damaged or stolen.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Medical Supply Business Equipment
Medical supply companies need essential office equipment, such as computers, phones, printers, and fax machines. You may require other equipment depending on the scope of your operation. For instance, if you operate a warehouse for wholesale distribution, you may need a forklift to move inventory around. If you deliver medical supplies, you’ll need a vehicle for transport. It’s important to research the specific equipment you need to run your business.
12. Develop Your Medical Supply Business Marketing Materials
Marketing materials will be required to attract and retain customers to your medical supply business.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your medical supply business. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional medical supply business website provides potential customers with information about the products you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your medical supply business.
13. Purchase and Setup the Software Needed to Run Your Medical Supply Business
To run a medical supply business, you need software to manage inventory, track sales, and manage customer relationships. You’ll also need accounting software to manage finances. There are many options available for medical supply business software. Some software companies offer all-in-one programs made specifically for medical supply stores. So, with a bit of research, you should be able to find one that suits your needs.
14. Open for Business
You are now ready to open your medical supply business. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Start a Medical Supply Business FAQs
No, it’s not too difficult to start a medical supply business. However, it does require some basic knowledge and understanding of the industry. The most important thing you'll need to get started is a good business plan.
The best way to start a medical supply business with no experience is to do some research. Learn about the industry, what products are in demand, and what prices to charge. You can also join an industry organization or attend trade shows to learn more about the business. You may want to consider working for a medical supply company and network with medical professionals before starting your own business. This will give you a chance to learn about the industry and gain some experience. Finally, create a business plan and secure financing before starting your business.
The most profitable type of medical supply business is one that manufactures and distributes disposable medical supplies. These large medical supply companies can be exceptionally lucrative because there is a constant demand for their products and they typically have low overhead costs.
To start a small medical supply business, it will cost you approximately $5,000-$10,000. This includes the cost of setting up your business, getting inventory, and marketing your new business. Costs will be greater for a larger operation.
Medical supply businesses have a few common ongoing expenses. The most significant expense is the cost of the supplies themselves. This can include anything from bandages and gauze to surgical equipment. Medical supply businesses must also account for the cost of delivering or shipping their supplies. In addition, these businesses often pay for ongoing advertising and marketing to make sure their products are seen by potential customers.
Medical supply businesses make money by selling products to hospitals, doctors' offices, and other medical facilities. They also make money by providing services such as equipment rentals and repairs. Some business owners also earn by taking their medical supply business online.
A medical supply business can be profitable because it meets a fundamental human need. People will always need medical supplies, whether it is for themselves or for a loved one. Additionally, the demand for medical supplies is growing as the population ages and more people require treatment for chronic illnesses.
There are many reasons medical supply businesses can fail. A common one is that the company doesn’t understand the needs of its target market and lacks the right products and services to meet those needs. Additionally, many businesses do not have a clear marketing plan or strategy, which can doom them to fail.