Look around you and you will find that the need for medicine and other medical related stuff will never go into extinction. This is hinged on the solid fact that medicine and drugs are one of the basic needs of man.
Any known medical practitioners, from veterinarians to midwives and eye doctors, need specific supplies to do their duties and these equipment needs to be manufactured and supplied by a firm. Businesses supplying these equipment are growing on daily basis, but it is indeed possible for you to be successful if you know what to do.
23 Steps on How to Start a Medical Supply Business Online
Table of Content
- 1. Understand the Industry
- Interesting Statistics About the Medical Supply Industry
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide What Niche to Concentrate On
- 4. Know the Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 6. Know the Possible Threats and Challenges You Will Face
- 7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- 8. Choose a Catchy Business Name from the ideas Below
- 9. Discuss With an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Writing a Business Plan
- 14. Do a Detailed Cost Analysis
- 15. Raise the Needed Startup Capital
- 16. Choose a Suitable Location for your Business
- 17. Hire Employees for your Technical and Manpower Needs
- The Service Delivery Process of a Medical Supplies Business
- 18. Write a Marketing Plan Packed With ideas & Strategies
- 19. Develop an Iron-clad Competitive Strategies to Help You Win
- 20. Brainstorm Possible Ways to Retain Clients & Customers
- 21. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
- 22. Create a Supplier/Distribution Network
- 23. Tips for Running a Medical Supplies Business Successfully
1. Understand the Industry
Businesses in the medical supplies industry manufacture and supply instruments and supplies, store these items at distribution centres, and deliver the products and some other services to professionals in the medical field. The steady increase in the world population over the past five years has undeniably increased the demand for healthcare services and all other related industry.
However, at the same time, pressure from manufacturers to move pass the wholesalers and vice versa has hindered the industry’s growth potential.
Interesting Statistics About the Medical Supply Industry
Revenue growth in this industry is expected to slow in the next five years as the Affordable Care Act continues to fold the industry with huge regulation and increase medical device tax. But notwithstanding, businesses in the industry will continue to gain from new product development.
Unlike most lucrative industries in the world, the medical supplies industry has moderate entry barriers. The advantage of brand identity in this industry is quite minimal, because customers are concerned more with quality and price.
The low cost of customer switching will in great lengths ease the entry of new businesses into this industry. The cost of switching is actually is tangent and it’s closely associated with changing transportation and communication systems.
Low switching costs brings about greater industry competition because new businesses can easily entice customers away from existing operators with new incentives and price. But companies in the medical supplies industry face stringent regulatory controls and relatively high fixed costs, including warehousing technology, transportation equipment and complex machinery.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographics and Psychographics of a medical supplies business is not farfetched or doesn’t need a soothsayer for us to know and understand. Just as Doctors and nurses are needed as much as we need air, they in turn need medical equipment and supplies to be able to work.
A medical supplies business is a business that offers medical equipment to professionals (scrubs/uniforms, shoes, stethoscopes, otoscopes, blood pressure cuffs, pulse oximeters, etc.). It simply instigates that those doctors and nurses are the air and foundation for your medical supplies business.
The major focus of your medical supplies business would be to sell medical equipment to hospitals and health centres by soliciting or using the tender process in which hospitals and medical centres usually ask for bids to replace their equipment.
Major products in this industry include surgical and medical instruments such as syringes, surgical clamps, and stethoscopes (about 40% of industry revenue) and surgical appliances and supplies such as surgical dressings, orthopaedic devices, and hospital furniture (also about 40%). Ophthalmic goods (prescription glasses, contact lenses) and dental equipment and supplies (autoclaves, drills, and dentures) are also major products.
3. Decide What Niche to Concentrate On
A large amount of medical supplies worth billions are sold annually in the world and this is a very good opportunity for you to get a portion of this very lucrative industry. There are a few different approaches that can be taken in terms of medical equipment sales. Indeed you cannot sell all types of medical supplies available in the health care industry. So, choosing a niche will make it easier and successful for you. These niches may include:
- Start a retail store that sells medical equipment to customers
- Be an independent sales consultant who represents various manufacturers of medical equipment
- sell supplies to home health aides
- Sell supplies to midwives
- Sell supplies to dentists
- Sell supplies to nursing homes
- Manufacture these equipment and sell to the wholesaler
Level of Competition in the Medical supplies Industry
The Medical Supplies Industry is a fast growing industry and should be considered very competitive and the two major customers are hospitals and doctors offices. Primary drivers of demand in this industry are demographics and advanced, effective products. Big companies in the industry work to manufacture and supply top-quality products across a broad territory.
While the small ones are always looking to specialize in a particular market segment, thereby increasing operating potential. But just as expected the stocks of the big companies in this industry offer investors solid long-term growth and income potential.
Small companies often depend on one or just a few very complex or specialized product lines, and their shares usually attractive to daring, risk-tolerant market participants seeking above-average appreciation potential.
4. Know the Major Competitors in the Industry
In the medical supplies industry, there are the big dogs that have started a while now and have paid their dues in the industry. As such they have grown from strength to strength and have become a great force to reckon with. Here is a list of these big brands;
- Baxter International
- Boston Scientific
- Johnson & Johnson
- B Braun (Germany)
- Essilor (France)
- Smith & Nephew (UK)
- Terumo (Japan)
- General Electric
- Cardinal health
The medical supplies industry is quite isolated from negative macroeconomic factors, since the need for treatments is rather constant. But, they are by no means susceptible to harsh cyclical downturns. In very hard times, hospitals will try to delay purchases of the most expensive capital equipment and go for affordable ones.
Also, during times of high unemployment, patients, with limited available income and handling with rising health insurance costs or loss of coverage, might reduce or shut down treatment for as long as possible. Businesses that provide products and services for elective surgeries (e.g., laser, cosmetic) are always vulnerable.
Heavy competition in the medical supplies industry can unarguably pressure operating performance, and Products that are not protected by patents are open to competition in the industry. Product recalls are very hard to avoid and can have a great impact on results.
When products cause patient injuries or fatalities, companies will have no option than to pull them from the market or regulators may handover a suspension of sales to them.
Not only are sales and incomes affected, as companies strive to resolve the problem, but activities could suffer for a period of time because of the vigilance of hospitals, doctors and patients to return to a previously recalled offering. So all businesses in the industry strive to limit the number of recalls, so as to protect their reputation and income.
The medical supplies sector is one of the biggest industries in the healthcare, driven by new ideas and new technologies. The last few years has seen an immeasurable growth in innovative and improved technologies, which has in turn heightened the development of state-of-the-art medical devices and catalysed growth and improvement in the healthcare industry.
5. Decide Whether to Buy a Franchise or Start from Scratch
It can’t be denied that buying a medical supplies business franchise can be more enticing than starting from the scratch, but you need to weigh the pros and cons before you decide. Existing companies already have proven business models and an unadulterated history of profitability.
They also have the gift of brand recognition and an established customer base. But the disadvantage remains that medical supplies business acquisitions can be difficult to adapt to your own unique business philosophy.
But in the medical supplies industry, an industry where brand recognition is minimal and doesn’t matter, buying into a franchise still seems like the best way to venture into the industry due to strong foundation and an existing Business model. They will all go a long way to move your business further.
6. Know the Possible Threats and Challenges You Will Face
With healthcare costs estimated to be as much as 16% of the United State’s GDP, it’s not difficult to see the reason why people are eager to venture into the industry. You don’t need a medical degree to venture into this industry but a comfortable knowledge of orthopaedics, medical equipment, safety devices and other products will go a long way to help you. Here are a few barriers of starting a medical supplies business:
- Industry competition
- Registering your business
- Selecting a specific niche
- A suitable location
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
When starting your medical supplies business, be wise to note that the LLC structure is the best legal entity for your medical supplies business. LLCs is simpler and more flexible, don’t require a board of directors, shareholder meetings and other managerial formalities. You decide how to split the profits, as opposed to shareholders in corporations, who have to mark them out in proportion to their percentage ownership in the company.
One more advantage of LLC’s: it also gives you the leverage to entice talented employees with a share of the profits, even if the said employees didn’t pony up their own equity in the beginning. The LLC structure also gives tax-treatment flexibility. An LLC’s can be taxed as a corporate entity (a C Corporation) or as a “pass through” entity (an S corporation), meaning that the company avoids paying tax on both the corporate profits and the owners’ personal income.
8. Choose a Catchy Business Name from the ideas Below
Thinking deeply on the type of name to opt for as a Business Name, but have no clue? Here is a list to choose from, which might do:
- Agile Technologies Inc.
- Rime medical equipment
- Sovereign Therapy LLC
- Raglan Medical Devices
- Health Wise Inc.
- Stringent Medical Plans Corporation
- GTECH Designs, Inc.
9. Discuss With an Agent to Know the Best Insurance Policies for You
Medical supplies business generally supply hospitals, doctor’s offices, clinics and other medical facilities. Supplying such important equipment can put your business at risk for financial hardship when accidents occur. It is then your duty to protect your customers and business with very good business insurance. Which may include:
- General Liability Insurance.
- Property Insurance.
- Business Owner’s Policy
- Workers’ Compensation Insurance.
- Commercial Auto Insurance.
- Inland Marine Insurance.
- Umbrella Insurance.
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
Modification in the global economic environment has affected the development of business models where IP is a central element creating value and potential growth. In addition to these systemic changes, the international accounting practices have put a lot of pressure on firms to recognize and value all identifiable intangible assets of a business as part of an agreement (in a merger or acquisition, for example).
Due to these trends, proper valuation of IP, followed by ways to protect that value, have actually become a key element of the success and viability of a modern business. There are three methods of valuing intellectual property of your medical supplies business: cost-based, market–based, and income-based valuations.
- Cost-based valuation puts into consideration both how much it took to construct the asset historically and how much it would take to redo it given current rates.
- Market-based valuation proposes comparable market transactions, be it sale or purchase, of similar assets to decide on a value.
- Income-based valuation looks at the stream of income channelled to the intellectual property on the basis of the historical earnings and expected future earnings.
11. Get the Necessary Professional Certification
Certification is a voluntary process by which individuals increase their recognition in a specialized knowledge and skill in a specified field of endeavour. The agenda of voluntary certification is to promote public safety and welfare by providing assurance that their holders have the knowledge, skills and abilities needed to provide services to the public at a professional level with competence.
- Biomedical Equipment Technology Certificate
- Medical Equipment Technician Certification
- Reliable Medical Supply Accreditation and Certifications
- Medical Business Office Professional Certificate
12. Get the Necessary Legal Documents You Need to Operate
There are several documents needed for the effective operation of a medical supplies business. They include;
- Sales and use tax permit
- Resale permit
- Assumed name certificate
- Employer Identification Number
- Operating agreement
13. Writing a Business Plan
A business plan is simply defined as a written document that describes your business. It covers objectives, strategies, sales, marketing and financial forecasts. If you have decided to open a supplies business, you need to write a comprehensive business plan to state the goals and focuses of your medical supplies business.
When writing your medical supplies business plan, discuss and carefully put out the details listed below:
- Executive Summary
- Company and Financing Summary
- Products and Services Overview
- Strategic Analysis with current research!
- Marketing Plan
- Personnel Plan
- 3 Year Advanced Financial Plan
- Expanded Financial Plan with Monthly Financials
- FREE 30 Page Sample Private Placement Memorandum
- FREE PowerPoint Presentation for Banks, Investors, or Grant Companies!
14. Do a Detailed Cost Analysis
Starting a medical supplies business is a very rich proposition because demand for these products will always be on the increase. Outlined below is a detailed cost analysis of starting a medical supplies business.
- Location – $1500
- Registering your business – $750
- Sourced products and inventories – $10,000
- Promoting and networking your business – $1450
From our cost analysis above, it will cost $13,700 to start a small scale medical supplies business and $198,082 to start a medium scale medical supplies business, and a whooping $469,022 to start a large scale medical supplies business.
15. Raise the Needed Startup Capital
Medical supplies business is a business that is capital intensive, and since it is based on the latest technology. The niche you decide to venture into will dictate the amount you will need to kick start your business. For example, if you decide to sell motorized wheelchairs, you will need around $30,000 to buy the first dozen wheelchairs you will sell.
However, if you will be selling cheaper medical products, such as thermometers and blood pressure monitors, etc.; you may be able to kick-start your business with about $10,000 or less. Ways of acquiring fund for your medical supplies business may include:
- Seed capital from family and friends
- Personal savings
- Venture capitalists. Angel investors
- Taking your company public through IPO
- Through merger and Acquisitions
- Small business loans and grants
16. Choose a Suitable Location for your Business
When planning to start your own medical supplies business, you need to search for a place depending on the type of business you would like to set up, and it is economically advised that you lease at least to save cost. Always be certain that the place is clean and has enough rooms to store your stock.
If you’re also planning to have a retail store, if you decide to have an outlet to show off your products or sell on wholesale basis, you will require a larger facility. Also, if you want to sell the medical supplies directly to the consumers, it will have to be located near a health care facility. If you also decide to sell bigger supplies like wheelchairs, a lot of space will also be needed.
If you have plans of storing supplies that can get contaminated due to change in temperature, getting a warehouse where temperature can be controlled will be the only reasonable option you have. Your location should also aid your supply chain and boost profits.
Choosing your medical supplies business location is an issue most prospective entrepreneurs approach calmly, without knowing that it is a decision that will go a long way to determine how successful your business will be.
Many business start-ups, in order to reduce expenditure usually settle for a cheap location and most people believe that location doesn’t matter provided the product is right. But getting a good location is very important to the success of your business but this can prove stressful, but nothing good cones easy. Things to consider may include:
- Supply Chain
- Free trade zone
- Basic infrastructures
- Economic policy
- Closeness to the market
- Industrial Clusters/areas
- Export processing zone
- Distributive channel
17. Hire Employees for your Technical and Manpower Needs
When starting your medical supplies business and you’re not manufacturing them, you need to source them from vendors. It will be your duty to be wary about the quantity of products and their cost to be paid to the distributor or manufacturer.
Bear in mind, the difference between buying price and the price at which you are selling to the consumers because it is going to be your profit. You also need to inculcate your tax, transportation expenses and all other logistics in your price.
Source your products from reliable manufacturers as faulty products may affect the patient’s health. In case of any complaints regarding the products, you will have to refer to the manufacturer and replace them immediately. Also try to keep the products in labelled folders in a large closet for easy identification.
When it comes to the manpower requirements, hiring as you start might be expensive for you. Just try to run a one-man show until the time the business picks up. Then you can hire people on a part-time or temporary basis. That will aid with the management of the business, maintaining and updating stock, replacing products, handling the cash counter, etc.
Make sure you hire honest people that wouldn’t kill your business behind your backs. Just as your business grows, you can hire more staff to help you run your business. Training your employees to have good communication skills and proper knowledge of the industry.
The Service Delivery Process of a Medical Supplies Business
The process of retail operational processes is similar between different businesses. Understanding the basic operational processes and workflow of a retail store will help you understand the process you have to go through in your medical supplies business, and this process will in turn help you to structure operations and build a concrete foundation for your medical supplies business. The service processes will include:
- Purchasing Process
This process starts with purchasing your first other or regularly taking stock of the inventory you have on hand, including goods on the shelf as well as inventory in storage areas. You need to customize the procedures to suit the management styles and the specific needs of your store, place orders with suppliers on a regular basis
- Handling inventory process
Everyone in your store should get involved in this process. This process begins with receiving shipments, which includes unpacking boxes, sorting received items, and disposing of boxes and packing materials. All the inventories are to be stored according to the firm’s policies and everything should be taken into account.
- Customer care process
The core element of any retail store and also that of a medical supplies business is the customer service, and it is the hook that holds the entire workflow together. You sure ventured into the medical supplies business to provide an avenue for customers to view, handle and purchase medical supplies.
So all your services should be centred on the customers. Customer service in the medical supplies business can be broken down into three categories: in-store assistance, transaction processing and handling complaints.
- Accounting process
One major component of the workflow of your medical supplies business is to regularly maintain the account of your business. Store managers send daily updates to report sales numbers, refunds, lost inventory, hourly payroll data and information on bank deposits before the workflow cycle begins again the next day.
18. Write a Marketing Plan Packed With ideas & Strategies
Marketing strategies is very important for any business that intends to generate income. Strategies often involve the best way to push your product and/or service out in order to gain the attention of clients. You might need to leverage on different networks so as to be able to source for deals that would be of advantage to your payroll service business.
While running a small scale business, you might not need to deploy too many strategies especially if you are working alone so that you would not be overwhelmed by demands. If however, you intend to run a medium or large medical supplies business, then you would need all the strategies available – conventional and unconventional. Some of the marketing strategies and ideas that can be adopted for your medical supplies business include;
- Ensure you introduce your medical supply business to potential clients by sending an introductory letter contract document and business cards.
- Advertise your business in relevant business magazines
- Ensure that you attend business seminars as well as other related seminars that will expose your business to potential clients
- Ensure that your payroll business is listed in local directories as well as online directories
- Use the internet to promote your payroll service business
- Engage in direct marketing
- Place cold calls and send emails to potential clients
19. Develop an Iron-clad Competitive Strategies to Help You Win
Even before you start your medical supplies business, you should research your location to find out more about competitors. It’s a good idea to find out how many competitors you have. You can then know where to focus your advertisement.
Without marketing, no one will know anything about your business. Yes there are many ways to win your business competitors both through online and offline advertisements, you should consider only those avenues that will help you reach your target market.
For example, if you sell wheelchairs meant for frail seniors, then you should try advertising in newsletter of senior centres. Or, if you sell high quality stethoscopes, then advertise on online forums for doctors or medical journals and magazines. Ways to win your business competitors may include:
- Understand your competitors
- Understand your customers
- Make a difference
- Step up your marketing
- Make your business attractive
- Target new markets
- Invest into new markets
- Be the best employer
- Look at the future
20. Brainstorm Possible Ways to Retain Clients & Customers
Current customers are the best asset any retailing business can have. They already know the brand, they know the products and they know the service. You should focus your time and energy on these individuals as oppose to always trying to find new customers who will be costing you more.
There are many ways to retain and maintain your customers and make them to always want to come back. These ways may include
- Make them satisfied
- Patronage discount and coupons
- Loyalty and reward programs
- Help desks and support systems
- Customer feedback survey
- Light personalization
21. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
When you have brand awareness as a medical supplies business, it simply means that your customers know who you are, where you are, and increased sales in the marketplace. Make your brand awareness strategies flexible and susceptible to change as at when needed.
Ways to promote brand awareness and create a corporate identity in the medical supplies industry may include holding an event, exhibiting yourself, sponsor something, create an experiential stunt, take to social media, organize a public relation campaign, invest in promotional merchandise, join forces with other businesses etc.
It is true that brand awareness doesn’t really matter in the medical supplies industry because of the interest of the customers on price and innovation. But boosting your brand awareness and creating a corporate identity will be an additional advantage.
22. Create a Supplier/Distribution Network
The medical supplies is a business that can expand really fast if you have good networking skills. Try offering incentive and referral programs for medical professionals for routing patients to your business. You can also create contracts with them for monthly medical supplies.
You also can offer them good discounts and quality services. It will encourage them to refer your business to their colleagues. They will sure like free delivery, schemes, etc., and it will also help create goodwill. Also, try to sponsor medical fairs and gatherings as this will create a networking platform for you too. And with time, you will be able to increase your business.
Establish wholesale accounts with distributors of medical equipment suitable for your niche — buying wholesale is necessary to make a profit. You will need to provide business documentation and order a minimum dollar amount to open a wholesale account and since you will not be manufacturing the medical supplies yourself; you need to find manufacturers or distributors that will help your business grow and provide more profits.
While you can buy some products directly from the manufacturers, others can only be purchased from specific distributors due to contracts between the said distributors and the manufacturer.
23. Tips for Running a Medical Supplies Business Successfully
If you currently own a medical supplies business, your issue now should be to devise standard means to run your business and make reasonable profits. The medical supplies industry is indeed, a business that will continue to be in demand irrespective of the economic conditions. Pitch your tent here and always remember the following in other to manage your business successfully.
- Know your target market well
It can be dentists, midwives, baby boomers, medical facilities, etc. You have a lot of choice when it comes to choosing a niche for your medical supplies business. You can either choose a particular niche or have an all-purpose store.
For example, you can decide to supply only medical supplies meant for dental procedures or you can offer all the supplies required for medical purposes including surgical equipment, gauze and band aids, syringes and needles, wheelchairs, bath seats, arm slings, etc. Understand the requirements of your target market and provide it for them. It is always better to start with a niche and then expand the business
- Promote your business
Like all businesses, your medical supplies business needs to be promoted to gain maximum profits. The social media is available as a platform to speak about your venture. Creating a wellness newsletter for the local people every month will be a great way to advertise your medical supplies business.
Once the business picks up, try to sponsor health care events with the local community, church, NGO, etc., to gain good mileage. You can aim at sponsoring medical awareness programs. You can also utilize the radio and television medium to reach many people. Use other print Medias, like newspaper ads, flyers, posters, etc., to reach your target market.
- Make sure you register your business
When you’re starting your medical supplies business, you have to register your business with the IRS for your tax formalities. You may also need to consult your state and local authorities to understand if you need licenses to sell a particular type of medical equipment.
Hire a professional to look after your accounts and tax requirement. You may also have to register your business as “doing business as” and also get your Employer Identification Number. Apart from this, you will also have to get the necessary permit for carrying out a retail or wholesale business.