How to Start a Medical Supplies Business
As long as people continue to live, get sick, have babies and fall down the stairs once in a while, there will be no end to the demand for medical supplies. It's a $232 billion industry, with an annual growth rate of 2.9%. However, the competition is stiff, as there are already over 14,000 companies in this sector.
Price is a factor when you are getting into the sector, but if you select the right market and do your research, it could be a great opportunity.
If you have the capital, purchasing an existing company gives you a jump-start into the medical supply sector. Even if you don't think that buying an existing company is what you want to do, it's still worthwhile to research what is out there. Seeing what someone else has done with a company in another state may give you good ideas for your own business.
If there is a medical supply business for sale in your region, it's better that you know about it now rather than later. Find out as much as you can about the business, talk to the seller, and find out the asking price. If you can't come to a mutually beneficial agreement, at least you learn about your competition's capabilities.
The most significant benefits of buying an existing business are established customers and supplier relationships. In addition to looking at the company's revenue, cash flow and inventory, make sure these relationships are solid and something you can build on.
Franchising opportunities in the medical supply sector are limited in the U.S. in 2020. Many of the opportunities you find in franchise directories in the medical supplies sections of industry publications are specialized and not what you may think of as medical supplies, such as suppliers of hearing aids and dental implants.
That's not to say there are not general medical supply franchises out there. Even a specialized franchise, such as orthopedic supplies or mobility chairs, may be just what you need to get started. As your business grows, you can expand your product offerings with related supplies.
One of the benefits of being in a franchise is that a national or international company can negotiate better pricing from manufacturers because of its higher volume. Other things to look for in a franchise include:
- Industry name recognition and a good reputation
- Exclusive territory rights
- Leads and referrals in your territory
- Marketing assistance
- Technical support
- Preferred supplier relationships
Market research is an important component of any business plan, and a major part of this is learning about your local competitors. Google Maps is a good place to start. Enter "medical supplies" as well as specific examples of supplies you may be interested in selling. Visit the companies' websites to find out what they offer and — more importantly — what they don't.
Once you know who your local competitors are, it's time to find out how many customers are in your region. This obviously depends on the types of equipment you plan to offer, but for most supplies, you should look for:
- Medical clinics
- Nursing homes and retirement homes
- Veterinary clinics
- Nursing services and agencies
Again, Google Maps is probably the best place to start looking at your potential client base, although Bing Maps and Apple Maps are useful, too.
Knowing your local market is a small piece of the larger picture. If you're planning to sell medical equipment online, the national market and international market are your virtual street corners. However, even if you plan to keep your business at the local level, understanding the national market gives you insights that benefit you.
The best way to get up to speed on the national medical supply market is usually to purchase an industry market report. The report gives you specific information, such as the average profit margins of medical supply companies, which companies dominate the market, how many companies there are, what the average profit margin is, and how revenue trends are looking.
Speaking of trends, you also need to know the trends for the specific types of supplies you plan to sell. For example, if you are going to sell medical scrubs, you should know how often people purchase them, where they usually get them, and how much they cost. If you're planning to sell diabetes monitoring equipment, then you should know the technologies that are most popular now and those that may be on the horizon. All of this type of information can be found in comprehensive market reports.
Medical supplies is a broad market, and it is impossible to be all things to all customers, particularly when your business is starting. It's important to narrow your target market to a precise niche, based on your research of available opportunities in your region and gaps that the competition isn't focusing on.
After you identify your primary market, look at additional supplies they may need. For example, suppose you decide to start with mobility products, like scooters, walkers and wheelchairs for seniors who still live in their own homes. This could lead to pads and liners for incontinence and discreetly delivered personal care wipes. It could also open opportunities for safety bars and railings for their homes, especially if you can install them.
Hand-in-hand with your target market is sourcing a supplier. Whether you're selling to hospitals, nursing homes or directly to consumers, pricing is going to be a factor to your customers. However, this doesn't mean you can afford to sacrifice quality for the sake of pricing.
Contact manufacturers to find out what is needed to get an account. In some cases, you may be able to buy directly from the manufacturers, while others refer you to a distributor. If you're planning on becoming a medical supply distributor yourself, you should have connections with a manufacturer or have identified a new company offering a new product that is looking for its first distributors and is willing to give you an exclusive territory.
It is easy to purchase cheap medical supplies from AliExpress in China. If this is your plan, make sure you order sample products before buying them for your inventory or drop-shipping them to your clients. Look for reviews of the suppliers and contact the company to begin developing a solid relationship so that if problems arise, your supplier is more likely to help you resolve the problem.
As with any business, you need to register your business with your state and the IRS, as well as choose a business structure. In most cases, an LLC (Limited Liability Company) may be the best option, since it gives you some personal protection in the event your business fails or is subjected to lawsuits. Due to the risk of lawsuits, business insurance and liability insurance are especially important in the medical supply business.
Pay particularly close attention to requirements the government has for the storage and handling of your inventory. Your customers, especially hospitals, may have their own requirements for the shipment and handling of supplies, as well as specific quality control standards they need you to comply with. Talk to an accountant and a lawyer with experience in your industry before you open shop.