Is Starting a Medical Supply Business Right for You?
Starting a medical supply business can be a fun and profitable venture. The medical supplies market was valued at over 134 billion dollars in 2022 and may grow to over 188 billion by 2031. Although it is similar to owning any other type of retail store in many ways, the medical aspect introduces additional challenges and opportunities that other small business opportunities do not provide.
What Is a Medical Supply Business?
A medical supply business sells a variety of medical devices for both patients and practitioners. These can include disposal items like medical-grade latex gloves and face masks and items designed for long-term use, like canes, wheelchairs, and shower stools.
It’s not required to have a pharmacy as a medical equipment supplier, and most such businesses do not have one. After the business grows, you may add one if you’re qualified and can get the relevant licenses.
Reasons to Start a Medical Supply Business
The medical supply industry offers a way for entrepreneurs to start a business that is both profitable and beneficial to the community. With the rise of telehealth medical visits that patients can conduct over the phone or via video chat, many people have started looking to medical supply stores for their needs.
While it requires more steps than opening another type of business, like a coffee shop, it can be more fulfilling on a personal level. Many people love a cup of coffee in the morning, but everyone will require some sort of medical device at some point in their life. Improving a customer’s quality of life can be an amazing feeling.
It also provides many of the benefits offered by small business ownership, like being your own boss, working the hours most convenient for your schedule, and enjoying a greater share of the company’s profits. Although it’s significantly more responsibility than simply being an employee, owning a small business is often a rewarding experience.
Requirements for Opening a Medical Supply Business
Nearly all medical supply stores sell items classified as durable medical equipment (DME) or home medical equipment (HME), which means they are often subject to certain legal requirements depending on the city, county, or state they’ll be located in. Some states require a special license from the State Pharmacy Board. However, other states do not, and a simple business license will suffice. Checking the state and local laws where you want to open your business is an essential first step.
The next step to opening a medical supply store is startup capital. This involves having enough money on hand to purchase the supplies to get the business off the ground. You will also need a physical location for the storefront. Although operating an online-only store could be an option in some cities, the competition from Amazon and other established retailers will make it difficult to get a foothold in the market.
The exact amount of startup capital required for a given store will vary greatly depending on several factors, but a bit of market research should be able to give potential entrepreneurs a good idea as to how much will be needed. This can be secured through many ways; although, the most common is a small business loan or a loan from a family member.
To better serve customers, it is helpful to have a medical background or at least a working knowledge of current medical devices and common ailments. However, it may not be required in your jurisdiction. Having knowledgeable employees can be a tremendous help if you lack experience in the industry.
Some customers will order based on doctor prescriptions, but others might come in looking for something to help with whatever ailment they’re currently experiencing. Having an employee, for example, who knows about proper cane heights or how to choose the right arm brace can not only help customers feel like they are understood and taken care of, but it will also increase sales and establish a loyal customer base.
It’s also recommended that you keep up with current advances and emerging medical technologies. Consulting trade journals and doing regular internet research on upcoming innovations can help you decide which products should be kept in stock to best meet the needs of your customers.
Market Research
The next major step is to analyze the city or town where the supply store is to open. You should carefully study the existing online and local competitors. After all, you want to avoid opening a business in an already saturated market. Your market research should also explore a potential customer base to see which demographics are most commonly found in the area and how best to fulfill their needs.
If the average age is 35, the most commonly sought types of medical supplies will be quite different than a place whose average age is 65. In the former case, a supply store might want to focus on sports-related injuries, as they’re more likely to occur in a younger community. For the latter, focusing on long-term care and stocking supplies for conditions more common to older adults would likely be the better choice.
Market Research Example
For example, let’s imagine a fictional location called Supply City, where your medical needs shop is to be built. Supply City has roughly 100,000 people with an average age of 58.9, which has continued to increase over the past few years. The most popular employers are medium-sized tech companies staffed by a younger population.
There are two existing local competitors. One has been open for 25 years and has been run by the same husband and wife throughout its existence, but it is only open 8 a.m. to 4 p.m. Monday through Friday. It has many loyal customers who have been shopping there for years, despite its decidedly inconvenient location at a strip mall in a shady part of town.
The other store has been around for roughly 10 years and has slightly lower prices, but the reviews suggest it is a bit lacking in customer service. The employees are helpful but not overly knowledgeable and will openly check Wikipedia on their cell phones to answer customer questions.
Based on this information, opening a medical supply store in Supply City could be viable, especially if it is customer-service-focused, has knowledgeable employees, and is open on nights and weekends.
Further, the owner can deduce that the business should stock items generally aimed at older adults, like walkers, wheelchairs, and canes. However, there could also be a section aimed at young tech employees who might suffer from carpal tunnel syndrome and require wrist braces or other similar equipment for conditions associated with extended computer usage.
Business Plans
Before you acquire licensing and startup funding, you’ll need to write up a full business plan that contains market research, a five-year plan that details potential growth, and a list of risk factors and how you will overcome them. It should also include expected revenues and profits, which may be helpful when seeking funding.
A business plan is essential, as states that require licenses will generally expect a business plan as part of the application. This shows them that the entrepreneur is serious about their desire to open a medical supply store and that the plan has the potential to succeed.
It’s also important to show to potential investors, organizations that grant business loans, and others potentially providing capital, as they’ll want to make sure that their money will be invested wisely and not thrown away on a poorly thought-out project that will close within a few months.
When writing the business plan, it’s also essential to determine the classification that will be used for your business. The most popular ones include sole proprietorships, partnerships, corporations, and S corporations, among others. There are advantages, disadvantages, and requirements that must be met for each, so the exact classification should be researched and chosen carefully.
Business Loans
The easiest way to fund a medical supply business is by securing a small business loan. These funds can be used to cover opening costs like the storefront lease, employee salaries, the merchandise to be sold, and much more. Some loan providers may offer or require a certain level of oversight to ensure the money is being spent properly, although others may only require regular reports as to how the money has been used.
These loans can be secured in a variety of ways, including from the the U.S. Small Business Administration. SBA loans often have great terms and convenient repayment schedules, although they also tend to be more exclusive and can be challenging to qualify for, depending on a variety of factors.
Loan providers that specialize in small business startups are generally considered the best way to obtain funding, as they offer a certain level of flexibility that other loan sources can’t. In some cases, the funds can also be received more quickly than through governmental backers.
Get a Loan Through American Business Credit
A medical supply business can be an invaluable addition to a community by helping citizens acquire essential items for their health. You’ll need a solid business plan with market research, a physical storefront, potential licenses or registrations with the relevant state agencies, and startup capital to get started.
Although there are many ways to obtain the necessary funding, securing a small business loan is generally the easiest way. American Business Credit has proudly supplied business loans to many clients for years. By filling out the form on our website, you can start the process and get your funding in as little as three days after approval, which generally takes less than 48 hours.
Even if your financial history isn’t perfect and your credit score is a bit low, a co-signer can help you get the financing you need to get a loan. We work to minimize red tape, required documents, and hassle to make sure that entrepreneurs across the country have access to the loans they need to start their amazing businesses.
No matter why you have decided to open a medical supply business, American Business Credit can help you realize your dreams. By securing the startup capital you need, you can get your business up and running. Fill out the form on our website and get the process started today.
