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How to Start a Medical Scrubs Business

Overview

How to Start a Medical Scrubs Business

Medical clothing is a line that won’t go out of style when the next season comes around. Scrubs are sanitary clothing made for medical professionals to protect them from coming in contact with bodily fluids. The material is typically thick and helps prevent fluids from seeping through. The term “scrubs” came about because this clothing was worn in a “scrubbed” environment, such as surgical rooms.

Today, many medical professionals wear scrubs: doctors, nurses, dentists, phlebotomists, and countless others. As a result, medical scrub businesses have a broad customer base. They can market different styles and designs, such as kid-friendly prints for pediatricians or custom, logo-printed scrubs for uniforms.

Business Description

Boiled down to the basics, medical scrub retailers draw up designs, purchase materials, produce the final product, and sell their items to customers. But however simple the basics are, a lot more detail goes into a medical scrub retail business.

For instance, are the scrubs handmade or contracted to a manufacturer? Will your business sell generic scrubs, or will your items be boutique, custom designs? Will the line be sold in a retail store? A mobile booth? Online? The potentials are endless, and so are the business decisions. Ultimately, medical scrubs businesses can sell their products in various niches.

Industry Summary

In recent years, the demand for medical clothing and protective wear has boomed. In fact, the market grew by 36% in 2020 and is expected to see continual growth. Additionally, the medical clothing market earned nearly $86 billion in revenue in 2020.

Related Industries

Clothing Boutique
Clothing Line

Industry Trends

The growth in demand for medical clothing is understandable, given the recent pandemic. The accelerated spread of infections prompted a heightened need for medical clothing because many people went to the doctor’s office or hospitals.  

Although many have adapted to the changes that 2020 brought, the demand for sanitary medical clothing is expected to continue growing. Medical establishments and personnel will always need new or replacement clothing, giving the medical scrub industry a steady market.

Nevertheless, new medical scrub uniform businesses may encounter challenges that can stall progress. For example, medical clothing retailers have requirements and guidelines that can make it hard for a new business to take off. These requirements often mean that the material and production costs are more expensive.  

Medical clothing is typically categorized as medical devices, requiring manufacturers to meet regulations, such as appropriate barrier levels and pathogen resistance. Because regulations on scrubs increase manufacturing costs, a new business may face challenges with its initial profit margin, which can make advancement hard for a budding business.

Target Market

Medical scrub businesses can operate in various markets, ranging from individuals to large business contracts. Determining your business’s niche can help narrow down which market is best.

Retailers: Many medical scrub businesses will target physicians, nurses, surgeons, and other health care and medical staff . Selling at retail can not only be done through a storefront but also through online store, or traveling booths at conventions and markets.

Wholesalers: Selling to retailers typically requires some level of manufacturing as retailers often purchase scrubs in bulk. If you want to keep things smaller and avoid manufacturing, you may opt for local shops and sell your line in smaller batches.

Business contracts: Establishments, such as medical offices, dental offices, or long-term care living facilities, often need scrubs for their employees. Additionally, they may want a certain color, logo, or design, leading them to purchase custom scrubs through a medical clothing business. As such, contracting with these types of businesses can be lucrative and offer steady business.

Checklist for Starting a Medical Scrubs Business

Starting any business can seem like a daunting task, but with a little planning, it can be surprisingly simple. If you’re thinking of starting a medical scrubs business, here’s a checklist to help you get started:

Step 1: Write a Business Plan

While not the most fun step of starting a business, a business plan is important for a medical scrubs business because it can help you to outline your goals and strategies for the business.

When you are writing your business plan, be sure to include information on the target market for your medical scrubs. This will include demographics such as age, gender, income level, and geographic location. You should also research the competition in your area and determine what sets your business apart from them.

Related: How to write a business plan

Step 2: Name the Business

When coming up with a name for your medical scrubs business, be sure to choose something memorable and easy to spell. If you have a fixed location, you may want to consider using the name of your town or state as part of the name or use a catchy slogan.

Finding the perfect name for a business can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.

Related: Tips on naming a business

Step 3: Form a Business Entity

A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a medical scrubs business, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
 
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start, which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

IncAuthority - $0 plus state fees & free registered agent the first year!

ZenBusiness - $49 plus state fees & free registered agent for 1 year!

Step 4: Select Your Location

When picking a location for your medical scrubs business, you will need to consider several factors. The ideal location will vary depending on whether you have a physical retail location, sell online, or sell directly to clinics, hospitals, doctor’s offices, or a combination of all. The most important thing in a retail store is location, and if you plan to sell at retail, you’ll ideally want to be located close to a medical center, or hospital.

Another important factor to consider when picking a location is the cost of doing business. Be sure to calculate all of the costs to operate this location, as the rent is just one aspect of the expenses for your location.

Finally, you will need to make sure to check local zoning regulations before signing any lease or sales agreement. If the location isn’t zoned for retail, it could be difficult or take some time to get approval from the city.

Related: Choosing a business location

Step 5: Apply for Business Licenses and Permits

There are a variety of licenses that may be needed for a medical scrubs business, regardless of whether it is operated out of a retail location or as a mobile business.

Every city and state has different licensing requirements for retail businesses, but some common licenses include a local business license, sales tax permit, Employer Identification Number (EIN), and more.

Related: Common business licenses, permits, and registrations by state

Step 6: Find Financing

Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a medical scrubs business is another.  

Banks are typically going to want the borrower to have good credit and be able to invest 15-25% of their money towards the total start-up costs.

Related: Finding the money to start a business

Step 7: Open a Business Bank Account

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

Step 8: Get your Marketing Plan in Place

Starting a new business is always an exciting undertaking, but before you can open your doors, people need to know you exist!

Advertising is a key part of getting the word out for any business, and varies by your business model, but with so many options and channels available, it can be overwhelming to prioritize which ones to start. The most important thing is to identify your target audience and craft messaging that resonates with them. Once you have a clear picture of who you’re trying to reach, you can begin planning your advertising strategy. Traditional methods like print ads, business cards, radio spots, and TV commercials can be effective, but don’t forget about digital channels like social media and online advertising.

If you plan to sell your brand of scrubs, you can advertise in medical publications, like the Journal of Clinical Investigation, American Journal of Nursing, American Journal of Public Health, and The Journal for Nurse Practitioners.

Related: Low-cost ideas to market a new business

Every business is going to need a logo. Make a professional logo in no time with the free Canvaa logo maker!

Step 9: Get Business Insurance

There are several types of small business insurance to consider when starting a medical scrubs business. A few of these include:
– General liability insurance covers expenses if a client is ever injured or if the business ever damages a client’s property.
– Worker’s compensation insurance is required if a business hires employees. It helps cover expenses like lost wages or medical bills if an employee is injured while working.
– Automobile insurance is needed to cover any vehicles and drivers.  If you plan to use a personal vehicle, be sure to review your current policy to ensure it allows for commercial activity.

The cost to insure a medical scrubs business will differ according to factors like a business location, the value of the equipment to be insured, and the number of employees on staff. To get a more accurate idea of potential insurance costs, request quotes from multiple insurance companies. Compare the policies and consider factors like deductibles and coverage limits to find the policy that’s best for a business.
 
Related: Types of insurance your business may need

Step 10: Hire Employees

Every state has different rules and regulations for hiring employees. Before researching, though, you will want to identify the skills and qualifications that are required for the positions you are looking to fill. Once you have a clear idea of what you are looking for, you can begin to search for potential candidates.

Optimally, finding someone in the medical field who is looking for a different career path is ideal, but there are also a number of online job boards that can be a great resource for finding qualified employees. It’s important to conduct background checks on your top candidates before making any final decisions.

Related: Hiring your first employee

Step 11: Set up an Accounting System

Setting up an accounting system for your medical scrubs business is critical to your business’s long-term success.
Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.

Related: Setting up the accounting for your business

The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:

- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.

Find bookkeepers in your local area or use a service like 800Accountant.

How much does it cost to start a medical scrubs business? 

Opening a new business is an exciting adventure. But any business owner knows that once you pass the initial planning stage and start gaining traction, it helps to know some of the finer details, such as the costs.

Business Formation Costs. Business licenses, permits, and insurance are all essential aspects of setting up your new business, and these aspects have price tags. However, the cost varies depending on where your business is located.

The best way to determine fees for registering and licensing your business is to visit your local government’s website. Similarly, you will need to contact an insurance company for a quote, as the cost is determined by risk exposure and coverage limits.

Inventory
There are multiple options for obtaining retail inventory. The primary merchandise sold will be scrubs, but there are opportunities to make additional sales items such as shoes and equipment.

Distributors are a common option, but if you plan to sell your own unique brand, you will need to research medical uniform manufacturers.

Clothing factories typically have a minimum order quantity (MOQ), meaning you must order at the minimum amount per designed item. So, for example, a medical scrub outfit could cost from $3 – $12 a piece with a MOQ ranging from 100 – 3,000 pieces or more.

Let’s assume you place an order with a factory for 200 pieces at $5 each; then, the minimum order would cost you $1,000.

Materials are another cost to consider. Sometimes the material costs are included in the factory MOQ quote, but it is always good to check whether the fabric is included. Otherwise, your expenses increase quite a bit without the fabric and materials included.

If you aren’t sure which way to go or looking for more information, check with the Uniform Retailers Association (URA) and North American Association of Uniform Manufacturers and Distributors (NAUMD)

Marketing. Marketing is essential in growing your business reputation and selling your product. A good marketing plan is one that gets you exposure. However, this often (but not always) requires an investment of money. A cost-free way to market is through your business’s social media accounts. But, purchasing ads and mailers is another excellent way to promote your product. For reference, ads on social media platforms cost between $0.38 – $5.26 per click.

A professional website sets you apart from your competitors and builds client trust. The average cost for a professionally designed website is $2,000 for a small business. If a professionally designed website is not within the budget, you can do it yourself with a website builder service, such as Wix or Squarespace.

Employees. Whether you hire a seasonal accountant or a full-time employee, you may want to account for employee costs in your business budget. On average, freelance accountants charge $30 per hour, and marketing managers charge around $22 per hour.

How profitable is a medical scrubs business?

Custom scrubs sell for a higher-than-average price simply because the items are specially made and designed. For this reason, it’s not uncommon to see higher prices for scrubs. High-end scrubs tend to sell for $40 – $50.

So, let’s revisit our earlier example. Let’s say you order through a factory to produce your line of scrubs at $5 a piece with a minimum order of 200. Then, you decide to sell your scrubs for $30—a competitive price compared to high-end scrub brands.

Assuming you sell every piece, you would have invested $1,000 to produce the scrub line and earned $6,000 selling the scrubs, leaving you with $5,000. After business expenses, you will likely turn a profit. Ideally, finding a good profit margin, where costs are low, and sales are high, leaves you in a comfortable position.

What Skills Are Needed to Run a Medical Scrubs Business?

As you explore starting your own medical scrubs business, you likely already have entrepreneurial skills to help jumpstart your business. Here are a few skills that come in handy:  
 
Coordination and Planning. Coordination and planning are similar but slightly different skills you need to run a medical scrubs business. For instance, you will need to coordinate
– Scrub designs
– Manufacturer orders
– Customer orders and deliveries
– Bookkeeping and accounting

In addition, you must be able to plan out launches, marketing strategies, and timing of order fulfillment.

Although employees can help with a lot of these tasks, it remains important for you to have these skills too. Business coordination and planning help ensure efficiency, reduces company waste, and keeps you in tune with the business. The last thing you want is customer orders to go unfulfilled, accomplished incorrectly, or delivered late. A poor reputation can be a devastating business setback.

Design. Finding your niche helps to set your business apart from other medical scrub businesses. Developing your niche includes defining your brand and clothing designs. For example, perhaps your line focuses on scrubs with lots of functional pockets, or maybe the scrubs are designed for pregnant customers. Although a professional designer can help you plan out brand ideas, having an overall vision for your business’s niche helps.

Sales and Marketing. Once you have your line of scrubs and your brand identity, you will need to acquire customers. You gain customers through selling and marketing your product to buyers. In addition to sales and marketing, having a knack for negotiation is another valuable skill, especially while lining up ongoing contracts.

Are there grants to start a medical scrubs business?

It’s extremely rare to find a grant to start a medical scrubs business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.

Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.

Final Thoughts

Starting a medical scrubs business is a great option for those passionate about designing clothing lines and eager to sell. Scrubs are a line of clothing that won’t go out of style, and medical professionals will continuously need new and replacement scrubs, securing a steady market.

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