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Laboratory Business Plan

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Fargo Medical Laboratories

Executive summary executive summary is a brief introduction to your business plan. it describes your business, the problem that it solves, your target market, and financial highlights.">.

Fargo Medical Laboratories (FML) is a start-up company committed to providing the most convenient, friendliest blood testing service to the physicians of the Main Street Professional Building and the surrounding area. Fargo Medical Laboratories has been founded as a single member L.L.C. registered in North Dakota by Dave Gigsted. Fargo Medical Laboratories will quickly gain market share serving the Fargo medical community.

Objectives Fargo Medical Laboratories has established three significant objectives to pursue. The first is securing 60% of the physicians in the Main Street Professional Building as customers. The second objective is to develop 20% of their revenue from physicians who practice in the nearby vicinity. The third objective is the desire to reach profitability with 12 months. This is especially important since Fargo Medical Laboratories will be using bank debt would like to see a positive ROI fairly soon.

Market Fargo Medical Laboratories has identified two market segments they will serve. First is the large number of physicians that have a practice in the Main Street Professional Building, where Fargo Medical Laboratories will lease space. This customer segment has 128 potential customers with a growth rate of 3%. The second group is physicians that have medical practices in other nearby facilities. There are 115 potential customers in this segment with a 5% annual growth rate.

Services Fargo Medical Laboratories offers a comprehensive battery of blood tests for physician’s patients. Several tests will be done in-house including:

• CBC- A complete test of red blood cell count, white blood count, and a platelet count. Each of these three can be ordered individually if needed.
• Blood sugar test- Frequently requested for diabetics or possible diabetics.
• Electrolyte testing- For patients who are on diuretics and there is concern that they may be losing too many of their electrolytes.
• Creatine- Often used to check kidney functioning or to determine if there is heart or kidney problems.

Other types of blood analysis can be done with the specimen sent to a central lab for testing.

Management Fargo Medical Laboratories has been founded and will be led by Dave Gigsted. Dave received an undergraduate degree in small business management.  After graduation Dave got his laboratory technician certification and went to work for a laboratory. He was eventually elevated to lab manager, staying with the lab for five years.

Dave then moved with his wife to Fargo where he worked for a year in a lab. Surveying the business environment with the thought of opening up his own blood laboratory, he recognized the great need for a lab in the Main Street Professional Building, and developed a plan and secured financing for the venture.

1.1 Objectives

• To gain 60% of the Professional Building’s blood testing work.
• Develop 20% of the revenues from offices outside the Professional Building.
• Reach profitability within 12 months.

1.2 Mission

It is Fargo Medical Laboratories’ mission to serve local physicians with fast, accurate, private, reasonably priced blood testing services. Fargo Medical Laboratories exists to exceed all of their customer’s expectations. 

1.3 Keys to Success

• Lease space in the Main Street Professional Building, the location of our primary target market.
• Set up a strong contract with a large local laboratory to outsource the more difficult tests, ensuring fast service and good rates.
• Follow a strict regime of accounting controls to help ensure profitability.

Company Summary company overview ) is an overview of the most important points about your company—your history, management team, location, mission statement and legal structure.">

Fargo Medical Laboratories has been formed as an L.L.C., registered in North Dakota. Fargo Medical Laboratories is a single member entity owned by Dave Gigsted. Fargo Medical Laboratories will lease office space in the Main Street Professional Building. This building has over 120 offices, 93 of which are leased by medical professionals. Of the 93, a high percentage of those are primary care physicians or general practitioners. There currently is no laboratory within this professional building, and doctors are forced to send their patients across town to have blood drawn and analyzed.  

2.1 Company Ownership

The owner of Fargo Medical Laboratories is Dave Gigsted. Dave has received bank debt financing and will have a long term loan to pay off.

2.2 Start-up Summary

Fargo Medical Laboratories will require the following equipment for the start up of the business:

• Waiting room furniture
• Two computers with QuickBooks Pro, Microsoft Office, and insurance billing software, sharing a laser printer and a broadband Internet connection.
• Five portable ice coolers.
• Four chairs for the blood drawing rooms.
• Latex gloves, syringes, needles.
• Autoanalyzer.
• Complete blood testing machine.
• Centrifuge.
• Refrigerator/freezer unit.

Fargo Medical Laboratories offers routine blood tests on-site and more complex blood tests outsourced to a central lab. FML will be located inside the Main Street Professional Building which is home to numerous physicians. Currently, when the doctors need blood work done, they have to send their patients to an off-site laboratory, a 15 minute drive from the doctor’s office.

Once Fargo Medical Laboratories is up an running the doctors will be able to send their patients to FML’s offices, within the building. For simple tests Fargo Medical Laboratories will do the analysis in-house, for more complex blood work the specimens will be sent to an outsourced central laboratory.

The advantages to the physicians and their patients include: convenience (blood can be drawn within the same building), and faster service (there is no driving or transportation time to get the blood drawn), and for the most commonly requested tests the analysis occurs in-house guaranteeing results within 24 hours.

Fargo Medical Laboratories will offer the following tests in-house:

• Red blood cell count- $15
• White blood cell count- $15
• CBC (a more complete test that counts platelets in addition to white and red blood cell counts)- $30
• Blood sugar (suited for diabetics or people who are trying to determine if they have a blood sugar problem)- $15
• Electrolytes (for people on diuretics)- $20
• Creatine (tests for heart or kidney difficulties)- $15

If more extensive blood work is needed, blood with be drawn in our offices and sent to a central laboratory. Fargo Medical Laboratories will use a courier service that transports the samples in an ice cooler. The specimens are tested within 24-36 hours of receipt at the central lab and the results are returned to FML via encrypted email.

Market Analysis Summary how to do a market analysis for your business plan.">

4.1 Market Segmentation

Fargo Medical Laboratories will provide services geared to two distinct customer segments.

• Main Street Professional Building physicians – This segment is made up of physicians that practice medicine in offices that are located within the Main Street Professional Building. There is a wide range of specialties represented, but predominantly primary care and general practitioners. Most types of doctors need blood work done on their patients with some regularity. The Main Street physicians have always just had to send their patients to another area of town to have blood drawn and analyzed. This is not convenient for their patients and is time consuming, so physicians in the building would generally be quite happy if there were a blood laboratory within the building.
• Nearby physicians – These physicians practice near the Main Street Professional Building. These doctors also have to send their patients out to a different location to have blood work done. Fargo Medical Laboratories’ services would be attractive to this group because FML would be located closer to their offices than the blood lab currently used. The advantage to this group of physicians would also be convenience.

4.2 Target Market Segment Strategy

It is fairly intuitive as to why physicians within the Main Street Professional Building will be targeted, they are the customers who would have the most demand for Fargo Medical Laboratories’ services. Almost all types of doctors regularly have patients who need blood testing done. Assuming that the lab accepts most of the common types of medical insurance, the lab is generally chosen by being the most convenient for the patient since they are the ones who must travel to the lab to have the blood drawn.

For physicians who work within the Main Street Professional Building, Fargo Medical Laboratories would be the most convenient laboratory, being located within the same building as the physician’s offices. No longer would the doctor have to ask the patient to travel to have blood drawn. For the second target market, the nearby physicians, the reasoning is similar, convenience for the patients. While it is not quite as convenient as sending the patient to another office within the same building, Fargo Medical Laboratories would still be closer than the current lab.

4.3 Service Business Analysis

Blood laboratories all provide similar services. Most accept a wide range of insurance plans. Some do the tests in-house, others will outsource the tests. Where the tests are completed is not really that significant. To be competitive the labs need to have the tests completed within a couple of days at the most. This means it all comes down to convenience. Labs serve the physicians and doctors that are closest in terms of geographic proximity. In most cities/towns, you will see labs placed throughout the city serving the different clusters of physicians.

Fargo is different, or at least Main Street is. Main Street Professional Building has for years been trying to have a laboratory locate within the building to serve the large population of doctors. The trouble has been that South Dakota is experiencing an exodus of people. As college students have completed school, they have left the state. Fargo has had difficulty attracting qualified technical people, in this instance phlebotomists (blood drawing technicians) and chemical analyzers. This is the explanation for the absence of a blood laboratory in the Main Street Professional Building. The need has existed, just no one has “stepped up to the plate”, at least not until now.

4.3.1 Competition and Buying Patterns

In Fargo, there is a total of seven blood drawing laboratories. Of the seven, two only serve their specific clients and do not do work for other physicians. Of the remaining five, three offer basic tests done on-site, like Fargo Medical Laboratories, and the remaining two are full service laboratories that do work complex for the other labs.

The closest competitor to Fargo Medical Laboratories is Mednet, located four miles away. This is the facility that 95% of the physicians in the Main Street Professional Building currently use. It is used by these physicians because of convenience, it WAS the closest laboratory. As mentioned earlier, blood testing service providers are chosen based on convenience, how close they are to the patients. Hours of operation (i.e. longer hours/evening hours) are insignificant since physicians are only available during traditional daytime office hours.

Strategy and Implementation Summary

Fargo Medical Laboratories will leverage their competitive edge of a convenient location within a large medical facility to help it quickly gain market share. FML has developed a strategic marketing plan that will use several different methods to develop local awareness of itself and the benefits offered. Fargo Medical Laboratories has also developed a sales strategy to help turn the qualified leads into clients by emphasizing the significant benefits that physicians can offer their patients by sending them to Fargo Medical Laboratories. Sections 5.1-5.3 offers more detail regarding the competitive edge, marketing and sales strategies.

5.1 Competitive Edge

Fargo Medical Laboratories’ competitive edge is convenience. In the blood analysis industry it is hard to differentiate yourself from competitors assuming a few basic levels of care and performance:

• You accept several popular insurance plans, otherwise many patients could not use your service.
• You provide fast analysis, tests are completed and reported within 48-60 hours at the most.
• You provide accurate, precise results.

If these basic, foundational levels of performance are met, then you are competitive. This is why convenience is so important and why it is an effective way of distinguishing one lab from another. The physician is looking for a way to get a blood sample from a patient that is easiest from the patient’s perspective.

Other factors include maintaining a high level of customer satisfaction. If these were not met it would not “kill the deal” but would decrease sales. Here are some important customer service elements that all employees of Fargo Medical Laboratories will emphasize:

• The receptionists and phlebotomists are friendly.
• A satisfactory specimen is secured on the first try.
• Patient discomfort is minimized.
• The phlebotomist was able to personify the laboratory and promote a positive impression between the lab and the patient.

These customer service factors will certainly be taught to all employees to ensure the most positive patient experience.

5.2 Marketing Strategy

Fargo Medical Laboratories will undertake a marketing strategy employing three means of communicating its new service offering:

• Direct mail . Local physicians will receive a flyer announcing the opening of Fargo Medical Laboratories and detailing the services offered. A list of physicians is easily obtained through the local licensing board.
• Personal introductions to Main Street Professional Building tenants. A representative from Fargo Medical Laboratories will visit all of the medical offices within the building as a way of introducing FML to the doctors. This will provide FML with an opportunity to develop a personal relationship with doctors, something that is useful and valuable for service providers within a licensed industry.
• Advertisements . Ads will be placed in the regional flyer that all licensed physicians receive as members of their local chapter of the American Medical Association (AMA). 

5.3 Sales Strategy

Fargo Medical Laboratories’ sales strategy will be used to convert a qualified lead into a client by emphasizing three important services:

• Most forms of insurance accepted – This is important because the vast number of patients that will have their blood tested will not be self-paying, they will be using insurance. FML would not be a viable alternative if they did not accept popular insurance plans.
• Quick turnaround – A doctor’s diagnosis and treatment is often based on the results of the test. It is not reasonable to expect the patient to wait an excessive period of time for the results. Fargo Medical Laboratories will deliver results fast.
• Convenience – There is no other alternative that is more convenient than sending the patients to an office within the building.

5.3.1 Sales Forecast

Fargo Medical Laboratories had developed a conservative sales forecast for the three years of this business plan. A conservative forecast was chosen because the venture is being funded by bank debt, which is fairly risk-averse, and therefore, it is in Fargo Medical Laboratories’ best interests if they are able to meet the monthly sales goals. If the forecast was more aggressive it would be far easier for FML to miss sales targets and find themselves hurting financially due to inaccurate assumptions and forecasts. This would then cast doubt on the survival of the business.

5.4 Milestones

Fargo Medical Laboratories has identified several milestones for the organization to achieve. The achievement of the milestones will be instrumental in the success of the the venture. By enumerating the milestones it provides the organization with clear goals that everyone can focus their energy on.

Management Summary management summary will include information about who's on your team and why they're the right people for the job, as well as your future hiring plans.">

Dave Gigsted is the founder and manager of Fargo Medical Laboratories. Dave received his undergraduate degree in Small Business Management from the University of Illinois. While in college, Dave worked at a bicycle shop, initially as a mechanic, moving up to assistant manager by the time he graduated. This provided him with hands-on business experience to combine with his business degree. 

Upon graduation, Dave began his job search, including opportunities in the medical profession. His mother and aunt are both registered nurses who shared with Dave that, at that time in Illinois, lab technicians were in short supply. So Dave enrolled in an eight-month program through the community college for a degree in Laboratory Technology. After completing this degree, Dave went to work at a laboratory. Within two years, he had been promoted to Lab Manager. Dave found this work challenging, enjoyed the medical aspect and worked hard in the business end of the job.

After five years, Dave and his wife moved to Fargo for a job opportunity for his wife. He immediately began working at a laboratory and worked there for a year. During this time Dave began looking into different business opportunities, recognizing that he had now developed sufficient business skills to operate his own business. Dave found there was a high concentration of physicians in a professional building with no nearby lab. In talking with people, he learned the physicians were looking for a lab to relocate to the building but but had been unable to find any. Armed with this information, Dave began to draft a business plan confident that with a solid strategy and comprehensive plan he would be able to find financing and begin his new venture.  

6.1 Personnel Plan

• Dave will handle business development, sales, marketing, accounting, courier, customer service, and assorted lab tech work.
• Two phlebotomists on staff at any one time to draw blood
• One Lab technician will be responsible for doing onsite blood tests. This will be a part-time position. Dave will be able to fill in as needed in this capacity

Financial Plan investor-ready personnel plan .">

The following sections will outline important financial information.

7.1 Important Assumptions

The following table includes important financial assumptions.

7.2 Break-even Analysis

The Break-even Analysis indicates what will be needed in monthly revenue to reach the break even point.

7.3 Business Ratios

The following chart provides business ratios for Fargo Medical Laboratories as well as for the blood-related health industry, SIC Code 8099.01. Fargo Medical Laboratories’ ratios are consistent with the industry, with the exception of liabilities because it is a start-up organization that is relying on financing for its start-up costs.

7.4 Projected Profit and Loss

The following table will show annual projected profit and loss. A net loss will occur the first year, with well developed profit in year two and year three.

7.5 Projected Cash Flow

The following chart and table describe the projected cash flow. Because we will have a large starting balance because of our initial bank loan, our cash flow should be strong enough to cover our expenses as the business becomes established. The only concern will be to monitor the accounts receivable balances, since the majority of our revenue will be in receivables.

7.6 Projected Balance Sheet

The following table will indicate the projected balance sheet. We will achieve positive Net Worth in the second and third years.

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Medical Lab

Back to All Business Ideas

How to Start a Medical Lab: Cost, Licenses and Profit Potential

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on June 15, 2022

Investment range

$38,550 - $77,100

Revenue potential

$390,000 - $780,000 p.a.

Time to build

3 – 6 months

Profit potential

$78,000 - $156,000 p.a.

Industry trend

Pay attention to these important factors as you establish your medical lab:

• Facilities — Set up a suitable facility that meets regulatory requirements and provides a safe, clean, and efficient environment for lab operations. Consider factors such as layout, ventilation, and accessibility.
• Licenses — Get the Clinical Laboratory Improvement Amendments (CLIA) certification from the Centers for Medicare & Medicaid Services (CMS) to legally operate a clinical laboratory in the United States.
• Accreditation — Consider obtaining additional accreditations from organizations such as the College of American Pathologists (CAP) or the Joint Commission to enhance credibility and ensure high-quality standards.
• Regulatory compliance — Ensure compliance with all relevant federal, state, and local regulations, including HIPAA (Health Insurance Portability and Accountability Act) to protect patient privacy and OSHA (Occupational Safety and Health Administration) standards for workplace safety.
• Quality control — Implement rigorous quality control measures to ensure accurate and reliable test results. Establish standard operating procedures (SOPs) for all lab processes.
• Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or hire one of the best LLC services on the market.
• Legal business aspects — Register for taxes, open a business bank account, and get an EIN .
• Lab equipment — Invest in high-quality lab equipment and instruments , such as centrifuges, microscopes, analyzers, and refrigerators. Ensure you have the necessary equipment for the types of tests you plan to offer.
• Specialization — Consider specializing in specific areas such as genetics, microbiology, or oncology to differentiate your lab and attract specialized referrals.
• Hire staff — Hire qualified and experienced staff, including medical technologists, lab technicians, pathologists, and administrative personnel. 
• Networking — Build relationships with local healthcare providers, hospitals, clinics, and insurance companies to generate referrals and establish partnerships.

Interactive Checklist at your fingertips—begin your medical lab today!

You May Also Wonder:

How profitable is a medical lab?

Medical labs are very profitable, and most bills are paid by insurance companies. More importantly, though, medical labs provide services that are vital to the health care system.

How do you market a medical lab?

To market a medical lab, use targeted advertising through channels like medical journals and online platforms, develop referral programs with healthcare professionals, establish an online presence with a professional website and social media, and network at healthcare conferences and events.

How can I differentiate my medical lab from competitors in the market?

Differentiate your medical lab from competitors by offering specialized services, such as rare tests or advanced technology, promoting accreditations and certifications, emphasizing quick turnaround times or personalized patient care, and highlighting any unique features or advantages your lab has.

What measures can I take to ensure the privacy and security of patients’ medical information and test results?

To ensure privacy and security of patients’ medical information and test results, implement strict access controls and user authentication measures, encrypt sensitive data, train staff on data protection protocols, conduct regular security audits, comply with relevant privacy regulations (such as HIPAA), use secure communication channels, and have proper data backup and disaster recovery plans in place.

Step 1: Decide if the Business Is Right for You

Pros and cons.

• Higher Purpose – Contribute to the health and well-being of your community
• Consistent Demand – Medical lab tests are always needed
• Good Money – Many tests are quite pricey
• Education Required – Certifications are a necessity
• Legal Compliance – Many regulations to follow

Starting a medical lab has pros and cons to consider before deciding if it’s right for you. 

Medical lab industry trends

Industry size and growth.

• Industry size and past growth – The US diagnostic and medical laboratory industry is worth $68.3 billion in 2022 after expanding 3.1% annually the last five years.(( https://www.ibisworld.com/industry-statistics/market-size/diagnostic-medical-laboratories-united-states/ )) 
• Growth forecast – The US diagnostic and medical laboratory industry is projected to grow 3.2% in 2022.
• Number of businesses – In 2022, 29,151 diagnostic and medical laboratory businesses are operating in the US.(( https://www.ibisworld.com/industry-statistics/number-of-businesses/diagnostic-medical-laboratories-united-states/ )) 
• Number of people employed – In 2022, the US diagnostic and medical laboratory industry employs 347,259 people.(( https://www.ibisworld.com/industry-statistics/employment/diagnostic-medical-laboratories-united-states/ ))

Trends and challenges

Trends in the medical lab industry include:

• Improving data tools and standardization are providing lab scientists with more advanced analytics. 
• Traditionally, labs were designed according to the testing being conducted. Today, most labs use a form of “open” design with testing in one core area.

Challenges in the medical lab industry include:

• Laboratories are facing shortages of employees trained in medical science.
• Laboratories produce significant amounts of waste from bodily fluids and must dispose of them sustainably to protect the environment. 

Demand hotspots

• Most popular states –  The most popular states for lab technicians are Alaska, New York, and Massachusetts.(( https://www.zippia.com/laboratory-technician-jobs/best-states/#massachusetts )) 
• Least popular states – The least popular states for lab technicians are Oklahoma, Arkansas, and Idaho.

What kind of people work in medical labs?

• Gender – 46.7% of lab technicians are female, while 53.3% are male.(( https://www.zippia.com/laboratory-technician-jobs/demographics/ ))
• Average level of education – The average lab technician has a bachelor’s degree.
• Average age – The average lab technician in the US is 43.8 years old.

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

Startup costs for a medical lab range from $40,000 to $80,000. Costs include a space rental and preparation, a considerable amount of lab equipment, and an operating budget. 

Medical laboratory technicians must be licensed. You need to have an associate’s degree from an accredited program and pass an exam through either the American Society for Clinical Pathology Board of Certification or the American Medical Technologists Agency. Each state also has its own licensing requirements. 

You’ll need to comply with regulations and requirements administered through the Centers for Medicare & Medicaid Services (CMS). You’ll also need a CLIA certificate. You can get information about this from the CMS .

You’ll need a handful of items to successfully launch your medical lab business, including: 

• Microscopes
• Hematology analyzers
• Blood gas analyzers
• Chemistry analyzers
• Differential counters
• Histology and cytology equipment
• Urinalysis analyzers
• DNA analyzers
• Gamma counters
• Microplate readers/washers
• Point of care analyzers
• Immunoassay analyzers
• Refrigerator and freezer
• Computer system
• Waiting room furniture

How much can you earn from a medical lab business?

You’ll need to develop relationships with major insurance companies to ensure your services are covered by most plans. 

Lab tests cost anywhere from $100 to $1,000 or more. These calculations will assume an average price per test of $300. Your profit margin after rent, overhead, and labor should be about 20%. 

In your first year or two, your lab might do five tests a day, five days per week, bringing in $390,000 in annual revenue. This would mean $78,000 in profit, assuming that 20% margin. As you begin to get more referrals from physicians, you could do 10 tests per day. With annual revenue of $780,000, you’d make an outstanding profit of $156,000.

What barriers to entry are there?

There are a few barriers to entry for a medical lab. Your biggest challenges will be:

• The education needed to meet licensing requirements
• The startup costs of setting up the lab and purchasing lab equipment

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Step 2: hone your idea.

Now that you know what’s involved in starting a medical lab, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research medical labs in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a clinical laboratory with a medical laboratory scientist or a pathology lab. 

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as medical testing or routine lab tests.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your services and type of tests

The types of medical testing you do will be based on your skills and equipment. You should try to offer as wide a variety as possible. 

How much should you charge for medical lab services?

Prices for lab tests range from $100 to $1,000 or more depending on the type of test. Check your local market for various test prices. Your profit margin after all costs should be about 20%. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will generally be physicians who will refer patients to you. You can connect with them on LinkedIn or find them on Google or Yelp and call them directly. 

Where? Choose your medical lab location

Choosing the right location for your medical lab is essential for attracting clients and ensuring its success. Look for a spot in a central and convenient area, such as a busy commercial district or a medical center. Consider accessibility and convenience, ensuring that the location is easily reachable by foot or public transportation, and has ample parking.

Depending on the type of medical lab services you plan to offer, you may also want to consider the proximity to hospitals, clinics, or other healthcare facilities. When selecting a location, ensure that it meets all necessary safety and regulatory requirements for medical labs.

By strategically choosing the right location, you can establish a reputable and successful medical lab that provides quality services and stands out in the competitive healthcare industry. You can find commercial space to rent in your area on sites such as Craigslist , Crexi , and Instant Offices .

Step 3: Brainstorm a Medical Laboratory Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “medical lab” or “medical testing”, boosts SEO
• Name should allow for expansion, for ex: “MedLab Innovations” over “Cardiology Lab Services”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Find a Domain

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Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Medical Lab Business Plan

Here are the key components of a business plan:

• Executive Summary : A brief overview of the entire business plan, summarizing key points and objectives.
• Business Overview : A concise description of the medical lab business, its mission, and its goals.
• Product and Services : Explanation of the medical tests and services offered by the lab.
• Market Analysis : An assessment of the market for medical testing services, including target demographics and trends.
• Competitive Analysis : Examination of competitors in the medical lab industry.
• Sales and Marketing : Strategies for attracting customers and promoting the lab’s services.
• Management Team : An introduction to the individuals responsible for running the business.
• Operations Plan : Details on how the medical lab will function, including location, equipment, and staffing.
• Financial Plan : Projections for the lab’s finances, including income statements, balance sheets, and cash flow forecasts.
• Appendix : Additional information such as supporting documents, resumes, or any supplementary materials.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to medical labs. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your medical lab will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have.

Form Your LLC

Choose Your State

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a medical lab business. 

Step 8: Apply for Medical Lab Business Licenses Permits

Starting a medical lab business requires obtaining a number of licenses and permits from local, state, and federal governments.

You must comply with regulations and requirements administered through the Centers for Medicare & Medicaid Services (CMS). You’ll also need a CLIA certificate. You can get information about this from the CMS .

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your medical lab business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software, such as qualer , HealthAxis , or CGM , to manage your workflows, records, compliance, specimen inventory, and billing.

• Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero . 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Here are some powerful marketing strategies for your future business:

• Professional Branding — Develop branding that exudes trust, precision, and expertise, featuring a professional logo, business cards, and a well-designed website.
• Website Optimization — Launch a website detailing your lab services, certifications, and specialties, optimized for SEO to attract local searches related to medical testing and diagnostics.
• Local SEO  — Regularly update your Google My Business and Yelp profiles to strengthen your local search presence.
• Social Media Engagement — Utilize LinkedIn for professional networking and sharing industry news and advancements, and Facebook to engage with the broader community and share health-related information.
• Content Marketing — Publish a healthcare blog with posts about medical testing advancements and laboratory practices, and distribute email newsletters updating healthcare providers on new tests and medical research.
• Video Content — Produce videos that offer tours of your facility, explain testing processes, and emphasize the importance of accurate diagnostics.
• Experiential Marketing — Host open house events to showcase your lab facilities to healthcare providers and participate in medical conferences to network and stay informed about industry trends.
• Healthcare Partnerships — Build relationships with local healthcare facilities to become their regular testing provider and collaborate with educational institutions for research and training opportunities.
• Customer Loyalty Programs — Implement a referral program that rewards healthcare professionals for new referrals and offer service agreements to ensure a steady business flow from regular clients.
• Targeted B2B Advertising — Advertise in medical journals and on online healthcare platforms to reach a professional audience effectively.
• Community Engagement — Engage in community health initiatives and sponsor local health events to enhance brand visibility and demonstrate your commitment to community health.
• Direct Outreach — Network with local healthcare providers, clinics, and research institutions to introduce your services and establish collaborative partnerships.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your medical lab meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your medical lab business could be: 

• Accurate lab test results in 24 hours
• Reliable medical testing with quick results
• A sustainable medical lab for all your testing needs

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a medical lab business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in medical labs for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in medical labs. You’ll probably generate new customers or find companies with which you could establish a partnership. 

Step 12: Run a Medical Lab – Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a medical lab business include:

• Medical Laboratory Technicians – perform testing
• Medical Laboratory Scientists – perform more advanced testing
• General Manager – scheduling, accounting
• Marketing Lead – SEO strategies, social media, call on physician’s offices

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Start Making Money!

Medical labs are a necessity in any community and provide valuable information to physicians and patients. Medical tests are also relatively expensive, which is why the industry is a major opportunity. If you have a desire to boost health care, you could start your own medical lab, have an impact on people’s lives, and make a good living at the same time.

You’ve added business education to your resume now, so it’s time to break out the microscope and get your successful medical lab going!

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• Decide if the Business Is Right for You
• Hone Your Idea
• Brainstorm a Medical Laboratory Name
• Create a Medical Lab Business Plan
• Register Your Business
• Register for Taxes
• Fund your Business
• Apply for Medical Lab Business Licenses Permits
• Open a Business Bank Account
• Get Business Insurance
• Prepare to Launch
• Run a Medical Lab - Build Your Team
• Start Making Money!

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