Anatomy of a Healthy Startup

The medical-care industry is expanding, but that doesn't mean a would-be entrepreneur can learn the ropes by trial and error

By Karen E. Klein

Q: I am an aspiring entreprenuer interested in establishing a medical-staffing agency. I am in the process of research and would appreciate any tips you can give me. -- A.A., Atlanta


First, do not consider opening a business unless you have worked in the industry or a closely related field, and have established relationships with talented accountants, lawyers, insurance brokers, and other experienced advisers. If you need some experience in the industry, take a year or two, get a job at a staffing agency, put as much money as you can into your startup fund, and learn first-hand how the business works. If you're ready, once you know how the industry actually works, start out on your own.

"The staffing business, no matter what the specialty, is no longer one which can tolerate well-meaning novices," says Patty DeDominic, CEO of PDQ Personnel Services. "Employment and malpractice litigation is rampant and the costs of defending one real -- or even frivolous -- lawsuit or complaint can pile up quickly. Particularly in the medical arena, the stakes are high and the risks are great."


  Once you're ready to get started, DeDominic advises that you hire the best advisers, helpers, and staff you can afford -- and then get as much training for them and for yourself as possible. "Nothing costs a business like 'bargain basement' help," she says.

Trust your team of advisers and staff, but continue to educate yourself as well, and don't hesitate to get additional opinions and, when necessary, be prepared to ask for help. Search out some of the excellent programs available for entrepreneur training at community colleges and universities. DeDominic says she found the Service Corps of Retired Executives (SCORE) particularly valuable. Says DeDominic: "SCORE will assign you an experienced, probably retired business executive with skills in the areas you identify that you need."

Michael Ban, of Paladin Staffing Solutions,, suggests you contact the American Staffing Assn., in Alexandria, Va., for specific advice on the industry. "They are a wonderful source of services and information," Ban says, adding that the member-services department is the place to start.


  Medical staffing is a growing industry. "Hospitals and physicians groups can be some of the best clients," DeDominic says. "The work they do is so important and they can use the best partners to help them. My company has a number of extraordinary organizations as clients, such as Children's Hospital in Los Angeles, and USC and UCLA Medical Centers, and we wouldn't trade them for the world!"

From her own experience, she suggests that you do your financial forecast, then cut your revenue projections by 66% and double expense projections. "This may seem crazy, but Murphy's Law takes over with any business," she says. "Particularly with new businesses, it is easy to underestimate startup and operating expenses, then miss projections. Make sure you can withstand the cash requirements of this new 'adjusted' budget and capitalize your company accordingly." Good luck!

Have a question about running your business? Ask our small-business experts. Send us an e-mail at, or write to Smart Answers, BW Online, 46th Floor, 1221 Avenue of the Americas, New York, NY 10020. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally.

Before it's here, it's on the Bloomberg Terminal.