Start a health food store by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your health food store. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
STEP 1: Plan your Business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a health food store?
These costs will depend on the geographic location, size of the store, buildout costs if required, the number of employees, equipment and services. Some costs to consider are:
- Cash registers
- Storefront lease
- Shelves, including refrigerated and freezing shelves
What are the ongoing expenses for a health food store?
General expenses include rent, utilities, indoor/outdoor signage, cash registers, and supplies to stock tasting centers and fresh juice bars. Additional ongoing expenses include insurance, employee salaries/benefits, a maintenance crew, accounting and legal services, shopping carts, computers, printers, tech support, software, security, janitorial supplies, and paper goods.
Who is the target market?
The preferred client/customer types are individuals interested in health (such as bodybuilders, weight lifters, athletes, and sports coaches) or who have special dietary needs (such as weight loss, diabetes, and food allergies).
How does a health food store make money?
In addition to creating an attractive and friendly atmosphere with top quality products, store location with high foot traffic and convenient or free parking is important in attracting customers. Sales increase when the staff caters to consumers who are looking for a rewarding shopping experience that supports their healthy lifestyle. Consider including a complimentary newspaper featuring educational materials about vitamins/minerals, food plans, discount coupons, and recipes in the store. Boost sales with video displays, interactive media, kiosks, and food sampling programs.
How much can you charge customers?
Most health stores keep their prices slightly above the average grocery store due to their more local sourcing and organic ingredients. Look at competitors to make sure your pricing is not too low or too high.
How much profit can a health food store make?
Health food stores earn a profit based on revenue generated, minus all overhead and labor costs. Averages vary depending upon geographical location and your specific business model.
How can you make your business more profitable?
Here are some additional strategies you can employ:
- Offer seasonal foods for various holidays
- Partner with local produce growers to increase your presence in the community
- Start a juice bar, salad bar, or hot food bar inside your store for hungry customers to grab a quick meal
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your health food store is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a health food store. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
Certificate of Occupancy
A health food store is generally run out of a large storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a storefront:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a health food store.
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a storefront:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for you business’ location to ensure your health food store will be in compliance and able to obtain a CO.
STEP 7: Get Business Insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
How to promote & market a health food store
A professional website is a necessity, and some health store owners add an attached blog. A number of hosting companies offer a package that includes the site, blog, hosting, and a website name, known as a domain. Sending out a newsletter or handing out flyers can also be a good idea. Flyers can be put up in other businesses such as gyms or juice bars that serve a similar demographic.
How to keep customers coming back
Social media gives customers a great way to interact with and review your business. Develop a customer loyalty and rewards program to help promote business. Frequent specials such as buy one, get one free, or at half price help to deliver sales and repeat business.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Health Food Store In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This question should be carefully examined prior to becoming involved in the industry as a store owner. A health food shop can be perfect for someone with firm beliefs in developing and maintaining a healthy lifestyle and helping others do the same. For an entrepreneurial individual who is willing to take risks if needed, the retail health food industry can be ideal. It's important for the owner or owners and the employees to be committed to a customer centric atmosphere. In many instances, owners and managers form very personal relationships with customers in need of recommendations for health issues that were unsuccessfully treated with traditional medicine for months.
What happens during a typical day at a health food store?
Your daily duties will vary depending on whether you have a partner, and the number of employees you plan to hire and supervise. Whether you plan to manage the store, or hire experienced managers. The time commitment in the health food retail industry is extensive since most stores in large and medium-sized cities are open late seven days a week. Inventory turnover with variable expiration dates takes place eight or nine times a year. As a result, small business inventory management takes on a new perspective with an inventory tracking system that is consistently followed. Another option is using a POS solution that automatically tracks and orders inventory.
What are some skills and experiences that will help you build a successful health food store?
The following skills will serve you well:
- Excellent business, communication and customer service skills
- Existing industry knowledge, product training, and a solid business plan
- The ability to recruit and hire experienced store managers and contract with a marketing professional or agency.
What is the growth potential for a health food store?
The global dietary supplements market is expected to reach $278 billion by 2024. The importance of the medical nutrition market is growing due to the increased need for the treatment of malnutrition and cardiovascular disorders and the need for dietary supplements. Sports nutrition sales in the U.S. are growing due to the increasing prevalence of fitness and sports at a domestic level and new product launches.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a health food store?
There are several approaches you can take to becoming a health food store owner. Purchasing an existing business that is up for sale is one approach, or you can start your own business. Franchise startups offer opportunities for ambitious entrepreneurs. Franchises also tend to perform better than independent startups regardless of industry since franchises don't have many of the risks typically associated with a business startup.
How and when to build a team
You will need a team when opening this business to manage cash registers, inventory restocking, etc. As your store grows, consider hiring more staff to relieve you of managerial responsibilities.
Read our health food store hiring guide to learn about the different roles a health food store typically fills, how much to budget for employee salaries, and how to build your team exactly how you want it.