Start a supplement business by following these 10 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 supplement business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
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 much can you charge customers?
- 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 supplement business?
A supplement business can be started for about $5,000, although business owners will have a much easier time if they have $10,000 available to invest. With $5,000, business owners can usually get:
- ~150 bottles of a supplement product
- Professionally designed labels
- A website
When selecting a supplement manufacturer, business owners should look for a manufacturer that is NSF-certified, GMP-certified and FDA-registered. The manufacturer should also provide a certificate of analysis for every batch, which proves what components are in each batch. Such manufacturers are often not the cheapest to work with, but they provide guaranteed products that a business can stand behind.
Among the manufacturers that meet these criteria, few accept initial orders of just 150 units. Having $10,000 total gives business owners the funds they need to place larger initial orders that meet manufacturers’ higher initial orders.
Business owners also shouldn’t skimp on label design costs. Most customers base their supplement choice on packaging alone, so it’s vital to have a professionally designed label. There are graphic designers that will create professional logos for between $300 and $500.
What are the ongoing expenses for a supplement business?
The ongoing expenses for a supplement business are manageable. They typically include the cost of ordering new product, advertising expenses, and paying insurance premiums any employees’ salaries.
Who is the target market?
The target market for a supplement business is anyone who would benefit from the supplement. Depending on what type of supplement a business offers, this may be people who exercise regularly, want to lose weight, want to increase their IQ, have trouble sleeping, feel anxious constantly or struggle with any number of other issues.
How does a supplement business make money?
A supplement business makes money by selling supplement products. Products may be sold directly to customers, or through distributors and retailers.
How much can you charge customers?
Supplements sell for from just a few dollars to more than $100. Price is often a matter of how rare a supplement’s ingredients are and what benefits the supplement provides.
How much profit can a supplement business make?
How much a supplement business makes per product sold depends on how the product is sold. Businesses that sell directly to consumers should aim for a 10 to 40 percent profit margin. Those that sell through distributors frequently see a 5 to 15 percent margin.
How can you make your business more profitable?
Many supplement businesses increase their sales and profits by developing more supplement products. A business that starts out with a few truly unique supplements can add some basic ones that aren’t as creative but are widely used. Customers who purchase unique supplements will frequently add basic ones that are from the same company.
(Businesses will struggle to stand out in the industry if they start out with basic supplements and then add unique ones. Beginning with unique and moving toward basic is an easier way to distinguish a business’ products.)
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Supplement Business Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your supplement business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
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?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
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.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
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: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
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.
Federal Business Licensing Requirements
There are federal regulations regarding what can and cannot be added to, sold as, and processed with food. Attached is a resource from the Food and Drug Administration detailing the process of starting a food business: How to Start a Food Business
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a supplement business. 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.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
When selling food, you will need licensing from a local health department; all establishments serving food are required to pass a health inspection. Tips for faring well on a health inspections
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.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
How to promote & market a supplement business
There are many ways to promote a supplement business. Some commonly used strategies include:
- Direct sales
- In-person marketing
- Pay-per-click advertising
- Social media marketing
Businesses that have retailers carry their products in stores should also develop displays and informational materials that stores can use.
How to keep customers coming back
A supplement business can keep customers purchasing more products by offering truly great products that provide results. If customers see results, they’ll continue buying the products that they believe work. This is why having an expert develop each supplement is so important.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Supplement Business 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?
Anyone who has personally used supplements and appreciates the benefits they offer may enjoy running a supplement business. Marketing supplements requires a fierce tenacity, and being passionate about their products helps business owners keep going after sales.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a supplement business?
A typical day at a supplement business might involve talking with manufacturers, distributors, retailers and/or customers. Because supplement businesses don’t actually manufacture their products, there’s little hands-on work.
What are some skills and experiences that will help you build a successful supplement business?
A supplement ought to be designed by someone who’s an expert in biology, biochemistry and/or physiology. The product designer should have a degree (and perhaps an advanced graduate degree) in one of these areas, and they ought to be familiar with the current literature on supplements.
Business owners themselves, however, don’t have to be experts in these areas. Business owners who have a basic or no background in science can hire someone who does have the credentials needed to create a product. There are experts who will offer consulting services, and many supplement manufacturers have product development teams that can help business owners.
Whoever helps with product development is usually paid on a per-project basis. At least at the initial stages, they normally aren’t brought on as a regular employee.
What is the growth potential for a supplement business?
A supplement business may remain a small operation, or it can grow into an international company. Wink Naturals and Reactiv are two smaller supplement companies. An example of a larger company is Maximum Human Performance.
TRUiC's YouTube Channel
For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe below to view later.
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.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
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 supplement business?
Many new business owners plan on creating a supplement and then marketing it, but this order is actually backward.
Rather than first coming up with a supplement, business owners should instead start out by thoroughly researching the market. They should research the competition and the target market. This effort will eventually show how a new supplement business can stand out and attract customers.
After business owners have identified a unique feature that competitors aren’t offering and the target market wants, everything else falls into place. An expert can help develop a product with the desired feature, a graphic designer can create a label that highlights the desired feature and the marketing plan can focus on emphasizing the feature. Even the target market is defined as whoever would especially benefit from the feature.
How and when to build a team
Many supplement businesses start out with no employees, and even large companies might have only a skeleton crew. Distribution can be outsourced, which greatly reduces the workload that comes with fulfilling orders. If assistance is required, business owners can hire employees as revenue grows