Business Overview

People are constantly looking for ways to better themselves, and many turn to supplements. Supplement businesses create and market -- but don’t actually manufacture -- these supplements.

The supplement industry is large, strong and offers lots of potential. In-store sales at health stores have been growing at a respectable 4.5 percent annually, and online vitamin and supplement sales have been growing at 12 percent each year. Together, these industries account for more than $30 billion annually and have over 100,000 businesses.

Who is this business right for?

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.

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 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.

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.

Getting Started

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 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
  • Insurance

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 steps to start a supplement business?

Once you're ready to start your supplement business, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:

STEP 1: Plan your Business

A clear plan is essential for success as an entrepreneur. A few important topics to consider are:

  • What are the initial costs?
  • Who is your target market?
  • How long it will take you to break even?
  • What will you name your business?

Choosing the right name is very important. 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.

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STEP 2. Form a legal entity

Establishing a legal business entity such as an LLC prevents you from being personally liable if your security guard company is sued. 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.

STEP 4. Open a business bank account

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 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.

STEP 7. Get Business Insurance

Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.

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.

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.

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Select your state below for an in-depth guide on completing each of these steps in your home state.

Where can I 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.

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.

Growing 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
  • Blogging

Businesses that have retailers carry their products in stores should also develop displays and informational materials that stores can use.

Recommended: Get started with local advertising for your business with a $300 credit from Yelp.

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.

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

Legal Considerations

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:

Maintain Personal Asset Protection

Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.

When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.

Two of the simplest steps that will protect your business, and yourself, are to:

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.

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.
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To learn more about maintaining your LLC's corporate veil, read our guide and protect your personal assets.

Food Regulations

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

Earning Potential

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.

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.

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.)

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