How to Start a Health Food Store

Start a health food store by following these 10 steps:

1. Plan your Health Food Store
2. Form your Health Food Store into a Legal Entity
3. Register your Health Food Store for Taxes
4. Open a Business Bank Account & Credit Card
5. Set up Accounting for your Health Food Store
6. Get the Necessary Permits & Licenses for your Health Food Store
7. Get Health Food Store Insurance
8. Define your Health Food Store Brand
9. Create your Health Food Store Website
10. Set up your Business Phone System

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.

Exploring your options? Check out other small business ideas.

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 will you name your business?
• What are the startup and ongoing costs?
• Who is your target market?
• How much can you charge customers?

Luckily we have done a lot of this research for you.

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 Health Food Store Name Generator

If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.

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.

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
• Inventory
• Staff
• 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

STEP 2: Form a legal entity

The most common business structure types are the sole proprietorship, partnership, limited liability company (LLC), and corporation.

Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your health food store is sued.

You can form an LLC yourself and pay only the minimal state LLC costs or hire one of the Best LLC Services for a small, additional fee.

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!

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.

Open a business bank account

Besides being a requirement when applying for business loans, opening a business bank account:

• Separates your personal assets from your company's assets, which is necessary for personal asset protection.
• Makes accounting and tax filing easier.

Get a business credit card

Getting a business credit card helps you:

• Separate personal and business expenses by putting your business' expenses all in one place.
• Build your company's credit history, which can be useful to raise money 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.

Make LLC accounting easy with our LLC Expenses Cheat Sheet.

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.

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.

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.

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.