How to Start a Supplement Business

Part 1 - How to start a Supplement business - Background

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.

Our guide is in 3 parts:

• Part 1 - How to start a Supplement business - Background
• Part 2 - Our planner tool to see if this idea is the right fit for you
• Part 3 - Action plan to get started

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 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.)

Day-to-Day and Growth

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.

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

Part 2 - Is a Supplement business the right fit for you?

Part 3 - Action plan to launch your Supplement business in 90 days