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You might consider targeting a niche market by specializing in a certain aspect of your industry such as beauty supplements.
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Written by: Carolyn Young
Carolyn Young has over 25 years of experience in business in various roles, including bank management, marketing management, and business education.
Published on December 22, 2021
Updated on September 23, 2022
Investment range
$7,350 - $15,600
Revenue potential
$80,000 - $400,000 p.a.
Time to build
3-6 months
Profit potential
$60,000 - $160,000 p.a.
Industry trend
Growing
Commitment
Flexible
Thanks in part to the pandemic, people today are more health-conscious than ever before. This explains why the US supplement market is seeing lightning-fast growth and already worth $35 billion. You could launch your own supplement business, grab a share of the market, and make a good living while improving lives. Even if you’ve never worked in this area before, you can do some research on formulating supplements and come up with a product that helps people meet their health goals.
Of course, starting a supplement business will require diligence, and it will take time. It’s best to first get some knowledge on the industry and on starting a business, and this step-by-step guide is chock-full of insight on how to develop and launch your business and boldly begin your entrepreneurial journey.
Starting a supplement business has pros and cons that you should weigh before deciding if the business is right for you.
The US supplement industry grew nearly 15% in 2020 due to increased health consciousness driven by the COVID-19 pandemic.((https://www.hopkinsmedicine.org/news/newsroom/news-releases/covid-19-news-can-dietary-supplements-help-the-immune-system-fight-coronavirus-infection))
Citing a new supplement with vitamin B, omega 3s, and bilberry extract that aims to improve cognitive health and curb memory loss, research firm Coherent Market Insights expects the global brain health supplement market to see nearly 9% annual growth through 2027.((https://www.businesswire.com/news/home/20201001005590/en/Global-Brain-Health-Supplements-Market-to-Surpass-US-13492.6-Million-by-2027-Says-Coherent-Market-Insights-CMI))
Trends that shape the supplements industry are:
Challenges faced by the supplement industry include:
Startup costs for a supplement company range from $7,500 to $15,000 or more. The main cost is the manufacturing of your first products, so you might start with a small quantity to keep costs low. But keep in mind that most manufacturers have a minimum order amount.
Startup Costs | Ballpark Range | Average |
---|---|---|
Setting up a business name and corporation | $150 - $200 | $175 |
Licenses and permits | $100 - $300 | $200 |
Insurance | $100 - $300 | $200 |
Business cards and brochures | $200 - $300 | $250 |
Website setup | $1,000 - $3,000 | $2,000 |
Initial inventory | $5,000 - $10,000 | $7,500 |
Professional labeling | $300 - $500 | $400 |
Initial marketing budget | $500 - $1,000 | $750 |
Total | $7,350 - $15,600 | $11,475 |
The average price of a bottle of supplements is about $8 and you can expect a profit margin of around 75% when you’re working out of your home.
In your first year or two, you could work from home and sell 10,000 bottles in a year, bringing in $80,000 in annual revenue. This would mean $60,000 in profit, assuming that 75% margin. As your brand gains recognition, sales could climb to 50,000 bottles a year. At this stage, you would rent out a production facility and hire staff, reducing your margin to 40%. With expected annual revenue of $400,000, you’d make a tidy profit of $160,000.
Now that you know what’s involved in starting a supplement business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Research other supplement businesses to examine their products, price points, customer reviews, and what sells best. You’re looking for a market gap to fill. For instance, maybe the market is missing a multivitamin combined with a brain health supplement. Or maybe as Covid-19 lingers people are looking for new immunity-boosting supplements.
You might consider targeting a niche market by specializing in a certain aspect of your industry such as beauty supplements.
This could jumpstart your word-of-mouth marketing and attract clients right away.
You should research and create a formula based on the type of supplements you plan to offer. Start by learning the benefits of various vitamins and minerals.((https://www.health.harvard.edu/staying-healthy/listing_of_vitamins))
You could also offer custom supplements. Some manufacturers, like Nutracap Labs, have an in-house team of professionals that formulates supplements based on customer goals.
The average price for a bottle of supplements is about $8, but mineral and beauty supplements are often priced a little higher, averaging $11. You might offer a variety of products at several price points.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will be health-conscious people in general, but it will also depend on what type of supplements you decide to offer. If you decide on beauty-related supplements your target market will probably be women 30 and older, so you can most likely find them on Facebook.
In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an office. You can find commercial space to rent in your area on Craigslist, Crexi, and Commercial Cafe.
When choosing a commercial space, you may want to follow these rules of thumb:
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to supplement businesses.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your supplement business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best options, other than friends and family, for funding a supplement business. You might also try crowdfunding if you have an innovative concept.
Starting a supplement business requires obtaining a number of licenses and permits from local, state, and federal governments.
Your products will be subject to the requirements of the Dietary Supplement Health and Education Act (DSHEA) and the FDA. Your manufacturer will make sure that you are in compliance. Your labeling and marketing will be subject to Federal Trade Commission (FTC) rules. Hiring a professional label company could help you stay in compliance with FTC rules.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your supplement business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You can use industry-specific software, such as Batch Master, Finale Inventory, or Process Pro, to manage your product lines, orders, inventory, and bookkeeping.
Some of your business will come from online visitors, but still, you should invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.
Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:
Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
Unique selling propositions, or USPs, are the characteristics of a product or service that set it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your supplement business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your supplement business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a supplements business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in supplement manufacturing for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in dietary supplements. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
If you’re starting out small from home, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a supplement business would include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
The pandemic has sharply increased our health concerns, so it’s no surprise that the $37 billion supplement market in the US is seeing explosive growth. You can get in on the action with a relatively small investment and start making good money fast.
You can specialize in certain types of supplements or create a new line of supplements with your own formulas. But keep in mind that you’ll have to comply with all the relevant regulations and make sure your supplements are safe.
Now that you have the relevant knowledge, you’re ready to embark on your entrepreneurial journey in the supplement business!
You can create a formula and have some initial products manufactured for a relatively low cost. You also need business licenses and insurance, a website, and a labeling partner. You should be able to start for as little as $7,500.
There are many manufacturers that you can find online but do your homework to choose the best one. You need to find one that will manufacture your formula, is reputable, and will manufacture a small quantity to get you started.
You’re subject to the same regulations that any business is at the federal, state, and local levels, but you also need to comply with the rules of the Dietary Supplement Health and Education Act (DSHEA) and the FDA. Your labeling and marketing will be subject to Federal Trade Commission (FTC) rules.
Many people buy supplements online, so that is probably your best bet to get started. As you gain traction, you may be able to get retailers to offer your products as well.
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