How to Start a Supplement Business

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.

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a supplement business has pros and cons that you should weigh before deciding if the business is right for you.

Supplement industry trends

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))

Industry size and growth

• Industry size and past growth – Market analyst IBISWorld values the US supplement industry at more than $37 billion, after a steady growth over the past decade. The market has grown by an average of 1.6% annually since 2017.((https://www.ibisworld.com/industry-statistics/market-size/vitamin-supplement-manufacturing-united-states/)) 
• Growth forecast – The dietary supplements market in North America, which is dominated by the US, is projected to grow at least 5% per year through 2028.((https://www.grandviewresearch.com/industry-analysis/north-america-dietary-supplements-market))
• Number of businesses – There are nearly 1,400 vitamin and supplement manufacturers in the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/vitamin-supplement-manufacturing-united-states/)) 
• Number of people employed – More than 43,000 people are employed in this industry.((https://www.ibisworld.com/industry-statistics/employment/vitamin-supplement-manufacturing-united-states/))

Trends and challenges

Trends that shape the supplements industry are:

• Rising incidence of Alzheimer’s, depression, and anxiety is driving demand for supplements that provide mental health support and stress relief
• Strong demand for supplements that contain collage peptides, support immunity such as Vitamin D, and taste good, such as fruit-flavored gummy vitamins
• Growing awareness about health, fitness, and sports nutrition

Challenges faced by the supplement industry include:

• Compliance with stringent regulations on labeling and claims of health benefits
• Competition from lower-priced botanicals imported from China
• Lack of information on the proper and safe use of supplements

Consumer spending

• Average consumer spend – An average American consumer spends $68.30 on supplements every month.((https://www.athsport.co/blogs/news/how-much-do-americans-spend-on-their-health-and-fitness))
• Potential customer base – An ADM report in 2021 says 79% of Americans believe dietary supplements are important to their health.((https://www.adm.com/globalassets/news/adm-stories/the-dietary-supplement-consumer-of-tomorrow-report-min.pdf))
• Average prices – The Nature Made brand sold its supplements in 2019 at an average of $10.88 per bottle.((https://www.statista.com/statistics/1055227/price-of-the-leading-mineral-supplement-brands/))

What kind of people work in a supplements business?

• Gender – 84% of nutritionists in the US are female, while 16% are male.((https://www.zippia.com/nutritionist-jobs/demographics/#gender-statistics))
• Average level of education – 65% of nutritionists hold a bachelor’s degree.((https://www.zippia.com/nutritionist-jobs/demographics/#degree-level-types))
• Average age – The average age of a nutritionist is 43 years old.((https://www.zippia.com/nutritionist-jobs/demographics/#age-statistics))

How much does it cost to start a supplement business?

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.

How much can you earn from a supplement business?

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.

What barriers to entry are there?

• Competition in a very saturated market
• Finding a manufacturer willing to accept a small order

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Step 2: Hone Your Idea

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.

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

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.

What? Determine your products

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.

How much should you charge for supplements?

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.

Who? Identify your target 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.

Where? Choose your business premises

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:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Supplement Company Name

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:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “supplements” or “beauty supplements”, boosts SEO
• Choose a name that allows for expansion: “Vitality Labs” over “Vegan Vitality Supplements”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

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.

Step 4: Create a Business Plan

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:

• Executive Summary: Provide a brief overview of your supplement business, emphasizing your focus on offering high-quality, scientifically backed nutritional supplements for health-conscious consumers.
• Business Overview: Describe the business’s specialty in developing and selling dietary supplements, including vitamins, minerals, and herbal products.
• Product and Services: Detail the range of supplements offered, focusing on their health benefits, target demographics, and any unique formulations.
• Market Analysis: Assess the current demand for dietary supplements, identifying key consumer trends and health concerns that drive purchases.
• Competitive Analysis: Compare your products with other supplement brands, highlighting your unique selling points like organic ingredients, custom blends, or clinical research backing.
• Sales and Marketing: Outline your strategy for reaching customers, such as through e-commerce platforms, health food stores, or targeted digital marketing.
• Management Team: Highlight the expertise of your team, especially in areas like nutrition science, product development, and business management.
• Operations Plan: Describe the process of supplement production, from sourcing ingredients to manufacturing, quality control, and distribution.
• Financial Plan: Provide an overview of financials, including startup costs, pricing strategy, and revenue projections.
• Appendix: Include supplementary documents like product certifications, laboratory testing results, or detailed market research to support your business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

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.

Choose your business structure

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:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

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 an 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. 

Form Your LLC

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Step 6: Register for Taxes

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.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

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.

Step 8: Apply for Supplement Business Licenses and Permits

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.

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.

Step 9: Open a Business Bank Account

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.

Step 10: Get Business Insurance

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:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

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.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Developing a website for a supplement company is crucial for establishing a strong online presence and driving sales. You have two primary options: using a website builder, which is cost-effective and user-friendly, or hiring a professional developer, which offers more customization and technical expertise.

The key is to optimize your e-commerce store for user experience and search engine visibility. This involves a clean, intuitive design, high-quality product images, detailed descriptions, and an easy checkout process. Incorporating effective calls to action (CTAs) throughout the site encourages visitors to make purchases or engage with your content, further boosting sales.

Marketing

As you embark on launching your supplement business, it’s vital to implement targeted marketing strategies that resonate with your specific audience. Here are some key strategies to consider:

1. Influencer Partnerships: Collaborate with fitness influencers and health bloggers who align with your brand values to promote your products, leveraging their established trust and reach.
2. Educational Content: Create and share informative content (blogs, videos, infographics) about the benefits and usage of your supplements, establishing your brand as a knowledgeable authority in the industry.
3. Social Media Marketing: Utilize platforms like Instagram and Facebook to engage with your audience, showcasing customer testimonials, product highlights, and interactive content.
4. Email Marketing: Build an email list to provide subscribers with exclusive offers, new product announcements, and valuable content, fostering a direct relationship with your customers.
5. SEO Optimization: Optimize your website with relevant keywords to improve search engine rankings, making it easier for potential customers to find your products online.
6. Partnerships with Health Professionals: Network with nutritionists, personal trainers, and wellness coaches who can recommend your supplements to their clients.
7. Referral Programs: Implement a referral program to incentivize current customers to refer new customers, effectively turning your satisfied customers into brand ambassadors.
8. Paid Online Advertising: Invest in targeted online advertising, such as Google Ads or Facebook Ads, to reach potential customers actively searching for supplements.

Focus on USPs

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:

• Top-quality beauty supplements for your hair, skin, and nails
• Boost your mood with this all-natural supplement
• Elevate your brain function for maximum memory and productivity!

Networking

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.

Step 12: Build Your Team

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:

• Sales Reps – Sell products to retailers or direct to consumer
• Customer Service Reps – Handle customer calls and orders
• Marketing Lead – SEO strategies, social media, other marketing

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.

Step 13: Run a Supplement Business – Start Making Money!

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!