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How to Start a Supplement Business

Written by:

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by:

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

How to Start a Supplement Business

Fast Facts

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.

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.

Pros

  • Good money – Profit margins are high in the supplement market
  • Growing Industry – Demand is increasing for vitamins and dietary supplements
  • Work from Home – You can work from home selling your supplements online
  • Improve Lives — Provide products that make people stronger, healthier

Cons

  • Competition – Increasingly saturated market as health-consciousness grows
  • Regulations – Licensing and labeling requirements can be onerous

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

supplement industry size and growth

Trends and challenges

supplement industry 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

supplement industry consumer spending

What kind of people work in a supplements business?

supplement industry demographics

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.

Startup CostsBallpark RangeAverage
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

How much can you earn from a supplement business?

supplement business earnings forecast

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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If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.
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Step by Step Business values real-life experience above all. Through our Entrepreneur Spotlight Series, we interview business leaders from diverse industries, providing readers with firsthand insights.

Discover Christian Passwaters’ secrets to success in supplement manufacturing by reading this compelling interview.

Step 2: Hone Your Idea

develop a business 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
supplement business idea rating

Step 3: Brainstorm a Supplement Company Name

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”
  • A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

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

Here are the key components of a business plan:

what to include in a business plan
  • 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

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!

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:

types of business structures
  • 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:

jewelry store financing
  • 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

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.

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.

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:

types of business insurance
  • 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

Launching a Business

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

Here are some powerful marketing strategies for your future business:

  • 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.
  • 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.
  • Social Media Marketing: Utilize platforms like Instagram and Facebook to engage with your audience, showcasing customer testimonials, product highlights, and interactive content.
  • 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.
  • SEO Optimization: Optimize your website with relevant keywords to improve search engine rankings, making it easier for potential customers to find your products online.
  • Partnerships with Health Professionals: Network with nutritionists, personal trainers, and wellness coaches who can recommend your supplements to their clients.
  • Referral Programs: Implement a referral program to incentivize current customers to refer new customers, effectively turning your satisfied customers into brand ambassadors.
  • 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 proposition

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

Building a Team for a New 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:

  • 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!

Running a Business

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!

Supplement Business FAQs

How can I get my supplements manufactured?

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.

What regulations are involved in a supplement business?

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.

How can I sell my supplements?

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.

How profitable is a supplement business?

It’s important to conduct a thorough market analysis and develop a comprehensive business plan to assess the potential profitability of your specific supplement business. This should include considerations like target market, distribution channels, cost structure, and revenue projections.

What supplement sells the most?

Some popular and commonly sold supplements include vitamins (such as vitamin D, vitamin C, and multivitamins), minerals (like calcium and iron), omega-3 fatty acids, probiotics, protein powders, and herbal supplements (such as ginkgo biloba or turmeric). 

How can I promote my supplement business?

Create a professional website and utilize social media platforms to showcase your products, provide valuable information, and engage with your target audience. Produce high-quality content, such as blog posts, articles, or videos, that educates and informs consumers about the benefits of your supplements. This helps build trust and establishes your business as an authoritative source in the industry.

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How to Start a Supplement Business