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How To Start A Supplement Company

How To Start A Supplement Company

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How To Start A Supplement Company

How To Start A Supplement Company

When we hear ‘supplements,’ many immediately think of fish oil capsules and vitamin C pills. For others, multivitamins and herbal supplements are front of mind; for some, it’s all about supporting workouts, recoveries, and proteins. Whatever ‘supplements’ mean to you, it is big business. And the industry is not showing any signs of slowing down. Humans seek to live healthier and improve our well-being and supplements offer convenient ways to do that. 

If you’ve ever dreamed of launching your own supplement company, this article is for you. Starting a supplement company requires more than just understanding nutrition and health; but our guide is here to help with the steps you need to take!

Business Description

A supplement company develops, manufactures, and sells dietary supplements that are intended to add nutritional value to the diet. These may include sports nutrition products, mineral herbs, and herbal supplements, vitamins, and multivitamins that can be bought without a prescription.

The business makes money through direct sales to consumers, either via online platforms, retail stores, or both. Revenue streams can also include wholesaling to other retailers or private labeling for other brands.

Industry Summary

The dietary supplement industry in the United States is a robust and growing market. According to a report by Grand View Research, the U.S. dietary supplement market generated close to $51 billion in 2022 and is expected to grow by 5.7% annually to 2030.1

Several factors contribute to this anticipated growth. The rising health consciousness among consumers, increasing prevalence of lifestyle diseases, and growing usage of supplements for wellness purposes are just a few. Furthermore, the shift towards natural products and the increasing trend of active living have also helped fuel the demand for dietary supplements.

Unless you are manufacturing the supplements in-house, this is not as highly regulated market as you might think, with the exception of a few requirements for testing and correct labeling of supplementary products. However, diminished oversight, the relatively low barriers to entry, and the increasing demand for wellness products have created an increasingly competitive environment and saturated market.  

Steps To Start A Supplement Business

Step 1: Write a Business Plan

Every business, no matter what industry, needs a business plan. This document serves as a roadmap for your business, laying out your goals and how you plan to achieve them. If you’re thinking of starting a supplement business, there are a few things your business plan should include.

First, you’ll need to research the supplement market and determine what gap you can fill. Who is your target audience? What kind of products are they looking for? What do they currently use, and why aren’t they satisfied with it? Once you have a good understanding of the market, you can start to develop your own unique selling proposition and set your products out from the competition.

Next, you’ll need to create a financial projection for your business. This will involve estimating your costs for ingredients, packaging, shipping, and marketing, as well as projecting your expected sales. Don’t forget to factor in a buffer for unexpected expenses. Finally, you’ll need to put together a marketing plan. How will you reach your target audience? What kind of messaging will you use? What channels will you advertise on? Answering these questions will help you develop a clear plan for getting your products in front of potential customers.

Related: How to write a business plan

Step 2: Source Funding

Finding the money to start a supplement company is an integral part of the journey to becoming an entrepreneur. It’s no secret that starting a business requires capital, and for those looking to launch their own supplement company, securing the necessary funding can be one of the most challenging tasks. So, how does one find the money to start a supplement company? Here’s a closer look at some of the most common sources of funding.

Personal investment is often the first source of funding to assess. This involves determining how much personal savings is available to finance the business. If personal savings aren’t enough to cover the startup costs, outside funding sources will be needed.

For many entrepreneurs, traditional lending is the first outside funding source small business owners look to. Banks and other financial institutions offer various loan products suitable for startups. However, lenders typically require a borrower to invest between 15% and 25% of their personal funds towards the total cost of the project, have a good credit score, and have sufficient collateral. If the bank feels the loan is too risky, they can use a Small Business Administration (SBA) loan guarantee to secure it.

Friends and family can also be a possible source of funding. While this option can provide access to needed capital, it’s important to treat these agreements professionally and put them in writing to avoid misunderstandings or conflicts later on.

Microloans are another alternative for smaller funding requirements or when traditional lending options are unavailable. These are provided by local economic development organizations, and some even offer business training in addition to funding.

Angel investors are individuals who provide capital in exchange for equity. They are often experienced entrepreneurs or business professionals who, in addition to money, bring industry expertise and connections. This can be particularly valuable in the supplement industry where knowledge and networks can significantly influence business success.

Last, crowdfunding is another way to fund a supplement business. Platforms like Kickstarter allow entrepreneurs to raise small amounts of money from a large number of people if you have something unique. This can be a good way to validate your product concept and generate early buzz.

Related: Finding the money to start a business

Step 3: Register the Business

If you’re aspiring to start your own supplement company, properly registering your business is an important step. This involves following several important steps and adhering to specific requirements. Keep in mind that the process can vary from state to state. In this article, we’ll outline some essential suggestions to guide you through this process.

Determine your business structure: There are four main types of business structures: sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).

  • Sole proprietorship: This structure offers ease of startup and lower costs as you would be the sole owner, but you would be personally liable for the business.
  • General partnership: Similar to a sole proprietorship, but shared between two or more individuals. It also has unlimited personal liability.
  • Corporation: A separate entity from its owners, providing limited liability protection and potential tax advantages.
  • Limited Liability Company (LLC): Combines features of both corporations and sole proprietorships, providing limited liability protection while being easier to form and maintain compared to a corporation.

Related: Comparison of business structures

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.

Some popular LLC formation services include:

IncFile - $0 plus state fees & free registered agent for 1 year!

ZenBusiness - Best for beginners. $0 plus state fees & free registered agent for 1 year!

Northwest - Best privacy protection. $39 plus state fees & free registered agent for 1 year!

Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.

Related: Finding a domain name for your business

Obtain business licenses and permits: Any business that manufactures, distributes, or sells dietary supplements or other health-related products must obtain a license from the FDA.

To obtain a license, businesses must submit an application that includes information about the manufacturing process, ingredient list, and product labeling. The FDA will then review the application and may request additional information before granting a license.

In addition to FDA regulations, there are also general business licensing requirements that will vary depending on where the business is located. A few of these may include a local business license and sales tax permit.

Additionally, some states may have additional registration requirements specific to the supplement industry. Research your state’s regulations to ensure compliance.

Related: State guides for general business licensing

Comply with FDA requirements: Strictly adhere to all FDA labeling, Good Manufacturing Practices (GMP), and reporting requirements. It is crucial to fully understand and implement these regulations well in advance of selling any products. Compliance with FDA guidelines is essential to ensure product safety and maintain compliance within the industry.

Research patents and trademarks: Before using any ingredients or formulations, research if there are any existing patents from the U.S. Patent and Trademark Office (USPTO) that may apply. To avoid patent infringement, you might need to obtain licenses for certain ingredients. Additionally, consider trademarking your brand name, logos, and unique slogans. This step will protect your intellectual property from potential competitors.

Step 4: Find a Manufacturer

When starting a supplement business, one of the most important decisions you’ll make is finding a manufacturer. You want to find a company that is reputable and has experience manufacturing supplements. Here are a few tips for finding the right manufacturer for your business:

Do your research: Be sure to research any potential manufacturers thoroughly before signing any contracts. Check online reviews, ask for references, and visit their facilities in person if possible.

Ask about their experience: Make sure the manufacturer you choose has experience making the specific type of supplement you need. Ask about their production process and quality control procedures to ensure they meet your standards.

Compare costs: Get quotes from several different manufacturers before making a decision. Be sure to compare not only the cost of the finished product, but also the cost of shipping and any minimum order requirements.

Choose a company you can trust: When it comes to manufacturing supplements, you want to choose a company you can trust. Make sure you feel comfortable with the staff and that they are transparent about their manufacturing process.

Taking the time to find the right manufacturer for your supplement business will pay off in the long run. By doing your research and asking the right questions, you can be confident you’re working with a company that can provide high-quality products that meet your needs.

Step 5: Set Up Operations

Now that you have completed the required legal and regulatory obligations, it’s time to start thinking about the operational side of things.

The first consideration is where you will operate the business, and the ideal location for your supplement company varies depending on your business operations. If your supplier or a third-party warehouse fulfills your products, you may not need a warehouse to store inventory and can operate from the comfort of your home. Alternatively, if you plan to create formulas in-house, manage inventory, or sell products locally. In that case, you may need to invest in a commercial building as a base of operations.

With the location out of the way, the next step is working through how you are going to sell to customers. For starters, an e-commerce platform like Shopify is a must for supplement companies. While e-commerce is an essential element for supplement companies, brick-and-mortar retail distribution still offers a huge opportunity. Consider partnering with health food stores, gyms, and other distribution channels to reach customers who prefer in-person shopping experiences.

Step 6: Create a Marketing Strategy

In the highly competitive world of supplements, effectively marketing your new company is crucial for standing out and attracting customers. As a new entrant in the market, your primary goal is to build brand awareness and establish a strong online and offline presence. A few recommendations for marketing a supplement include:

First, it’s important to identify your target audience and craft your marketing message accordingly. Are you selling to athletes? Bodybuilders? Everyday consumers? Once you know who you’re targeting, you can create ads and social media content that resonates with them. It’s also crucial to use the right channels to reach your audience. For example, if you’re targeting athletes, sponsorships and tradeshows may be more effective than online ads.

If your marketing strategy focuses on a local market, you could partner with a gym or fitness center and offer discounts to members who purchase your supplements. You could also partner with a health food store or online retailer and offer in-store samples, promotional discounts, or coupons.

Additionally, you could sponsor events such as fitness competitions or running races. This would provide excellent exposure for your brand and help to create a positive association in the minds of potential customers.

Another great way to market your supplement business is to create informative blog posts or videos about the benefits of taking your supplements. You could also offer free samples or giveaways, which would generate excitement and word-of-mouth buzz.

By taking advantage of these marketing strategies, you can help ensure that your supplement business is a success.

Step 7: Prepare to Launch!

As you approach the final stages of setting up your supplement company, it’s important to recognize that beyond the core steps, there are several minor yet essential tasks that need to be addressed. While these steps will vary based on individual needs and business models, here are a few common areas to consider.

Business insurance: Product liability insurance is a must for any supplement business. This type of insurance protects you if one of your products causes harm to a customer. Additionally, carrying property and casualty insurance is important to cover potential damages to your premises or loss of inventory. If you have employees, it’s also likely that your state will require you to have workers’ compensation insurance.

Setting up bookkeeping: Efficient bookkeeping is essential for managing your financial health. This includes handling daily transactions, preparing for taxes, and creating financial statements. You have options: hire a professional bookkeeper or use bookkeeping software.

Opening a business bank account: Setting up a dedicated business bank account helps in separating personal and business transactions, simplifying accounting processes, and preparing for tax season.

Common Questions When Starting A Supplement Company

How much does it cost to start a supplement company?

Starting a supplement company can range in cost depending on the size, scope, and type of products you’re selling. However, for a supplement company, you can expect to spend between $10,000 to $75,000 to start.

Product development: Initial costs for product development, including formulation, testing, and production of the first batch of supplements, can range from $5,000 to $30,000, depending on the complexity and ingredients

Inventory: The initial batch of inventory costs, can range from $2,000 to $20,000, depending on the scale of your operation.

Business registration: Registering your business entity and obtaining necessary licenses and permits can range from $500 to $2,000.

Location: The cost of initial deposits for office space can vary greatly depending on the location and size of the space. Expect $1,000 to $5,000 for initial deposits and utility setup.

Insurance: The cost of insurance can vary depending on the size and nature of your business, but initial costs can range from $1,000 to $2,000.

Marketing: Initial marketing costs, which include website development, branding, and initial advertising campaigns, can range from $1,000 to $15,000.

How profitable is a supplement company?

To provide a general idea of the profitability of a supplement company, let’s use some assumptions and industry averages.

Suppose a supplement company focuses on a popular product line, such as protein supplements. If the average retail price of a protein supplement bottle is $30 and the company successfully sells 1,000 units per month, the monthly revenue would be $30,000 (1,000 units x $30 each). Annually, this amounts to $360,000 in revenue.

Next, we need to consider the expenses involved in running the business. Key expenses include cost of goods sold (COGS), marketing, rent, salaries, and other operational costs.

Assuming the COGS (including manufacturing, packaging, and shipping) is about $10 per unit, the annual cost for COGS would be $120,000 (1,000 units x $10 x 12 months). If we allocate another $60,000 annually for marketing, $24,000 for rent (assuming $2,000 per month), and $100,000 for salaries and other operational expenses, the total annual expenses would be approximately $304,000.

Now, to calculate the profit, subtract the total expenses from the total revenue. In this case, the annual profit before taxes would be $56,000 ($360,000 in revenue – $304,000 in expenses).

This is a simplified illustration and actual profit can vary based on numerous factors such as the efficiency of operations, the effectiveness of marketing strategies, the specific product niche, and market conditions.

What is the NAICS code for a supplement business?

The NAICS code for a supplement business is 446191.

The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.

Related: What is a NAICS code?


  1. Grand View Research ↩︎

How To Start A Supplement Company

How To Start A Supplement Company

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