How to Start a Dietary Supplement Business

Simply put, a dietary supplement business provides customers with a means to fill in gaps in their diet. Not eating enough veggies? Supplement with a comprehensive multivitamin. Trying to put on lean muscle? Add a scoop of protein powder to your oatmeal. Your business works to establish a rapport with your audience by delivering high-quality health and wellness products and building brand loyalty.

The most popular dietary supplements are in the categories of amino acids, minerals, and vitamins. You’ll primarily be responsible for choosing the supplements you want to sell, determining what ingredients you want to include in your supplements, and most importantly, building your brand through effective marketing. You are in the business of selling supplements—typically, dietary supplement businesses outsource their manufacturing, at least during their first few years in operation.

Before you get started, you’ll need an idea of what resources you’ll need and how to monetize your business in a practical way. We’ve answered the biggest questions about clients, costs, and profits below.

Who is the target audience?

Ultimately, there is no hard and fast rule here, but your business has a much better chance of thriving if you start with a handful of supplements catered to a specific demographic. Long-term, your company itself can and probably should aim for a broad target audience, but what you initially sell will likely become what you’re known for. If you start by selling Ayurvedic products for joint pain, for instance, your audience will likely skew toward middle-aged individuals—it would be tough to later release products catered to younger audiences. That’s why it’s best to consider how factors such as age, gender, income, and geographic location of your target audience will affect the slate of products you’ll initially sell, your branding, and your long-term marketing campaigns.

You can opt for a general audience, but in a highly competitive industry, tapping into the right niche and building the right voice can make all the difference. A twenty-two-year-old female bodybuilder in Minneapolis will likely have completely different health and wellness goals from a fifty-seven-year-old male accountant in Phoenix.

How do I get clients?

Getting clients comes down to building an online presence that appeals to your target audience’s goals and concerns.

• Get to know your audience: Dive into Reddit and Quora forums to get a sense of what your ideal clients are trying to accomplish in their fitness or wellness journey. You can even check out the community at Bodybuilding.com for some older threads of discussion or check out the comments section of popular health and wellness influencers on YouTube and Instagram.
• Research competitors: Maybe you’ve decided that your target audience is men between the ages of 18 and 34, who are focused on performance and appearance. Chances are you’ll look into selling caffeinated pre-workout supplements because caffeine is generally the cheapest ingredient. But what makes your product unique in a sea of Bang, C4, and Total War? Not only is the market flooded, but the branding angle for pre-workouts is similar across the board: loud, aggressive, and in-yer-face. The point here is to determine what makes your competitors successful and decide how to carve out your own space with your own unique selling point.
• Establish an online presence: Facebook and Instagram are common entry points for older and younger audiences, respectively. While you build your following on social media, you can develop your online reputation by (1) posting testimonials to your own website and (2) sending samples of your products to well-known review sites such as Supplement Database or Fitness Informant. Basically, make your product visible online and generate buzz that can translate into positive customer reviews.

In truth, the dietary supplement industry is mostly about effective marketing. Even if you formulate a product with scientifically-proven effective doses and unparalleled flavors, a competitor who knows their audience and markets to that audience where they live will usually outperform you. We’re not telling you to ignore making great products! But how you market those ingredients is how you’ll get clients.

Where can I get supplements manufactured?

Luckily, there are plenty of manufacturers to choose from in the USA—Makers Nutrition and Nutrix are two particularly renowned custom manufacturers. While you could look into doing the manufacturing yourself, this is a huge logistical and financial undertaking (securing the facilities, obtaining licenses, sourcing raw materials). The best move when you’re first getting started is to find a US-based turnkey manufacturer. Typically, these manufacturers have the infrastructure in place to order the raw materials, quarantine and test those materials, prepare batches (R & D, limited samples, and a pilot batch), and eventually deliver a finished product that has been vetted at every step of the process.

When you are researching manufacturers, keep in mind that the best manufacturers will do more than just formulate your product. Outside of National Sanitation Foundation (NSF) and FDA registration, your ideal manufacturer will have years of experience and expertise, the ability to package and label your products, and the capacity to grow with your business. Even though a lot of manufacturers offer stock formulas that can be put on the market within a couple of weeks, you won’t get far in the industry by opting for a generic formula. To succeed, you should have a unique dietary supplement, and your manufacturer, after preparing test batches according to your specifications, can advise you with regard to the ingredients, their interactions, and the claims you can make on your product label.

How much money will it take to get started?

After registering a domain name, acquiring web hosting, enlisting a web designer, and securing a manufacturer, you can expect to invest at least $5,000 to start selling online. While you might think to skimp on costs by building your own site, designing your own logo, and choosing bottom-of-the-barrel ingredients for your supplements, going down that road could be a costly dead-end in the long run.

• Web Presence: Between marketing on social media platforms and getting your website up and running, you’re probably going to spend about $100 monthly when you first get started.
• Branding: Hiring a designer to bring your brand to life can cost a few hundred dollars for a logo and basic branding, but can easily cost over $1000 for more involved services.
• Manufacturing: This really depends on your manufacturer and the ingredients you choose, but you can expect your first batch of products to cost at least $500 from formula to packaging and labeling. And yes, you should consider going with the manufacturer’s in-house designer for the labels because they will likely have far more experience with FDA compliance.
• Insurance: Between general liability and product liability insurance, you are looking at about $50 monthly once your revenue starts to break $10,000 per month.
• Storage & Delivery: Some manufacturers offer comprehensive fulfillment services, including storing your products, real-time reporting of your inventory, and several channels for delivery and distribution. If, however, you choose to work with a manufacturer that focuses solely on manufacturing, then you’ll need somewhere to store your products and a way to deliver them. You’re just getting started—consider storing your inventory at your home and shipping via USPS. If you can keep your products in the 1-2 pound range, then you can expect to spend about $7-$11 per shipment. If you can keep your products to under a pound, you’ll save considerably.

This isn’t a comprehensive list, but it covers most of what you need to take into account for your initial costs. From there, you can branch out into new demographics, look into partnering with well-known vendors (GNC and Vitamin Shoppe, to name a couple) or even franchise your own supplement store.

How much do dietary supplement businesses make each year?

While you can expect a profit margin of about 10 to 40 percent when you sell directly to consumers, a lot of variables will affect what your bottom line looks like.

Take plant-based products—they’ve really taken over the industry over the past decade, coinciding with the “all-natural” and “organic” movement in general. Say you start your dietary supplement business in that niche. Your initial costs will spike because you’ll now likely need to vet your ingredient sources and seek out third-party ingredient testing and certifications, and since you’ll be competing with a few established brands in the plant-based market, your profit margin will likely be closer to 10 percent.

What does this mean? The quality of your research will determine your earning potential. If you have a unique idea for dietary supplements and can spot a gap in the market, you can really capitalize.

How much should I charge?

What you charge will depend on what you sell, your target audience, the quality of the ingredients, and the doses you choose to include. If you opt for clinically effective dosages for your products, you’ll be charging more than sellers who opt for proprietary blends or filler ingredients. It’s a lot cheaper to include more caffeine in a pre-workout drink than it is to include an appropriate amount of L-Citrulline, which would allow you to charge less. However, not every customer is a “stim-junkie,” and a successful product usually includes effective (and likely more expensive) ingredients rather than ingredients that feel effective.

Have a great name idea? Before you start marketing and branding your business, you’ll need to ensure your name is available. Most states prohibit or restrict businesses from adopting names that are already in use. Even if it’s legally allowed, a copycat name puts your business at risk of a lawsuit.

See if your business name is available in your state with our Free Business Name Search.

Trademarks and Domain Names

Plan to trademark your business name? You can see if the trademark is available on a website like Trademarkia. It’s also a good idea to see if the domain name is available, which you can do on websites like Network Solutions and GoDaddy. Even if you don’t plan on putting together a website right away, you can buy the domain name to make sure no one takes it in the meantime.

Should you form an LLC? A sole proprietorship? Your choice of business structure will affect many aspects of your business, from liability to taxes. For a dietary supplement business—or any business where consumers ingest your product—there are increased risks. It may be a safer bet to seek an entity with liability protection, like an LLC or corporation.

Sole Proprietorships & General Partnerships

If you don’t file any paperwork to legally form a different kind of business—you have a sole proprietorship or general partnership. Essentially, these are “default” business structures. A sole proprietorship has one owner, and a partnership has multiple owners.

These structures have a few initial benefits. They’re easy, fast and cheap to start and maintain. However, the limitations and risks of these business structures quickly become more apparent as your business grows. In both of these business types, you are your business, legally speaking. Your company’s legal business name is YOUR name—so you’ll need a DBA to operate under any other name. Any business debt is YOUR personal debt. If anyone sues your business, they are suing YOU personally.

LLCs & Corporations

Limited liability companies (LLCs) and corporations are business entities formed at the state level. The entity is legally separate from its owners, meaning the owners are not personally liable for the debts and obligations of the business. As a separate entity, the business also has multiple tax election options. For example, both LLCs and corporations can choose to be taxed as S-corps if they meet the requirements.

LLCs and corporations are not quite as simple and inexpensive as default structures. LLCs and corporations come with formal requirements like state reports. They also have more fees than default structures, such as formation and annual report fees. However, the benefits of an LLC or corporation—especially liability protection and tax flexibility—are significant.

Check out LLC vs Corporation and Why Turn a Sole Proprietorship into an LLC to learn more about choosing the best structure for your business.

If you opt for a sole proprietorship or general partnership, there’s no formal paperwork to file to legally create your entity—you just start selling your product or service. However, you will not have any liability protections or tax flexibility.

LLCs and corporations are formed by filing paperwork with a state agency, typically the Secretary of State. To start an LLC, you file articles of organization. To start a corporation, you file articles of incorporation. In most states, you can file these forms online or download a paper form from the state’s website.

Whether you’re forming an LLC or corporation, your articles will require certain basic information about your business, such as your company’s:

• name
• business address
• registered agent and office
• business purpose
• members/managers or directors/officers’ names and addresses
• number and type of authorized shares (for stock corporations)

You’ll also need the signature of someone authorized to sign on behalf of the business, along with the state’s filing fee. Fees vary by state but are typically between $100 and $200. If you hire Northwest to form your LLC or corporation, we complete and submit your formation paperwork on your behalf for just $100 plus state fees.

It’s important to put your company’s internal policies and procedures in a written document, especially if you’re starting your business with others. Partnerships have partnership agreements. LLCs have operating agreements. Corporations have bylaws.

These documents look a bit different for each kind of business, but they serve the same general purpose. They ensure there’s a clear path forward for any major issue that may arise, from changes in ownership to closing the business. LLCs and corporations also typically need an operating agreement or bylaws in order to open a bank account.

Get a free template for an LLC operating agreement or corporation bylaws.

Nearly all LLCs and corporations will need to request a federal employer identification number (EIN) from the IRS. If you file corporate income taxes, have employees, or file certain franchise taxes, you must have an EIN. An EIN is also a common requirement for opening a business bank account. Most businesses can request an EIN by filling out the IRS’s online form.

Your EIN is for federal taxes—but you’ll likely have state and local tax obligations as well. You will most likely need to set up an account with the state’s Department of Revenue, and you may need to apply for a state tax ID or a sales tax license as well.

Learn more about how to Get an EIN for your business.

A business bank account keeps your personal finances separate from your business finances. For LLCs and corporations, keeping separate finances is essential for maintaining liability protection. To open an account, LLCs and corporations typically need to bring to the bank a copy of their articles, their operating agreement or bylaws, and their EIN.

Many businesses will need a business license to operate. Licensing information—as well as any zoning requirements or other permits—can usually be found on the city or county website.

By choosing to outsource your manufacturing, you won’t need to worry about obtaining manufacturing licenses and permits yourself. That said, you definitely need to ensure that, at the minimum, your manufacturer operates from an FDA-approved facility and has NSF certification.

If you’re shipping from home or selling to clients at your home, you may be required to obtain a Certificate of Occupancy (a document certifying the property owner has given the business permission to operate). Likewise, if your home is part of a homeowner’s association, you’ll also be subject to any of their restrictions for home-based businesses.

After your business is up and running, there are a few additional steps you may want to take as you grow:

• Get online: With your domain name, you can create a business website. You can hire a professional or use a website-builder like Wix or WordPress. You may also want to invest in online ads through a program like Google Ads.
• Hire employees: Hiring employees requires quite a few steps. You’ll need to collect W-4s and I-9s from employees, report the new hires to the state, set up withholding, pay for unemployment insurance, distribute any required documents and notices to employees, and display wage and safety info in the workplace. Employer.gov is a good place to start, followed by your state’s tax or labor office.
• Get business insurance: While LLCs and corporations protect you from personal liability, you don’t want your business to go bankrupt in the face of an accident, injury or other disaster. At minimum, it’s a good idea to look into general liability insurance. Home-based businesses can sometimes add insurance onto their homeowner’s policy.

What’s it really like to work in a dietary supplement business?

You can expect to spend a lot of time collaborating with creative minds, communicating with manufacturers and distributors, and studying the latest industry trends. Your daily work will keep you glued to a computer screen and on the phone, but in the end, you’ll have the satisfaction of putting your expertise to good use in developing quality products that actually make a difference. But again, you’re entering a market dominated by branding above all else, so you’ll spend a lot of your time hooking your customers with the right pitch and then educating them on why your product is worth the cost.

You’d think that most of your time would be spent at a warehouse or a lab where you test products to ensure that they meet your standards, but unless you’re going down the path of manufacturing your own products, the dietary supplement business is about generating buzz about your product.

What does it take to succeed in the world of dietary supplements?

Patience and vision. There have been quite a few trends in the health and wellness industry that have had a direct impact on the popularity of certain dietary supplements. You don’t want to be a prisoner of the moment—you want to build a robust and lasting organization.

Take a look at trends in the dieting industry. From the 1950s to the 1980s, low-fat diets were all the craze and spawned entire product lines based on the idea that a low-fat diet is a healthy and effective means of weight loss. Then came the Atkins Diet in the 1990s and low-carb diets swept the nation. Nowadays, the Keto Diet is all the rage. This same cycle applies to several dietary supplements. Turmeric was once touted for its anti-inflammatory properties. Soon, though, the industry began to catch up to the science and focus on the active compound (curcumin) responsible for the health benefits of turmeric, mixing that compound with others (piperene, namely) that maximize curcumin’s bioavailability.

What does this mean for your ability to succeed in the world of dietary supplements? You need to be clear on the underlying science behind why a particular compound works. Then—and this is the hard part—you need to be able to convey that message to your audience, and make no mistake about it: a lot of people are already quite loyal to their brand. But given how the industry is so susceptible to trends, you’ll secure success if you can look beyond the trends and produce evidence-based products. In an industry rife with misleading claims, results stand the test of time.

Northwest Registered Agent is here to help with all your small business ideas and needs. Answer a few simple questions about your business, and we’ll prepare and submit your formation paperwork to the state. We also provide your new business registered agent service, free business forms and guides, and much more.

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