Today, more people seek to improve themselves, both physically and mentally. Due to this fact, the market for supplements has been constantly growing. Thus, the huge demand for these products has generated lots of potential in the overall supplement industry. The benefits of making and selling your own supplements have become more obvious now.
According to Statista, back in 2018, in-store sales together with online vitamin and supplement sales accounted for annual revenues of more than $30 billion.
What is interesting about supplement businesses is that they develop and advertise their products. However, they usually don’t manufacture these products but outsource to a third party.
Before we dig into details, it is important to understand the overall supplement industry and ways to enter this business.
How to Start Your Own Supplement Business?
First of all, starting your own supplement company might be more difficult than it seems. It requires immense dedication, time, skills, and effort. Yet, strategic planning and proper implementation can significantly facilitate the process.
You will need to align financial planning, manufacturing, distribution, legal matters, logistics, marketing, and customer support. In continuance, you can learn how to start and market your dietary supplement line.
Start With a Business Plan
Any marketing expert would advise you to start a business with a structured plan.
It is essential to map out the key specifics of your business. As an entrepreneur, you will have to think of the name of the brand, your target market, the expenses related to starting your own business, and ongoing costs.
The target market will help you define the type of supplement products you will be selling. More exactly, you can focus on people who want to lose weight, the ones who exercise regularly, have trouble sleeping, aim to increase their IQ, etc.
It is fundamental to determine this issue before production. This way, you can be crystal-clear about what the manufacturer should and shouldn’t include in your product. Establishing your target audience after the production is equal, or even worse than not having a market at all.
And now, you must be asking why wouldn’t you produce the supplements yourself?
The Costs of Starting a Supplement Business
Generally, you can start a supplement business with approximately $5,000 – $10,000. However, this money is adequate only for starting a website, articles of incorporation fees, purchasing insurance, designing your brand or labels, and packaging. Thus, any additional finances are welcomed.
As you can notice, the manufacturing is not included in the calculation. That’s because most entrepreneurs find it costly and far riskier. To be more specific, you would need over $1,000,000+ in order to start your own legitimate supplement manufacturing operation.
That’s why most supplement businesses decide to leave the manufacturing to a third-party.
What Is Contract Manufacturing?
Contract manufacturing is a form of outsourcing that allows you to find another firm to manufacture components or products for your market. It is a great possibility for companies with limited resources or the ones that lack a full-service, in-house development team.
With a contract manufacturer, you can significantly save on costs and be able to maximize your profits. More exactly, you will know your costs ahead of time, so you will be able to practice better budget control.
Furthermore, CMs have in-depth technical knowledge which allows them to spot potential risks and problems related to your product design early on. Besides, you can take advantage of the extensive CMs resources. For example, they can quickly scale and adjust production when your demand is peaking or you are facing a seasonal decrease in sales.
However, it is essential to choose appropriate, trusted CMs. More specifically, you should look for a GMP-certified and FDA-registered manufacturer for your start-up.
Making Your Supplements
No matter if you have decided to manufacture or outsource the production of your products, you should start the formulation process of the supplements.
Nowadays, the FDA, or the United States Food and Drug Administration, imposes strict regulations for selling dietary supplement products. Thus, you will have to obtain a certification, insurance, and even contact an attorney before you create your nutritional formulas.
At first, the process seems quite complex. However, a good contract manufacturer can assist you in the creation and labeling of your products, both of which will be FDA compliant. Furthermore, an appropriate CM can give you general product liability insurance along with your private label order. Thus, you can avoid those costs.
Another great tip for making your nutritional formula is to start with the key features you want to advertise. Then, you can add and subtract other components to the base.
You should also feel free to review the work of your competitors. This way, you will be able to copy what works well to your already existing vision. Besides, you can find new ways to create an even better formula than your competitor on the market.
You should never be afraid to go for a unique approach, especially in such a high-demand market as the supplement industry.
Finally, you should always reach out to a good supplement manufacturer or hire product development staff if you are uncertain of the right proportions of ingredients for your supplements.
Selling Your Supplements
Next, you will have to find a way to sell your products. You must remember that how you sell your supplements may be the most important aspect of your entire business.
Today, the most popular options for acquiring customers include starting your own website, blogging, media buying, pay-per-clicks, trade shows, direct sales, setting up your retail outlet, or using e-commerce platforms like Amazon to sell your supplements.
But no matter which option you choose, you should always focus on the metrics. The most important ones you should track are your CPA (cost per acquisition) and CLTV (customer lifetime value).
To be more exact, your CLTV should be at least 300% of your CPA. This way, your business will be able to scale and you can make millions in revenue.
But as mentioned before, you should also focus on your target audience, develop ways to engage with those people, and listen to their problems. As an entrepreneur, you should constantly perform different analyses including marketing and cost-benefit ones. It is the only way to spot potential issues or find new ways to increase sales and profitability.
After all, you should remember that start-ups need time to blossom. At first, you will have to invest a lot of money and not expect to get much in return. The only tip is to keep exploring even after you have set up your business plan. Do not hesitate to combine different marketing tools, compare the results, and even modify your supplement formulas.
It is best to begin your supplement business with contract manufacturing, as it will significantly cut your costs and legal requirements. Once you feel comfortable in this niche, you may be able to invest further and start your production.
SMP Nutra is a leading manufacturer in the supplement industry and can be your partner in manufacturing high-quality supplements that are going to sell. We are capable of manufacturing capsules, tablets, gummies, softgels, and more.