How to Start an Online Nutraceuticals Business
Starting your own supplements company is rewarding and lucrative. The nutraceutical industry is one of the fastest growing businesses and will continue to break records over the next few years. Millennials and health conscious men and women are spending billions on supplements in order to maintain a healthy lifestyle in a hectic world.
But it takes much more than a great idea. A lot of hard work and strategic thinking is required to turn an on-paper concept into a viable business. The right game plan, however, can expedite your journey to becoming a successful nutraceutical business owner.
So here is a step-by-step guide to help you set up your own online diet supplements company:
STEP 1: PLAN YOUR BUSINESS
The first step in setting up any business is to know your audience inside out. From what age-groups they belong to all the way to what websites they spend their time on, you need to understand how your customer thinks. When creating an audience, consider:
- Experience with nutraceuticals
- Family and relationship status
To build a successful Nutraceutical company, it is crucial to understand what your customers’ needs are, what their lifestyle looks like, if they suffer from any common illnesses etc.
Secondly, you need to understand your competition. What are the main players offering, what their points of strength are in terms of differentiated products or competitive price points and what challenges they face as business owners.
Go to Google and enter in the products, keywords and search terms that you think your audience will use to find your products. Look at the companies that are showing up on page 1. Study them as much as you can. What are they doing right and what are they doing wrong? You don’t have to be the most incredible nutraceutical company on the web, but you should be just a little better than the competition.
This two-step process will help you understand the nutraceutical market holistically and to zero in on the biggest gaps in the existing market. Now assess whether you can effectively devise a solution to this problem with a differentiated product or service. Factor in all the critical aspects like the initial investment needed, the time required to break even, ability to meet the FDA’s regulations etc. If the answer is ‘Yes’, you may have cracked the code to a multi-million dollar company. If the answer is ‘No’, don’t lose heart. You just need to be a little better than the competition.
And remember, you don’t have to be the first to market. When Facebook started it already had 2 massive competitors: Friendster and MySpace. That did not deter the founders. Instead of giving up before they began, they decided to do it a little better and the results speak for themselves.
STEP 2: FORM A LEGAL ENTITY
Setting up a legal entity like a limited liability company (LLC) can prevent you from becoming personally liable for any financial troubles the company might run into.
Because the nature of nutraceutical companies is somewhat turbulent, an LLC is recommended. They are easy to set up and you can use Legal Zoom to get the process started today.
STEP 3: REGISTER FOR TAXES, OPEN A BUSINESS BANK ACCOUNT AND SET UP BUSINESS ACCOUNTING
Register for all the relevant state and federal taxes, Open a dedicated business account to protect your personal assets. And set up a robust accounting system to regularly monitor your financial performance and ensure smooth tax-filing.
Now online taxes can be tricky and the rules and regulations are constantly changing to it’s important to stay up to date and remain compliant. Check out the Turbo Tax guide to online sales tax regulations.
Working with an experienced high risk merchant account service provider is the best way to remain compliant. It’s in their interest to ensure that you can continuously accept payments and succeed online. Consider looking for a credit card processing company that offers consulting as well.
STEP 4: OBTAIN NECESSARY PERMITS AND LICENSES (FDA Regulations)
Under US law, dietary supplements can only be marketed to support the structure or function of the body, and cannot claim to treat a disease or condition. So steer clear of making any direct medical claims on your website.
If you are starting a nutraceutical business from scratch, chances are you don’t have a lawyer or legal department at your beck and call. That’s fine, but you MUST ensure that your content writers are well versed in FDA laws and regulations.
You can discuss the benefits and potential gains that your online customers may enjoy if they use your supplements. But be sure to avoid any promises or direct medical treatment advice.
STEP 5: GET BUSINESS INSURANCE
A good insurance policy is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
If you are a small online supplement seller than it may not be necessary right away but consider getting insurance as soon as your balance sheet will allow it.
STEP 6: IDENTIFY YOUR SUPPLIER
Most importantly, ensure your supplier follows the current good manufacturing practices (cGMPs) as stipulated by the FDA. Also, run a background check, enquire thoroughly about the product and consider the additional services offered like storing, packaging and distribution.
Do some digging. Check out reddit and other B2B forums and ask questions. You can also look into Alibaba, the platform that connects businesses to manufacturers in China. You can begin working with a dedicated coordinator and work out a deal that is good for you.
STEP 7: PICK THE RIGHT FULFILLMENT PLAN
Do not ignore this step while you plan your business. The Walmarts and Amazons of the world owe a large part of their success to unmatched last mile operations. Invest resources in figuring out how your orders will reach the customers.
Fulfilment strategies are no walk in the park and managing this step could be the make or break of starting a nutraceutical company. You have to consider cash flow management, restocking, storage, shipping, returns and the entire system from start to finish.
You can find a great guide to creating a fulfillment strategy here.
STEP 8: DEFINE YOUR BRAND AND ESTABLISH YOUR WEB PRESENCE
Choose what your brand stands for and what is the best way to acquire your customers – Website, Social Media, Blogs, Pay per click etc. This will enable you to effectively build your nutraceutical company’s digital presence and consistently achieve your business goals.
Follow the steps listed above meticulously, and work consistently towards your business goals and soon your labor of love will bear fruit!
Check out this amazing and detailed video that Travis Marziani released a few months ago. He details all the pitfalls and mistakes he made in his first year as a supplement seller on Amazon. He includes his actual figures and goes into great detail.