How to Start a Supplement Company

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The global dietary supplement market is forecast to reach $210.3 billion by 2026. In the U.S., this industry reached $42.6 billion in 2018. Whether you want to become a supplement distributor or launch your own product line, now is a good time to do it. According to the Lancelet, about three-quarters of Americans take supplements regularly, so the earning potential is huge — as long as you put in the time and effort.

TL;DR (Too Long; Didn't Read)

The supplement industry is highly regulated and has strict requirements for manufacturers and distributors alike. Whether you want to create and launch a line of products or become a supplement distributor, it's important to comply with the FDA's regulations on product labeling, safety, health claims and other key aspects.

Research the Legal Requirements

Dietary supplements are concentrated sources of vitamins, minerals, protein and other nutrients with potential health benefits. Although these products are not as tightly regulated as medications, they are still subject to specific governmental restrictions. They fall under a different set of regulations than conventional foods and prescription drugs. Supplement manufacturers and distributors must comply with the requirements imposed by the FDA and DSHEA (Dietary Supplement Health and Education Act of 1994).

Research the legal aspects before you make a business plan and determine the cost of starting a supplement company. Those who work in this industry are not allowed to make false health claims or sell misbranded products. Any claims you make should be authorized by the FDA and meet certain criteria. For example, you cannot say that a multivitamin prevents or cures specific disorders unless these claims are based on extensive research and satisfy the FDA's requirements.

If you're planning to use new ingredients, you must notify the FDA at least 75 days before the ingredient becomes available to the public. Include your name and contact information as well as the ingredient name, a brief description, clinical evidence and other relevant details. The notification can be submitted by mail or online through the FDA's ePortal.

Choose a Business Model

Different types of supplement companies exist, and each has specific characteristics. Depending on your business goals and budget, you can become a supplement distributor, launch your own products, open a franchise, or partner with private-label supplement manufacturers. Formulating your own products is the most expensive option, requiring a lab, warehouses, distribution centers and qualified staff.

A more convenient option is to join forces with a private-label supplement manufacturer who researches, formulates and manufactures your products. The company also designs the bottles and packaging, assists with branding and handles the order fulfillment process. Nutritional Engineering, Inc., Private Label Express and Bioinnovation Labs all offer these services. Ideally, choose a GMP-certified company that produces supplements in FDA-approved facilities and uses pharmaceutical-grade ingredients.

If you have a favorite supplement brand, inquire about franchising opportunities. This option involves lower costs and less paperwork than launching a line of products. For example, the initial investment for a GNC franchise is up to $200,000 and covers the franchise fee, opening inventory, construction, signage and marketing materials. To qualify, you need $130,000 or more in liquid assets. Franchisees receive training and ongoing support with their day-to-day operations.

Become a Supplement Distributor

Although it's possible to start a supplement company for as little as $5,000, that's barely enough to produce a few dozen bottles and sell them online. If you're on a tight budget, consider applying for small business loans or grants. Another option is to become a supplement distributor. In this role, you promote brand name products to potential clients and receive a commission for every sale you make.

In general, supplement manufacturers provide training and support to their distributors. However, it's your job to research the local market, follow the industry's best practices and reach out to prospects. Again, it's recommended to team up with companies that are certified by the FDA, NSF, GMP and other regulatory bodies. NOW Foods, for example, works with distributors based in the U.S., Europe, Latin America, Asia, Africa and the Middle East.

Regardless of the business model you choose, take the steps needed to achieve legal compliance. Register your business with the state, apply for a tax ID number and get the necessary business licenses and permits. Consult a lawyer or contact the FDA to find out more about the labeling of dietary supplements and the claims you can make. Draft a business plan that outlines your goals and strategies, determine the costs involved and reach out to investors.