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Tips on Starting a Nutraceutical Business

By John DiGiacomo

Nutraceuticals — dietary supplements — are very popular and some of our clients have asked us, here at Revision Legal, how to start a nutraceutical business. Like any start-up, there are practical, financial and legal challenges. You will need experienced business lawyers and, if you plan to operate online, you will need online business attorneys and ecommerce business lawyers. In this article, we will start with some basics on setting up a new business and then offer some tips specific to the nutraceutical industry.

Basics on Starting a New Business

Becoming an entrepreneur is involved, time consuming and takes a lot of advance planning. So, being a start-up can be anxiety-inducing, but also exhilarating at times. What follows may seem daunting (and it can be). But, the most practical advice is: KEEP IT SIMPLE. Start with one product, one target audience and one sales channel and see how it goes. As you succeed, expand the products, the customer base and the sales channels.

Here are the basic steps for any new business:

  • Create your business plan — this involves finding start-up capital (money); identifying what you want to sell or manufacture; identifying and locating your target customers; mapping your cash-flows; identifying sales, costs, and profit potentials; finding a lender (if possible and/or desired), etc.
  • Form a corporate entity — you will need to come up with a good name for your business; you do not want to operate a nutraceutical business as a sole proprietorship; indeed, that may not be possible; you will need an experienced business lawyer to help with this
  • Obtain tax ID numbers for your new company (or other corporate entity) along with business bank accounts, sales tax ID numbers, etc.
  • Obtain local business permits and licenses (as needed)
  • Obtain appropriate business insurance — every business needs insurance appropriate to the type of business and this is even more true for a nutraceutical business; a nutraceutical business is considered a “high-risk” business, so the insurance will be higher; if you cannot afford insurance, then go back to the first step and re-work your business plan
  • Identify and locate suppliers and vendors, shippers, credit card and payment processing companies that specialize in supplement and nutraceutical products, etc.
  • Purchase or lease your business location — at first, this may be where you live, but be aware that operating a business from your home has implications for home-owners’ insurance and, potentially, for local ordinances and even HOA regulations, etc.
  • If you will be operating online, create your website and/or open your online sellers’ accounts — note that websites have a number of legal requirements, particularly if you are collecting customer data and information
  • Establish your branding and trademarking — this is often linked to the name of your business
  • Begin the process of becoming an employer — maybe not immediately, but at some point, you will likely want to hire employees; becoming an employer entails a host of obligations like withholding income taxes, satisfying labor law obligations, etc.
  • And more

Some Specific Issues for Starting a Nutraceutical Business

The nutraceutical industry lies at the boundary of food, medicines and drugs that are regulated by the federal Food and Drug Administration (“FDA”). If you are planning to manufacture and/or sell medicines and prescription drugs, then you will need FDA approval and licensing and will need to meet all of the FDA regulations. However, nutraceuticals are generally NOT regulated by the FDA as long as they are made and marketed for the treatment of diseases or other medical conditions. Thus, your nutraceutical business must be exceedingly careful about how its products are labeled and marketed. Otherwise, the FDA will come to investigate.

Aside from the FDA, be aware that, like most ingestible products, nutraceuticals are subject to State and federal regulations that are intended to safeguard quality and safety. Among many other things, these include regulations for your physical facility and for product warnings and labeling.

Contact Revision Legal

If you have questions, contact the business lawyers at Revision Legal.You can contact us through the form on this page or call (855) 473-8474. We are lawyers specializing in internet law.

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