There are a lot of good reasons to start your own health supplement company.  Among them are:

1. The costs of starting one have gone down considerably the last ten years
2. You’ll help people be healthy
3. It can be fairly lucrative if you find the right niche
4. The job market sucks and it’s just as good a shot as gasping for air at your brick and mortar employer that’s sinking like the titanic.

I started my own about 1 year ago, and it’s gone reasonably well, although I’m by no means a “big” player.  But Health Kismet is profitable and has fairly high margins despite low order volume.  It’s also primarily a one man operation with the periodic help of certain contractors.

The ins and outs of how to run a supplement company are beyond the scope of one blog post, in part due to their complexity and also because I have yet to master many of the finer aspects of the job.

To be frank, I’m pretty clueless when it comes to accounting, distribution, and the finer aspects of revenue optimization.  I am quite good at crafting business systems, analytics, and certain types of marketing.  I’m also good at doing things on the cheap.  I’ve made lots of mistakes but they’ve always been very manageable.

Calling All Newbies

I wrote this post for two groups of people: Health Kismet customers who might be curious about how I approach the company and  would-be entrepreneurs looking for a little clarity on how to start their own business.  You can find blogs scattered across the internet on software startups, SEO, and other digital moneymaking endeavors, but I’ve found the blogosphere is a meadow of crickets when it comes to the area of food and health supplements.

So please, allow me to fill in the void.

The Most Important Choices

For the most part, the skeleton of any supplement company will revolve around the following components:

1). What product you decide to sell

2). Who you choose to manufacture your product

3). Your choice of business model

All three are intertwined, but I want today’s post to be devoted to the initial seed of any food or supplement company: your initial product idea.

Debunking Myths

Most people overestimate how difficult it is to make a health supplement.  In my experience aligning the peripheral business activities that must accompany your product is the much more sensitive and time consuming  task.  I’m well over a year into it and still picking up new things as I go along.

When it comes to actually making the product the whole process is automated and much of the thinking has already been done for you.  Most manufacturers  have a large variety of ingredients stocked and machines that can make the different categories of products: powders, capsules, gels, liquids, etc.  Smaller operations might have an ingredient list in the hundreds, the larger ones in the thousands.

Most have a variety of stock recipes in place, and if you look hard enough you’ll probably find one that’s close to your imaginary product.  If you want to go organic,  fair trade, non-gmo, or something else then they can usually arrange for ingredients that’ll meet the certification.  If they don’t have anything in stock they can simply order on your behalf and usually get it much cheaper than you could.

So you don’t have to be an amateur scientist who concocts zany potions in your kitchen or know very much about ingredient sourcing to get started.  You just need to know what you want.

The Product Dilemma: Something New or +/- 1?

Product ideas usually fall into two categories: you can do something that’s entirely novel or you can add your own twist to an existing product.

I prefer the latter approach.  It’ll have lower startup costs and more reliable demand.  I make a greens powder, and those certainly aren’t new.  In one form or another they’ve been around for 30 years.  If Health Kismet is in any way innovative (I don’t really think it is) it’s its ability to create a unique twist on something people are already familiar with and put it on top of a business model that’s scalable with very low fixed costs.  But I didn’t invent the wheel when it comes to greens powders.

It is a great product, because it has a uniquely good taste while delivering similar nutritional potency to comparable products.  It takes the concept of a greens powder and puts a “+1” next to it.

Taking the “+1” or (-1) approach is a good idea for first time entrepreneurs.  It’ll give you a higher chance of success if you do everything else right and it’ll give you more flexibility with your choice of business model.

The Dangers of Being Too New

Many people might have the impression that the best way to make inroads in the supplement market is to make a product that’s very novel.  Novelty has its benefits, but too much novelty can be a bad thing IMO.  It’s not all that necessary if you can find some other competitive advantage you have in the marketplace, and it’ll make your business less dependent on the most frequent cause of death of new products: trends.

I hardly shop at Whole Foods, but whenever I do I’m reminded of what I don’t want to do with Health Kismet.  I get the impression that at least 1/2 the inventory was not there the previous quarter.  As a consumer I get a quick buzz looking at the different mash-ups that ignite the buying impulse.  As a business owner I shake my head at the inevitable plight of 3/4  the companies that risked their neck to make it in there.

Health food stores are as much about selling products that are different as they are about selling products that are healthy.  They have to reinvent themselves every 3 months to justify their higher prices.

Grocery store aisles are a darwinian jungle that’ll reward your years of hard work with a half year of shelf space before you get tossed out for the newest thing.

It’s not my style, and it probably isn’t yours either.

The Best-Seller vs the Back Seller

Lots of authors aspire to be on the NYT best-seller list.  They’re chasing false idols.  Like getting into a prestigious college or attaining some other hard to get form of validation, the NYT best seller list strikes me as little more than an empty vessel of status and vanity.  Getting on the list is just as likely to make you broke as it is to make you rich.  If you don’t have a large distributor you’ll have to front a huge portion of the printing  costs up-front and pray the book still sells once it falls off the best-sellers list.  Most books don’t.

The real place to be as an author is the back list.  Those are the books that sell year in and year out, even decades after they’ve been written. Here’s a good comparison of the best seller list vs. the back list.

You probably want to follow similar advice if you own a supplement company.  Being the first product to market with a new ingredient might give you a lot of initial lift, but does nothing for your long-term competitive advantage once copy cats rush in or a bigger company uses your idea.

In other words, you don’t want to be the trendy fusion restaurant that’s opening downtown that’s frequented by the local aristocracy.  You want to be the plain looking Italian restaurant around the corner that has a bunch of heavy people hanging out at the bar waiting for their table.