How to Start an Herbal Business

Monday, July 1, 2013

How to Start an Herbal Business

Medicinal herbs are ancient healing tools with important modern applications. The cost and toxicity of many modern pharmaceutical drugs have made herbal remedies an appealing option for some modern consumers. To start an herbal business, you should have knowledge of herbal remedies and applications, although sales of most medicinal herbs are not regulated by state authorities. Despite the lack of specific oversight, it is wise to know state and federal rules regarding specific claims about the effectiveness of herbal medicines. You also should know enough about the herbs you sell to steer customers toward appropriate choices.

Step 1

Write a business plan for your herbal business. Outline your specific focus, such as whether you will cultivate medicinal herbs and sell them wholesale to wellness centers and naturopaths, or whether you will operate a retail store selling herbal products directly to consumers. Provide a marketing plan with concrete details about how you will reach customers interested in herbs and natural health, such as working cooperatively with holistic health practitioners. Attach financial information for your herbal business, including a balance sheet detailing your personal resources. Also include projections showing how much it will cost to buy the herbs and supplies necessary to start your business, and how much you will have to sell in order to break even and earn a profit. Provide specific information about profit margins for growing herbs and crafting herbal products.

Step 2

Contact your city and state revenue departments and get the licenses necessary to run an herbal business. If you will be hiring employees for your herbal business, contact your state's unemployment insurance and industrial insurance divisions. Call the IRS and register as an employer to receive an employer identification number.

Step 3

Follow FDA labelling requirements for herbal products, designating them as food supplements rather than medicines. Learn the specific language protocols for legally making claims about the uses and effectiveness of herbal products. Learn which herbs the FDA considers unsafe, such as ephedra, and do not sell them.

Step 4

Set up a space for your herbal business. If you will be growing herbs, lease or buy a plot of land, as well as fertilizer and seeds. If you will be retailing herbs, lease a storefront in a part of town frequented by your target market, such as an affluent area with yoga studios and natural food stores. Outfit your retail location with shelves for inventory, books and accessories such as mortar and pestle sets. Purchase jars, scoops and labels for bulk herbs, as well as packages of herbs and tinctures, or liquid herbal preparations.

Step 5

Market your herbal business by advertising in venues that appeal to your target market, such as local holistic health periodicals and food co-op newsletters. Set up booths at local wellness events. Network with naturopaths and other holistic health practitioners who recommend herbal products to their clients. Build an attractive, informative website describing your products and services. Include ecommerce capabilities to reach customers outside your immediate geographic area.

Things Needed

Federal, state and local regulations
List of alternative providers in your area

References (2)

About the Author

Based in North Carolina, Felicia Greene has written professionally since 1986. Greene edited sailing-related newsletters and designed marketing programs for the New Bern, N.C. "Sun Journal" and New Bern Habitat ReStore. She earned a Bachelor of Science in business administration from the University of Baltimore.

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Easy Tips and Ideas to Start Business

Although anyone can start a business, many people fail because of a bad product or improper research. If you want to start your own business, you can improve your chances for success before you even begin. In order to make your business successful, start strong and make sure that your idea will hold out for the long haul.

Have a Good Product

Ensure that you plan to sell something useful. Although you may think that your product is important or special, that doesn't mean the general public will agree. Ask friends, family and strangers what they think of your product. If they don't seem that interested, ask them why. With their suggestions, you can either improve the product or scrap the idea completely. According to Brad Sugars of Entrepreneur magazine, most small businesses fail because they sold a product that didn't have an adequate market. This also applies to small businesses that provide a service. A lawn-care business might be useful for part of the year in a northern state, but it is in-demand year-round in the south. Consider whether people will actually want to use your service and get constructive advice from those not afraid to give their opinion.

Research Local Businesses

Research local companies before starting up your own business. This will not only give you an idea of the amount of competition you will have, but it will also help you price your product or service. If you're looking to start a wedding photography business, you may find during your research that the market is over-saturated in your area. If not over-saturated, you should contact each business and ask them for a price list. Alter your prices so you can stay competitive with the competition in town. Researching similar local businesses will also help you decide where to locate your business location. Try not to start up a store or office close to another business of your type. If your small business is located away from similar business types, this will cause locals to choose you over businesses that are farther away from where they live.

Get Professional Advice

You may know someone who has started their own successful business. Ask him for advice and listen to his stories of how he started his company. You may gain useful advice on the good and bad ways to start a business. Local entrepreneurs can also introduce you to local product providers or advertisers that you may not have met without their help. Accept any advice with open arms, especially if the advice is coming from someone successful in the area.

How to Calculate Business Start Up Costs

Starting a business in no easy endeavor. It takes a great deal of research, perseverance and hard work. While sweat equity will make your small business more successful, you will most likely need real capital to get the business started. Before you start raising capital and/or investing your own funds, the first thing you need to do is determine the total start-up costs.

Step 1

Determine your costs of sales. For most small businesses this means inventory, the cost of raw materials, manufacturing equipment, shipping, packaging, and warehousing. However, not all businesses sell products. In this case, the cost of sales is primarily the direct labor involved in making the sale. For example, to open a small shoe business entails purchasing enough inventory ($10,000) to stock the store.

Step 2

Determine professional fees. Planning your business structure, i.e., limited liability corporation or general partnership, means hiring an attorney. There may also be the need to pay an attorney for help with establishing trademarks, copyrights, and patents. In this scenario, that puts total professional fees at an estimated $20,000.

Step 3

Determine technology costs. Technology can greatly reduce the cost of labor for small business if used effectively. Most small businesses require computers, printers, cell phones, website development, Internet access, software applications, information security, data storage, and outsourced information technology (IT) consulting. If the cost of technology is $10,000 to start, add an additional $5,000 a year for maintenance (hint: maintenance is not included in start-up costs).

Step 4

Determine administrative costs. This varies with business types and may include items such as business insurance, office supplies, product packaging, parking, rent, express shipping, desks, chairs, fax machines, phones, or anything else necessary to operate the business daily. A good estimate for start-up administrative costs would be $5,000 for the first six months.

Step 5

Determine initial sales and marketing costs. Now that you have your product, you need to let folks know about it. Sales and marketing costs generally include marketing materials for presentations, printing stationery, business cards, advertising, trade show events, and public relations. These initial sales and marketing costs can add up to $3,000.

Step 6

Determine the wages and benefits needed to secure a staff. This includes employee salaries, benefits, workers compensation, and payroll taxes. Let's put the cost of wages and benefits estimated at $20,000 for the first three months of business.

Step 7

Add all costs associated with starting the business for a total. Be sure to only include business start-up costs that will be incurred in the first three to six months of operations. For this example, the calculation is: $10,000 + $20,000 + $10,000 + $5,000 + $3,000 + $20,000 = $68,000.

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Monday, July 1, 2013