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HRB 637: The Business of Herbal Products
Course Description:
A strategic understanding of how to organize an herbal product business to help ensure business success. This includes methods used by entrepreneurial startups and mature corporations to validate manufacturing requirements for third party auditors and certification agencies. The course will review how to select contractors for various elements of the product development process, involving manufacturing or using contract manufacturers, lab testing, supply chain and business services. Students will engage the material by applying each of the major concepts to plan out their own future business structure, culminating in the creation of elements of a business and marketing plan.
Course Learning Outcomes:
- Identify the key components and associated resources required of a successful herbal product business.
- Describe how to successfully engage the various herbal business regulatory agencies and business services in the marketplace to ensure the viability of the enterprise.
- Create a business and a marketing plan for an herbal product business.
Courses that enhance student’s business understanding in conjunction with HRB 637.
- HRB636: the course contextualizes supply chains by production, processing, manufacturing, quality control and purchasing. This course is taken concurrently.
- HRB642: the course will cover 21 CFR 111 compliance as well as Botanical Reference Materials and Pharmacopeial standards. In particular, specific subparts will be addressed in greater detail.
Week 1: Overview
The first week gives an overview of the course and begins to get students to think about the business that they will be working on. Always begin with the end in mind.
- Who are you serving in entering this business?
- Do you want to make a difference?
- How will you do it?
Week 2: The Regulatory Environment
Herbal products are regulated as dietary supplements, a subset of the food regulations. In this week, you will learn and understand the complex regulatory environment and how to navigate some of the key issues specific to herbs and botanicals. What you need to know.
- Herbal Products: Regulatory Requirements
- History of DSHEA (Dietary Supplement Health and Education Act of 1994) regulation (repurposed from 612/642)
- State and local requirements and regulation
- FDA facility registration for homeland security, Unique Facility Identifier
- Key provisions of the Food Safety Plan (FSP) to comply with the Food Safety Modernization Act (FSMA)
- Expiration dating on product should be addressed this will be included in the key provisions along with HACCP, GMP, PCQI, etc.
6. Types of claims and claims substantiation files
7. What are post-market and adverse event reporting requirements?
Week 3: Contract Manufacturing
We will discuss the role of contact manufacturing in getting a product to market. Even existing companies will use contract manufacturers if entering a new product area or using complex technology (such as gel capsules for vitamin E and oils). You will learn important concepts to keep in mind when managing contract manufacturers.
- Contract manufacturing. Look for someone who is willing to partner you.
- Checklist of what to look for in a manufacturer (requirements, best practices, etc.)
- Introduction to certificates of analysis.
- Review 3rd party auditors/certification agencies who can help to point to the best operators
- Vendor certification (this represents everyone but the contract manufacturer or lab)
- Level of audit dependent on nature of service
- Supplier assessment and review policy
- Preparing for an FDA inspection
Week 4: Contract Testing Labs
Use of contract analytical laboratories is common in the industry for both basic testing (moisture, alcohol) and for herbal constituents. You will learn how to choose a contract testing laboratory or set up in-house testing.
- Demonstrating Compliance
- How do you setup In-House testing
- Botanical Identification and Traceability Testing
Week 5: Techniques for Sourcing Product
This week will focus on strategize what form your raw material will take, how to locate sourcing and to compare the various options. Additionally, the role of QA processes will be discussed – covered in HRB 636.
- How to find extract suppliers
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How to identify sustainable supply chains for your raw material
- Review of how-to setup ongoing QA processes
- Will the business be:
- Buying their own herbs and sending them to their manufacturer?
- Using the supplier's stock ingredients?
- What are the pros and cons of each route?
Week 6: Manufacturing Technology and Layout
In this week, we will discuss the types of equipment that may be needed in a manufacturing plant and how to look at plant layout for best efficiency.
- Processing equipment and flow charts
- Analytical equipment
- Extraction equipment
- Packaging equipment
- Miscellaneous process
- Shipping and storage
- Packaging/bottling need to discuss sustainability and new tech here, glass is worst environmentally according to new research
- General lab equipment
- Inactive ingredients
Week 7: Overview of the Business Plan
Starting your journey, are you ready? You will learn about how to create a business and marketing plan. What is the cost of doing business and how much should you charge for your finished product? What are the business margins to consider and how do they differ based on your route of distribution?
- Create a business and a marketing plan
- Create a draft business plan
- How to figure out cost of doing business? Finished product?
- Bill of Materials, Cost of Goods Sold (COGS)
- Margins, exploration of varying margins in product sector, Amazon vs. direct sales, etc.
Week 8: Modern Business Operations and Tools
You will consider a number of business requirements and how to address them – accounting, inventory, taxes, ingredient tracing and which software might be useful. Additionally, legal issues focused liability insurance, personnel laws and how to structure the business will be covered. We will also cover a range of federal agencies that have regulatory oversight of some component of your business.
- Business software
- Accounting Software (Quickbooks and the like)
- Common Business reporting - Profit and Loss etc.
- Inventory Asset Management Software -
- Taxes
- Ingredient tracing software. TraceGains
- Where to find information about
- Liability insurance
- How to use lawyers
- Legal considerations about Health Guidance Compliance Guide
o Corporate structure
o Copyright and trademark protection
o State business registrations
- HR/personnel federal laws
8. Other regulatory agencies and how they intersect: OSHA, FCC, SEC, etc.
9. Trade associations - what can they do for you?
10. Consultants - when to use and how to find
Week 9: Defining Idea, Market Research, Competition, Design Brief
- Product design brief
- What is a value proposition?
- How to do a SWOT analysis for better strategic planning
- Defining your market
- How to conduct and prepare a competitive analysis
Week 10: Marketing/Branding
Develop your concepts into actual business practices and generate a product rollout plan.
- Concept development
- Rollout plan
- Where is your product going to be available?
- How do you measure return on advertising/placement?
- Websites and social media
Week 11: Sales and Distribution—the Launch How to Go to Market
You will create a rough draft of a launch strategy to drive sales that includes ideas for branding your organization and products.
- Create a launch strategy as an exercise. HOW will you drive sales?
- Components of digital marketing
- Website
- Blogging
- Email marketing
- Newsletters
Week 12: Funding/Business Scaling
How do you acquire your startup funding? Once you begin to grow where is the investment sourcing for growing the business? You will consider a 3-year financial projection while identifying potential funding for your startup. Also scaling your business regarding people and capital resources.
Week 13: Mentoring Meeting in Preparation for Shark Tank
Upload your final business plan as your discussion for this week and answer the questions below. You may answer them all if you feel that will help you in the development of your nutrition business:
- What was most surprising to you as you completed your business plan?
- What changed throughout the planning process?
- What are you left to figure out?
Week 14: Careers
During this week, we will discuss many of the career opportunities in the herbal industry. In addition, there are opportunities in the pharmaceutical industry for certain types of skillsets acquired in the herbal industry.
- Careers in the herbal products industry
- Careers in the pharmaceutical industry
- Other careers and entrepreneurship
Shark Tank presentation (voluntary) to faculty board
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