Hello! Who are you and what business did you start?
My name is Nik Hall and I’m the founder of Vitafive - an all-natural custom vitamin pack. When
I started the business when I was a 21 year old at Texas Christian University studying entrepreneurial management and finance. I had a big dream to start my own company but honestly didn’t think it was possible. My business partner Garret and I started the business with the hopes of building something similar to a dollar shave club.
When we started the business, it was a completely different business than what is here today. Our first business was direct to consumer custom gummy vitamin pouch business where you could pick and choose your vitamins and we would send it on a four-week subscription basis directly to your door.
After the first six months of grueling pain, we finally started to figure out our Facebook and Instagram ads and later scaled to a seven-figure business. After we hit the scale it became incredibly difficult to grow with the cash on hand. Although we were profitable, our cash flow was not an ideal situation. So we gave ourselves a choice to either go out there and raise millions of dollars or we can go about it in a little bit more of an organic route similar to several other consumer goods companies.
Today, we still sell the custom gummy vitamin packs however we also sell delicious gummy vitamins in eco-friendly packaging (pouches rather than bottles) to retailers like Target, Walgreens, Kroger, Rite Aid, H-E-B, and several other retailers across the country totaling 6500+ doors. We will hit near $3m in revenue in 2021 and are continuing to grow.
What's your backstory and how did you come up with the idea?
My business partner came up with the idea of the custom-coming vitamin packs. He went down to a meeting in Austin Texas back in 2015 and met a gentleman down there who had a similar idea but with pills. When he was asking questions in hopes of getting an internship, the businessman turned him away and told him that he doesn’t want any of his help. He came back to me the next day and said let’s go ahead and change a couple of things in this business and see what we’re able to do ourselves!
Although Garrett and myself had zero experience in the consumer goods or direct-to-consumer industry before, there were several factors that we looked into before launching this company. We looked into the market size, the market potential, the number of competitors, the difficulty of these competitors. But there were several things that we forgot to look into. What was going to be our cost per acquisition, how are we going to get to market, what was the minimum order quantity and the cash flow with this model that we had, and many other things.
After presenting this idea to several judges and multiple different pitch competitions we started to get the idea where we wanted it and then went out and pitched it to investors. We continue to do deep research into the market, the competitors, and how to convert customers to our website, but now was the time to go out there, raise money, and start selling the product.
Take us through the process of designing, prototyping, and manufacturing your first product.
Google was our best friend!
Day in and day out we were looking for the best manufacturers for each piece of our business. We had a little bit of a different business than most people. Most people in the industry use bottles and we were about to use bags. There were no machines that worked for these bags at a scalable level. After finding a list of the number of manufacturers we then had to figure out if we were going to do a co-pack ourselves or if we were going to outsource that. After a deep conversation with two main gummy suppliers, we finally found one that seemed to be the best overall that could also help with the research and development of these products.
We raised an initial $500,000, which allowed us to get a lot of inventory or website set up and all designs necessary. However, this amount of money is not what was needed if we were to redo this today. We probably could do this for 1/10 of the cost, however, we didn’t have the expertise or knowledge that we have today.
In the vitamin industry, you have to follow regulations from the FDA. Supplements are a space that a lot of people get very confused about and think that there is no regulation at all. However, there is still regulation where they can shut you down as a company and you still have to follow the rules that are not very clearly written.
Once we finalized the suppliers that we wanted to use we ended up going into the R&D phase of the project with specific products that we wanted to launch. Fortunately for us, they already had stock formulations available and we decided to use a couple of their stock products to get started and potentially look at custom formulations later down the line.
Describe the process of launching the business.
Launch. Easily the worst part of the business. My business partner and I were on top of the World the day before we launched the product. We were the only company at TCU to have raised money and launched consumer goods produced in the last number of years. We thought that we were going to crush the numbers that we had in our forecast, but that was very quickly torn down. After getting the website (which was outsourced to a local web development firm), the product, the machinery, the packaging, and all of the other miscellaneous items together with a business. It was time to launch online. On the first day of launch, we had 31 orders. We were so excited! However, after day one we were getting a max of 1 to 2 orders per day. After the first week, we were getting 0 to 1 orders per day and we’re very very convinced that there was an error on our website side, not our marketing!
The biggest thing that we have learned through all of these channels is whatever channel that you go into you have to dive incredibly deep to be successful.
After weeks of slow sales, it was very apparent that we did not know what we were doing on the marketing side of the business. It took us 6 to 9 months to figure out that our website was very poorly designed. It looked pretty but it wasn’t good for converting sales. Long story short, after those 6 to 9 months we finally figured out the formula on Facebook and Instagram marketing along with our website and we were getting a consistent Cost per acquisition after a few months. We continually improved our website every week and finally switched to Shopify rather than having a fully custom-built site.
Now that we figured out a consistent Cost per acquisition, we started to scale the business. Over the next 9 to 18 months the business went from 100 recurring members to over 4000 recurring members. Although this was never pretty, one week we would be getting a $30 acquisition the next week we would be getting a $70 acquisition and this was a week over week for months!
Since launch, what has worked to attract and retain customers?
In 2016, 2017, and 2018, we focused a lot of our time on Facebook and Instagram marketing. That marketing today is quite a bit more complex and substantially more expensive. We were spending from $10,000 a month up to about $60,000 per month on advertising only on Facebook and Instagram. Where we missed a big gap was probably email and SMS more things back in the day. However, they still allowed us to grow to about 4000+ members. Figuring out the way that you’re going to acquire a business is probably the most important thing when starting a business.
As we scale the business to 4000+ members, the cost of advertising radically decreases. So it was up to us now to find an alternative way to scale the business in a cash-flow-friendly way. In mid-2018 we turned off most advertising and looked at other channels like Amazon and retail doors to launch our eco-friendly pouches. It was the same product inside with the same delicious gummy vitamins, however, we had a different form of packaging than what others provided on the shelves.
We were very fortunate to sign on some retailers early on that were very good partners with us, however, we still didn’t have any idea for the best way to sell to retail and then sell to the consumers once the product was on the shelf.
During this time our sales dropped substantially on the e-commerce side of the business because we were not spending any money on marketing. Our turn rate was around 8 to 10% per month and so gradually that revenue fell while the retail revenue continued to rise.
The biggest thing that we have learned through all of these channels is whatever channel that you go into you have to dive incredibly deep to be successful. If you want to go to the one channel you have to know everything about it. Launching 10 different channels at once will likely fail overall. So be very very focused.
How are you doing today and what does the future look like?
Today we are in a much better place. In the beginning days of the business, my business partner and I were paying ourselves $1000 per month as a salary. The first year we made $7000 the second year we made $17,000. The business was making $3000 a month in the early days and now we do $250,000 plus per month in revenue at a profitable level. Otherwise, growth has had spurts, we are finally focusing on a couple of key areas that we’ve seen substantial growth over these next couple of years.
Now the big play for us is to get into a new market within the same industry that adds a ton of value that is not currently present. With this, we will need to make sure that we are very focused on the channels that we are launching with
Through starting the business, have you learned anything particularly helpful or advantageous?
Although this sounds cliché, the most important thing is the product or service itself. If I were to start a service business or a product business it needs to have differentiation and be without question the best product or service available.
What platform/tools do you use for your business?
SPS commerce for retail
What have been the most influential books, podcasts, or other resources?
The biggest and most influential person in my life outside of my amazing wife has been Craig Groeschel, the pastor of Life Church.
He is without a doubt one of the best leaders in the world and is truly living his purpose in life. He is not just successful in “business” but he also has an amazing wife and amazing family, is in very good shape, has what seems to be amazing friends, and understands the meaning of life!
Advice for other entrepreneurs who want to get started or are just starting out?
Don’t burn yourself out early! If you’re wanting to start a business don’t do it for the money.
Are you looking to hire for certain positions right now?
We are not actively looking for any hires, however, I would love to work with a contractor that has been involved in consumer good sales to retail accounts and has built a growing healthy better for you food/supplement brands.
Where can we go to learn more?
- I’m very active on LinkedIn
If you have any questions or comments, drop a comment below!
Hey! 👋 I'm Pat Walls, the founder of Starter Story.
Get our 5-minute email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.