The beauty industry is booming. Customers are ready to pay a high price for the latest trends and revolutionary new products. As an entrepreneur and beauty lover, this represents an exciting opportunity to sell makeup products that you love and believe in. However, the beauty market is also ultra-saturated with brands and products.
With such high stakes, it is important to set up your business correctly from the start. How can you create a successful makeup business that stands out from the fierce competition? Fortunately for you, this step-by-step guide presents everything you need to know to develop and launch a great business.
We have put together this simple guide to start your makeup business.
1. Fund Your Makeup Business
Owning a makeup business can be expensive. From the cost of ingredients to packaging and manufacturing, the costs add up quickly. Your first step is to create an estimate of the capital you need. This includes everything from hiring design experts to creating a website to making the product itself.
Once you know how much money you need, you can determine where you will get the financing. You can choose to pay for everything out of pocket, in which case you would use your savings and the income from your current job. You can also contact your friends and family and ask them if they would invest in your business. You will need to clearly agree on their level of involvement in the company.
You can also apply for a business loan. You can get a loan from your local bank or an online lender. It is important to shop around for the loan with the lowest interest rate so that you don’t end up in debt. There are also grants to companies, both from the government and from local organizations. You do not have to repay the grants, but you will need to meet certain criteria to be eligible.
Finally, you can use a professional credit card to pay for your expenses. Credit cards tend to have high interest rates, so this should be a last resort. However, they can be easier and faster to obtain than loans, so this is an option to consider.
2. Manage the Inventory
There are many concerns about beauty products when it comes to labeling, ingredients and shelf life. You will have to keep a close eye on your packaging and your inventory to manage everything.
Start by checking that you are labeling your product packaging correctly. Are the claims of your products supported? For example, you must obtain certifications to affirm that your product is organic. If your product contains common allergens, you will also need to disclose this on your packaging.
Speaking of packaging, it is important that your packaging correctly represents the personality and brand of your product. Appearances aside, you should also make sure that your packaging protects the product itself and includes the appropriate applicators. Clearly label the expiration dates, ingredients and instructions for use.
Finally, beware of common beauty inventory problems. For example, heat and humidity can damage your products, so you should store them in a temperature-controlled room. Some ingredients, especially natural ingredients, have a shorter shelf life, so you can keep a limited inventory on hand. If you store the product yourself, you should also organize everything in such a way that you don’t lose inventory or find it difficult to fulfill orders.
3. Make It Official
You will need to make sure that you are operating your business legally at the local, state and federal level. First of all, register your business with the state in which you live. If you are planning to operate a sole proprietorship, you may not need to register. However, the creation of an LLC (limited liability company) or a company can separate your personal assets from the business.
Most states allow you to register your business online. It usually costs about $125 to register an LLC, but the fees may vary.
You will probably also need certain permits and licenses to sell your product, depending on your location and where you plan to sell. To find out what is required, check the U.S. Small Business Administration guide and your State Department’s website to learn more about federal and state permits. Call your county clerk for local requirements.
Finally, you will need a federal EIN (employer identification number) from the IRS (Internal Revenue Service). Go to the IRS website to apply online. You will not necessarily need an EIN if you do not have employees and you operate as a sole proprietor, but it may be useful to have it when opening business bank accounts.
4. Set Up Your Storefront
You can choose to sell your product online or in person. If you sell homemade products, you can sell them at your local farmer’s market. However, if you have a manufacturer who creates and stocks your product, it might be more efficient to sell online.
Either way, it is important to have a professional website. Here you will present your brand image, your products and your story. This is a way for you to strengthen your credibility with your customers and encourage them to buy your products. You can pay a web designer to create your website or use a website builder like Squarespace or Shopify.
You can also sell in a physical store. In this case, you will have to find and decorate a showcase. You can also contact beauty chains like Sephora and see if they will offer your product. Often these stores will only take established brands, so you can try this later.
5. Put Together A Business Plan
With your product and your brand image in place, it’s time to put everything on paper. Your business plan is where you define your business, explaining your products and processes. You can turn to this document in the future to guide your decision-making. You can also modify it later as things progress.
Your business plan will include:
• Business name
• Business structure (sole proprietorship, LLC, corporation, or partnership)
• Executive summary
• Company overview
• List of products and pricing
• Analysis of the competition
• Description of your target market
• Startup costs
• Earnings projections
• Marketing strategy
6. Build Your Brand
With so many beauty products and companies on the market, your branding is a way to really distinguish your company from others. Your brand and your brand image are what create an experience for your customers.
You present your brand through your:
• Logo
• Design guidelines
• Packaging
• Brand voice
• Copy
• Brand values
At this point, you may want to hire someone to help you with your branding. Design professionals can create color stories, packaging models and stylize logos. Photographers can help you create an aesthetic and tell your story. Copywriters can help you create the brand values, the voice in which you speak to your customer and the slogans.
This step is important because this is how you will convince customers to buy your product rather than the competition. This is how you will present your brand’s story to the whole world. You will use the guidelines you create in this step to share them on social networks, lead your team and even manage your business.
7. Create or Source a Unique Product
There are several ways to get products for sale. Naturally, this is one of the most important steps, because it is your opportunity to create or choose a product that distinguishes you from other makeup businesses. When selecting products, ask yourself why a customer would choose to buy them from you rather than from someone else.
You can either resell products from other brands, or make your own. Dropshipping can be a practical solution, but you can choose to affiliate with makeup brands and sell their products, which is another way to get products quickly. Beware, however, of MLM systems that have high start-up costs and make it difficult to make a profit.
White labeling is another option: it is when you buy generically manufactured items and package them with your own brand. It’s a quick way to get started and it’s ideal if you have an idea for something new, such as natural beauty products for redheads.
You can also make your own products. It’s a little more difficult and time consuming, but it’s a good opportunity to be creative! You can make some products at home, such as lip balms. You can also make makeup by creating your own formulations in a facility. You will need to contact the manufacturing facilities and go through a sampling and testing phase to make sure you get it right.
The Pros and Cons of Starting Your Own Makeup Business
In any commercial enterprise, it is important to weigh the potential advantages and disadvantages. One of the main reasons to start a makeup business is profit. The beauty industry has been growing steadily, so you can earn a good part of your money. The profit margin is high, with some earning up to 80%.
However, the competition is tough in this industry. If you are unable to differentiate your product and market it correctly, you will probably find it difficult to make sales. It can also be expensive to get started, as you will need financing for branding, packaging, products, manufacturing, etc.
Still, selling makeup can be fulfilling. You can provide products that make people feel beautiful and confident. The beauty industry also has high rates of customer loyalty – when a customer finds a “Holy grail product”, they tends to stick to it for years.
