Starting a Cosmetic Line in 8 Steps
Once reserved solely for mega-corporations like L’Oreal and Estee Lauder (which own a whopping 63 cosmetic companies between them), the beauty space has been totally revolutionized by the digital age. Ostensibly, a person needs little more than a handful of ingredients, punchy branding, a social media presence, and a stylish website to become a beauty entrepreneur.
But if you want to know how to start a makeup line the right way—the way that does your vision, your talent, and the quality of your beauty products justice—then you’ll need to set aside a bit more time and effort.
Ahead, we’ve outlined the eight steps you’ll need to start a business in the cosmetics industry, the legit way. Time to channel your inner Rihanna and get to work.
We’re just as excited for your lipstick/serum/curl cream/brow gel/cruelty-free bath bombs as you are. Here’s how you can get those products out into the world.
1. Do Your Research
Being obsessed with makeup is a precursor to starting your own makeup line, for sure. But being a cosmetic consumer—even an informed and enthusiastic one—is very different from being a cosmetic manufacturer. So before you hit the market, you need to do your research.
Study the Market
Take stock of the brands and products you love as a consumer and that you strive to emulate as an entrepreneur. Consider what about those brands and products you love so much: Is it the unparalleled pigmentation in the eyeshadow? Is it the inclusive shade ranges? And what is it about the company’s branding and marketing campaigns that you’re drawn to? That they use unretouched photography in their marketing campaigns? That their products suit a diversity of ages, gender expressions, and skin tones and types? Do you like the colors, fonts, and layouts across their branding channels?
At the same time, think about what’s missing from the market and how you can fill that niche. With so many makeup lines on the market, you want to make sure you’re creating unique and in-demand products.
Understand Cosmetic Ingredients
Most importantly, research cosmetic ingredients, both the common and the unusual. Know what they do in isolation and in combination with each other. Know what they do for the formula (are they a stabilizer? A preservative? An emollient?), and their effects on the human body (does it soften skin? Minimize pores? Stimulate collagen production?). Cover both your synthetic and your natural bases, since some of the best products use a combination of both scientific- and plant-derived ingredients. From there, you can start to ideate your own formulas.
Hire a Chemist
Depending on the products your cosmetic line will offer, it’s possible to go totally DIY. All-natural bath, body, and skincare products using very few and simple ingredients, for example, can be made relatively easily in your kitchen, bathroom, or otherwise homegrown workspace.
But if your product heavily involves synthetic ingredients, it’s a good idea to hire a chemist or find a lab to work with. Either an independent chemist or a bigger lab can help you understand ingredients and how they interact with one another, develop formulas for your own products, and actually manufacture those products. Your lab can probably help you navigate FDA guidelines on cosmetic manufacturing, testing, and labelling, as well.
Working with a professional is as important for ensuring consumer safety as it is for maintaining your own sanity. As a burgeoning business owner, you’ll quickly learn that the more tasks you can delegate to trusted partners, the better you’ll feel—and the more time you’ll have to dedicate to all the other aspects of your business.
If you plan on DIYing your makeup line, get in that workspace and start cooking. Even if you plan on hiring out a chemist for the job, having this hands-on experience will only help you better understand the nature of cosmetic ingredients. But know that nailing down your perfect formulation takes trial, error, and time. Be patient, stay focused, and treat your willing friends and family as guinea pigs. (Then maybe take them out for a meal in thanks.)
2. Plan Your Business
All that research and experimentation you just did? It’s time to write it down into an actionable plan.
If you want to go relatively formal, consult our step-by-step guide on writing a business plan. Going the traditional route is especially recommended if you plan on approaching a bank or lender for a business loan anytime in the future; however, even if you’re the only one who will see it, it’s still a crucial resource.
Regardless of the form it takes, your business plan should address the following, at a minimum:
- Sales channels: Are you going entirely ecommerce, or do you plan on opening a brick-and-mortar store? Will you build your own ecommerce store, sell through social media, or on third-party platforms like Amazon and Etsy?
- Packaging and labeling: Will you hire a private label company, an independent designer, or make your labels and package your products on your own?
- Product line: Which products are you rolling out first? Which products need more time to perfect? (Remember that you don’t have to introduce all your planned products at once. It’s a good idea to have some on the back burner.)
- Identify any other vendors or suppliers you’re using, such as your ingredients sourcing.
- How will you price your products?
- What’s your branding and marketing strategy?
- What are your short- and long-term goals for your business?
- How much money do you need to launch your business?
- How long will it take for your business to break even? Make a profit?
Obviously, this step requires taking your initial research one step further, as you’ll need to think through and identify the details, logistics, and financial investment required to launch and run your business. That said, your business plan is a working document. You can always go back in and amend your initial plan once you gain some traction and on-the-ground experience.
3. Name Your Cosmetic Line
It’s likely that you’ve already created a name for your business; but if you haven’t, now’s the time to do it. And if you’re having some trouble on that front, take a look at our article on how to come up with a business name. A business name generator can also help get the creative juices flowing.
Speaking of logistics: Get ready for a lot of them. Before you can register your business name with your state, you need to ensure that your potential business name is available for use. Here’s how:
- Do a Google search to make sure your business name isn’t being used by someone else, somewhere else in the world.
- Perform a secretary of state business name search. If another business owner in your state is operating under your intended name, then you won’t be able to register.
- Run a trademark filings search through the U.S. Patent and Trademark Office if you plan on trademarking your name or patenting your products.
You should also buy your domain name and grab your business social media handles ASAP. Then you can start building your business website or ecommerce store and connecting with potential clients on social media.
4. Register Your Business
Once your business name is in the clear, you can officially register your business.
To do so, you’ll first need to decide on a business entity type, which dictates the registration process. Moving forward, your entity type will also determine how your business is taxed, its ownership structure, your personal liability, and the ongoing requirements you’ll be responsible for to ensure that your business remains in good standing. Ideally, you’ll enlist the help of an accountant or business attorney to help you with this important step.
LLCs are the most common entity type, however, because they’re relatively easy to form and maintain, and you can choose how you’d like your business to be taxed. They also protect business owners’ personal assets in case the business runs into legal trouble.
Once you’ve landed on a business entity, you can move onto the registration process. Head to your state’s secretary of state website to do so online. You should also use this step to understand your business’s tax obligations and register with the appropriate authorities, as well as apply for an EIN through the IRS. Again, the help of an accountant or attorney is invaluable here.
5. Obtain Permits, Licenses, and Insurance
Depending on where you live and how you intend to operate your business, you may need to obtain additional permits and licenses to operate your business legally. Some potential permits and licenses required to run your makeup line might include:
- A business license from your state
- A cosmetology license, if you plan on applying makeup
- A manufacturer license, if you’re creating your own products (contact your state’s health department for more information)
- An esthetician license, if you’re providing skincare services
- A seller’s permit, which enables you to sell your items and charge a sales tax (contact your state’s occupational agency for more information)
Additionally, all cosmetics businesses need to follow the FDA’s guidelines for cosmetics. Their website is surprisingly easy to navigate, but to make it even easier on small businesses, the FDA created a guide geared toward small cosmetics businesses and homemade cosmetics.
This is another step where you should consult a business attorney familiar with the cosmetic industry. It’s a pretty sticky landscape to navigate, and you don’t want to run the risk of accidental non-compliance. And while you’re at it, they can help you figure out which types of business insurance make sense for you to purchase, as well.
6. Open Financial Accounts
Maintaining a clear division of your business and personal assets may actually be legally required, depending on your business entity. But even if it’s not mandated by law, maintaining dedicated business financial accounts will be essential for keeping your records organized—which, in turn, will make filing your taxes much easier.
Start with a business checking account—there are a range of online and in-person options. Once your makeup line starts bringing in significant revenue, you can also open a business savings account to let your money gain interest.
Next, find the right business credit card for your needs. Whether you’re looking for a 0% introductory APR, cash back, travel rewards, or other perks, there’s a card out there that will help you get the most out of your spending.
Lastly, choose a good business accounting software to keep your finances organized and ready for tax time. There are even free options if you’re on a tight budget.
7. Fund Your Business
You may be wondering: How much does it cost to start a cosmetic line? This answer will depend on what types and how many products your line includes, whether you’re making them at home or in a lab, whether you need a chemist, and many other factors. On the low end of the spectrum, you can still expect to put up a few thousand dollars to get you started, but this number can easily climb to several thousand.
Brand-new business owners find the most success pursuing alternatives to traditional bank loans since they don’t yet have the time in business or revenue that banks require. Most entrepreneurs collect their startup funding through some combination of bootstrapping, self-financing, and, potentially, taking loans from supportive friends and family members. Crowdfunding on a platform like Kickstarter or Indiegogo is another approachable, if less lucrative, funding method to help get your makeup line off the ground. And with crowdfunding comes the added benefit of gauging customer interest in your products.
If you’re willing to put more effort into securing startup funding, you can also consider seeking some form of equity financing, like an angel investor. Keep in mind, however, that equity investors require a stake in your business in return for their investments. So while an investor can inject enough cash into your business to fund it fully, you may need to cede some control and decision-making power to that investor. You just need to be willing to make that tradeoff.
8. Market Your Business
Once you’ve completed all the above steps and are ready to launch your makeup line, the next thing to do is get the word out about your new brand. Some strategies to explore include:
- Social media marketing
- Create a business website
- Influencer marketing
- Direct-mail campaigns
- Partner with other businesses
- Run an event, promotion, or giveaway
Think about your target audience, the ways they consume media, and where they shop. With this information in mind, you’ll be able to tailor your marketing strategy to reach your audience and start driving sales.
The Bottom Line
Ultimately, starting a cosmetic line follows a similar process to starting any other kind of business: It requires equal parts passion, patience, hustle, and navigating some bureaucracy. But don’t let the drier, logistical aspects of starting your business detract from your vision. While they may not be the most glamorous parts of launching your business, they will help ensure the success and longevity of your brand.