The beauty industry is booming. Customers are willing to pay top dollar for the latest trends and new revolutionary products. As an entrepreneur and beauty lover, that presents an exciting opportunity to sell makeup products that you adore and believe in. However, the beauty market is also ultra-saturated with brands and products.
With such high stakes, it’s important to set your business up correctly from the start. How can you create a successful makeup business that stands out amongst the steep competition? What fundamental measures do you need to take to create the business? This article will help you do just that, breaking it down into just 8 actionable steps.
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8 Steps to Start a Makeup Business
1. Create or Source a Unique Product
There are several ways to source products to sell. Naturally, this is one of the most important steps, as it’s your opportunity to create or choose a product that sets you apart from other makeup businesses. As you select products, ask yourself why a customer would choose to purchase them from you rather than someone else.
You can either resell products from other brands or make your own. Dropshipping can be a convenient solution, but you may choose to affiliate with makeup brands and sell their products, which is another way to get product fast. Beware, though, of MLM schemes that have high start-up costs and make it hard to earn a profit.
White labeling is another option: it’s when you buy generically manufactured items and package them with your own branding. This is a fast way to get started and is ideal if you have a novelty idea, like natural beauty products for redheads.
You may also make your own products. This is a bit more difficult and takes time, but it’s a good opportunity to be creative! You can make some products at home, such as lip balms. You can also manufacture makeup by creating your own formulations in a facility. You’ll need to reach out to manufacturing facilities and go through a sampling and testing phase to make sure you get it right.
2. Build Your Brand
With so many beauty products and companies on the market, your branding is one way to really set your business apart from the rest. Your brand and branding are what create an experience for your customers.
You showcase 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 put together color stories, mock-up packaging, and stylize logos. Photographers can help you create an aesthetic and tell your story. Copywriters can help you create brand values, the voice in which you speak to your customer, and taglines.
This step is important because it’s how you’ll convince customers to buy your product rather than the competition. It’s how you’ll present your brand’s story to the world. You’ll use the guidelines you create in this step to share on social media, lead your team, and even run your business.
3. Put Together a Business Plan
With your product and branding in place, it’s time to put it all down 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 edit it later on 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
4. 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 how much 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’ll get the funding. You can choose to pay for everything out of pocket, in which case you’d use your savings and income from your current job. You might also reach out to friends and family and ask if they’d invest in your business. You’ll need to make a clear agreement on their level of involvement in the business.
You can also apply for a business loan. You can get a loan from your local bank or an online lender. It’s important to shop around for the loan with the lowest interest rate so that you don’t get stuck in debt. There are also business grants available, both from the government and local organizations. You don’t have to pay grants back, but you will need to meet certain criteria to qualify.
Finally, you could use a business credit card to pay for expenses. Credit cards tend to have high-interest rates, so this should be a last resort. However, they can be easier and faster to get than loans, so it’s an option worth considering.
5. Manage the Inventory
Beauty products come along with many concerns when it comes to labeling, ingredients, and shelf life. You’ll need to keep a close eye on your packaging and inventory to manage it all.
Start by checking that you correctly label your product packaging. Are your product claims supported? For example, you need to get certifications to claim that your product is organic. If your product contains any common allergens, you’ll also need to disclose that on your packaging.
Speaking of packaging, it’s important that your packaging represents your product’s personality and brand appropriately. Appearances aside, you also need to ensure your packaging protects the product itself and includes the appropriate applicators. Clearly label expiration dates, ingredients, and instructions for use.
Finally, beware of common beauty inventory issues. For example, heat and moisture can damage your products, so you must store them in a temperature-controlled room. Some ingredients, especially natural ones, have a shorter shelf life, so you might keep limited inventory on hand. If you’re storing the product yourself, you should also keep it all organized so that you don’t lose inventory or struggle to fill orders.
6. Make It Official
You’ll need to make sure that you’re operating your business legally on a local, state, and federal level. First, register your business with the state you live in. If you plan on operating as a sole proprietorship, you may not need to register. However, forming an LLC (limited liability company) or corporation can separate your personal assets from the business.
Most states allow you to register your business online. It typically costs about $125 to register an LLC, but fees can vary.
You’ll likely also need certain permits and licenses to sell your product, depending on your location and where you plan to sell. To find out what’s required, check out the U.S. Small Business Administration guide and your Department of State website to learn about federal and state permits. Call your county clerk for local requirements.
Finally, you’ll need a federal EIN (employer identification number) from the IRS (Internal Revenue Service). Head to the IRS website to apply online. You won’t necessarily need an EIN if you have no employees and operate as a sole proprietor, but it can be helpful to have when opening business bank accounts.
7. Set Up Your Storefront
You can choose to sell your product online or in person. If you’re selling homemade products, you might sell them at your local farmer’s market. However, if you have a manufacturer creating and warehousing your product, it could be more efficient to sell online.
Either way, it’s important to have a professional website. Here, you’ll showcase your branding, products, and story. This is a way for you to build credibility with your customers and encourage them to buy your products. You may pay a web designer to create your website or use a website builder like Squarespace or Shopify.
You could also sell at a physical store. In this case, you’ll need to find and decorate a storefront. You can also reach out to beauty chains like Sephora and see if they will carry your product. Oftentimes, these stores will only take on established brands, so you may attempt this further down the line.
8. Set Up a Payment System
Picking a payment system is one of the most important parts of setting up your business. Customers who find your checkout process untrustworthy or hard to use will quickly abandon their carts, so it’s critical that you choose the right system.
Pay.com has Level 1 PCI DSS compliance, which is the highest level of security. Pay.com also provides you with everything you need to get paid right away, including a merchant account, payment processing services, and a payment gateway. Plus, it’s easy to set up in just a few clicks.
We make payments incredibly easy for both you and your customers. Using the Pay Dashboard, you can quickly add payment methods to your website. You can also send Pay Links to your customers and get paid via email or text message. You can even manually enter your customer’s information if they’re paying in person or over the phone.
Don’t wait till the last minute – click here to get started with Pay.com now!
The Pros and Cons of Starting Your Own Makeup Business
With any business venture, it’s important to weigh the potential benefits and drawbacks. One of the biggest reasons to start a makeup business is profit. The beauty industry has been in a consistent state of growth, so you can earn a good chunk of money. Profit margin is high, with some earning as much as 80%.
However, competition is stiff in this industry. If you fail to differentiate your product and market it properly, you’ll likely struggle to make sales. It can also be costly to get started, as you’ll need funding for branding, packaging, products, manufacturing, and more.
Still, selling makeup can be fulfilling. You can provide products that make people feel beautiful and confident. The beauty industry also has high customer retention rates - when a customer finds a “holy grail product,” they tend to stick with it for years.
The Bottom Line: Is Starting a Makeup Business Right for You?
The beauty industry can be challenging to break into, but is ultimately incredibly rewarding. Starting a makeup business could earn you a huge profit while allowing you to change people’s lives for the better. To ensure you create a successful business, spend plenty of time creating a unique product and memorable branding.
Of course, your business won’t get far without a good payment system. Pay.com makes taking payments quick and easy, whether you’re selling online or in person. With these steps in place, there’s no limit to how big you can grow your makeup business. Click here to get started now!
