Cosmetic Business Plan Template
Written by Dave Lavinsky
Cosmetic Business Plan
Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their cosmetic companies.
If you’re unfamiliar with creating a cosmetic business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.
In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a cosmetic business plan step-by-step so you can create your plan today.
Download our Ultimate Business Plan Template here >
What Is a Business Plan?
A business plan provides a snapshot of your cosmetic business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.
Why You Need a Business Plan
If you’re looking to start a cosmetic business or grow your existing cosmetic company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your cosmetic business to improve your chances of success. Your cosmetic business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Cosmetic Businesses
With regards to funding, the main sources of funding for a cosmetic business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for cosmetic companies.
How to Write a Business Plan for a Cosmetic Business
If you want to start a cosmetic business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your cosmetic business plan.
Executive Summary
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your executive summary is to quickly engage the reader. Explain to them the kind of cosmetic business you are running and the status. For example, are you a startup, do you have a cosmetic business that you would like to grow, or are you operating a chain of cosmetic businesses?
Next, provide an overview of each of the subsequent sections of your plan.
- Give a brief overview of the cosmetic industry.
- Discuss the type of cosmetic business you are operating.
- Detail your direct competitors. Give an overview of your target customers.
- Provide a snapshot of your marketing strategy. Identify the key members of your team.
- Offer an overview of your financial plan.
Company Overview
In your company overview, you will detail the type of cosmetic business you are operating.
For example, you might specialize in one of the following types of cosmetic businesses:
- Niche market cosmetics: This type of cosmetic business specializes in one particular segment of cosmetics. For instance, a niche cosmetic business could sell only fragrance-free products, all vegan products, or gluten free products.
- High-end cosmetics: This type of cosmetic business develops and sells premium make-up and skin care products.
- Kids cosmetics: This type of cosmetic business specializes in producing inexpensive play-makeup products for children.
- Beauty blogger/influencer: This type of cosmetic business involves trying out products from different types of cosmetic brands and providing tutorials, reviews, and other helpful information for people who may be interested in the products. Usually, beauty companies will pay the blogger/influencer to sample or endorse their products.
- Make-up Artist: This type of cosmetic business involves providing make-up services for special occasions like weddings or graduation ceremonies.
In addition to explaining the type of cosmetic business you will operate, the company overview needs to provide background on the business.
Include answers to questions such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include the number of customers served, the number of products sold, and reaching $X amount in revenue, etc.
- Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
Industry Analysis
In your industry or market analysis, you need to provide an overview of the cosmetic industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the cosmetic industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.
The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your cosmetic business plan:
- How big is the cosmetic industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential target market for your cosmetic business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
Customer Analysis
The customer analysis section of your cosmetic business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: individuals, families, and corporations.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of cosmetic business you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.
Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.
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Competitive Analysis
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other cosmetic businesses.
Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes mass market cosmetic brands and retailers, as well as secondhand cosmetic retailers. You need to mention such competition as well.
For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as
- What types of customers do they serve?
- What type of cosmetic business are they?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you make it easier for customers to acquire your products?
- Will you offer products or services that your competition doesn’t?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Marketing Plan
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a cosmetic business plan, your marketing strategy should include the following:
Product : In the product section, you should reiterate the type of cosmetic company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide premium make-up, skin care products, or esthetician services?
Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.
Place : Place refers to the site of your cosmetic company. Document where your company is situated and mention how the site will impact your success. For example, is your cosmetic business located in a busy retail district, a business district, a standalone store, or purely online? Discuss how your site might be the ideal location for your customers.
Promotions : The final part of your cosmetic marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:
- Advertise in local papers, radio stations and/or magazines
- Reach out to websites
- Distribute flyers
- Engage in email marketing
- Advertise on social media platforms
- Improve the SEO (search engine optimization) on your website for targeted keywords
Operations Plan
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.
Everyday short-term processes include all of the tasks involved in running your cosmetic business, including answering calls, stocking shelves, greeting customers, and collecting payments, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to acquire your Xth customer, or when you hope to reach $X in revenue. It could also be when you expect to expand your cosmetic business to a new city.
Management Team
To demonstrate your cosmetic business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in managing cosmetic businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a cosmetic business or successfully running a small salon.
Financial Plan
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.
Income Statement
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you expect to serve 20-30 customers per day, and will each customer purchase 1-5 items on average? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.
Balance Sheets
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your cosmetic business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.
Cash Flow Statement
Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.
When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a cosmetic business:
- Cost of equipment and supplies
- Payroll or salaries paid to staff
- Business insurance
- Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or photos of happy customers using your products.
Writing a business plan for your cosmetic business is a worthwhile endeavor. If you follow the template above, by the time you are done, you will truly be an expert. You will understand the cosmetic industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful cosmetic business.
Cosmetic Business Plan FAQs
What is the easiest way to complete my cosmetic business plan.
Growthink's Ultimate Business Plan Template allows you to quickly and easily write your cosmetic business plan.
How Do You Start a Cosmetic Business?
Starting a cosmetic business is easy with these 14 steps:
- Choose the Name for Your Cosmetic Business
- Create Your Cosmetic Business Plan
- Choose the Legal Structure for Your Cosmetic Business
- Secure Startup Funding for Cosmetic Business (If Needed)
- Secure a Location for Your Business
- Register Your Cosmetic Business with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Cosmetic Business
- Buy or Lease the Right Cosmetic Business Equipment
- Develop Your Cosmetic Business Marketing Materials
- Purchase and Setup the Software Needed to Run Your Cosmetic Business
- Open for Business
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Other Helpful Business Plan Articles & Templates
Cosmetic Business Plan Template
Cosmetic business plan.
You’ve come to the right place to create your cosmetic business plan.
We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their cosmetic companies.
Below is a template to help you create each section of your cosmetic business plan.
Executive Summary
Business overview.
Guilt-Free Glow is a cosmetics shop located in Spokane, Washington. The company’s mission is to provide customers with high-quality, cruelty-free cosmetics. We want our customers to look and feel their best without feeling guilty about the harm cosmetics do to the environment and animals. Therefore, the shop will sell a wide variety of vegan and cruelty-free cosmetics for people all over the world to enjoy. Some of these products include makeup, moisturizers, and hair care products.
The company is founded by Kiera Smith, who has been a vegan beauty vlogger for five years. During that time, she has amassed 500,000 followers through her beauty vlogs. She has always been committed to finding products that are vegan and cruelty-free. Now that she has gained popularity on Youtube, she is eager to start her own cosmetics line. She will offer an online shop for her followers around the world but also start a shop in downtown Spokane for local residents.
Products Served
The following are some of the vegan, cruelty-free products sold by Guilt-Free Glow:
- Makeup tools and brushes
- Shampoo and conditioner
- Moisturizers
Customer Focus
Guilt-Free Glow will target both online customers and customers located in the Spokane area that are interested in vegan and cruelty-free cosmetics. Since the founder has a large following on Youtube and social media, we expect most of our customers will come from her fanbase. When marketing to local residents, we will focus our efforts on women ages 15 to 65, as this is traditionally the largest customer segment for the cosmetics industry.
Management Team
Guilt-Free Glow is led by Kiera Smith, who has been a successful beauty vlogger for five years. She creates tutorials on makeup techniques and offers other beauty tips. She has always been passionate about using vegan and cruelty-free products in her videos and encouraged her followers to do the same. Since there aren’t many cosmetics companies that dedicate their whole line to these values, Kiera Smith was inspired to create her own line of cosmetics and beauty care products.
Kiera Smith will be the owner of the company and will conduct much of the marketing efforts through her own social media channels. She will hire other staff to help her with the other aspects of the business, including running the retail shop.
Success Factors
Guilt-Free Flow will be able to achieve success by offering the following competitive advantages:
- The founder, Kiera Smith, is a popular beauty guru, and her brand and popularity will help sales and minimize marketing costs.
- Guilt-Free Glow offers great pricing in the vegan cosmetics industry. Vegan and cruelty-free products are often expensive and unaffordable to the average consumer. Guilt-Free Glow will sell all its products at a moderate price so that everyone can buy cosmetics without feeling guilty.
- Guilt-Free Glow will hire friendly, knowledgeable, and highly-qualified staff to help both our online and in-store customers.
Financial Highlights
Guilt-Free Glow is seeking $300,000 in debt financing to launch its cosmetics business. The funding will be dedicated to securing a retail space, manufacturing the products, and purchasing the necessary supplies and equipment for the store. Funding will also be dedicated toward three months of overhead costs, including payroll, rent, and marketing costs. The breakout of the funding is below:
- Retail space build-out: $50,000
- Equipment, supplies, and materials: $25,000
- Three months of overhead expenses (payroll, rent, utilities): $125,000
- Marketing costs: $50,000
- Working capital: $50,000
The following graph below outlines the pro forma financial projections for Guilt-Free Glow.
Company Overview
Who is Guilt-Free Glow?
Guilt-Free Glow’s History
In 2017, Kiera Smith started her Youtube channel, which focuses on beauty tutorials and product reviews. Kiera commits to promoting and working with vegan and cruelty-free brands and educates her audience on the importance of these values for the cosmetics industry. Over the years, Kiera has found that very few cosmetics brands commit to any pledge to be vegan or cruelty-free. Therefore, she decided to start her own cosmetics line that is committed to these values.
Since its incorporation, Guilt-Free Glow has achieved the following milestones:
- Developed the company’s branding image, social media, and website.
- Found a retail location and signed a Letter of Intent to lease it.
- Found manufacturers to create the cosmetic products.
- Obtained a sales and use tax permit for use in Spokane, Washington.
Guilt-Free Glow Products
The following are some of the vegan and cruelty-free products sold by Guilt-Free Glow:
Industry Analysis
According to Fortune Business Insights, the cosmetics industry is currently valued at $287.94 billion and is expected to grow to $415.29 billion over the next few years.
This growth is due to the increasing demand for high-quality cosmetics. The target market for cosmetics has expanded substantially over the past decade, with people of all ages and genders opting to pay good money for high-quality makeup, hair care, and other beauty products. This trend is expected to continue, and the cosmetics industry will only continue to grow rapidly.
Another important trend is the increasing popularity of environmentally friendly, vegan, and cruelty-free products. Guilt-Free Glow is taking advantage of this demand and selling exclusively vegan and cruelty-free cosmetics.
By capitalizing on these trends and our founder’s increasing popularity online, Guilt-Free Glow is expected to thrive in the cosmetics industry.
Customer Analysis
Demographic profile of target market.
Guilt-Free Glow will primarily target Kiera’s current fanbase on Youtube and social media. This fanbase includes 500,000 followers, with the majority being females and under the age of 40.
The company will also target residents of Spokane who may be interested in purchasing vegan cosmetics. Traditionally, the customer segment most interested in this industry is women ages 15 to 65.
The precise demographics for Spokane, Washington are:
Customer Segmentation
Guilt-Free Glow will primarily target the following customer profiles:
- Women ages 15-65
- Kiera’s fanbase
- Beauty professionals and influencers
- Spokane residents looking for vegan, cruelty-free cosmetics
Competitive Analysis
Direct and indirect competitors.
Guilt-Free Glow will face competition from other companies with similar business profiles. A description of each competitor company is below.
Ulta Beauty
Ulta Beauty is a major retailer in the cosmetics industry, being the ultimate provider of all beauty products for millions of people across the globe. The company aims to be the most loved beauty destination of its guests and has ultimately succeeded in that mission. At Ulta, you can find any beauty brand you are looking for, such as Dior, Chanel, and Lancome. Whatever item or brand you need, you are bound to find it at Ulta.
Since 1988, Sephora has been a giant in the cosmetics and beauty industries. It’s one of the top locations to shop for all your high-quality beauty and cosmetics needs and has dominated the cosmetics industry with its global presence. With 2,700 stores in 35 countries worldwide, there are very few locations around the world where you can’t find a Sephora store to visit.
At Sephora, you can find some of the hottest and most exclusive brands, such as Rare Beauty by Selena Gomez and FENTY BEAUTY by Rihanna. Furthermore, Sephora has been recognized by Forbes as one of America’s Best Employers four years in a row and scored 100% on the Human Rights Campaign’s Corporate Quality Index three years in a row. When customers are looking to buy cosmetics conveniently and ethically, they often head to Sephora first.
The Cosmetics Company Store
The Cosmetics Company Store is an online cosmetics company that sells high-quality cosmetics brands to customers all around the world. They carry thousands of products for anyone in need of beauty products, including hair care products, makeup, and moisturizers. Customers can purchase from a wide variety of brands they love and are familiar with, including Estee Lauder, Clinique, and Aveda. In addition to having a large online store, The Cosmetics Company Store has a few retail locations in select areas.
Competitive Advantage
Guilt-Free Glow will be able to offer the following advantages over the competition:
- Guilt-Free Glow offers great pricing in the vegan cosmetics industry. Vegan and cruelty-free products are often expensive and unaffordable to the average consumer. Guilt-Free Glow will sell all its products at a moderate price.
Marketing Plan
Brand & value proposition.
Guilt-Free Glow will offer a unique value proposition to its clientele:
- Wide selection of cosmetics.
- A focus on vegan and cruelty-free products.
- Competitive prices that are more affordable than the competition.
Promotions Strategy
The promotions strategy for Guilt-Free Glow is as follows:
Guilt-Free Glow will be located in a very convenient, highly-trafficked area of Spokane that is frequented by men and women of all ages and backgrounds. The store will be in the same neighborhood as stores, restaurants, and salons. The area of Spokane is frequented by shoppers who live in the area and have disposable income to be able to spend frequently on cosmetics.
Social Media
Guilt-Free Glow will have Instagram, Twitter, and Facebook business profiles where Kiera will post frequently new arrivals to the store, featured clients who are using the products, and upcoming sales and events. The posts will be appealing with professional photographs and will engage customers with discount opportunities if they tag friends in the comments in order to grow their social media following. Kiera will also use her personal social media accounts to promote the company and its products.
Website & SEO Marketing
Kiera will reach out to a website designer to develop a website for Guilt-Free Glow. The website will be easy to navigate and include an option to purchase items online and schedule a pickup time in the store, contact information, and location. The SEO will also be managed to ensure that anyone searching “cosmetics store near me” or “Spokane cosmetics” will see Guilt-Free Glow listed at the top of the Bing or Google search engine.
Partnerships With Beauty Influencers
Kiera will partner with other beauty influencers to spread the word about her company. She will offer discount codes to the influencers’ audiences to entice them to shop for her products.
The pricing of Guilt-Free Glow will be moderate so customers feel they receive value when purchasing their products.
Operations Plan
The following will be the operations plan for Guilt-Free Glow.
Operation Functions:
- Kiera Smith will be the Owner and President of the company. She will oversee the major operations of both the retail and online stores.
- Kiera will hire a General Manager for the store. They will be in charge of day-to-day administrative functions, product inventory, supply orders, hiring, and training.
- Kiera will hire an Assistant Manager to assist with product inventory, supply orders, and managing the store when Kiera and the General Manager are unable to be there.
- The store will have 6 – 8 part-time and full-time employees to assist with stocking merchandise and customer service.
- As the store grows and business picks up, more employees will be added to the team to keep up with customer demand.
- Kiera will hire a Marketing Specialist and Web Designer to develop the store’s branding, logo, and social media accounts. The marketing specialist will also develop the website and manage the SEO.
- She will also hire an Administrative Assistant to help her with the other operations tasks needed to run the company.
Milestones:
Guilt-Free Glow will have the following milestones completed in the next six months.
6/1/202X – Finalize lease agreement for 10,000 square foot retail storefront location.
6/15/202X – Begin build out of leased space.
6/30/202X – Finalize agreements with cosmetics distributors to schedule their upcoming product deliveries to the store.
7/1/202X – Kiera will meet with the web designer so they can get started developing guiltfreeglow.com
8/1/202X – Final walk-through and approval of the built-out beauty retail store.
8/2/202X – Begin social media marketing campaign of Guilt-Free Glow.
8/15/202X – The first shipment of store inventory arrives.
8/16/202X – Hire employees and begin training.
8/18/202X – Stocking and display of product inventory in anticipation of the Grand Opening.
9/1/202X – Grand Opening of Guilt-Free Glow.
Financial Plan
Key revenue & costs.
The revenue drivers for Guilt-Free Glow will come from the sales of cosmetics through the retail location and online store.
The cost drivers will be the cost of the cosmetics inventory, labor expenses, marketing expenses, rent, utilities, and overhead costs.
Funding Requirements and Use of Funds
Key assumptions.
The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.
- Number of Initial Customers Per Month: 1000
- Average Item Cost: $20
- Annual Lease: $100,000
Financial Projections
Income statement, balance sheet, cash flow statement, cosmetics business plan faqs, what is a cosmetics business plan.
A cosmetics business plan is a plan to start and/or grow your cosmetics business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
You can easily complete your cosmetics business plan using our cosmetics Business Plan Template here .
What are the Main Types of Cosmetics Businesses?
There are a number of different kinds of cosmetics businesses , some examples include: Niche market cosmetics, high-end cosmetics, kids cosmetics, beauty blogger/influencer, or make-up artist.
How Do You Get Funding for Your Cosmetics Business Plan?
Cosmetics Businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.
What are the Steps To Start a Cosmetics Business?
Starting a cosmetics business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.
1. Develop A Cosmetics Business Plan - The first step in starting a business is to create a detailed cosmetics business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.
2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your cosmetics business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your cosmetics business is in compliance with local laws.
3. Register Your Cosmetics Business - Once you have chosen a legal structure, the next step is to register your cosmetics business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws.
4. Identify Financing Options - It’s likely that you’ll need some capital to start your cosmetics business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms.
5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations.
6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events.
7. Acquire Necessary Cosmetics Equipment & Supplies - In order to start your cosmetics business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation.
8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your cosmetics business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
Learn more about how to start a successful cosmetics business:
- How to Start a Cosmetics Business
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How to Write a Beauty Products Business Plan
Updated: 22 March, 2022
As a founder of a beauty brand start-up, you’ll need a clear vision, a well-written beauty products business plan and to have put some skin in the game in terms of hard work, time and funds. But how do you go about getting started on that all-important business plan and what should it contain?
In this blog post, we summarise the 10 key steps new beauty entrepreneurs need to work through to write a business plan for a cosmetics company. This is essential reading for anyone wondering how to start a beauty business from home as it makes you aware of just what you will need to think through and start planning for.
Running a cosmetic business requires you to be very organised. You will need a strong business plan that leads you through all of the main components of your cosmetic business. The relief is that your business plan does not need to be the size of a thesis. In fact, the more concise it is the better as you will be able to tackle it and feel like referring to it in the future.
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Our step-by-step video guide below is based on the business planning exercises we provide as part of our Diploma in Beauty Brand Business Management . The Diploma is an extensive, six-module course that takes you on an intensive journey from would-be entrepreneur to empowered founder armed with a structured business plan. Pre-enrol to find out more about this diploma and our other courses.
10-Step Guide to Your Beauty Products Business Plan
Step 1: why your beauty business needs a plan.
The first step is to set yourself a challenge: ask yourself why you are writing a business plan in the first place. There is no point in going through the motions of writing a beauty product business plan. You need to buy into the very concept of business planning.
We know that the thought of writing a business plan can seem daunting. However, your business plan is a necessary and very important strategic document as it focuses your energy, time and resources on a clear end game; not only that of launching a successful beauty business, but also of ensuring it has the potential to thrive longer term.
Your business plan isn’t just to show potential investors and otherwise hide away in a filing cabinet. It is a tool to refer to every time you are faced with important decisions. Your plan guides your decision-making and makes the everyday of running your beauty business simpler and smoother.
It will take time to write your business plan as it summarises the hard work you need to do beforehand in discovering your vision, working out your ‘why’ and what your brand stands for, what you’ll be selling, where you’ll be selling, who your competitors are and what your market gap is, and how you’ll fund your business. It also entails drafting a full financial plan, based on things like sales’ forecasts.
With this mindset challenge out of the way, let’s cover the key areas of your plan in the next steps.
Step 2: Your beauty brand mission and vision
We’ve seen many start-up beauty entrepreneurs rush into designing their branding before they have even worked out why they are in business. Before branding, come your vision and mission. Often confused and easily ignored, these two statements are the guiding lights of your business.
First, let’s define them. Your vision is about your bigger dreams. It isn’t simply that you want to make organic formulations to sell to anyone. Your vision statement sets out how you want to make a difference with your beauty brand. At Formula Botanica, our vision, in brief, is to make natural formulation as commonplace as cookery.
Your brand mission statement says how you intend to achieve that vision. At Formula Botanica, our mission is to ‘teach the world to formulate’. As you can see from our example, the mission is practical and active and states how we accomplish our vision – through teaching and our online courses.
When you write your brand vision and mission statements, you’re not writing boring, bland, catch-all statements. Coming up with why your beauty brand exists and how it serves your customers is not a quick back-of-the-envelope exercise either. It may take you weeks to define your vision and mission, but this is time well spent as these statements are the heart of your beauty business. Don’t move on to the next steps until you have total clarity on them.
Step 3: Your niche and customers
It’s all well and good having your vision and mission, but if you don’t know your niche in the beauty market nor much about whom you are selling to, then you might not have a business at all. We’re sure you’ve heard this advice a hundred times, but you need to know exactly who you’re going to be selling to. You need to understand who this type of person is, how they live and how they shop.
Once you know who your target customer is, all of a sudden everything clicks into place and becomes easier in terms of selling. You know which marketing messages work best for your customer, you know what they’re looking for and you know how to sell to them. When starting your beauty products business, you need to have a niche and that niche cannot be ‘organic’ or ‘natural’. There are so many untapped niches in the beauty industry, for instance, skincare for women in their fifties, skincare for certain types of athletes (swimmers, runners, etc.), and skincare for teenage boys.
Jot down bullet points about your ideal customer; include where they live, what other brands they buy, how they holiday, what their key skincare issues are and so on. Be brief but on point. Home in on a single person – often called your brand ‘avatar’. It might sound tedious to do, but once you have that person clearly in your mind, everything in your business will work to meeting their needs. Just ensure that you really do have a niche that exists.
We reported on some trends from In-Cosmetics Global , in Paris (April 2019). We’re not suggesting you need to keep up with the latest fad in the beauty industry, but do your market research thoroughly so you can decide where to position your brand and products.
Step 4: Your beauty products
Your business plan needs to detail your initial product(s) and explain what their sales’ proposition is and how they meet your target customers’ needs. This sounds simple to do, but believe us when we say we have seen new beauty entrepreneurs incur huge expenses as they change their direction and minds on products just after launching. Bringing new products on board can often be a way of diverting yourself from the hard task of marketing and sales.
When you learn to formulate natural skincare, you create a diversity of products without much thought about how they fit together as a range or as a beauty routine for customers. When you think like a business, you need to understand very clearly what you are selling and what proposition your products offer your target customers.
It is possible to launch with a single product, and there are well-known examples of beauty brands with only a ‘hero’ product to their name. If you are creating a range, work out how the products complement each other. Also, given issues of sustainable consumption, think about how a single product can demonstrate a unique selling proposition by multi-tasking.
Your range has financial implications so you need to decide how many products to launch with and which create a minimal viable range that makes sense for your budget and for your customers’ needs. Above all, your cosmetics’ range will need to demonstrate it has a place in the market and how it improves your customers’ lives.
Step 5: Your competitors
Yes, your competitors most certainly have a place in your skincare business plan. You, as the founder, bring your individual perspectives and experiences to your brand, so in one sense you have uniqueness built into the foundations of your beauty business. That said, you need to keep a close eye on the movers and shakers in your niche and in particular at your product range’s price point. Knowing your competitors keeps you on your toes and is information any investor will ask for, up front and early on.
It can be frustrating at times to research your competitors as their websites might be PR speak and not give much away. Look for interviews with the founders and follow them on all their social media to glean more. Competitor research can help you identify areas where your brand can thrive and can show you more effective ways to grow customer loyalty – and build your business. See what they are doing so that you know what’s working for them and what isn’t. Write a list of their strengths and weaknesses to see how you can do better. You also need to know where to position yourself in comparison to your competitors.
Don’t obsess about your competitors, but check in on what they are up to every few months. Your aim is not to copy them, but to control your beauty products’ conversation. Again, if you have clarity on the earlier steps – mission, vision, niche and customer – then you are on solid ground. It is just good business sense to know what is going on in the market.
Step 6: Your manufacturing strategy
Your manufacturing strategy is a large part of your business strategy. You need to decide whether you will be producing your beauty products yourself in your own (home) lab – according to Good Manufacturing Practice (GMP) , using a contract manufacturer or opting for private label products. You need to define also which route suits you at launch and mention any plans to switch model later on.
Each model has its pros and cons depending on your mission and vision, as well as implications for important aspects of your business such as distribution, logistics, financing, and contractual obligations to retailers who stock your brand. How many units of products do you envisage creating a year? Which model suits your entrepreneurial ambitions and lifestyle? As you can see, your business model and manufacturing model go hand in hand. Having an end goal in sight is critical to shaping your overall business plan, the amount of capital you need to raise and the way you conduct your day-to-day operations.
There is no right or wrong choice here, but ensure you know the implications of whichever route your opt for. It might sound perfect making your own products at home in small artisanal batches, but we do know of beauty entrepreneurs who find their business sky rockets faster than they imagined. They then play catch up trying to find and fund outsourced manufacturing so they don’t let retail stockists down. This is a critical area of your business plan and needs you to consider your vision and ethos, as well as think about your own time, hiring staff, and your overall financial situation.
Step 7: Your retail strategy
We’ve seen many indie beauty entrepreneurs think they can sell direct to consumer from their website alone. To do this successfully, you need to invest in becoming a proficient digital marketer – or outsource the role. It can be tempting at the outset to want to sell directly from your own website because your keep all the profit yourself. However, although you receive lower profit margins by having your products stocked in stores and e-stores, retailers can help get your products sold and your brand known as they have a ready customer market; whereas you are unknown and have to build awareness of your brand from scratch.
The work you have done so far in defining your niche, customers, competitors and product range should indicate which retailers suit your brand best. Will your brand fit into the mass, so-called ‘masstige’, premium or luxury retail categories? And which retailers do you hope will stock your brand? What are their likely margins and what implications does this have for your manufacturing model and financial forecasts? Will you also work with distributors in certain markets, especially overseas, and again, how do their margins affect your bottom line?
You must address all these questions and more in your beauty business plan . It is no good working out how and where to sell once your products are all stacked in boxes in your living room or at a warehouse!
Step 8: Your funding
We might have left finances to last, but finding the money to fund your business is an issue that dominates your entire business plan. As you’ve seen, each previous step has financial implications. As we mentioned in our post on how to start a cosmetic business from home , you won’t be able to run a successful beauty brand without having a firm grip on finances. Having sound plans for raising finance at various junctures in your business is sound business practice.
Your business plan needs to cover the different types of funding options available to you now and in the future, whether ‘love money’ loaned from friends and family, bank loans or other sources such as crowdfunding. it needs to look at short-term and long-term sources of finance. You need to understand and pre-empt what your potential investors will ask you about financing and demonstrate in your business plan that you and your business are worth investing in.
Step 9: Your financial forecast
If you are reading this, it is likely you are thinking of starting an indie beauty business. As business plans are best written in the first year of your beauty business, you may well be pre-revenue when you draft it – or need it when pitching to investors. You may not have sales yet, but you can still show some key figures on the size of your market and your brand’s potential.
To introduce your financial forecast, you should include a timeline showing your milestones, such as when you started, your key achievements, any brand or packaging development, what stage you are at now, i.e. do you have a product in creation and how much have you invested or fund-raised so far? If you are already selling, then you can show how much investment has gone into the company already, what returns and sales you have and what your financial projections are.
There will be a need for you to factor in expenses you hadn’t thought of. One such ‘hidden’ expense we see many beauty entrepreneurs fail to predict is the need to cover retailers’ promotions. Stores generally expect you to contribute to their promotions of your products. Cashflow is everything in a business, even one selling successfully. You may face shortfalls of cash while waiting for retailers to pay you. That time lag means your day-to-day business can grind to a halt if your cash is tied up in stock and you have nothing to cover buying in more raw materials to keep production going or to cover promotions or seasonal campaigns.
As you can see, financial forecasting is about your day-to-day business, and this alone is one reason you need to revisit your business plan frequently. You need to keep an eye on your profit and loss sheets and map the trends monthly. Learn as much as you can yourself about financial forecasting and measuring your business’ financial health. Having an accountant or financial expert assist with this information can help you be better prepared both day to day and when talking about your finances to potential investors.
10: What to do with your plan now
Congratulate yourself. You have made it through the first draft of your business plan – or roadmap. But, now comes perhaps the hardest step of all; that of doing something useful with your business plan, as opposed to archiving it in some filing cabinet. This is a plan to revisit and adjust, and to assess your business’ health and performance against. It is not a document to present to banks and potential investors at the start of your business journey and then forget all about.
So, what exactly do you need to look at it for, and how often? Let’s take just a few examples of areas you will need to review.
First, you need to revisit your financial forecast monthly. See how your budgeting is measuring up against actual sales and expenses. Are things on track? Either way, yes or no, you will have a benchmark against which to measure your current business health. This information will guide you as you go forward.
Then, revisit your competitors and the overall market situation. How have things changed and how might this affect your product range, pricing or development? Be aware that you need time to get established in your market. Knee-jerk reactions can be costly. But use your plan to monitor things.
Examples of areas to review annually are your mission, vision and niche. Was your research when drafting the plan accurate? Have you proved the concept of your brand and product range? Access to a mastermind group of like-minded business founders, even in different sectors, or a mentor can help you work through any changes you think are necessary to your core statements. Again, think these through basing decisions on financials too.
Pre-enrol in a Formula Botanica course and learn how to start a cosmetic business
We hope our points have given you the outline of what you need in to think through in starting a beauty business. If you have a mission to create a beauty brand that’s bigger than yourself – a skincare brand, haircare line or makeup range that changes people lives – we can help you learn how to formulate your own products and all about bringing a brand to market.
Pre-enrol now in our Diploma in Beauty Brand Business Management – the ultimate online training programme in starting or growing your indie beauty brand. We like to refer to it as a Beauty Brand MBA. It is a combination of award-winning teaching materials and a web summit with 30+ influential speakers drawn from the best in the beauty and business community.
Or why not pre-enrol on one of our formulation diplomas and courses in skincare, haircare and cosmetic science to change your life through natural formulation? All our courses are fun and empowering and can be career changing.
Your start-up costs with a beauty business vary according to where you set your sights and relate very much to your personal goals and circumstances and not only to current funds and cash flow. The ballpark figure you find is around US $20,000 or similar in Euros. If you wish to outsource, initial start-up costs are high as most contract manufacturers require large minimum order quantities. Similarly, your branding and packaging also rack up costs especially if you are aiming at the more luxury end of the market. Writing a business plan to help you think through all the variables can give you a clearer idea of your beauty business start up costs and help you plan finances as your business grows. You can start on a small budget by making product at home to sell at local markets. Work out your personal goals and lifestyle needs first to have an idea of what costs you will face.
Indie beauty is flourishing and ever more skincare entrepreneurs find a niche and enter the market. But, finding a niche that resonates with customers is key to defining what type of beauty business to launch. Being clean, green, natural or even organic is not enough these days to necessarily differentiate your potential beauty business. Think carefully about how your beauty products will resolve the issues and fulfill the needs of a clear segment of consumers. Do not be all things all to people. By researching for and writing a beauty brand business plan, you will shape your ideas and define a viable product offer, customer base and route to market.
Join us at Formula Botanica, where tens of thousands of students and followers take our free and paid online courses to learn how to formulate organic skincare and haircare for themselves or to sell and also how to set up a beauty brand and business.
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Liz is Formula Botanica’s Content Coordinator and joined our team in August 2020. Liz worked as a professional blogger, journalist and site developer for many years and was also part of the Formula Botanica student community. Read more about the Formula Botanica Team .
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Cosmetics Business Plans
Did you know each of these plans was created in LivePlan? Learn More
Cosmetic Herbal Sundries Business Plan
Gentle Touch Creations manufactures herbal health and beauty aids, and sells them retail at craft fairs and online, as well as wholesale to large retailers.
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Bluespa is a multi-channel concept, combining a wholesale distribution network with a retail strategy, e-commerce, and a consumer catalogue.
Tattoo Parlor Business Plan
Tablature Tattoo will open a small tattoo parlor where both tattoo newbies and collectors will be able to work with two established, talented artists.
The cosmetics industry is more than just makeup. It includes a vast array of businesses such as anti-aging clinics, aromatherapy, beauty salons, beauty spas, cosmetic stores, as well as online beauty consultants and cosmetic shops. There are plenty of health and beauty options to consider as a viable cosmetics business, you just need a business plan to get started. Check out our selection of sample business plans if you want to explore launching your own cosmetics business.
If you’re looking to develop a more modern business plan, we recommend you try LivePlan . It contains the same templates and information you see here, but with additional guidance to help you develop the perfect plan.
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SAMPLE BUSINESS PLAN FOR COSMETICS BUSINESS.
2020, SAMPLE BUSINESS PLAN BY AKAMPURIRA BRIAN
This plan is to set up a cosmetic shop in the name of " Briox Cosmetics Enterprise ", which will be located in Easy View Arcade Garage street Mbarara. The cosmetic shop will be a sole proprietorship owned by Akampurira Brian. I will use startup capital of 52,380,000 Uganda shillings. UGX 34,380,000 will be owners’ equity and the remaining UGX 18,000,000 will be a bank loan which will be secured from centenary bank at 10% interest rate. The key personnel at the cosmetic Enterprise will include Senior manager, buying inputs and overall supervisory work, operations and production staff, sales and marketing staff, skin therapy and hairdressing staff, record keeping and accounting, stock control and direct selling staff The key objective of the cosmetic shop will be to provide fresh quality cosmetics to our clients to enable them improve their general skin beauty, to obtain maximum customer satisfaction through continued quality production, to obtain continuous production and supply of our products to the customers, to create customer loyalty to our products such that they become well pronounced in the customer minds. To achieve our objective, the cosmetic shop will employ strategies such as: Offering quality, body skin lotions, oils and herbal cosmetics that help fight the skin diseases made from fresh fruit and vegetable which are nutritious through adequate research and proper mixture of the lotions, oils and herbal ointments to meet the standard skin contents and characteristics of customers in the market through advertisement by use of sign posts, direct selling and radio stations, offering special incentive to our regular clients, offering our cosmetics at relatively lower prices for market penetration, creating a conducive environment for our clients, employing people who understand the meaning of customer care and meaning of quality by giving them samples for use as a way of expanding our markets especially among the young children, youth and women. All this encompasses our strategies that include, communication strategy, supplier relationship strategy, marketing strategy, competitive strategy and human resource strategy. The vision of the cosmetic shop will be ‘To be the leading suppliers of quality, fresh and health skin booting cosmetics product’ Our mission will be, dedicated at improving the skin health and body look and appearance of our client. "We seek to become the recognized leader in our targeted local and international market for carrying a diverse line of in demand cosmetics including perfumes, makeup, and other accessories that will have a competitive edge towards customer satisfaction and retention at attractive prices. Our major customers will be corporate employees, students, market vendors, tourists and retailers who will be consuming a range of our products including; Perfumes 1st class, Lemon body lotion, Hair relaxer cream, Avocadoes body cream smoother and Hair glow. Our forms/ ways of distribution will include, through Retailers, distributors and wholesalers who will buy and sell in bulk to our final customers which we cannot sell to directly we shall also sell directly to the customers because we have a high customer traffic at our main outlet in Mbarara. We shall as well be using a van that will be leased to distribute to our customers who order in large quantities. In terms of our legal responsibilities, the following taxes apply to our business, sales tax, employees’ income tax, national social security fund and Mbarara Municipal Council Tax and other licenses like trading license, and Uganda National Bureau of Standards license. We shall as well need to the insurance for our business and also carry out other social responsibilities like corporate social responsibility, being environmentally friendly, and ensuring cleanliness of Mbarara town. Our products are costed and priced after comparison with our major competitor’s prices and costing information acquired through market research. We have as well carried out cash flow estimates to ensure that our business does not run out of cash. Our startup capital has been allocated to what we intend to start our business with that is renting building for two months, buying machines for mixing the inputs, Machines, leasing van, buying furniture and fittings, massage equipment, cloths and uniforms and other necessary things to start with including the employee salaries for the first two months. This plan will be effective on 1st January 2018 and that is when my business will begin in Mbarara Easy View Arcade.
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The cosmetic business umbrella has three vital areas. They include color cosmetics, aka makeup, fragrance, and skincare. Although these areas are closely related, they fall under different consumer personal cosmetic routines. In this blog, we will discuss the proper way to develop your cosmetic business plan. Irrespective of the type of cosmetic business you want to start, this foolproof guide may just increase your chances of success.
Cosmetic Industry Consumer Trends
The consumer trends in the cosmetic industry are nothing short of heartwarming. With pop culture and good grooming being an in-thing in the current fashion landscape, those in the cosmetic business are making fortunes. Generally, today’s consumers are open to spending a little more just to get high-quality products.
Is A Cosmetic Business Plan Necessary?
Think of your business plan as a vital strategic document that dictates where you should focus your resources, time, and energy. Generally, the program gives you a clear view of the game and what you intend to achieve. The tool will come in handy whenever you need to make crucial decisions that may make or break your venture. For most serious entrepreneurs, a business plan helps ensure that the everyday running of their ventures is as smooth and straightforward as possible.
Essentials Of Writing A Cosmetics Business Plan
Running a business requires you to make strategic moves. The cosmetic venture is no exception. Setting up a detailed strategy and ensuring your cosmetic business plan covers all ground is paramount.
Here are essential components you must include in the plan:
Business Mission and Vision
Your mission statement is the first thing to include in your cosmetic business plan. Think of it this way; the statement will be a navigation tool that gives a story about your plans for the future of your company. Moreover, the statement indicates the purpose of your work, making it simpler to identify your company goals and remain committed to achieving your vision.
Generally, the mission and vision statement is the bedrock of your business. It should play three vital roles, which include:
Identify Your Business Niche and Audience
Once your cosmetic business plan focuses on a specific audience, things will suddenly begin to fall in place. You will now have a good idea about the marketing strategies that are likely to work. In the end, if you choose skincare for seniors as your business niche, you may not want to use marketing strategies that mainly work for the youth.
Choose Your Range Of Products
Again, there is a whole world of beauty products available in the market. For instance, if you focus on natural products as your niche, it makes sense to centre your cosmetic business plan on products that fit well together. Most importantly, these products must attract the attention of your target customers.
Launching one product and exclusively selling it is not all doom. However, you may want to consider a bit of product diversity, especially if you are just getting started. Cross-selling or up-selling products that fall under the same classification may just be a good idea. Remember that according to current consumer trends, people use multiple cosmetics in combination. Focusing on one product alone may have profound financial implications that a young business may not bear.
Cosmetics Business Plan; Know the Competition
The next important step of developing your cosmetic business plan is to identify your competitors. The cosmetic industry is ripping fortunes. Hence it makes sense to know the movers and shakers within your chosen product niche . The idea is to know everything about them. Yes, everything about them. This includes their product range, their prices, marketing strategies, and more. This information will help you decide what to do to remain unique and keep pace with respected names within your line of business.
Develop a Manufacturing Strategy
So, do you intend to produce your unique range of cosmetic products? If you do, you need to have a manufacturing strategy. Typically, there are two options you have. One, you could opt to manufacture the products in person from your lab. Two, you could contract a manufacturer to do the hard work on your behalf. Either way, it is crucial to have a plan that ensures a smooth stream of products into your business.
Each of the two strategies has profound pros and cons. For instance, it’s easy to manage quality assurance when producing your cosmetics from your lab. On the downside, this can be a financially challenging option. On the other hand, working with a manufacturer may be cheaper. In this case, it is essential to plan on vital aspects such as logistics, contractual obligations, and finances. Irrespective of your choice, make sure it works well for your business model and aligns with your mission and vision.
Spruce Up Your Retail Strategy
Here’s the deal, you are likely not to grow to your best potential if you opt to sell directly to your consumers and in person. Even if you are a top-notch digital marketer, expanding your profit margins may be an uphill task if you opt not to outsource. Naturally, it is easier to hit your profit goals when you distribute your stock to retailers and e-stores that match your product niche.
Again, nothing is as important as developing a retail strategy that aligns with your product niche. At this point, you know your targeted customers, your competitors, and most importantly, your chosen range of products. With this in mind, deciding where your cosmetics fit naturally should not be a hurdle. Having a solid retail strategy is an integral part of ensuring the success of your cosmetic business plan.
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Cosmetics Business Plan; Keep an Eye on Financing
Develop a clear and detailed financial prognosis.
With a detailed financial prognosis, it should now be easier to get your business up and rolling. Think of it this way, your business may not be “thriving,” but you will have a draft to make your deal attractive to investors. Furthermore, even with no sales, you will have a clear plan of the steps you will take and how you will rip profits. Generally, a financial prognosis will give you a good idea of your brand’s potential.
A Great Online Class: Introduction to Professional Makeup Techniques by Domestika
If you are interested in learning more about professional makeup techniques for your business, we recommend taking a look at the online class “Introduction to Professional Makeup Techniques” by Domestika.
The course is currently under promotion, but you can use the discount code: T_BROWNLEES-PROMO to get an additional 10% discount on your purchase. This online class offered by Domestika, at a very inexpensive price covers all you need to know to create both bold, and understating looks by mastering makeup techniques. If you apply to the course through the link below you’ll be supporting 440 Industries, and we thank you for it!
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If you’re interested in reading up more about successful strategies to market your fragrance business, we’ve got a post right on that. You’ll also find a list of the most profitable, expensive, and successful fragrances sold worldwide. Here’s the link!
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How to Start Your Own Cosmetics Business
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There’s something extremely satisfying about having your own cosmetics business.
Maybe it’s the instant authority it gives you as a makeup expert.
Or how popular it makes you when going out with friends.
Or it could just be the amazing discounted makeup!
Personally, I love the fact that I earn a living doing something I have an actual passion for and making people’s lives better as a result!
We help people look their best, and give them confidence as a result. I can’t even count how often people have thanked me for just doing my job. And I didn’t just sell them makeup, skincare products, or hair care products. I helped them achieve the vision that they have of themselves at their best.
Honestly, that right there makes everything worth it. I do have to admit though, getting paid for to do something that I really enjoy is a nice bonus!
Believe me. There’s never a lack of people who need help but are helpless when it comes to makeup.
Start Your Own Cosmetics Business in 12 Steps
The cosmetics industry is growing every single year. In 2015, the beauty industry as a whole brought in over $56.2 billion in the U.S. alone! And makeup cosmetics made up 15% of that – or $8.5 billion – and is expected to rise to $11 billion by 2018.
So if you’re anything like me and really love and appreciate the power of cosmetics, maybe it’s time you invest in yourself and learn how to start a cosmetics business.
By the time you finish reading this post, you’ll understand exactly what you need to do in order to make your makeup dream into a reality!
Step 1: Learn How a Cosmetics Business Works
The first step to starting any business is to understand how it works. Fortunately, there are a few ways to do that.
You can start by studying everything you can online. Look up Sephora, MAC, and Estee Lauder, and learn everything you can about them.
Where are they from?
Where do their products come from?
How many employees do they have? What does their distribution channel look like?
Click here to download all of the 31 FAQs of starting a business in this Free Report.
Next, look for the most popular beauty stores in your area and study them, too. Get familiar with their marketing, their staffing, their product selection… basically, your goal is to learn literally everything you can about the most successful cosmetics businesses in your area!
Then – and here’s the fun part – go buy some products from them! Experiment. Play. Have fun and see what kind of magic you can pull off by giving your friends makeovers.
But the absolute best way to learn about the industry is to work in it.
Remember those stores you were studying? Go get a job at one of them! Learn their sales tactics, how they target customers , how they establish their sales projections, how they handle their ordering.
Know who their suppliers are, and what kind of prices they pay.
And learn as much as you can!
If you want to start a cosmetics business from home, then start researching which company you want to work under.
This is a GREAT option for those with limited budgets but huge social networks and people skills!
I’m not ashamed to admit that when I was younger, I was totally a Mary Kay sales rep! And you know what? I did really well there! But today, there are so many options for young entrepreneurial ladies looking to get into the cosmetics industry.
If you’re interested in starting up a cosmetics business from home, here’s a great site that ranks home based cosmetics businesses by user score, startup kit price, base commission, sales method, and product categories.
Once you’ve decided on which model you’re interested in pursuing, whether you want to open a brick and mortar cosmetics store, start a home based cosmetics business, or even create one online, then it’s time to create a plan.
RELATED: Start Your Own Cosmetic Store, A Complete Guide to Help You Run, Start and Manage Your Cosmetics Store
Step 2: Create a Plan
Why do cosmetics businesses fail?
It’s not for lack of customers. The worldwide cosmetics market has grown every single year for the last decade – including following the 2008 recession. In fact, with the exception of 2009 when the industry grew just 1.0%, the growth rate for cosmetics has never dropped below 3%.
That means that each year there are more and more customers wanting and needing cosmetics.
Which means that the real reason cosmetics businesses fail is the same reason as most other businesses – lack of a plan.
Even if you’re starting a cosmetics business from home, a business plan is so important to your success because it’s a roadmap for you to follow.
Creating a business plan is challenging, yes. But it also saves you lots of time, hassle, and money down the road. By making all your decisions ahead of time, you can make sure you’re not missing anything, and really come to understand your business.
Also, if you’re going to open a cosmetics storefront, you’ll need a business plan to show banks or investors for financing.
Your cosmetics store business plan should include an overview of your business, but should also get specific.
- What’s the mission and objectives of your store?
- Who is your target market?
- What is your startup cost?
- How much do you expect to make your first year? Your second year?
- What does your competition look like?
- Do you have a marketing plan?
Your business should guide you in effectively running your business plan after you’ve launched your company, so do not skip over it!
If you’re not sure where to start, Startup Jungle can help you create an expertly organized and professional business plan for your cosmetics business.
Just email [email protected], and they’ll give you the help you need.
Step 3: Discover Earning Potential
How much money does a cosmetics business make?
Well, that depends.
Different business models have different operating expenses and different earnings potential
If you’re working from home, you’ll pay a set amount for your kit, and then earn a commission based off of each product you sell.
If you’re creating an online store then you’ll earn whatever affiliate commission you agree to with the wholesalers.
And if you’re building an actual brick and mortar store, that’s where you have the highest earning potential. But that’s also where you have the highest setup and operating costs.
That being said, the earning potential is there.
As I said before, the industry is growing. Currently, growth is at about 5% a year. But online beauty sales are growing at 20% every year!
And according to L’Oréal, the term “beauty” is one of the top 3 most popular search topics on Google!
The U.S. market alone brings in more than $56 billion a year. If you’re serious about starting a cosmetics business, the earning potential is absolutely there for the taking!
Step 4: Set a Budget
Your budget should be part of your business plan.
You should be able to plan out all startup costs and recurring expenses ahead of time so that you know how much money you have to put back into your business or into your marketing campaign. If you run out of money, you can’t operate your business and have to shut down, making your budget an important tool in your business kit.
How much does it cost to open a cosmetics business?
Well, again that depends on what type of model you run with.
If you’re opening a cosmetics business from home, your costs will be lower. Really, your only required costs will be the kit you buy from the cosmetics company.
But then there are recommended costs. Get yourself a website. And business cards.
Print flyers, if you can.
Invest in stylish, high quality rolling makeup artist travel cases.
Perhaps you’d like to invest in a local magazine and get yourself featured? Or Facebook’s local awareness ads?
If you’re creating a drop shipping company , then you just need to invest in creating a beautiful website and directing online traffic to your site.
As for creating a real life store, that’s a bigger operation with much higher costs.
Some costs to consider when starting a cosmetics business include (in no particular order!):
- Business permits
You’ll have more needs, but this list should get you started.
To really understand everything, you need to go observe the most successful cosmetics business in your area and mimic whatever you can from their business.
Here’s my example here at Startup Jungle:
Running a business can be expensive, so here are some tips to keep costs down:
- Make sure your marketing is targeted – if it’s not working, don’t be afraid to change it
- Schedule appropriately – labor is your highest cost, make sure not to overdo it
- Pay attention to the little things – napkins and wet wipes add up, so think about washable towels instead to save money
- Don’t leave the lights on – sounds simple, but utilities get expensive, so make sure you’re conserving wherever you can
Step 5: Decide Which Products/Service to Offer
This is such an exciting piece!
How do you decide what products or services to offer?
Well, again that depends on your business model. But it also depends on you!
What are you really great at? What do you have a passion for?
Basically, you’re asking yourself what is the Unique selling point? What can you offer that nobody else can? Maybe it’s you, maybe it’s your service, maybe it’s your experience…
Figure it out and create a business out of it.
Once you know what you want to sell, you need to find out what your customers want to buy. It’s far more important.
So go talk to friends, family, customers, potential customers, and even strangers on the street. Find out what they’re interested in!
Don’t just say “would you buy this mascara?”
Ask them, “what order would you rank these products” or “what’s your favorite brand of concealer”.
By avoiding yes or no questions, you can give your business a better opportunity to understand what people like best as opposed to just what people say they like. There’s a big difference.
What sells best in the cosmetics industry?
Today, people are looking for sustainable, organic, and anti-aging products.
It’s not just women looking at cosmetics anymore, but men, too.
Men now represent a huge growing market in the industry which should absolutely be focused on.
Popular products include:
- Skin care products
- Mineral cosmetics
- Special effects makeup
There’s no limit to what you can find a market for. As men become more rugged, there’s even the opportunity to sell high-end beard and mustache products.
Don’t be afraid to explore, but remember to check with your potential clients first to understand if there’s a market for what you want to sell.
You can’t sell every product, or you’ll go broke simply by ordering stock. Keep in mind, many big companies have minimum orders, so when you place an order for an item, you’re anticipating being able to move every piece of your order.
When in doubt, go scout what the competition is doing!
Step 6: Decide on a Location
Where should you open a cosmetics business?
If you’re working from home, you want to have an area set up in your home which lets you display your products and host customers and guests.
But if you’re looking for a location for a storefront, you want a location with high foot traffic to increase sales. The best options include malls, kiosks, and high-end plazas.
Ideally, you want to set up your store in affluent areas where disposable income is high, prompting more sales from customers who can afford to look their best. However, if you’re competing on price, then perhaps you want to cater to low-budget neighborhoods as a discount beauty supply store. In this case, you should avoid affluent neighborhoods, but still focus on important factors such as:
- Visibility from the street
- Ease of access
Regardless of location, your business is best served by having multiple sales avenues. So you’ll want to explore online sales, as well.
If you’re not sure what to look for, speak to commercial realtors and see if they have any suggestions from past experience.
Step 7: Find Suppliers
What equipment do you need to open a cosmetics store?
That, as you know by now, varies based on what model you go with.
An online store will only need a web designer and a wholesale cosmetics supplier.
As a home-based business, you will have everything you need directly from your company, which is the biggest perk.
But a real world store has more needs. These include:
- Display cases
- Sponges, brushes, and other supplies
- Makeup products
- Point of sales system
- Art and decorations
- Security systems
You may want to explore buying wholesale directly from the cosmetics company. But some other suppliers to explore are:
- https://www.salonsupplystore.com/collections/makeup-supplies
- http://www.ccibeauty.com/index.html
Research what supplies you’ll need – and where to get them from – ahead of time. This saves time and hassle down the road. Don’t be afraid to shop around for the best prices.
Also, consider auctions or buying slightly used furniture and equipment to save money. Just make sure that everything is in great condition!
Step 8: Promote Your Cosmetics Business
Without customers, your business cannot survive. So it’s critical to promote your cosmetics business in order to bring in new and returning customers.
So how do you promote your business?
Well, there are the traditional, physical ways and newer, targeted digital ways. Both are effective.
Mailbox coupons and door flyers work, but they’re not targeted. So you may be wasting a little bit of money by giving your material to people who don’t need it. You also run the risk of angering people if you leave a flyer on their car or home door.
But it presents an opportunity to get yourself in front of local people who are potential customers. Don’t underestimate that.
You can also stand on a street corner offering samples or coupons to passersby who are your target market.
For more targeted methods, use the internet. Google AdWords allows you to be featured in local searches. Remember, “beauty” is a top 3 Google search term, so that’s a valuable tool. And if you want to really target your audience, use Facebook to differentiate your audience based on interests, age, and location. This is great if you’re looking for high-end buyers because you can target based on their current interests.
If you’re not sure where to start, look at what your competition is doing. If they’re successful, there’s no reason you can’t be, too!
Step 9: Create a Staffing Plan
If you’re working from home, then you can handle doing everything on your own.
But if you’re opening a store, it’s important to have help.
That’s why it’s important to have a hiring plan.
Hiring the wrong person for a position can really hurt your business.
You have to be able to trust your people to run the store even if (especially if) you can’t be there, need to know not only how many people you need on staff, but what type of people and where to find them and can protect yourself by having a potential hire demonstrate their abilities and also by interviewing with questions that will verify cultural fit.
Have a plan not just for who to hire and where to find them, but how to train them and how to staff them. Knowing all of this in advance will prevent you from tearing your hair out trying to organize everything on the fly, but also save you money by keeping you from over staffing.
Step 10: Decide on a Style/Design
Here’s another area that can be overwhelming.
Your style and design directly influence how customers feel about your business. You want to be warm and welcoming but still express your own flare and passion. Just be careful not to overdo it and risk scaring away customers.
The best way to figure this piece out is to talk to prospective customers. Get feedback from the people who would be frequenting your cosmetics business. Talk to them at existing beauty shops. See what people like and don’t like. If you’re still not sure, talk to some contractors and see what’s most commonly requested of them.
Another option is 99designs.com .
Here, you get designers competing for your prize money. For as little as $99, you get to choose from a large selection of high-quality logo options, giving you flexibility and options, and hopefully providing some inspiration.
And remember, if you’re not sure what to do, don’t be shy about looking for inspiration in other stores or even magazines.
Take your time when choosing your style. Remember, it should express you and your business, so make it appealing!
You’d also need business cards! Here are some designs you can start with:
Step 11: Create an Accounting Plan
Having an accounting plan is a must for any business.
As a business, you’ll be an employer. As such, you’d be responsible for payroll, taxes and documenting all your income. Which is why it’s so critical to have every dollar accounted for and everything in order.
Equally important, you’ll be able to project your sales more easily with proper tracking. In addition to knowing if you are on track, it helps you stick to your budget. You’ll also be able to tell if anything is missing from your store, thus, making an accounting plan part of your store’s security measures .
Here’s a few accounting software we have seen:
No one likes to crunch numbers, but that doesn’t change the fact that this is a requirement. If you’re not sure about how to move forward with an accounting plan, consult with a local accountant about either handling your books for you or offering suggestions as to how best to handle your own books.
Step 12: Get Into the Cosmetics or Beauty Community
Becoming involved in the beauty industry community is more beneficial to your business than almost any other activity you can do.
Follow your favorite brands on Instagram.
Get involved on Facebook in groups, fan pages, and communities.
It only takes one retweet, regram, or mention to get noticed by the right people.
While you’re at it, join associations!
Associations give you access to industry veterans, workshops, trade shows, and priceless information about how to best run your business. You’ll learn industry best practices, new strategies, and tips to sell your products more effectively .
An association can be the difference between losing money and making a profit!
Here’s a list of associations you may be interested in:
- http://hbia.com.au/
- https://probeauty.org/
- http://dayspaassociation.com/
- http://www.aestheticsassociation.com/
You can also explore local meetings through meetup.com!
You never know where your big break may come from, so make sure you’re actively engaged in the cosmetics community!
Here’s an infographic with useful information about the Cosmetics industry and some tips on starting a business within it:
The Bottom Line
Opening (and running) a cosmetics business is a lot of work.
But if you do it right, it’s not only rewarding, it’s a lot of fun.
You get to be your own boss and brighten people’s lives on a daily basis!
On top of that, you’re helping them improve their confidence and making their lives happier!
Hopefully, you put this guide to use .
If this was helpful for you and you want to learn more about opening a cosmetics business, StartupJungle.com has a 21-point checklist for starting your new business . Make sure you download this if you’re serious about getting started.
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The World's Leading Business Plan Template Directory
Cosmetic Business Plan Template [Updated 2023]
Cosmetic business plan template.
If you want to start a Cosmetic business or expand your current Cosmetic business, you need a business plan.
The following Cosmetic business plan template gives you the key elements to include in a winning Cosmetic business plan.
You can download our business plan template (including a full, customizable financial model) to your computer here.
Below are links to each of the key sections of your Cosmetic business plan:
Cosmetic Business Plan Home I. Executive Summary II. Company Overview III. Industry Analysis IV. Customer Analysis V. Competitive Analysis VI. Marketing Plan VII. Operations Plan VIII. Management Team IX. Financial Plan
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IMAGES
VIDEO
COMMENTS
Executive Summary · Give a brief overview of the cosmetic industry. · Discuss the type of cosmetic business you are operating. · Detail your direct competitors.
Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster. 1. Develop A Cosmetics Business Plan -
Step 1: Why your beauty business needs a plan · Step 2: Your beauty brand mission and vision · Step 3: Your niche and customers · Step 4: Your beauty products
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This is step 7 of our 10 steps to writing your beauty products business plan.In this short video, we'll take you through considerations for