How To Start a Makeup Line? (Business Formation Guide)
Before you launch a makeup line, you must understand how to formulate ingredient blends, design the products, outsource manufacturing, and the laws governing this business sector.
To assist you through the complex initial phase, we sought expert business advice from our licensed team of startup consultants, who have over a decade of experience in the entrepreneurship sector.
We have compiled this comprehensive step-by-step guideline on how to start a makeup line business.
Quick Summary
- Start a makeup line by conducting market research, defining your niche, planning your business, and fulfilling legal requirements.
- Your business plan should include objectives, a target market, marketing strategies, and financial projections.
- The beauty and personal care industry is expected to reach $716 billion by 2025, highlighting opportunities for new makeup brands.
- We would advise new businesses to focus on establishing a strong brand identity and ensuring the quality of their products, as these are crucial elements for the success of their makeup line.
8 Steps To Start a Makeup Line
Here's Venture Smarter's detailed guide to the steps to take when launching your cosmetic company.
1. Research and Pick a Niche
One of the most crucial things you can do before launching a beauty brand is to research the industry thoroughly.
In 2024, the beauty and personal care market in the United States is projected to generate revenue of US $100.30 billion, as reported by Statista [1].
It would be best to do market analysis and research to determine the niche to venture into to succeed in the industry.
If you encounter new makeup trends that haven't been tapped into and align with your business goals, you can venture into them while the competition is still low.
During the research process, develop the brand's values and the characteristics of your goods to help you stand out from the competition, such as the kind of ingredients you use and the target market you serve.
You should first research the kinds of beauty items that are in high demand if you want to identify a niche.
Identify the forces that push you to start a makeup line; chances are that the qualities that motivate you to establish a cosmetics company are frequently the identical ones that other fans of beauty products are seeking.
Venture Smarter always advises business owners to investigate their competitor's pricing strategy, promotional offers, social commerce tactics, client testimonials, and media coverage.
You may create a distinctive brand position that stands out by looking at a competitor's purpose, vision, and values.
Once you understand all these elements, you can devise new methods to differentiate your brand from the crowd further.
As part of the research, you must understand your target market. Find clients that want and need your cosmetics if you want your makeup line to be more successful.
Your beauty brand's main source of inspiration is its customers. It is better to focus on the market group purchasing your cosmetics.
2. Create a Business Plan
Successful beauty brands have business plans that describe what they want to sell, who they want to sell it to, and how they plan to sell it.
A makeup line business plan is also useful when applying for loans, partnerships, or grants. You can also share this plan with potential investors planning to invest in your makeup company.
Your beauty business strategy ought to contain the following:
- Overview of the business.
- Analysis of market research, including competitive analysis.
- Your company's overall management and organizational structure.
- An explanation of your cosmetic brand and products.
- A description of your marketing and sales plan.
- A thorough financial forecast.
- Any business-related documents, like tax records and contracts.
3. Register Your Business
Drawing from our experience as business advisors, you must register your business when you launch a cosmetics line.
If your makeup company is operating under a different name than its legal name, you should apply for a Doing Business As (DBA) and register it with the state.
The legal regulations in your state will determine how you classify your firm, but you can register it as a:
- Limited Liability Company
- Sole Proprietorship
- Corporation
- Limited Liability Partnership
- General Partnership
Once you've chosen your business structure, you must submit the Certificate of Organization or Articles of Formation to the Secretary of State and pay the relevant filing fees [2].
Once the state approves your registration, your company becomes a separate legal entity. This guarantees that you'll be personally covered if the company is sued, falls into bad debt, or any product contributes to an accident.
To be able to pay taxes, your company organization will also require a Tax Identification Number or an Employer Identification Number (EIN) from the Internal Revenue Service (IRS) [3].
The EIN is also important for opening a business bank account to secure your cosmetic income and register for business credit.
4. Obtain Business Licenses
As an operating business, you must obtain the correct permits and licenses before you open the shop.
Different states have different license requirements for beauty brands, but generally, you'll need to apply for the following licenses:
- Cosmetology license if you plan on applying makeup to your potential customers.
- Esthetician license if you'll offer skin care treatment services.
- Manufacturers license you if you'll be manufacturing your products.
- Municipal license to operate in certain jurisdictions.
You should also view the regulations for manufacture, labeling, and sale.
5. Find a Cosmetics Manufacturer
When you start a makeup line, you can have a manufacturing plant and make the products yourself.
However, starting on a small scale, you can outsource the production and hire a manufacturer.
Manufacturers in the beauty business often fall into two categories: white-label and private-label.
A white-label producer creates cosmetics under the names of several different companies, which subsequently rebrand them.
A private-label manufacturer supplies customized beauty products that you can market under your brand name.
With this type of manufacturer, you can alter your products' color, scent, or packaging. Dealing with a private-label manufacturer allows for more personalization, which makes your makeup lines distinctive and difficult to obtain elsewhere.
Both private and white-label production are similar and cost-effective, but choose a manufacturer that aligns with your cosmetic line and product goals.
For example, if you're running a luxury makeup line, you should use a private label manufacturer to get exclusive products unavailable elsewhere.
6. Build Your Brand Identity
The cosmetic industry is solely an image-driven entity; therefore, there's power in how you brand yourself.
Venture Smarter has guided successful clients through the process of building their makeup line brand.
It's crucial to consider how you'll convey your brand values to customers and enhance their experience with your products.
This strategic approach has proven successful in establishing a strong market presence and customer loyalty.
Unique website design, branding, voice, and packaging to tell a story to your target audience. Ensure clients feel special and heard when they interact with you and use your cosmetics brand.
Your cosmetics line's packaging decision can make or ruin your own brand. As a business owner, pick the packaging that most accurately reflects your brand and product.
You may pick from various bespoke packaging solutions with intricate design elements that distinguish your packages, such as form, size, color, and material.
7. Set Up the Shop
Setting up an online store is a straightforward method to reach customers worldwide for your makeup line.
I recommend utilizing website builders with customizable templates to reflect your brand's aesthetic.
Your website should present your makeup products in a clean, organized manner, ensuring an attractive and user-friendly shopping experience.
Optimize product pages to avoid clutter, incorporating tabs for ingredients and beauty tips.
Enhance your product pages with high-quality, clear images against a clean background, and use lifestyle photos that feature models of diverse skin tones. This approach aids in appealing to a broad audience.
Include comprehensive product descriptions to improve SEO and provide customers with valuable information, helping them make informed purchases and reducing return rates.
"Customers who purchase cosmetics from you online won't be able to test it out on their skin, so provide as much information as you can to explain the texture, finish, usage, and application of the makeup."
- Delina Yasmeh, Delina Yasmeh, J.D./Tax LL.M. Expert in Mergers and Acuquisitions
Our extra tip for enhancing the customer experience on your website is to add extra media like cosmetic tutorials and video lookbooks to your product pages, blogs, or galleries.
You can also add more context by adding user-generated content or picture reviews to the pages.
Related articles:
8. Market the Brand
Speaking from our experience with clients in the cosmetics industry, a healthy marketing and advertising budget is necessary to increase online store traffic and draw in new buyers.
Here are the marketing strategies to promote your cosmetics business:
- Building a Social Media Identity
Every company is distinct, so you want to select marketing and advertising channels depending on the location where your prospective clients visit to seek out information.
If your clients are TikTok-based, you want to open a TikTok account for your company and share video reviews of your products there.
You can also create videos of beauty brand challenges for the audience to participate in and win certain giveaway products.
- Working With a Beauty Influencer
People also research makeup brands by following their favorite online creators on Instagram, TikTok, and YouTube.
Honest influencer evaluations break through the assurances and demands made by the beauty industry by testing products on individuals with various skin tones.
Suppose you decide to collaborate with an influencer. In that case, numerous less popular creators with modest but active followings may be more economical to work with if you're just getting started.
Other tips to add to your cosmetics business marketing plan include:
- Manage a pop-up store that offers free mini-makeovers or a tester bar.
- Hire a temporary booth in a store that caters to your target market with comparable goods.
- Sponsor a runway fashion event where your makeup products are worn by models and are included in goody bags.
FAQs
How Much Does It Cost To Start a Makeup Business?
It costs $5000 to $20,000 to start a makeup business. The startup capital may depend more on business factors like size, pricing, product sourcing, and manufacturing.
How Profitable is Makeup?
Makeup is profitable, with retail sales markup amounting to 400%. If you set your product pricing well, you should receive a profit margin of around 70–75%.
References:
- https://www.statista.com/outlook/cmo/beauty-personal-care/united-states
- https://www.irs.gov/businesses/small-businesses-self-employed/business-structures
- https://www.irs.gov/businesses/small-businesses-self-employed/employer-id-numbers#
