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Starting a Lipstick Line Business – How Much Does It Cost?

Do you want to know exactly how much it cost to start a lipstick line business? If YES, here is a detailed cost analysis for starting a lipstick line business and raising finance.

When it comes to starting any business, one of the major considerations that an aspiring entrepreneur must pay serious attention to, is the total cost of starting the business. If proper costing and analysis is not carried out, the business might to be able to kick – off as expected.

So, if you are looking towards starting a lipstick line production company either on a small scale, medium scales or large scale you must ensure that you have the required startup capital to kick – start the business. Having provided you with a:

  1. Industry Overview
  2. Market Research and Feasibility
  3. Lipstick Line Business Plan
  4. Lipstick Line Name ideas
  5. Licenses and Permits
  6. Lipstick Line Marketing Plan
  7. Cost of Starting a Lipstick Line
  8. Marketing ideas & Strategies

We will consider how much it cost to start a lipstick line production business from scratch including the operating costs.

  • Industry Overview

In the last half, a decade, lipstick production line of business has experienced elevated demand, most especially from premium level goods, in line with increased consumer spending and the overall growth of the economy. Purchaser preferences and new product introductions have also contributed to boosted revenue and profit.

The Cosmetics Industry cum lipstick production line of business is indeed a large industry and pretty much active in all the countries of the world especially in countries such as the United Kingdom, the United States of America, Australia and Canada.

Statistics has it that in the United States of America alone, there are about 68 registered and licensed lipsticks manufacturing companies scattered all across the United States responsible for directly employing about 3,783 people and the industry rakes in a whooping sum of $4 billion annually.

The industry is projected to grow at 4.7 percent annual growth within 2011 and 2016. In the United States of America, Estee Lauder is the leading brand in the lipstick production line of business. Their products can be found in every nooks and crannies of the United States and also in most countries of the world.

How Much Does It Cost to Start a Lipstick Line Business?

Starting your own lipstick line production business from home can be profitable, and this can be anchored to some factors that must be put in place. When it comes to starting a lipstick production line of business just like any other business that falls under related field, your key start-up costs will be in three primary areas such as: product development, marketing, and business expenses.

Of course, these costs can vary widely depending on the formulations you are making and the state of the economy of the country you intend launching the business.

When starting your own lipstick production line business, the product development costs are what you generally think about. Essentially, these costs include everything that it will cost you to get the product from the factory to the market (end users).

You expected to budget for raw material costs, packaging, labeling and in most cases transporting the goods via your distribution channels. It also includes the cost of production activities such as mixing the materials together and filling them into the packaging.

Lipstick formulations can run anywhere from $0.10 per pound to $3 per pound but on the average, you can estimate that the products will cost about $1 per pound. Packaging and labeling is estimated to cost you about $1 per unit as well. Add in production and filling costs and your average per product cost will be about $2 – $3 per unit depending on the size of the product.

  • Starting a Lipstick Line on a Large Scale

If you intend starting a lipstick production line on a large scale, then the possibility of cutting cost of production can’t be ruled out. As a matter of fact, you will leverage on economy of scales and that will result to producing the product on the cheapest scale per unit cost.

The way it works is that to get the production costs to $2 – $3 per unit of lipsticks you are going to have to make a minimum of 500 — 1000 units. If you make less your production costs will go up significantly and that will affect the cost of the finished product and perhaps your profit.

  • Starting a Lipstick Line on a Medium Scale

Starting a medium scale lipstick line production company is indeed a capital-intensive business. This is so because the amount required in setting up a standard lipstick line production plant is not a piecemeal. The bulk of the start – up capital will be spent on leasing or acquiring a facility and also in purchasing mixing, blending, compounding and packaging equipment.

Aside from that, you are not expected to spend much except for purchase and servicing of distribution trucks, purchasing raw materials, branding and market promotion, paying of your employees and utility bills.

How Much Does It Cost to Start a Lipstick Line in the United States?

It is important to state that the amount required to start lipstick line production business in the United States of America is almost the same amount it will cost to start the business in the United Kingdom, Canada and Australia. The slight differences are in the area of incorporating the business in the country of your choice, paying of employees and in renting or leasing a facility for the business.

These are the key expenses you are expected to make when starting a lipstick line production business in the United States of America;

  • The total fee for registering the business in the United States of America – $750.
  • Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $1,300.
  • Marketing promotion expenses for the grand opening of business in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of – $3,580.
  • The cost for hiring business consultant – $2,500.
  • Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
  • Cost for payment of rent for 12 month at $1.76 per square feet in the total amount of $105,600.
  • Cost for construction of a medium scale but standard lipstick line production plant – $100,000.
  • Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $100,000
  • The cost for start-up inventory (mixing, blending, compounding and packaging equipment, raw materials, and packaging materials et al) – $80,000
  • Cost for store equipment (cash register, security, ventilation, signage) – $13,750
  • Cost of purchase of distribution vans – $60,000
  • The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, Fax Machines, tables and chairs et al) – $4,000.
  • The cost of launching a Website – $600
  • The cost for opening party – $10,000
  • Miscellaneous – $10,000

You will need an estimate of five hundred thousand dollars ($500,000) to successfully set up a medium scale but standard lipstick line production company in the United States of America. Please note that this amount includes the salaries of all the staff for the first 3 month of operation.

Starting a small – scale lipstick line production business in the United States of America will cost about one hundred and fifty thousand dollars to two hundred and fifty dollars ($150,000 to $250,000).

When it comes to starting a large-scale lipstick line production company in the United States of America, a company whose products can be found all across the United States of America and other countries of the world, then you should look towards budgeting well over one million dollars ($1 million).

How Much Does It Cost to Start a Lipstick Line in the United Kingdom?

These are the key expenses you are expected to make when starting a lipstick line production business in the United Kingdom;

  • In the United Kingdom, Online applications are usually registered within 24 hours and cost £12 (paid by debit or credit card or PayPal). Postal applications take 8 to 10 days and cost £40 (paid by check made out to ‘Companies House’). There’s a same day service costing £100
  • Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – £700.
  • Marketing promotion expenses for the grand opening of business in the amount of £2 and as well as flyer printing (2,000 flyers at £0.04 per copy) for the total amount of – £1,500.
  • The cost for hiring business consultant – £800.
  • Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – £2,400.
  • Cost for payment of rent for 12 month at £1.76 per square feet in the total amount of £25,600.
  • Cost for construction of a medium scale but standard lipstick line production plant – £10,000.
  • Other start-up expenses including stationery (£300) and phone and utility deposits (£1,500).
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – £60,000
  • The cost for start-up inventory (mixing, blending, compounding and packaging equipment, raw materials, and packaging materials et al) – £30,000
  • Cost for store equipment (cash register, security, ventilation, signage) – £9,500
  • Cost of purchase of distribution vans – £10,000
  • The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, Fax Machines, tables and chairs et al) – £2,000.
  • The cost of launching a website – £600
  • The cost for opening party – £2,000
  • Miscellaneous – £3,000

You will need an estimate of three hundred-thousand-pound sterling (£300,000) to successfully set up a medium scale but standard lipstick line Production Company in the United Kingdom. Please note that this amount includes the salaries of all the staff for the first 3 month of operation.

Starting a small – scale lipstick line production business in the United Kingdom will cost about fifty-thousand-pound sterling to one-hundred-and-fifty-pound sterling (£50,000 to £150,000).

When it comes to starting a large-scale lipstick line production company in the United Kingdom, a company whose products can be found all across the United Kingdom and other countries of the world, then you should look towards budgeting well over five-hundred-pound sterling (£500,000).

How Much Does It Cost to Start a Lipstick Line in Canada?

These are the key expenses you are expected to make when starting a lipstick line production business in Canada;

  • For federal incorporation of business in Canada, the cost to incorporate is $200 if filed online through Corporations Canada’s online Filing Centre ($250 if filed through other means)
  • Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $1,300.
  • Marketing promotion expenses for the grand opening of business in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of – $3,580.
  • The cost for hiring business consultant – $2,500.
  • Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
  • Cost for payment of rent for 12 month at $1.76 per square feet in the total amount of $105,600.
  • Cost for construction of a medium scale but standard lipstick line production plant – $100,000.
  • Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $100,000
  • The cost for start-up inventory (mixing, blending, compounding and packaging equipment, raw materials, and packaging materials et al) – $80,000
  • Cost for store equipment (cash register, security, ventilation, signage) – $13,750
  • Cost of purchase of distribution vans – $60,000
  • The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, Fax Machines, tables and chairs et al) – $4,000.
  • The cost of launching a Website – $600
  • The cost for opening party – $10,000
  • Miscellaneous – $10,000

You will need an estimate of five hundred thousand dollars (CAD$500,000) to successfully set up a medium scale but standard lipstick line production company in the Canada. Please note that this amount includes the salaries of all the staff for the first 3 month of operation.

Starting a small – scale lipstick line production business in the Canada will cost about one hundred and fifty thousand dollars to two hundred and fifty dollars (CAD$150,000 to CAD$250,000).

When it comes to starting a large-scale lipstick line production company in Canada, a company whose products can be found all across the Canada and other countries of the world, then you should look towards budgeting well over one million dollars (CAD$1 million).

How Much Does It Cost to Start a Lipstick Line in Australia?

These are the key expenses you are expected to make when starting a lipstick line production business in Australia;

  • In Australia, the fees to register your business name with ASIC include: $34 for 1 year. $80 for 3 years
  • Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $1,300.
  • Marketing promotion expenses for the grand opening of business in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of – $3,580.
  • The cost for hiring business consultant – $2,500.
  • Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
  • Cost for payment of rent for 12 month at $1.76 per square feet in the total amount of $105,600.
  • Cost for construction of a medium scale but standard lipstick line production plant – $100,000.
  • Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
  • Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $100,000
  • The cost for start-up inventory (mixing, blending, compounding and packaging equipment, raw materials, and packaging materials et al) – $80,000
  • Cost for store equipment (cash register, security, ventilation, signage) – $13,750
  • Cost of purchase of distribution vans – $60,000
  • The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, Fax Machines, tables and chairs et al) – $4,000.
  • The cost of launching a Website – $600
  • The cost for opening party – $10,000
  • Miscellaneous – $10,000

You will need an estimate of five hundred thousand dollars (AUD$500,000) to successfully set up a medium scale but standard lipstick line production company in Australia. Please note that this amount includes the salaries of all the staff for the first 3 month of operation.

Starting a small – scale lipstick line production business in Australia will cost about one hundred and fifty thousand dollars to two hundred and fifty dollars (AUD$150,000 to AUD$250,000).

When it comes to starting a large-scale lipstick line production company in the Australia, a company whose products can be found all across Australia and other countries of the world, then you should look towards budgeting well over one million dollars (AUD$1 million)

Estimating Start – Up Cost for Lipstick Line Business Based on the following factors;

  • Specific Location

One good thing about lipstick production line of business is that it is not location bound; you can start the business in the outskirt of town, in the middle of town or any location as long as you can secure a facility with government approval for the kind of production business that you want to start.

All you need to do is to ensure that you choose a good location that can give you easy access to raw material and available market; you will do pretty well in this line of business if you locate the business in centralized location with good distribution network. You can produce your lipsticks in the outskirt of town and still maximize sales.

In essence, you should ensure that you strike a balance in between securing an affordable facility in a good location and easy access to raw material and available market.

  • Inventory

In starting a lipstick production line, you will need the following startup – inventory;

  • Chemicals(Color pigments, oils, Castor oil, waxes (beeswax, candelilla wax, orcamauba, red fluorescent dye, solvent, antioxidant and emollients)
  • Labeling and packaging materials

Equipment

In starting a lipstick production line, you will need the following equipment;

  • Blending, mixing and compounding machine
  • Molding machine (tubes)
  • Packaging, labeling and sealing machines

Staff/Manpower

When it comes to starting a standard lipstick production line on a large scale, you would need the services of the following professionals;

  • Chief Executive Officer (Owner)
  • Plant Manager
  • Human Resources and Admin Manager
  • Chemist / Cosmetologists
  • Sales and Marketing Team
  • Machine Operators
  • Accountants / Cashiers
  • Distribution Truck Drivers

Can a Lipstick Production Line Business be Bootstrapped on a Lean Budget Right from Home?

Irrespective of the fact that there are several lipstick production line companies cum brands whose products than be found in some countries of the world, that does not rule out the fact that an aspiring entrepreneur can successfully start a small – scale lipstick production line business on lean budget right from your home. This is possible because the machines / equipment that are used in the production of lipsticks are affordable and small enough to fit into a room.

If you want to start on a small scale, you can choose to start servicing your city and state. All you would need is contacts, packaging, networking and good marketing and customer service skills. However, if you intend starting it on a large scale, then you should consider spreading beyond your city to state level and even national level.

As a matter of fact, the production process from start to finish can be done in well managed space in your home. All you need to do is to have a storeroom that will serve as your warehouse; a place where you store both your raw materials (chemicals and packaging materials) and finished goods.

Although there will be limit to the number of employees that you can employ per – time and also the number of products that you can churn out per time, but that does not stop you from breaking even within the expected time frame for a small – scale business that falls under the cosmetics industry.

Running a small – scale lipstick line production business will help you cut cost, but you must be ready to take on much more than two roles in the business. You are likely going to be the chief executive office, head of marketing and quality control office amongst other roles that you can fit in. You can’t rule out the fact that when it comes to starting a small – scale lipstick line production business from your home, you are more likely going to market the products from the booth of your car from one location to another.

How Much Does It Cost to Buy a Lipstick Line Franchise?

From available research conducted, there are no known lipstick production line company in the United States of America, United Kingdom, Canada and Australia that is into franchising; most players in this line of business are adopting strategies that will help them push their products beyond the city, state or country where their business in domicile to other parts of the world as against selling franchise of their product.

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