You need an estimate of $150,000 to $250,000 to open a scale lipstick line (Small Scale). Please note that this amount includes the salaries of all staff for first 3 months of operation.
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.
Estimated Cost Breakdown for Opening a Lipstick Line
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).
Having said that, here are some of the factors that will influence the cost of opening a lipstick line business in the United States of America;
Factors That Determine the Cost of Opening a Lipstick Line
- The Type of the Lipstick Line Business
A major factor that will determine the overall cost of opening a lipstick line in the United States of America is the type and size of lipstick line business you want to open.
Normally, a lipstick line produces and supplies or retails different types of lipsticks such as moisturizing lipsticks, satin and sheer lipsticks, matte lipstick, cream lipsticks, pearl and frosted lipstick, gloss lipstick, long wearing and transfer – resistant lipsticks amongst others.
For example, it will cost more to open a lipstick line that is into the production of these various types of lipsticks when compared to the cost of opening a lipstick line business that only retails lipsticks.
- The Choice of Location
Another major factor that will determine the cost of opening a lipstick line in the United States of America is the location.
In business, location is key part of what determines the success of the business. There are business consultants and realtors who are specialized in helping people choose an ideal location for their business; a location that will guarantee them to profitability.
So, you will agree that location can influence the cost of starting a business. For example, renting or leasing a store or production facility in a location that is off the city center or off a major road will be less expensive when compared to renting or leasing a store facility in a highbrow area; a location along a major road with high vehicular and human traffic.
- The Required Licenses and Permits
In the United States of America, you cannot open a lipstick line without first applying for the mandatory licenses and permits. You would need operational license, building license, zonal permits, signage permits and chemical handlers license amongst others.
These license and permits cost money and it will influence the overall cost of opening a lipstick business in the United States of America. Please note that there may be several inspections you must pass before you can be issued your permits and this will also cost you money.
In order to get the overall cost of licensing and permits associated with opening a new lipstick line business in the United States, we will advise that you reach out to your city government. You also need to consider state and federal requirements.
- The Type of Facility
The type of facility you want to operate your lipstick line in is also a major factor that will determine the overall cost of opening your business in the United States of America. You have the option of renting, leasing or constructing your own store or production facility from the scratch.
With renting and leasing, you might just need to spend extra cost to modify the store facility to fit into what you have in mind, the number of racks and storage room/warehouse that you want to attach to your production facility or store, but there is a limit to how far you can go and it will be dependent on what the landlord of the facility wants.
Let us assume that you want to construct your production and store facility from the scratch. It means that you will buy the land or a property, construct and equip the production and store facility to fit into the ideal picture you have in mind.
You will agree that you are going to spend way more when compared to people that rent or lease a production and store facility in a shopping mall.
- Your Products and Service Offerings
Another key factor that will determine the cost of opening and operating a lipstick line business in the United States of America is of course, your products and service offerings. The fact that there are different types of lipstick line businesses such as brick and mortar and strictly online stores means that these businesses are designed to operate differently.
The cost for opening a brick and mortar lipstick business with production facility and retail outlet will be far more when compared to the cost of opening a strictly only lipstick line business.
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
- The Size of the Lipstick Line Business
Another very important factor that determines the cost of opening a lipstick line business in the United States of America is the size of the lipstick store. Of course, the larger the lipstick store, the large the budget to get it up and running especially as it relates to stocking the store.
Aside from the cost of stocking the store, it will also cost you more to position employees to man different job positions in the store and this will translate to spending money to open the store. For example, less than a handful of employees can man a lipstick line store that is in a 12 by 12 facility while it will take about a dozen employees to man a lipstick line store that is in a 24 by 24 facility.
- The Cost of Hiring and Paying a Business Consultant and Attorney
If you want to get your business started on the right foundation, it will be a wise decision to hire the services of a competent business consultant and perhaps an attorney. A business consultant will help with drafting a workable business plan document, a marketing plan and strategy, comprehensive SWOT analysis, and other advisory services for the business.
Also, an attorney will help you with registering the business, drafting contract documents (especially for your suppliers and creditors) and offering you all the legal expertise that will help you start the business on the right foundation. You will agree that these services will cost you money and it will indeed influence the overall cost of opening a lipstick store in the United States of America.
- The Cost for Branding, Promotion and Marketing of the Lipstick Line Business
The cost for branding, promoting and marketing the lipstick line is yet another key factor that will determine the overall cost of opening a lipstick line business in the United States of America. Trust me, if you need to win a fair share of the available market in your city, then you must be willing to pay for effective branding, promotion and marketing of your lipstick line.
It is not cheap to come by an expert in branding, promotion and marketing that will help you compete with brands that are already determining the market direction of the lipstick line cum cosmetics and beauty line industry in your city. So, if you add the cost of paying a branding and marketing expert, it will sure increase the cost of opening your lipstick line.
- The Cost for Furnishing and Equipping the Facility
Another factor that will determine the cost of opening a lipstick line business is the cost for furnishing and equipping the production facility and/or store.
You will quite agree that aside from the basic facilities that are expected to be found in a lipstick line store or production facility, an investor may decide to spend more than expected to furnish and equip the lipstick line store or production facility to look unique.
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
Before you can open a lipstick line, you should budget for items such as storage hardware (bins, rack, shelves, case), shopping baskets and trolleys, counter area equipment,
Flat Screen TVs, sound system, Satellite dish and decoder, furniture (table, and stools), telephones, filing cabinets, store equipment (cash register, POS machines, security, CCTV, ventilation, signage), and security and fire alarms and prevention gadgets amongst others.
All these will cost money and it will influence the overall cost of opening a lipstick line store in the United States of America.
- The Cost for Insurance
Paying for insurance is yet another important factor that will determine the overall cost of opening a lipstick line business in the United States of America. In the United States, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from.
Thus, it is imperative to create a budget for insurance policy cover and perhaps consult an insurance broker to guide you in choosing the best and most appropriate policies for your business.
- The Cost for Registering the Business
The cost for registering the lipstick line business is yet another cost that will influence the overall cost of opening a lipstick line business in the United States of America. Although, the cost of registering a business is affordable, but it will no doubt add to the overall cost of opening a lipstick line business in the United States of America.
- Source of Your Supplies
Another major factor that will determine the cost of opening a lipstick line business in the United States of America is the source of your supplies.
For example, if you are not into the production of your lipsticks and you have to rely on supplies, then if you are able to build a robust business relationship with some of the leading lipstick line production companies, then you would have succeeded in cutting down the cost of your supplies. As a matter of fact, you can even get your supplies on credit.
- Cost of Recruiting and Training Your Staff
The fact that you are opening your lipstick line as a new business means that you are expected to recruit and train your staff to conform to the kind of business you want to operate. The training will help you sell the corporate culture of your organization to the new employees.
As expected, it will cost you money to hire expect trainers that will help you train your new hires, and that will add to the overall cost of opening a lipstick line business. 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
- The Cost for the Purchase and Customizing of Uniforms for Your Employees
Another factor that will determine the overall cost of opening a lipstick line business in the United States is the cost of purchasing and customizing of uniforms.
Sales boys and girls, front desk/payment attendants and security personnel all have different uniform and they are expected to put on these uniforms when they are on duty. All these uniforms will cost you money which is why it must be part of your budget.
- The Cost for Grand Opening of the Lipstick Line Business
You will agree that in recent times, no lipstick line business opens its door for business without first organizing an opening party to officially launch the business. This means that the cost of your grand opening is part of the factor that will determine the overall cost of opening a lipstick line business in the United States of America.
You can choose to do a soft opening if you are operating on a low budget or you can choose to go for a grand opening party. The bottom line is that it is a cost that must be part of your budget and this cost will influence the overall cost of opening the lipstick line business in the United States of America.
Can a Lipstick Line Business be Started from Home on a Lean Budget?
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.
In Conclusion,
These are some of the factors that will determine the overall cost of opening a lipstick line business in the United States of America.
Please note that there are other factors not listed above that will sure influence the overall cost of opening your lipstick line business which is why we will advise that you work with a result driven business consultant in your city to give you the needed guide and overall cost of opening your lipstick line business.