Lipsticks, lip gloss and similar products are used in all parts of the world and of course those that are in the business of producing these products, are known to generate sales year in year out if the business is well – managed. As a matter of fact, economic downturn hardly affects the usage of lipsticks, lip – gloss and similar products simply because it is a commodity that plays a major role in the beauty world.
This is no wonder the production of lipsticks and lip glosses, et al, have continued to soar high. If you are however thinking to dabble into lipstick line production business, then you must be ready to really learn the ropes and scale through all the necessary hurdles there are.
In as much as people can start this business on a small scale, it will be a wise decision to conduct an in-depth market research, feasibility studies and most importantly to write a good business plan document – especially if you choose to start the business on a large scale and as a standard business that can employ more than a handful of people.
20 Steps on How to Start a Lipstick Line Business
Table of Content
- 1. Understand the Industry
- Interesting Statistics About the Lipstick Industry
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide What Niche to Concentrate On
- 4. Know the Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 6. Know the Possible Threats and Challenges You Will Face
- 7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- 8. Discuss With an Agent to Know the Best Insurance Policies for You
- 9. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 10. Get the Necessary Professional Certification
- 11. Get the Necessary Legal Documents You Need to Operate
- 12. Raise the Needed Startup Capital
- 13. Choose a Suitable Location for your Business
- 14. Hire Employees for your Technical and Manpower Needs
- 15. Write a Marketing Plan Packed With ideas & Strategies
- 16. Work Out a Reasonable Pricing for your Services & Products
- 17. Develop an Iron-clad Competitive Strategies to Help You Win
- 18. Brainstorm Possible Ways to Retain Clients & Customers
- 19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
- 20. Define your Supplier and Distribution Network
1. Understand the Industry
Lipstick production line business involves preparing, blending, compounding and packaging both cosmetic and therapeutic lip products. The products they produce are lipstick, lip gloss, lip stains, lip liner and lip balm. Lipstick is applied to the lips as part of makeup basically to boost lip color, texture and often hydration.
Sheer lipsticks usually contain a significant amount of oil, with less wax and pigment than matte lipsticks, making them more translucent. Lipsticks with oil components, though, must be reapplied many times so as to make the lips look shiny and glossy.
The lipstick production line of business is a business whose products are used all across the world. It is fact that there is no cultural barrier to the usage of lipsticks. As a matter of fact, doctors do recommend that some patients with dry lips should make use of lip gloss.
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.
Operators flooded the industry over the period, as purchaser demand for brand – name and value-added products increased. An increasingly health-conscious customer base is becoming progressively more aware and sensitive to product ingredients.
Consumers are increasingly concerned with using products that are chemical-based or have traces of metals or animal by-products, pushing companies to invest in research and development to offer new natural and safe products
Interesting Statistics About the Lipstick Industry
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.
Despite the fact that the lipstick production line business appears to be somewhat saturated in the United States of America, there is a positive outlook for the industry especially when it comes to leveraging on the changing trends in technology and beauty cum fashion.
One of the major factors that encourage aspiring entrepreneurs to venture into lipstick line production businesses is the fact that there are readily available markets for lipsticks, lip gloss and similar products. Despite the fact that there are stiffer competitions amongst lipstick line manufacturing companies / brand, if you are able to carve a niche for yourself, it won’t be too difficult for people to accept your products.
Over and above, the lipstick line production business is a profitable industry and it is open for any aspiring entrepreneur to come into and establish his or her business; you can choose to start on a small scale selling your products within your city or state or you can choose to start on a large scale with your products spread across your country and even in other countries of the world.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition for those who make use of lipsticks and lip gloss, et al, is all encompassing. It is not restricted to just female genders, males also make use of lip gloss to help them protect their lips from hash weather condition that can cause lip cracks and lip dryness.
So, if you are thinking of starting your own lipstick line business, then you should look beyond producing and marketing your products to just the female genders, but also the male folks.
3. Decide What Niche to Concentrate On
There is no niche in the lipstick line production business. Those who are into the production of lipsticks are also into the production of lip gloss and any lip enhancing cosmetics in different colors and different packages to meet the trend in the industry. Branding and packaging is a major factor that can help you increase your sales and gain market prominence in the lipstick line of business.
- The Level of Competition in the Lip Gloss Industry
The competitions that exist in the lipstick line of business go beyond competitions in your city or country; it is both nationally and internationally. This is so because, major lipsticks line / brands in France, Italy, and united kingdom and in any part of the world can be found in cosmetics shops all across the United States of America. So, it will be right to say the competition in the cosmetics cum lipsticks production industry is stiff.
The truth is that, no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your products or business properly, you will always make headway in the industry. Just ensure you have what it takes to churn out quality products and you know how to reach out to your target market.
4. Know the Major Competitors in the Industry
When it comes to lipstick line, you can be rest assured that there are world class lipstick brands whose products are scattered all across the world; brands that have successfully become household names. Here are some of the well – known lipstick line companies in the United States of America and in other part of the world;
- Makeup Forever
- Bobbi Brown
- Estee Lauder
- Dolce & Gabbana
- Sonia Kashuk
- Napoleon Perdis
- Yves Saint Laurent
- NYX Cosmetics Guerlain
- Charlotte Tilbury Matte Revolution Lipstick
- Rimmel London Provocalips 16HR Kissproof Lip Colour
- Kat Von D Everlasting Liquid Lipstick
- Stila Stay All Day Liquid Lipstick
- A.C. Lipstick
- Clinique High Impact Lip Colour
- Origins Flower Fusion Hydrating Lip Color.
If you are looking towards successfully launching a business and maximizing profits, then you need to ensure that you get your economic analysis right and try as much as possible to adopt best practices in the industry you choose to build a business in.
Lipstick line business is not a Green business, as a matter of fact; you will come across several brand names in your local cosmetic store when you go shopping for lip stick, lip gloss or similar product. So, if you are mapping out your economic analysis, you should carry out thorough market survey and costing of the required raw materials, packaging materials and other equipment needed to successfully run the business.
Over and above, if you are considering starting a lipstick line company, then your concern should not be limited to the cost of setting up the business and churning out quality lipsticks and lip gloss et al but also on how to build a robust distribution network. The truth is that if you are able to build a robust distribution network, you are sure going to maximize profits in the business.
5. Decide Whether to Buy a Franchise or Start from Scratch
Unfortunately, you can hardly find a franchise of a lipstick line company to purchase- meaning that if you want to own a lipstick line business, then you must be ready to start from the scratch. This is so because the business is still pretty much thriving and there are loads of opportunities available to aspiring entrepreneurs that are interested in the industry.
The truth is that it will pay you to start your lipstick line company from the scratch. Starting from the scratch will afford you the opportunity to conduct thorough market survey and feasibility studies before choosing a location to launch the business.
Please note that most of the big and successful lipstick line companies around started from the scratch and they were able to build a solid business brand. It takes dedications, hard work and determination to achieve business success and of course you can build your own lipstick line brand to become a successful brand with your products distributed all across the length and breadth of the United States of America and other countries of the world.
6. Know the Possible Threats and Challenges You Will Face
Just like any other business, one of the major threats that you are likely going to face is economic downturn and unfavorable government policies. It is a fact that economic downturn affects purchasing power. Another threat that may likely face also is the arrival of a new lipstick line or even cosmetics and beauty care product manufacturing company that also produce lipstick, lip gloss and similar products in same location where yours is located.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
When considering starting a lipstick line company, the legal entity you choose will go a long way to determine how big the business can grow; some lipstick line companies design their business and products for regional market, some for national market, while others for international market.
No doubt choosing a legal entity for a business such as a lipstick line company can be somewhat straightforward going by the nature of the business they are involved in. When it comes to choosing a legal entity for your lipstick line business you have the option of choosing from a general partnership, a limited partnership, an LLC, a “C” corporation, or a “S” corporation.
It is important to clearly state that these different forms of legal structure for business has its own advantages and disadvantages; which is why you must weigh your options properly before making your choice on the legal structure to build your business on.
These are some of the factors you should consider before choosing a legal entity for your lipstick line company; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and tax issues.
If you take your time to critically study the various legal entities to use for this type of business, then you will agree that Limited Liability Company; an LLC is perhaps the most suitable. You can start your lipstick line company as limited liability company (LLC) and in future you can convert it to a ‘C’ corporation or a ‘S’ corporations especially when you have the plans of going public.
Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your lipstick line company so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company; you will enjoy flexibility in ownership and in your management structures as well.
8. Discuss With an Agent to Know the Best Insurance Policies for You
Actually, in the United States and of course in most countries of the world, you can’t operate a business without having some of the basic insurance policy cover that is required by the industry you want to operate from.
Besides, the nature of lipstick line of business requires that you have the proper insurance cover in place or else you will be forced out of business if you are sued for any business-related issues. So, it is important to create a budget for insurance cover and perhaps consult an insurance broker to guide you in choosing the best insurance policies for your lipstick line business.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own a lipstick line company in the United States of America;
- General insurance
- Health insurance
- Liability insurance
- Workers Compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
9. Protect your Intellectual Property With Trademark, Copyrights, Patents
If at all there are businesses that require intellectual property protection (copyright ©), then lipstick line business should be one of them. The truth is that your label, design and your style need to be protected or else anybody can successfully fake or create similar products and go scout free making money off your brand name.
If you want to protect your intellectual property or secure a trademark for your lipstick line company, you can visit The United States Patent and Trademark Office (USPTO) to fill a patent application form. The process is not in any way cumbersome. You are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subjected to the review of attorneys as required by USPTO.
10. Get the Necessary Professional Certification
Although you do not need any special professional certification before you can successfully start your own lipstick line business, but you will do yourself a whole lot of favor, if you study cosmetology or related course before starting this type of business. It will afford you the opportunity to truly maximize the business; you will be able to have full grasps of the business from start to finish especially as it relates to producing lipsticks, lip gloss and similar products.
11. Get the Necessary Legal Documents You Need to Operate
These are some of the basic legal document that you are expected to have in place if you want to start a lipstick line company in the United States of America;
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract Document
- Security Clearance
12. Raise the Needed Startup Capital
No doubt when it comes to financing a business, one of the first thing and perhaps the major factors that you should consider is to write a good business plan. If you have a good and workable business plan in place, you may not have to labor yourself too hard before convincing your bank, investors or your friends to invest in your business.
Here are some of the options you can explore when sourcing for start – up capital for your lipstick line business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank / banks
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends.
13. Choose a Suitable Location for your Business
When it comes to choosing a location for your lipstick line production business, the rule of thumb is that, you should be guided by the demand for such product and easy access to labor and raw materials in the location you so desire to start the business.
Of course, if you are able to secure a central location for your lipstick line production business, it will enable you cut the cost of transporting your raw materials and finished products to and from your production facility and warehouse.
Most importantly, before choosing a location for your lipstick line production company, ensure that you first conduct a thorough feasibility studies and market survey. The possibility of you coming across similar business that just closed shop in the location you want to open yours can’t be ruled out.
This is why it is very important to gather as much facts and figures before choosing a location to set – up your own lipstick line production business. These are some of the key factors that you should consider before choosing a location for your lipstick line production company;
- The demography of the location
- The demand for lipsticks, lip gloss and similar cosmetics in the location
- The purchasing power of the residence of the location
- Accessibility of the location
- The numbers of lipstick line companies and cosmetics manufacturing companies in the location
- The local laws and regulations in the community / state
- Traffic, parking and security et al
14. Hire Employees for your Technical and Manpower Needs
If you are considering setting up a lipstick line production company, it means that you should be prepared to purchase equipment and machines such as blending, mixing and compounding machine, molding machine (tubes), and packaging, labeling and sealing machines.
These are the basic machines needed to launch the business. If you don’t have enough cash, you can start with fairly used equipment / machines but if you are financially buoyant, then you should go for brand new ones since they usually have a long – life span.
As regard leasing or outright purchase of a production facility or warehouse facility, the choice is dependent on your financial standings, but the truth is that to be on the safe side, it is advisable to start off with a short – term rent / lease while test running the business in the location. If things work out as planned, then you go on a long – term lease or outright purchase of the property but if not, then move on and source for other ideal location / facility for such business.
When it comes to hiring employees for a standard lipstick line production company, you should make plans to hire a competent
- Chief Executive Officer (Owner)
- Admin and Human Resources Manager
- Sales and Marketing Manager
- Cosmetologist / Quality Control Officer
- Machine Operators
- Distribution / Delivery Van Drivers
- Client Services Executive
These are some of the key employees that you can work with. On the average, you will need a minimum of 7 key staff members to run a small – scale lipstick line production business.
The Production Process Involved in the Production of Lipsticks, Lip Gloss and Similar Cosmetic Products
When it comes to the production of lipsticks, lip gloss and similar cosmetics products, the first step to take is to determine the quantity and types (colors and sizes et al) of the lipsticks and lip gloss to be produced.
Other steps involved in the entire process are securing raw materials Chemicals (Color pigments, oils, Castor oil, waxes (beeswax, candelilla wax, or camauba, red fluorescent dye, solvent, antioxidant and emollients) and labeling and packaging materials.
The raw materials are then mixed under the right temperature and then filled into tubes, allowed to cool off. The next step is to properly packaged, labeled and brand the products for sale.
It is important to state that a lipstick line production company may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated lipstick and lip gloss production business process is not cast on stone.
15. Write a Marketing Plan Packed With ideas & Strategies
Generally, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a lipstick line production business, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands determining the market direction for lipstick line.
These are some of the marketing ideas and strategies that you can adopt for your lipstick line business;
- Introduce your products by sending introductory letters alongside your brochure to corporate organizations, businesses in the cosmetics and beauty retailer industries, beauty spas / salons and key stake holders throughout the United States and Canada.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across, so that those on the social media or those who read blogs can know where to go when they need to purchase your lipsticks, lip gloss and similar cosmetic products
- Creating a basic website for your business, so as to give your business an online presence
- Directly market your products.
- Engage in road show in targeted communities from time to time to sell your products
- Join local lipsticks cum cosmetics associations for industry trends and tips
- Provide discount days for your customers
- Advertise our business in community based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word of mouth marketing (referrals)
16. Work Out a Reasonable Pricing for your Services & Products
The factors that will help you get the right pricing for your lipstick is to source for cheaper raw materials, produce in large quantities, cut operational cost to the barest minimum, channel your efforts towards marketing and promoting your lipstick brand name. Aside from the fact that this strategy will help you save cost, and get the right pricing for your products.
You can also try as much as possible to work with independent wholesale distributors and marketers; with that, it will help you save cost for paying sales and marketing executives and also purchase, maintaining fleet of distribution trucks.
So also, if you are able to secure high volume lipstick making machines; machines that are efficient to run and maintain, then you will be able to get the right pricing and of course maximize profits from your lipstick line production company.
17. Develop an Iron-clad Competitive Strategies to Help You Win
The quality and uniqueness of your lipsticks, lip gloss and similar cosmetics, your business process and of course your pricing model et al is part of what you need to stay competitive in the industry. If wholesale distributors are making profits from selling your products, they will be more than willing to go the extra mile to help you push your products to every nooks and crannies of the cities they distribute products.
Another possible competitive strategy for winning your competitors in this particular industry is to build a robust distribution cum business network. Over and above, ensure that your organization is well positioned, key members of your team are highly qualified and your products can favorably compete with the some of the best in the industry.
18. Brainstorm Possible Ways to Retain Clients & Customers
When it comes to business, no matter the industry that you choose to pitch your tent in, one of the easiest ways to increase customers’ retention and perhaps to attract new customers is to satisfy your customers always. If your customers are satisfied with your products and service delivery, they can hardly source for alternative service provider or products.
Statistics has it that one of the major reasons why clients source for alternative service provider or product is when there is a drop – in quality of your products or services. If you can continue to improve on the quality of your lipsticks, lip gloss and similar cosmetics and customer service delivery and also give your customers options, then you won’t struggle to maintain loyal customers.
When it comes to managing your customers and building loyal clientele base, you should purchase a customized CRM software. With a customized CRM system, you can easily stay in touch with your customers (you can carry out quick survey, you can introduce new products and prices to them without any hitch, you can felicitate with them on their birthdays and other anniversaries, you can send bulk sms and customized e – mails and above all you can easily receive compliant and feedback from them).
19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If you are in business and you are deliberate about boosting you brand and communicating your corporate identity, then you must be ready to take on whatever the society portray your business to be. One of the secret of big corporations is that they are willing to spend fortunes year in and year out to boost their brand awareness and to continue to communicate their corporate identity.
If your intention of starting a lipstick line production company is to grow the business beyond the city where you are operating from to become a national or international lipstick brand, then you must be ready to spend money on promotion and advertisement of your brand.
In promoting your brand and corporate identity, you should leverage on print and electronic media. As a matter of fact, it is cost effective to use the internet and social media platforms to promote your brands, besides it is pretty much effective and wide reaching.
Another strategy is to sponsor relevant TV and radio programs, and also to sponsor events both locally and internationally. You can also brand all your official cars and trucks / vans; your workers should be encouraged to wear your company’s branded shirt and you should install your billboards in strategic locations where your target market exist.
20. Define your Supplier and Distribution Network
If you looking towards maximizing your lipstick line company, then you should go all the way to ensure that you build a robust distribution network. Products such as lipsticks do pretty well if they are found in every nooks and crannies of the city.
All you need to do is to ensure that you work with independent wholesale distributors, network with players in the beauty care industry (beauty salons and spas, make-up artists, cosmetic retail outlets, supermarkets and out outlets where lipsticks are sold and used). It will give you leverage.
Just ensure that you leverage on pricing and quality product to gain market acceptance; your wholesale distributors should be able to make good profits from selling your products if indeed you want them to go the extra – mile in promoting and marketing your lipsticks, lip gloss and other similar cosmetic products.