Do you want to start a perfume making business from home? If YES, here is a complete guide to starting a perfume production business with NO money and no experience plus a sample perfume production business plan template. If you intend to start a business where you can get a faster return on investment (ROI), then you should narrow your scope to businesses whose products are needed in our daily existence. One of such businesses is a perfume manufacturing company.
Perfumes are widely used in all parts of the world; this makes those in the perfume making business to generate steady sales year in year out once the business is well managed. As a matter of fact, people’s use of perfume is not determined by economic downturn.
This is because it is a commodity that plays a major role in our daily living. This contributed to the reason why the production of perfume has continued to soar. However, if you are planning to venture into the production of perfume, then you must be ready to learn its nitty-gritty and scale through all the necessary hurdles.
If truly you are interested in starting a perfume business, then you will surely find this article very helpful. This is because the information that you need to kick start your business has been adequately provided here.
17 Steps to Starting a Perfume Production Business
Table of Content
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
1. Understand the Industry
The perfume manufacturers’ role is to prepare and blend different compounds and fragrances together to make up sweet smelling beauty products for clients. Inconsistent incomes do not really affect perfume business and other cosmetics.
The demand for perfume is quite steady while the revenue has also increased steadily in recent years. Going forward, the perfume industry will keep experiencing increased revenue and growth. There has been an increase in demand and supply of the product.
The perfume manufacturing industry is a thriving business in the united states of America. It generates in excess of $42 billion annually from more than 3,361 registered perfume product manufacturing companies. The perfume industry is also a large employer of labor employing over 51,263 people. The industry is projected to experience an annual growth of 1.8 % from 2011 to 2016.
The Cosmetic and Beauty Products manufacturing industry where perfume is categorized is still in its growth phase, though it is likely to enter the mature phase in the near future. The industry’s contribution to the overall economy is expected to grow at an average annual rate of 0.7 percent in the 10 years to 2022.
With this kind of business, you could either choose to start on a small scale or large scale. If you intend starting on a small scale, you can start by supplying to your locality. You wouldn’t have to spend much; you only need a good packaging and marketing strategy coupled with great customer service skills. However, if you intend to start on a large scale, then you should consider spreading your tentacles beyond your city to the national level and even worldwide.
The perfume production business will keep booming because it is a product that is being used daily. This is necessitated by people’s wish to smell good and nice which is exactly what perfume does for them. You don’t need much marketing budget to sell your product.
A sweet smelling perfume markets itself. The perfume business can be done anywhere because it is widely used and accepted everywhere in the world. The perfume business is open to all and sundry. You can venture into it anytime and make huge profits from it.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of perfume users is all encompassing. Both young and old irrespective of their race and color use perfumes. So, if you plan to start your own perfume production business, then you should seize the opportunity of its wide popularity to sell your products beyond your city/state and spread it across the United States of America to other parts of the world.
3. Decide Which Niche to Concentrate On
It always pays to carve a niche in certain businesses. This is because you do not want to be known as a jack of all trades and master of none. But the perfume business, though a thriving business has no niche areas of specialization. The perfume business comprises of body sprays and deodorants in different sizes and packages according to customers preference. The way you package and brand your product is a determinant of how well received your product will be which will help increase sales, popularity and profit making.
The Level of Competition in the Industry
There isn’t a business on the face of the earth that does not have competitors in it. No matter how little, a business always has people who compete against one another. The perfume production business is a highly competitive market. The competition goes beyond the local level; it is an international competition for relevance and dominance.
The competition is stiff because major perfume brands from the United Kingdom, France, Italy, and other parts of the world can be found in cosmetics shops all across the United States. There are several top quality perfume brands in the United States you will have to compete with to thrive in the market.
Mere looking at the stiff competition in the industry, you might be discouraged from starting the business. But the fact remains that no matter how competitive the industry is, with proper branding and marketing you will also make headway in the industry. Just ensure that your products are of good quality.
There are other larger perfume manufacturing companies with strong brands that you have to compete with. These companies are stakeholders as regards to the latest trend in the industry and you should be prepared to compete with them for customers.
4. Know Your Major Competitors in the Industry
These are some of the leading perfume brands in the United States of America and around the world. Why is this so, you just, may ask? This is because there are brands that have gone way ahead of others as they have paid their dues in the past. These brands have passed through the various teething stages of business and have come out successful.
Here is a list of well know perfume brands in America;
- Dolce & Gabbana
- Marc Jacobs
- Hugo Boss
- Ralph Lauren
- Yves Saint Laurent
- Vera Wang
- Jean – Paul Gaultier
- Tom Ford
- Emporio Armani
- Christian Dior S.A
For you to maximize profit from your newly found business, you need to first figure out your economic analysis. Getting it right will set your business on the path to success. You also need to adopt best practices to achieve your business goal.
A thorough market survey of brands within your vicinity should be conducted, you ought to know the popular brands and carry out cost analysis. You ought to know how you can minimize cost and maximize profit while still maintaining your quality.
As I have mentioned earlier, the perfume business is a competitive business which demands utmost preparation before you can venture into it. As such you cannot afford to focus only on the set up cost, quality and product distribution. You should also focus on how to maximize your profit from the thriving business.
5. Decide Whether to Buy a Franchise or Start from Scratch
The best and the most realistic way of doing a perfume business is to start from the scratch because you will hardly see any franchise available to acquire. This is because the business is viable and thriving so no one wants to let go of his/her business.
There are several opportunities available for startups as starting from the scratch will give you a better chance to conduct market survey before you start the business. This is essential as it determines whether you will succeed in it or not.
It is encouraging to note that most of the popular perfume brands we know started as start-ups. They were able to lay the right foundation and do the right things like you are about doing to build a solid brand that will stand the test of time and competition.
It takes determination and hard work to succeed in this business because of its stiff competition and the number of people venturing into the business daily.
6. Know the Possible Threats and Challenges You Will Face
The most obvious threat in this business is the presence of large and established perfume brand. This is a big threat, and the only way you can minimize this threat is to try and create a new market which you can call your own.
Another major threat is economic downturn. This is the bane of most businesses all over the world, so it is nothing new once you are prepared for it. unfavorable government policies too can in some ways pose a threat to this business. You will also face potential threats from new entrants into the market who will struggle with you for market share.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
The legal entity you choose goes a long way to determine how big and profitable your business will grow. Before you choose your legal entity, you have to determine who your target market is and where you intend to sell your products. It could be to supply the regional market, national market, or international market.
In choosing your legal entity, you have various options to choose from. You could choose a Limited Liability Company (LLC), general partnership, or a sole proprietorship for a perfume production business enterprise. Ordinarily, sole proprietorship should have been the most appropriate business structure for a start-up perfume production business with a moderate start-up capital.
But most entrepreneurs prefer LLC for certain reasons. Sole proprietorship is not ideal for entrepreneurs in the perfume making industry who intend to distribute their products all over the United States and other countries of the world. The best option to choose when proposing to start a perfume business is Limited Liability Company. You could still fare well with the general partnership option.
One of the benefits of an LLC is that it protects you from incurring personal liability. In the case of eventualities in the perfume business, it is only the money invested into the limited liability company LLC that will be at risk of loss. But for sole proprietorships and general partnerships, the case is quite different. For LLC you don’t need to appoint a board of directors or hold any formal managerial meetings, and it is simpler and more flexible to operate.
These are some of the factors you should consider before choosing a legal entity for your perfume production business; Limitation of personal liability, admission of new owners and investors’ expectation, ease of transferability and tax rate.
If you take a critical study of the various legal entities being discussed in the perfume business, you will clearly see that Limited Liability Company is most suitable. You can even start your business as a limited liability company and convert it a ‘C’ corporation or an ‘S’ corporation in the future especially when you are planning to take your product to the public market.
Upgrading to a ‘C’ corporation or ‘S’ corporation will guarantee you a clear opportunity to grow your perfume business in order to compete with major brands in the industry. With this plan you be able to easily transfer ownership and enjoy separate tax structure. Lastly upgrading to a ‘C’ corporation or ‘S’ corporation will enable you to generate capital from venture capital firms.
8. Choose a Catchy Business Name
This is an interesting aspect of your start-up perfume business. In choosing a business name, you should be creative at it. You should choose a name that clearly defines your business. This will go a long way to create a perception of what the business represents. Usually people follow the trend in the industry they intend operating from when naming their business.
Below are some catchy perfume company names that you can choose from;
- Stallone® Cosmetic Line, LLC
- Smelling Good® Perfumes, Inc
- Gratchy Perfume Production Company
- Dive Perfume Production Company
- Drew & Dope Cosmetics, LLC
- Brace Up and In Perfume Brand, Inc.
- Smatch Perfume Line, Inc.
- Stella Maris Signature, Inc.
- Marcello Cosmetics, Inc.
- Baton Smell, Inc.
9. Discuss with an Agent to Know the Best Insurance Policies for You
You would not be able to operate a business in the United States and in most countries of the world if you lack some of the basic insurance policy covers required by the industry you intend to operate from. So, you should include the cost of insurance policy in your budget. You could also consult an insurance broker for the necessary guide in choosing the best and most appropriate insurance policies for your perfume production business.
Below are some of the basic insurance covers that you should have to successfully run your perfume production business in the United States of America;
- General insurance
- Health insurance
- Business owner’s policy group insurance
- Payment protection insurance
- Overhead expense disability insurance
- Liability insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
The perfume line business is one business that requires intellectual property protection. This is because perfumes have a high chance of it been counterfeited. If you don’t copyright your product, you risk your label, design and style being reproduced with fake ingredients which will create a dent to your brands quality. If you don’t protect your brand, you give opportunity for them to make free money off your brand name.
If you want to protect your company’s logo, formula, and other documents that are unique to you or even jingles and media production concepts, then you should file for intellectual property protection. To register your trademark, you should file an application with the USPTO. Your trademark would be approved based on the attorneys review as required by USPTO.
11. Get the Necessary Professional Certification
To start your perfume line business, you do not need any special professional certification; though you will have a competitive advantage if you study cosmetology or related courses before starting this this type of business. You will be able easily understand and know your way around the business from start to finish as it relates to producing perfumes, body sprays and similar products.
12. Get the Necessary Legal Documents You Need to Operate
To successfully run a perfume making business in the United States, you need to ensure that the necessary documentations are in place. Proper documentation is a prerequisite to running a business successfully in the United States. If you try to start your business without the right documentation, it won’t be too long before the long hand of the law catches up with you.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your perfume business in the United States of America;
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Employee Handbook
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Consulting contract documents
- Apostille (for those who want to take their business international)
13. Raise the Needed Startup Capital
Starting a perfume production business on a small scale can be cost effective. Securing a standard production facility for your small scale business is what takes up a large chunk of your start-up capital. If you choose to start the business on a large scale, you would need to source for external funds to finance the business because starting on a large scale is capital intensive.
To get external financing for your project you need to write a good and exciting business plan. With a good and workable business plan, you would not have to labor yourself before convincing your bank, investors and your friends to invest in your perfume business.
Here are some of the sources of start-up funding you can explore for your perfume production business;
- Raising money from personal savings and sale of personal stocks and properties
- Sell shares to interested investors
- Raising money from investors and business partners
- Source for soft loans from your family members and your friends
- Applying for loan from your bank/banks
- Pitching your business idea and applying for business grants
14. Choose a Suitable Location for your Business
The location you decide to site your perfume production business is very important to the success of the business.
You should rent or lease a facility in a visible location; a location where the demography consists of people who have the lifestyle and financial capacity to purchase your product. When choosing a location for your perfume line production business, you should always take note of the location with high demand for perfume product while also considering the easy access to labor and raw materials needed for production.
Be on the lookout for a location central to all the factors of production. This will help you cut cost of transporting your raw materials and finished products to and from your production facility and warehouse to the supply chain for onward distribution.
Below are some key factors to consider before choosing a location for your perfume business
- The demography of the location
- The purchasing power of the residence of the location
- The demand for perfumes and body sprays in the location
- The number of perfume line companies in the location
- Accessibility of the location
- The local laws and regulations in the state
- Security, Traffic, etc.
15. Hire Employees for your Technical and Manpower Needs
Before a product becomes a finished product a lot of technical and manpower efforts have gone into its production. So also if you plan to start your perfume business, you should be prepared to purchase the necessary machines and equipment like blending, mixing and compounding machines, molding machine, packaging, labeling and sealing machines.
These are the basic machines you would need to kick-start your perfume business. For cash strapped entrepreneur you can start with fairly used equipment/machines but if you are financially buoyant, then you should get brand new equipment/machines, it will save you cost in the long run since they usually have longer life span.
Concerning the leasing or outright purchase of a production facility or warehouse facility, the decision you make depends on how financially buoyant you are. I wouldn’t advise that you start with outright purchase especially if you are just starting the business. To guide against heavy loss, start off with a short – term rent/lease. If after test running the business in that location and it works out as planned, then you go on an outright purchase of the property.
When it comes to hiring employees for a standard perfume line production company, you should make plans to hire a competent Chief Executive Officer (You can occupy this role), Administrative manager, Human Resources Manager, Sales and Marketing Manager, Quality Control Officer, Cosmetologist, Machine Operators, Accountant, Customer Relations Manager and Delivery Van Drivers. These are some of the key employees that you can work with. You will need an average of 7 key staff members to run a small – scale but standard perfume line production business.
The Service Delivery Process of the Business
When it comes to the production of perfumes and body sprays, the first step is to determine the quantity, color, size and package design of the perfume and body sprays to be produced. The other steps involved in the production of perfume are; securing of raw materials and chemicals, labeling and packaging materials. The raw materials are then mixed and filled into bottles, tubes, cans, etc. The final step is to package, label and brand the products for sale.
A perfume line production company may change the process and procedures in order to guarantee more efficiency and flexibility; the above stated business process is not cast on stone.
16. Write a Marketing Plan Packed with ideas & Strategies
Getting the right words to people about your perfume brand is a task that should be taken really seriously. As we have earlier discussed, the perfume business is highly competitive. Therefore, you have to be on top of your marketing game to really make headway in this business.
You need to be proactive and highly flexible when it comes to marketing your goods or services. You need to find ways to attract customers so that you would not struggle with the business dominated by the known brands who determine the market direction for the perfume line.
Below are some marketing strategies you can adopt for your perfume production line business:
- Advertise on the internet and social media like Twitter, Facebook, and LinkedIn.
- Create a basic website for your business so as to give your business an online presence.
- Directly market your products.
- Provide discount days for your customers.
- Advertise in community based newspapers, local TV and radio stations.
- Engage in road shows in targeted communities from time to time to sell your products.
- Join local perfumes associations for industry trends and tips.
- List your business on yellow pages ads (local directories).
- Encourage the use of Word of mouth marketing (referrals)
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
To run a perfume business successfully, you need to boost your brand visibility. One of the secrets to success of established perfume brands is that they invest heavily to boost their brand awareness and make customers to have a positive perception about their brand.
Your major goal in this business is to boost your brand awareness and communicate your corporate identity, so that you will be able to compete with the big brands. If you intend to grow your business beyond the city where you are starting off from to become a national and international brand, then you must be ready to spend on promotion and advertisement of your brand.
No matter the business you are planning to start, you need to understand that they all require consistent brand awareness and brand promotion to continue to appeal to your target market. Your corporate identity is very important in building a lasting and profitable business.
Below are the ways you can create corporate identity and boost the brand awareness for your perfume production business;
- Place adverts on both print and electronic media platforms
- Sponsor relevant community based events/programs
- Promote your business with the use of internet and social media platforms like; Facebook, Twitter, Instagram, YouTube and Google
- Place your billboards in strategic locations all around your city or state
- Distribute your fliers and handbills in target areas
- Contact corporate organizations, businesses in the cosmetics industries and key stakeholders throughout the United States informing them about your products
- Advertise on your official website and pull traffic to the site
- Brand all your vehicles and distribution trucks/vans and ensure staff members wear your branded shirts and other official items