Do you want to start a skin care products business? If YES, here is a complete guide to starting a skin care products business with NO money and no experience.

Okay, so we have provided you an in-depth sample skin care products business plan template. We also took it further by analyzing and drafting a sample skin care products marketing plan backed up by actionable guerrilla marketing ideas for skin care products business. In this article, we will be considering all the requirements for starting a skin care products business. So put on your entrepreneurial hat and let’s proceed.

Why Start a Skin Care Products Business?

According to the NPD Group, the skin care industry in the united states is booming with an annual 8 percent growth in recent years, as everyone is becoming conscious of how they want their skin to look. The diverse audience that the industry has is a great chance for any innovative entrepreneur to tap into in order to make a name for him or herself. Even though entry into the market is low, start-up costs can make the market difficult for entrepreneurs to break into.

Running a business especially in the first two years of starting the business can be very challenging because aside from producing skin care products, you will also have to worry about the business aspect such as having enough capital at hand, paying bills, managing inventory, negotiating a lease with the landlord, maintaining your equipment, dealing with insurance companies and employees.

Also, before starting the business, you must know who your target market is because you will need to have detailed strategies on how you intend to attract and keep customers coming for your products. You must also know who you would be competing against, you might attend a trade show and see how products are exhibited and which brand has more customers and why.

Once you know who your target market is, ensure that your skin care products are extensive in order that you might have more clients or you can focus on a niche but ensure that whatever you are focusing on is in line with the trends.

In creating your skin care products, you will need to decide whether you intend to make the products yourself either at home or at a leased facility, outsource the production to a lab or buy white label skin care and then brand it with your own logo and design.

While the first two options aren’t bad, the last one might be risky especially if you run into problems with clients later. Whatever route you intend choosing when starting your skin care product business, ensure it is one that sets your product apart from that of your competitors by having a signature ingredient, name, personal story, brand concept or packaging design.

Having a business plan in place is very important as it will act as a guide from the moment the business starts till the entrepreneur is ready to exit the industry. The importance of the business plan is such that it can easily convince external investors of the viability of the business idea and the commitment of the entrepreneur to ensuring that the business succeeds.

Starting a Skin Care Products Business from Home – A Complete Guide

  • Industry Overview

The skin care industry in the United States is a viable industry due to the fact that most people regardless of sex and age want flawless skin. The $121 billion skin care industry consists of sectors such as body care, facial care, hand care, make-up removal products and depilatories.

Even though the older consumers are still the most prominent demography in this industry due to the fact that they are predisposed to having disposable income, younger people who are also becoming more aware of their skin have also become a driving force in the industry.

According to an analytical report by Lucintel, it is expected that skin care products globally will generate about $135 billion by the year 2021 especially with slogans such as anti-aging, sun protection and multi-functional skin cream that is trending in the industry. The facial care sector is expected to exhibit above average growth and skin care creams that offer customers a double task such as sun protection and anti-aging will also receive a general boost in the market.

A report by Grand View Research has it that more customers are looking for natural skin care products, an act that is affecting the trend in the skin care industry. It is expected that organic skin care products will see an increase of CAGR of 10 percent between the periods of 2016 to 2025.

Even though factors such as changing consumer lifestyles and preferences as well as increase in disposable income will help boost the organic skin care sector, the high manufacturing costs that companies have to bear will remain a huge strain for the growth of this sector.

Multi-functional products have also continued to receive high demand from customers especially those whose income cannot afford an array of skin care products. Demand for multifunctional products rise in relation to the increase in functionality of the products.

Products that, for instance, provide skin care and cosmetic benefits have grown in popularity globally in recent years even though most of these multifunctional products originate from Asia and Germany. According to a report by NPD Group, department stores in the United States generated $9 million in sales of multifunctional products in 2012.

The growing skin care industry will continue to launch new and innovative products and it is expected that in the United States alone, the market value for the skin care industry will reach nearly $11 billion by 2018. On a global scale, the skin care market is not only poised for more growth, it is expected to have a CAGR of nearly 4 percent within a five year period – 2016 to 2021. It is expected that anti-aging products will continue to have the largest growth due to the huge aging population.

North America is the largest market for organic skin care products as the region accounted for more than 30 percent of the revenue generated globally. In the same period, Europe generated over $750 million in its organic skin care market and it is expected that the rising need for chemical free products will have a positive impact on the global industry for the next 7 years. In Asia, the organic skin care sector is expected to grow at a CAGR of more than 25 percent between a seven year period – 2015 to 2022 as well.

E-commerce has been one of the main vehicles through which the market for skin care products has grown especially due to the wide range of products from the industry which has given consumers several choices when it comes to choosing between brands and the properties of the skin care product.

The global market for skin care is divided into two product segments – face creams and body lotions. In the organic sector of the industry, face creams have the largest product segments and it is expected that continual product launches as well as the establishment of strategic partnerships among key players will account for the success of the sector as well as the industry.

Starting a Skin Care Products Business – Market Research and Feasibility Studies

  • Demographics and Psychographics

The demographic and psychographic composition of those who use skin care products can be said to be majorly the older population – either male or female – with an in inclusion of the younger population.

The type of skin care products purchased often has to do with the purpose the user has in mind and also the purchasing power of the consumer, as those within the high income bracket will usually go for more expensive skin care products, while those with mid to lower income will go for multifunctional skin care products.

List of Niche ideas Within the Skin Care Products Business That You Can Specialize in

The skin care industry encompasses various sectors depending on the need of the consumers. Large scale skin care corporations are usually able to attract more customers due to economies of scale and large distribution networks as opposed to smaller or independent skin care companies.

If you are looking to go into a niche, ensure that you have conducted a thorough research about the niche so that you do not end up losing your investment and wasting your time. Below are some of the niche ideas that are available within this particular industry that one can specialize in;

  • Anti-aging Skin care Products
  • Organic Skin care Products
  • Multifunctional Products
  • Sensitive Skin Care Products
  • Infant skin Care Products
  • Dry Skin Care Products

The Level of Competition in the Skin Care Product Industry

The skin care industry is fraught with competition and the level of competition depends on the niche one is in, distribution networks, marketing and promotion efforts and quality of skin care products being produced.

What customers usually want from operators in this industry is a product that will meet their expectations. While some of these customers are hung up on brand names, others go for a product that they feel will help them achieve the results they want or solve their problems regardless of the brand name.

Therefore, if you are looking to start your skin care business in the United States, you will be competing with a lot of huge brands not only within the country but also outside of it.

List of Well – Known Brands in the Skin Care Products Industry

In every industry, there are brands that stand out and the skin care industry is no different. Some of the huge brands in the skin care industry have been in existence for a long while; some have been successful in their niche due to the quality of their products and some due to their availability in various places.

Some of the well-known skin care brands in the United States as well as globally are;

  • Elizabeth Arden
  • Seventh Generation
  • Procter & Gamble
  • J.R. Watkins
  • Clinique
  • RMS Beauty
  • Johnson & Johnson
  • The Body Shop International PLC

Economic Analysis

The skin care industry is constantly evolving due to changes in the preference and taste of consumers. The social media is one platform that has a huge impact on the skin care industry due to the fact that beauty users do follow trends from any part of the world. This has made the skin care segment to remain innovative in order to still remain the largest segment of the beauty industry especially as sales in this segment are expected to be over 0 billion by the year 2019.

Also, more people are beginning to prepare their own skin care products in their kitchen using kitchen products such as moringa and kale.

Aside from including kitchen ingredients in skin care products, there is the rising trend of ingesting skin care products especially as consumers are becoming increasingly aware of how what they ingest affects their skin; and so in trying to make healthy meal choices and remain hydrated, more consumers are beginning to add skin care products into their meals.

Two ingredients however hold sway over the skin care industry and they are hyaluronic acid and retinoids due to their anti-aging properties which help in treating issues such as acne, wrinkles, sun damage and scars and they have become very popular among users in the beauty industry.

Starting Your Skin Care Product Company from Scratch vs Buying a Franchise

As an entrepreneur looking to enter into the skin care industry, you will be faced with the decision of whether to start your business from scratch or whether to buy a franchise. While there are several franchise opportunities available in this industry, entrepreneurs that are passionate about the product which they intend to sell to their customers usually prefer to have their own brands on their products.

However, buying a franchise opportunity has some benefits to it as you won’t need to bother with making too much mistakes due to the fact that the franchisor will help handle several challenging parts of the business. Ensure that you conduct a thorough research on the company that you intend to buy the franchise from.

If you are however determined to see your brand succeed in the industry, then you need to start your business from the scratch. Starting from the scratch in an industry that is filled with intense competition is not usually an easy feat for any entrepreneur as most businesses usually fail within a couple of months due to the various challenges it has had to grapple with. However, if you have a comprehensively written business plan; the early stages of the business might not be as overwhelming as it would be for someone who didn’t have a business plan.

Possible Threats and Challenges You Will Face When Starting the Skin Care Product Company

When looking to start any business as an entrepreneur, you should not only be aware of the threats and challenges that would have an impact on your business but you should also be prepared for them. What you should however take into consideration is that while some of these threats and challenges can easily be handled, it is not all that would be and so you should remain focused on ensuring you attain your goals and objectives regardless of the challenges.

Some of the threats and challenges that you are therefore likely to face when starting or running your skin care product company include; changing consumer tastes and preferences, economic downturn, natural or man-made disasters, legal suits from unsatisfied customers and adverse government policies.

Starting a Skin Care Products Business – Legal Matters

  • Best legal entity to use for this type of business

When looking to start any business, one of the decisions that will have a huge impact on your business is legal entity. Depending on what extent you intend to grow your business into, certain legal entities might not be suitable and so it is usually best to conduct a thorough research on which legal entity will best suit your kind of business.

There are five major entities for entrepreneurs looking to start their business in the United States and they are; Sole Proprietorship, Partnership, S Corporation, C Corporation and Limited Liability Company (LLC). There are several major attributes which can be used to determine which legal entity would be right for the business. Some of the major attributes include; the objectives of your business, target market, capital, ownership and management of the structure; ease of setup and flexibility, taxation issue and liability.

Some legal entities are usually hard to setup and control, with lots of paperwork and it is usually best handled by an attorney. If you intend to run a complicated business, then it would be best to ensure that your personal assets are separated from the assets of the company so that in case of any legal issues, you do not end up losing all that you have.

If you intend to run a skin care product business that will be nationally and internationally recognized, then you must think of incorporating your business. The options that are available to you are S Corporation and LLC; as C Corporation is basically for specialist businesses.

The S Corporation and LLC are regarded as entities that are separate from their owners. They are both also flexible to a certain extent and the taxation structure especially for the LLC is similar to that off a sole proprietorship.

Catchy Business Name ideas Suitable for a Skin Care Company

When looking to start any business, before the business can be incorporated; you must first have come up with a name that isn’t being used by any other businesses. The name must also be unique, easily pronounceable and memorable so that your target market can easily identify your brand from other products.

Below are some of the catchy business name ideas suitable for a skin care product company;

  • Lily Organic SkinCare Inc.
  • Oosh Body Corporation
  • Ella Body & Facials
  • Manga Corp
  • Petals Beauty

Insurance Policies

Having insurance is very important for any entrepreneur looking to start their business in the United States of America, as this protects your business to a certain extent from manmade and natural disasters. According to an insurance research report, a quarter of new businesses shut down forever immediately after a manmade or natural disaster and so if you are one that has risked everything in order to start this business, it will be unwise not to purchase some insurance coverage for your business.

You can engage the services of an insurance agent or broker to help pick which insurance policies will be best for your business. Some of the insurance policies that you should consider purchasing when looking to start your skin care product business in the United States include;

  • General Liability
  • Contents Coverage
  • Commercial Property Liability
  • Workers’ Compensation Insurance
  • Product liability insurance
  • Health Insurance
  • Hazard Insurance
  • Casualty Insurance

Intellectual Property Protection/Trademark

As long as you intend to use certain ingredients and also have your own formula, it is best that you acquire intellectual property protection to protect your formula from being stolen by a competitor. Aside from your formula, you can also seek for intellectual property protection on the name of your company, your logo, slogan or any other material that you deem important.

There are several attorneys in the United States that have a thorough knowledge of the skin care industry and what you will need and how long it will take for your application to be considered.

Is Professional Certification Needed to Run a Skin Care Products Business?

In starting a skin care products business, you will need to know what you intend to produce and sell to your target market. This knowledge is required whether you intend producing the products yourself or seeking the services of a certified lab to help you out. However, while knowledge of your business is a must, it is not necessary to get any sort of professional certification before starting the business.

As an entrepreneur however, you can still acquire professional certification in areas that interests you especially when it comes to running a business but this does not mean that it will affect the sales of your products.

List of Legal Documents You Need to Run the Skin Care Product Company

When looking to start a business, there are legal documents that you will need to possess so as not to encounter any hitches while running the business. It is imperative that you have conducted a thorough research about your business so that you can know what documents will be needed or you engage the services of an attorney to help you get all the legal documents that you will need to start your business.

The skin care business is one that even though has low barriers to entry is sensitive as regards proper documentation. The list of legal documents that you will need to run your skin care product company;

  • Contracts Documents
  • Certificate of Incorporation
  • Operating Agreements for LLCs
  • Business License and Permit
  • Business Plan
  • Insurance Policy
  • Non-Disclosure Agreement
  • Sales Tax Permit

Financing Your Skin Care Product Company

No matter how unique your business idea might be, without proper financing, it is likely to fail and so as an entrepreneur you must realize how vital it is to know where you are going to source for your start-up capital. This is why it is often advised that you have a comprehensive business plan at hand as this will help convince intending investors – especially if you are going to be sourcing for funds from external sources – on why they should invest in your business.

Some of the available options that you have when it comes to raising finance for your skin care product business include;

  • Generating part of your start-up capital from personal savings and sale of personal property and stock
  • Sourcing for soft loan from family members and friends
  • Crowdfunding from popular sites
  • Applying for loan from the bank
  • Raising money from external investors and interested business partners

Choosing a Suitable Location for your Skin Care Products Business

Choosing an appropriate location for your skin care product business is very important in helping attain your goals and objectives. Due to the fact that most skin care businesses use a distribution network system in order to ensure that their products are on shelves, some skin care producers make their products from home.

Running your skin care business from home isn’t a bad idea especially if you are on a budget or if you have procured the services of a certified lab to help in developing your formula. All you would need is to ensure that you have a solid distribution network that will handle the distribution of your products and that you engage in intensive marketing and publicity strategies to promote your product.

There are however several reasons why leasing a facility to run your skin care business is important and one of them is that it gives your customers a sense of stability and it provides you with the chance of meeting your clients physically and providing solutions where necessary.

If you aren’t too familiar with the area you intend to lease your facility in, it is best that you seek the services of a real estate agent to help you out. Ensure that the lease you sign with the landlord allows you some benefits and it is one that you can back out of, should you find that the location is not one that is suitable for you, two years down the line.

Always ensure that you are leasing within the budget set aside for that purpose so that you do not end up causing a strain to your overall budget.

Starting a Skin Care Products Business from Home – Technical and Manpower Details

The nature of the skin care business is such that if you are starting on a small scale, you can run it from your home. However, if you intend to run something that is middle or large scale, then you can lease a facility with which to run the business from as you will definitely hire people to help you fulfill your aim and objectives.

However, the skin care business is one that requires substantial capital if you intend to make any sort of impact. Even though there is low entry barrier into this industry, it is a fact that you need enough capital to make an impact.

It is imperative that you have the necessary equipment in place if you intend to start your own skin care business. Some of the equipment that you will require include; packaging bottles, design labels, jars and the ingredients that you will use depending on your formula. You will also require administrative equipment such as computer, phones, cabinets, printer and scanner in order to carry out your work successfully.

It is important that you build a solid business structure in order that you might be able to attain your goals and objectives. Getting it right from the beginning is important and so you would need to ensure that you hire the following; Chief Executive Officer (owner), administrative and resource manager, marketing and sales executives, accountant, customer care representative, and cleaner.

From the above breakdown, you will require at least 7 people in order to successfully start your skin care product company.

The Service Delivery Process of a Skin Care Product Company

The processes involved in producing and ensuring that the skin care products are on the shelves are very detailed. It starts with the entrepreneur ensuring that a thorough research regarding the skin care products has been undertaken and a business plan developed.

Then depending on the niche the entrepreneur intends to focus on, formulas will start to be developed either by the entrepreneur or a certified lab contracted for that purpose. The product once produced has to undergo vigorous tests before actual production can begin.

An appropriate packaging is done for the product before it is then distributed and gets on the shelves for the consumer to buy.

Starting a Skin Care Products Business – The Marketing Plan

  • Marketing ideas and Strategies

One of the most essential aspects of a business – either new or existing – is marketing. It is through marketing that a business is able to generate the revenue that will ensure the sustainability and expansion of the business. With marketing, you get to know your target market, penetrate it, get a fair share for yourself as well as compete favorably against competitors in the industry.

As one who is just entering the market, it is important that your marketing plan is crafted to set you apart from existing operators. Once you have set your marketing plan, the next step will be creating the right strategies to ensure that you are able to attain your goals and objectives.

In order for your marketing strategies to be effective, ensure that a thorough survey has been carried out regarding the target market in order that you might know what it is your target market expects from you and how you can meet their expectations.

Whatever marketing team you are putting together, you should ensure that they understand what your goal is and that they are committed to ensuring that you achieve these goals. Empower your marketing executives to modify existing strategies all the time to ensure that they align with trends.

Some of the ideas and strategies that you would need for this particular business include;

  • Ensuring that your skin care product business is listed in yellow pages as well as online directories
  • Engage industry stakeholders such as estheticians, cosmeticians and sales representatives and inform them about your skin care products
  • Use social media platforms such as Facebook, Twitter and Instagram to market your products
  • Advertise your skin care products on popular blogs and forums
  • Advertise your skin care products in newspapers, magazines and on radio and television stations
  • Create a website and use this to market your skin care products

Possible Competitive Strategies for Winning your Competitors

The skin care segment in the beauty industry is the largest as there are many large scale corporations as well as independent businesses looking to continue expanding their market share, which has led to increasing competition amongst operators. As an entrepreneur looking to start this business, it is important that you are aware of how stiff the industry is with competition and that you are adequately prepared for it.

When it comes to winning competitive strategies, being in a niche that is in line with current industry trends is vital in order to win your competitors. Also, ensure that your products are of top quality and that you have great customer service relationship with your clients.

Possible Ways to Increase Customer Retention

Retaining a high number of their customers is one way businesses continue to remain in existence without spending so much in advertisements. According to analysis, it cost more for a business to keep attracting new customers than for them to work at retaining those they already have. This is because retained customers are those who are satisfied with the services of the company and would either consciously or unconsciously help attract new customers to the business.

When customers keep leaving a brand for another, it means that there are several things that the brand is doing wrong and it is imperative that the brand conducts a research into why it isn’t retaining a high number of its customers.

One of the reasons for customer exit is poor quality of a product. If the product doesn’t meet with the expectations of the customer, they would not come back and instead go to another brand that is likely to give them what they want, so ensure that your product quality is as advertised.

If you do not take your customers seriously, it is likely that they will leave you for another brand.

Strategies to Boost Your Skin Care Products Brand Awareness and Create Your Corporate Identity

The skin care industry is filled with intense competition and so in order to make a mark that will enable you attain your goals and objectives, you will need to engage in activities that will promote your brand and enable you get the attention of the target market. One thing to note about boosting awareness for one’s brand is that not only is the identity of the company communicated to the target market, a percentage of the awareness is converted to revenue generation.

The fact that boosting one’s brand’s awareness is so beneficial to even existing companies is why many companies set aside an amount of money every month or year in order to ensure that the company engages in activities that will continually boost their brand and communicate a positive corporate identity for the company.

Most brands usually engage the services of a brand consultant who has a thorough understanding of the industry to help craft the right strategies that will enable them attain their goals and objectives. Some of the strategies that will be used to boost the awareness of the brand while also creating a corporate identity for the company include;

  • Install flexi banners and billboards in strategic locations
  • Promote your skin care product vigorously on your website
  • Make use of social media platforms such as Facebook, Twitter and Instagram to promote your skin care products
  • Place adverts in newspapers and beauty magazines as well as on radio and television stations
  • Attend trade fairs and skin care events to network and create awareness for your products
  • Sponsor and participate in local community projects