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  • June 13, 2023
  • How to Make a Good Cosmetics Business Plan

Cosmetic products

The cosmetics business plan plans are the blueprint of any successful cosmetic business model. To create a proper business plan, you need to understand your business and its objectives. 

In this article, we’ll explain why it’s important to conduct market research and define your business concept and objectives. We’ll also explain why it’s essential to consider marketing, competitor analysis, advertising, partnerships, and even packaging when starting operations in a business.

Step 1: Conduct Market Research

The first step to starting a cosmetics business is conducting market research. To get the best from market research, you have to consider the overall market size and trends, consumer preferences, and look out for businesses that can be close competitors. Let’s explore these in more detail. 

Understand Market Size and Trends

If you want to grow in the cosmetic business and retain your customers, you have to be fully aware of some history behind cosmetic industry trends. According to Grand View Research, the cosmetic industry had a market size that is valued at 262.21 billion dollars in 2020 and is expected to extend further by 4.2% between 2023 – 2030.

Knowing the history behind the cosmetics industry will help you understand what your brand’s place is in the market, and how to develop from there. Understanding market trends can help to make informed decisions on what pattern to adopt for marketing cosmetic products.

Analyze Consumer Preferences

Let’s face it, not everyone likes the same thing. What you may like, another may find unsuitable for their needs. As a cosmetic industry, you have to accurately analyze what your target customers may want, and take their preferences into account when trying to make your product and construct a business plan for cosmetic products.

For example, some people may find several ingredients in a skincare product more helpful for their oily skin, while others may find it too harsh or irritating to their dry skin. Younger people may prefer airtight bottles with better precision, while older people may have no problems with any bottle packaging.

Investigate Competitive Landscape

No matter what industry you find yourself in, competition is stiff. However, competitive landscapes vary across industries, which is why it is important to do your research on the competition.

As a young business, you need to gather information about bigger cosmetic product companies like Nivea, Dove, Gillette, Pantene, and L’Oreal. Also, you can also keep tabs on fast-developing companies like Fenty Beauty. Including this in your cosmetics business plan will help you understand how to beat the competition and come out on top as one of your industry’s leaders.

Shopping cosmetic products

Step 2: Define Business Concepts and Objectives

A strong and sturdy business concept and cosmetics company business plan will make your objectives more achievable and will hasten your progress. Let’s see this in more detail.

Business Concept

As mentioned earlier, a cosmetics company’s business plan and business concept helps to analyze how valuable your business idea is, how well it will solve a problem, your target audience, and their interest in the problem itself. Doing this helps you understand whether that business idea is worth investing in in the first place.

Here are different business concepts needed for natural, organic, and healthy beauty.

● Natural/Organic Beauty

Natural/organic beauty products are popular among a niched target audience, and they tend to look out for some details when picking their products. Organic beauty business concepts include the production of cosmetic products using only natural or organic ingredients. 

Recently, there has been an increase in the number of natural or organic beauty product users. This is why it is important to include organic products in a cosmetic product lineup.

Organic beauty products

● Luxury/High-end Beauty

Undoubtedly, there are many luxury cosmetic products out there, and they currently dominate the cosmetic industry. Luxury or high-end beauty products need well-detailed business concepts and objectives in order to beat the competition. 

Luxury/high-end brands often focus on getting quality, highly-customizable packaging. When you come across this kind of packaging, you’re most likely going to feel a sense of exclusivity and sophistication. In your business plan for cosmetic products, you have to include the cost and pricing for this packaging.

luxury Plastic Jar

● Healthy Beauty

Cosmetics are made with ingredients that foster healthy skin. Different skin types react to cosmetics differently, but promoting a healthy beauty product will ensure that only the finest healthy ingredient is used on skin care products

Some of the healthy ingredients used in cosmetics are Aloe vera, green tea extract, shea butter, and chamomile. Aloe vera can hydrate the skin and reduce inflammation, shea butter improves the skin’s elasticity with its rich supply of vitamins A and E, and chamomile on the other hand is helpful on sensitive skin to promote better skin health.

Increasing market share and establishing a strong brand identity are key objectives for a cosmetic business’ growth.

● Increase Certain Market Share

One of the most essential objectives is obtaining a substantial portion of the market share. Not surprisingly, larger cosmetic businesses control a good amount of market share. That said, smaller, emerging cosmetic businesses’ primary objectives should be to take away some of this market share from their larger counterparts.

They can do this by improving the quality of their product and being innovative. Instead of focusing on the products of the existing larger cosmetic businesses, adequate research should be carried out to produce a more innovative formula that will yield a better result. This way, smaller businesses can garner the attention of cosmetic lovers and achieve their marketing objectives.

● Establish a Strong Brand Identity

Brand identity lets your customers know who you are, what you bring to the table, and your company’s values and personality. In order to attract your target audience, you need to include plans on how to gradually develop your brand identity into your brand’s business plan. 

Brand identity can be established in the form of a unique brand name and logo, design consistency in the brands’ visual or audiovisual materials, and catchy phrases. 

● Expand the Product Line 

A good cosmetics business plan often includes plans for expansion. If you sell a certain cosmetic product, you will most likely want to branch out and sell other types of cosmetic products. If the brand has mainly been selling skincare products, the brand’s product line can be expanded to include makeup products, hair products, and even fragrances.

For a better marketing result, you can create multiple business plans for different types of products such as a makeup business plan for makeup products, and a skincare business plan for skin care products.

primary packaging for makeup

Step 3: Identify Target Customers

Without identifying the kind of customers you want, it’ll be challenging to get sales and attract customers to your brand. Here are these types of target customers in greater detail.

● Beauty Enthusiasts

Beauty enthusiasts are often highly interested in all the best and latest cosmetic and skincare products. Additionally, they are highly interested in the latest beauty trends. These types of people use exclusive and innovative cosmetic application products like rollers. To attract these types of customers, your brand also needs to keep up with these trends.

Luckily, you can find many of these beauty enthusiasts closely following thought leaders in this industry on various social media channels and forums. For these target customers, you may need to include digital and offline marketing campaigns and create a detailed makeup business plan and skincare business plan. 

● Budget-Conscious Consumers

Budget-friendly consumers take their money into account when choosing their products. Because these consumers closely track how much they spend on products, they will only consider a particular product if it’s affordable, and fits into their budget.

To get these kinds of people, you have to make sure many of them can comfortably afford your product by leveraging on price strategies. Not surprisingly, these customers shy away from luxurious brands, choosing to purchase multi-purposed products instead.

● Minimalists

Minimalists prefer a simplified skincare and makeup routine. Unlike beauty enthusiasts, they don’t focus on getting the newest cosmetic products. Rather, they choose products with high functionality, allowing them to minimize their expenditure and the number of skincare products they buy.

Minimalists like to live their lives with less clutter, and generally choose to live simpler lifestyles. In the case of cosmetic products, they like to use as few products as possible. So, if you want to attract these types of people, make sure you develop a minimalist makeup business plan and skincare business plan that have these people’s best interests at heart.

Step 4: Conduct a Competitor Analysis 

In order to conduct an effective competitor analysis, you have to analyze their product offerings, brand position, pricing strategies, and distribution channels. Let’s see these in more detail.

Analyze Competitors’ Product Offerings

Product offerings help to present a unique value proposition to a consumer. For a business to become successful, it has to include detailed plans on how to present its product’s unique value proposition to its customers. Nivea’s unique value proposition is to protect the skin of the entire family.

Many cosmetic companies offer an array of products that make it hard for new businesses to break into the market and compete. For example, Nivea offers cosmetic products like hair care products, skincare products, and even deodorant for males and females. Analyzing these competitors and their products will make you weigh your options and determine how best to enter the market.

Analyze Competitors’ Brand Position

Brands like Nivea have taken steps to maintain a strong brand positioning. Before getting your business off the ground, make sure you understand your competitors’ position and how much influence they have on the market.

Contrary to popular belief, brand positioning isn’t just slapping catchy tag lines and fancy logos on your web and social media pages. Effective brand positioning will make your brand favorable and valuable to your consumers. 

Cosmetic Jar

Analyze Competitors’ Pricing Strategies

Strategic pricing is another way to infiltrate the market. If you want to figure out the best pricing, take a quick survey of all your competitors and their pricing. 

For example, if Nivea and other big brands’ hair care products are being sold for an average of $50, try to figure out a way to sell your products significantly or slightly lower. This way, you can attract budget-conscious customers who want more for less. 

Analyze Competitors’ Distribution Channels

Analyzing distribution channels helps you figure out the best distribution channel for your business.

In addition to traditional distribution channels like wholesaling and retailing, E-commerce has emerged as one of the biggest distribution channels in the beauty industry. If you’re a smaller cosmetic company trying to find its footing, E-commerce is a good way to get orders coming in. 

Step 5: Develop Product Line and Brand Strategy

Brand strategy and product lines can make or break your brand. Big brands like Pantene and Dove have solid brand strategies and diverse product lines for inclusivity. 

Product lines and breaks strategies involve developing core product lines and seasonal collections, brand storytelling, and collaborations with influencers. Let’s look into these points. 

Product Line Strategies

The best product line strategies are creating a core product line and a product line specific to a particular season or holiday period. 

● Core Product Line

Your brand is more likely to stand out if it has a core product line. Having this improves your brand’s ability to stand out, and makes your products accessible to more diverse audiences. Collections like the Gold series collection owned by Pantene have become so popular that it has won multiple awards in the cosmetic industry. 

● Seasonal Collections

Seasonal collections are exactly what they sound like seasonal. We have different cosmetic care needs during various seasons, so it’s essential for your brand to take that into account. Also, during periods like Christmas and Easter, it’s important to have collections in order to divert attention toward your brand and increase sales.

Brand Strategies

Telling your brand story and collaborating with thought leaders and influencers in your industry are amazing ways to drive your business’ growth and infuse some personality.

● Tell the Brand Story

Every brand has a story. Brands have missions, goals, and visions peculiar to them that drive them forward, and communicating this mission to your audience will boost your customer acquisition and retention. For example, Nivea is now a household name, as it has sold itself as a family-oriented cosmetic care company. 

● Collaborations with Influencers

 Influencers will always be able to drive customers to patronize your brand, and it’s important to include them in your cosmetics business plan. Not only do they bring customers, but they put your brand in the cosmetic industry’s limelight and make them favorable to your desired customers.

7

Step 6: Define Marketing and Sales Strategies 

Marketing and sales is another essential part of a successful skincare business plan. Now, digital marketing, retail partnerships, and advertising have proven to be the most effective ways to promote your brand. Here are the facts:

Digital Marketing

Due to the integration of technology and, specifically, the internet, into the cosmetic industry, business has booked like never before. Search engines and social media channels like Facebook, Twitter, and Instagram can create massive awareness for your brand and also enable you to create and maintain a positive relationship with your customers.

Retail Partnerships

Wholesale and retail partnerships will always remain powerful ways to get new customers fast. For increased reach, you can reach out to select retail stores within and outside your area. More often than not, these businesses are open to opportunities that will make them more money. 

Also, retail partnerships help with your brand positioning and improve customers’ trust in your brand. For instance, there is a higher chance of selling a cosmetics product if a retailer talks to the customer about the product.

Online and Offline Advertising

Advertising has become a highly extreme marketing tool, and it is now used by large and small cosmetic brands alike. 

Offline advertising involves guerilla marketing campaigns, using billboards, flyers, posters, and so on. On the other hand, online advertising involves running ads on search engines and social media. Make sure to include a good blend of both into your skincare business plan and marketing efforts.

Step 7: Outline Operational and Plans

Without plans for operations, a business plan is as good as useless. Supply chain management and quality control are important factors to consider when making plans for operation. Here are these factors in more detail. 

Supply Chain Management

Supply chain management is the management of the flow of goods, data, services, and finances related to a particular business, from the state of manufacture to the state of consumer consumption. 

If you want good customer loyalty and avocation on a cosmetic product, you have to make this process as smooth and quality as possible. Additionally, efficient supply chain management saves costs and hastens the delivery process to the final consumer. 

Quality Control

Quality control is a set of procedures that your product will be subjected to in order to ensure that it meets the criteria for quality. In order to avoid your brand putting out inconsistent quality, you will most likely face a lot of customer satisfaction issues that you have to meet. 

Quality standards have been put in place in the cosmetic industry, starting from ingredient selection which should strictly follow the INCI (International Nomenclature of Cosmetic Ingredients) list of approved ingredients. 

Also, microbiological testing is carried out on cosmetic products to ensure that they are not contaminated, and are not harmful to cosmetics users.

1 3 1

Step 8: Outline Financial Plans

Financial planning is the backbone of any business plan. Creating a cash flow forecast and a profitability analysis is key to your business’s growth and profitability. Let’s take a look at these factors. 

Create a Cash Flow Forecast

Cash flow forecasts typically predict a company’s future financial position; a company’s cash flow involves receivables and expected payments from various sources. Cash flow also involves money from future sales of assets, grants, bills, and miscellaneous expenses.

That said, a cosmetics company can create a cash flow forecast to track how much the business is estimated to spend in the future. Doing this will help to plan for times when the company’s low on cash.

Profitability Analysis

Profitability analysis is the calculation and analysis of the profits of a business. The cosmetic industry has a different net profit margin that is affected by the company size, location of the business, availability of competitors, and the business strategy used. All these are determining factors in deciding on the cost of a product, and the profit that can be gotten from the product.

Customize Your Ideal Cosmetic Bottle Packaging

One of the trends in cosmetics involves developing an ideal bottle packaging that speaks for your brand. These trends revolve around making eco-friendly packaging and maintaining thoughtful pre-sale and post-sale services. 

Eco-Friendly Cosmetic Packaging Materials

Eco-friendly cosmetic packaging is becoming increasingly common, and many customers now look out for this. Luckily, Cosmopacks have created highly customizable packaging for brands worldwide using bamboo, Post-consumer recycled plastics, glass, and bioplastics.

Our list of cosmetic packaging includes:

  • Cosmetic bottle
  • Cosmetic jars
  • Cosmetic tubes
  • Makeup packaging
  • Recycled cosmetic bottle

Thoughtful Pre-Sale and Post-Sale Service

We offer thoughtful pre-sale and post-sale services that include efficient consultation and communication, printing and sampling, production and warehousing, and inspection and shipment of all our packaging products to our customer’s desired locations.

Creating a skincare business plan can seem like a herculean task, but taking the time to add these details above can make all the difference. Effective marketing and customer service, competitor analysis, cosmetic packaging plans, operational plans, and market research are all integral to your brand’s success in the short and long term.

Cosmopacks offers amazing, highly customizable bottle packaging for brands worldwide. Their objective is to find the best way to reflect your brand’s identity by creating tailored packaging options and eco-friendly packaging. 

Get in touch with us by visiting our website or reaching out to us through our various helpline channels. 

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Cosmetic Business Plan Template

Written by Dave Lavinsky

How to Start a Cosmetic Business

Cosmetic Business Plan

Over the past 20+ years, we have helped over 500 entrepreneurs and business owners create business plans to start and grow their cosmetic companies.

If you’re unfamiliar with creating a cosmetic business plan, you may think creating one will be a time-consuming and frustrating process. For most entrepreneurs it is, but for you, it won’t be since we’re here to help. We have the experience, resources, and knowledge to help you create a great business plan.

In this article, you will learn some background information on why business planning is important. Then, you will learn how to write a cosmetic business plan step-by-step so you can create your plan today.

Download our Ultimate Business Plan Template here >

What Is a Business Plan?

A business plan provides a snapshot of your cosmetic business as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.  

Why You Need a Business Plan

If you’re looking to start a cosmetic business or grow your existing cosmetic company, you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your cosmetic business to improve your chances of success. Your cosmetic business plan is a living document that should be updated annually as your company grows and changes.  

Sources of Funding for Cosmetic Businesses

With regards to funding, the main sources of funding for a cosmetic business are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for cosmetic companies.

How to Write a Business Plan for a Cosmetic Business

If you want to start a cosmetic business or expand your current one, you need a business plan. The guide below details the necessary information for how to write each essential component of your cosmetic business plan.  

Executive Summary

Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.

The goal of your executive summary is to quickly engage the reader. Explain to them the kind of cosmetic business you are running and the status. For example, are you a startup, do you have a cosmetic business that you would like to grow, or are you operating a chain of cosmetic businesses?

Next, provide an overview of each of the subsequent sections of your plan.

  • Give a brief overview of the cosmetic industry.
  • Discuss the type of cosmetic business you are operating.
  • Detail your direct competitors. Give an overview of your target customers.
  • Provide a snapshot of your marketing strategy. Identify the key members of your team.
  • Offer an overview of your financial plan.

Company Overview

In your company overview, you will detail the type of cosmetic business you are operating.

For example, you might specialize in one of the following types of cosmetic businesses:

  • Niche market cosmetics: This type of cosmetic business specializes in one particular segment of cosmetics. For instance, a niche cosmetic business could sell only fragrance-free products, all vegan products, or gluten free products.
  • High-end cosmetics: This type of cosmetic business develops and sells premium make-up and skin care products.
  • Kids cosmetics: This type of cosmetic business specializes in producing inexpensive play-makeup products for children.
  • Beauty blogger/influencer: This type of cosmetic business involves trying out products from different types of cosmetic brands and providing tutorials, reviews, and other helpful information for people who may be interested in the products. Usually, beauty companies will pay the blogger/influencer to sample or endorse their products.
  • Make-up Artist: This type of cosmetic business involves providing make-up services for special occasions like weddings or graduation ceremonies.

In addition to explaining the type of cosmetic business you will operate, the company overview needs to provide background on the business.

Include answers to questions such as:

  • When and why did you start the business?
  • What milestones have you achieved to date? Milestones could include the number of customers served, the number of products sold, and reaching $X amount in revenue, etc.
  • Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.

Industry Analysis

In your industry or market analysis, you need to provide an overview of the cosmetic industry.

While this may seem unnecessary, it serves multiple purposes.

First, researching the cosmetic industry educates you. It helps you understand the market in which you are operating.

Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.

The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.

The following questions should be answered in the industry analysis section of your cosmetic business plan:

  • How big is the cosmetic industry (in dollars)?
  • Is the market declining or increasing?
  • Who are the key competitors in the market?
  • Who are the key suppliers in the market?
  • What trends are affecting the industry?
  • What is the industry’s growth forecast over the next 5 – 10 years?
  • What is the relevant market size? That is, how big is the potential target market for your cosmetic business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.

Customer Analysis

The customer analysis section of your cosmetic business plan must detail the customers you serve and/or expect to serve.

The following are examples of customer segments: individuals, families, and corporations.

As you can imagine, the customer segment(s) you choose will have a great impact on the type of cosmetic business you operate. Clearly, individuals would respond to different marketing promotions than corporations, for example.

Try to break out your target customers in terms of their demographic and psychographic profiles. With regards to demographics, including a discussion of the ages, genders, locations, and income levels of the potential customers you seek to serve.

Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.  

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Competitive Analysis

Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.

Direct competitors are other cosmetic businesses.

Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes mass market cosmetic brands and retailers, as well as secondhand cosmetic retailers. You need to mention such competition as well.

For each such competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as

  • What types of customers do they serve?
  • What type of cosmetic business are they?
  • What is their pricing (premium, low, etc.)?
  • What are they good at?
  • What are their weaknesses?

With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.

The final part of your competitive analysis section is to document your areas of competitive advantage. For example:

  • Will you make it easier for customers to acquire your products?
  • Will you offer products or services that your competition doesn’t?
  • Will you provide better customer service?
  • Will you offer better pricing?

Think about ways you will outperform your competition and document them in this section of your plan.  

Marketing Plan

Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a cosmetic business plan, your marketing strategy should include the following:

Product : In the product section, you should reiterate the type of cosmetic company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide premium make-up, skin care products, or esthetician services?

Price : Document the prices you will offer and how they compare to your competitors. Essentially in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.

Place : Place refers to the site of your cosmetic company. Document where your company is situated and mention how the site will impact your success. For example, is your cosmetic business located in a busy retail district, a business district, a standalone store, or purely online? Discuss how your site might be the ideal location for your customers.

Promotions : The final part of your cosmetic marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:

  • Advertise in local papers, radio stations and/or magazines
  • Reach out to websites
  • Distribute flyers
  • Engage in email marketing
  • Advertise on social media platforms
  • Improve the SEO (search engine optimization) on your website for targeted keywords

Operations Plan

While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows.

Everyday short-term processes include all of the tasks involved in running your cosmetic business, including answering calls, stocking shelves, greeting customers, and collecting payments, etc.

Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to acquire your Xth customer, or when you hope to reach $X in revenue. It could also be when you expect to expand your cosmetic business to a new city.  

Management Team

To demonstrate your cosmetic business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.

Ideally, you and/or your team members have direct experience in managing cosmetic businesses. If so, highlight this experience and expertise. But also highlight any experience that you think will help your business succeed.

If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who would act as mentors to your business. They would help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a cosmetic business or successfully running a small salon.  

Financial Plan

Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.

Income Statement

An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.

In developing your income statement, you need to devise assumptions. For example, will you expect to serve 20-30 customers per day, and will each customer purchase 1-5 items on average? And will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to root your assumptions in reality.

Balance Sheets

Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your cosmetic business, this will not give you immediate profits. Rather it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately. Rather, that is a liability you will pay back over time.

Cash Flow Statement

Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit but run out of money and go bankrupt.

When creating your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a cosmetic business:

  • Cost of equipment and supplies
  • Payroll or salaries paid to staff
  • Business insurance
  • Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment

Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or photos of happy customers using your products.  

Writing a business plan for your cosmetic business is a worthwhile endeavor. If you follow the template above, you will be able to prepare a winning beauty product business plan, makeup business plan or a business plan for a cosmetic company. You will understand the cosmetic industry, your competition, and your customers. You will develop a marketing strategy and will understand what it takes to launch and grow a successful cosmetic business.  

Cosmetic Business Plan FAQs

What is the easiest way to complete my cosmetic business plan.

Growthink's Ultimate Business Plan Template allows you to quickly and easily write your cosmetic business plan.

How Do You Start a Cosmetic Business?

Starting a cosmetic business is easy with these 14 steps:

  • Choose the Name for Your Cosmetic Business
  • Create Your Cosmetic Business Plan
  • Choose the Legal Structure for Your Cosmetic Business
  • Secure Startup Funding for Cosmetic Business (If Needed)
  • Secure a Location for Your Business
  • Register Your Cosmetic Business with the IRS
  • Open a Business Bank Account
  • Get a Business Credit Card
  • Get the Required Business Licenses and Permits
  • Get Business Insurance for Your Cosmetic Business
  • Buy or Lease the Right Cosmetic Business Equipment
  • Develop Your Cosmetic Business Marketing Materials
  • Purchase and Setup the Software Needed to Run Your Cosmetic Business
  • Open for Business

Don’t you wish there was a faster, easier way to finish your Cosmetic business plan?

OR, Let Us Develop Your Plan For You

Since 1999, Growthink has developed business plans for thousands of companies who have gone on to achieve tremendous success.

Click here to see how Growthink’s business plan writers can create your business plan for you.  

Other Helpful Business Plan Articles & Templates

Business Plan Template For Small Businesses & Entrepreneurs

Cosmetics Business Plan for New Entrepreneurs

Cosmetics Business Plan for New Entrepreneurs

A cosmetics business plan is a document that outlines the company’s goals, objectives, and strategies for success. Thus, it can help you to lay out your plans and target audience before you start your business.

A cosmetic business plan includes: 

  • Company Overview 
  • Industry Analysis 
  • Product Description
  • Marketing Plan 
  • Operations Plan 
  • Financial Projections
  • Organization and Management 
  • Future Goals 

How to Create a Cosmetic Business Plan?

1. company overview .

Company Overview is an introductory section in the Cosmetic Business Plan. 

It provides a snapshot of the company's current status.

A Company Overview should include:

  • Company name, address, phone number, email address
  • CEO name, title, and contact information
  • Company's mission statement or purpose
  • Company's product or service description
  • List of the company's key employees
  • Legal Business Structure ( Private Limited Company Registration , One Person Company, Limited Liability Partnership, Sole Proprietorship or Partnership)

The Company Overview should not be longer than two pages. 

This section should be brief, but it should include all the necessary information to provide an understanding of the business.

It should not include any confidential information or sensitive data about the company.

Also, it is important to use a formal tone when writing about your company because it will help to establish credibility and professionalism.

2. Industry Analysis 

Industry analysis is a research-based process of identifying and understanding the forces that affect an organization’s success. 

It is a process of figuring out the strengths and weaknesses of an industry, its opportunities, threats and competitors.

The following are some of the questions you should be able to answer in your industry analysis: - 

  • Who are your competitors? 
  • What is your competitive advantage? 
  • What are the current trends in your industry? 
  • What factors will influence the future of your industry? 
  • What are the key drivers of change?

Potential of the Cosmetic Industry in India

The cosmetic industry is doing quite well currently. It is estimated to be at USD 24.53 Billion in 2022 and expected to reach USD 33.33 Billion by 2027 growing at a 6.32% CAGR .

3. Product Description

The product list and the description of the products are the two most necessary aspects of a cosmetic business plan.

The product list is a detailed list of all the products that will be available at the store. 

The description of each product should be detailed enough so that it is easy to know what the customers are buying.

For example, if you are selling lipstick, include the brand's list, shades, prices, quality, organic or non-organic, side effects, benefits, purpose etc in the description.

4. Marketing Plan 

The marketing plan is where you outline your company’s marketing strategies and tactics. 

To build a successful marketing strategy, you must understand why you are creating it in the first place.

It includes branding, product positioning, pricing strategy, distribution channels, and promotional activities.

Also, you must know where your target audience is most active.

For example, if it is social media, you can try approaching your target niche through Content to Commerce Strategy .

Also, here are some tips on how to write a marketing plan for your cosmetic business:

  • Define your target market
  • Identify what they want
  • Identify what they need
  • Determine how much they are willing to spend
  • Define what you can offer them
  • Define when, where and how often you can offer it to them
  • Determine who is most likely to buy from you
  • Get feedback from them about your product or service

5. Operations Plan 

The Operations Plan is a section of the Cosmetic Business Plan that discusses how the company will make, market and distribute its products . 

It should include discussions on:

  • Manufacturing Process
  • Stock Requirements
  • Personnel Requirements
  • Costing Process and Strategy
  • Distribution Channel 
  • Quality Control Plan 
  • Customer Service Plan 
  • Packaging and Labeling Process 
  • Warehousing System
  • Personnel management and Labor Requirements

The operations plan is a critical component of a cosmetic business plan because it details how the company will be operating on a day-to-day basis.

6. Funds Planning and Financial Projections

This part will include the estimated investment you will require for the cosmetic business. After that, you will decide how you are going to use that funds. For this purpose, you must also know the cosmetics profit margin to have a more accurate estimate.

Also, include the list of your investors and how much they are investing in your cosmetic business.

Your potential investors could be: 

  • Family or Friends 
  • Partnership Investment 
  • Angel Investors  
  • Venture Capitalists 
  • Business Bank Loans
  • Private Equity Loans 

Financial projections show the potential for growth and provide a clear picture of what the company expects to happen in the future.

They outline the expected revenues and expenses for a given period. It is used for planning purposes and to determine whether a business is successful or not.

Financial projections can be done in different ways, from simple to complex. 

The most popular way is to base it on past performance and make assumptions about future performance. 

These assumptions are based on market research, industry trends, and the company’s strategy.

7. Organization and Management 

There are many ways to organize and manage a cosmetic business. 

One of the most common ways is to divide the company into three departments: Production, Sales, and Marketing.

  • The production department is responsible for manufacturing products that are sold by the company. 
  • The Sales department is in charge of selling products to customers. 
  • The marketing department manages all marketing activities which includes advertising, promotions, and public relations.

Thus, elaborate in your business plan how you will divide the teams, the qualification requirements of each person and what will be the authorities and responsibilities of the teams.

The cosmetic industry is a competitive market with many different companies vying for the same customers. 

The success of any cosmetic business is dependent on the organization and management it implements .

8. Future Goals 

The future goals should be realistic and achievable in your Cosmetics Business Plan. They should be written in a way that will motivate the employees to work towards them.

The future goals should also be written in a way that will allow the company to keep up with the changing needs of their customers. 

This can be done by keeping an eye on customer feedback and industry trends.

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Starting a Cosmetic Business at Home

How to start a cosmetics business at home

Thanks to a booming indie, natural beauty sector, more entrepreneurs are now learning how to start a cosmetic business at home. The global natural and organic beauty market was worth US$11.5 billion US$ in 2018 and is set to more than double by 2025, reaching an estimated US$23.6 billion by the end of 2025 and growing at a CAGR of 9.4% during 2019-2025 (i).

With this kind of growth predicted, it’s exciting to see indie beauty entrepreneurs taking the leap into the sector by empowering themselves to become organic formulators. They are not only learning how to design unique natural skincare lotions and hair conditioners , these indie beauty entrepreneurs are also turning their passion for botanical ingredients into something bigger than themselves. They are going on to create high-performance and truly innovative natural and organic beauty products that are taking the traditional beauty business by storm.

If a change of career into the natural beauty sector excites you, we’re here to help get you started on your own journey as a beauty entrepreneur by summarising the 7 key steps required to start a cosmetic business at home.

7 Steps to start a cosmetic business

Step 1 – think like a beauty entrepreneur.

Think like a beauty entrepreneur - mindset

The most important factor in your beauty brand success is you. We know from experience that the biggest hurdle that can get in your way when starting a beauty brand is you. As you start to work through all of the steps required to create a successful beauty brand, you’ll realise that starting your own makeup, haircare or skincare business will be one of the hardest and yet most rewarding steps you’ll ever take, which means that you need to be prepared.

The way you handle any challenges in your beauty brand will determine your overall business success – and with that, comes the need to cultivate a positive and growth mindset, as well as being able to create a clear vision for your business.

Step 2 – Create a strong brand for your beauty business

Build a Strong cosmetics brand

So many brand owners create an amazing website or feel that their beauty products are better formulations than their competitors, and think they can then relax and wait for their customers to come to them. This is the wrong approach: you have to attract your customers to your beauty brand by having a well-defined brand identity and then create a rich, sensory experience, which covers visual, tactile, scent (olfactory), audio, emotional and even potentially taste (gustatory) branding (think of lip balms, for instance!).

Ultimately, a successful beauty brand is one that changes customers’ lives, even if in a small way. You have to decide what it means to be life-changing and infuse that passion into your beauty business.

Step 3 – Decide on your business model & manufacturing strategy

Your cosmetics business business model

You need to choose the right business model for your needs and then choose a manufacturing model that fits your business, as the two decisions go hand in hand. After all, you need to understand how many units you’re going to be manufacturing before you can decide how to set up your manufacturing strategy. Having an end goal in sight is critical to shaping your overall business plan, the amount of capital you want to raise and the way you conduct your day-to-day operations.

Deciding on your business model will require you to dig deep and ask yourself some very tough questions, such as ‘how hard do I want to work?’ or ‘how much of my own personal savings do I want to put into this business?’

Once you decide approximately which business model fits best with your dreams, you can still decide to change your business model at any time. You can grow your business to get bigger, or you can shrink it down to become smaller. The deciding factor is you, because you know what’s best for your own personal circumstances and your business. You do however need to have a plan for where you want to take your beauty brand.

Step 4 – Sort out your finances

Cosmetics Business Financial Planning

If you have never run a business at home before, financial planning can seem overwhelming and overly detailed. However, without getting your money flows sorted, you can imagine things quickly spiral out of control. The key to success is knowing how to bring in cash, where and when to spend money and how to make sure everything is balanced. As the Founder of your beauty brand, you must have an up-to-date overview of the money in your business at any given time, so financial planning will become a firm part of your daily and weekly routine.

Now that you’ve got a financial plan in place for your beauty brand, it’s time to look at the products you’re going to be selling. First, look at how you cost those products – in other words, how much does it cost you to make each unit? You must include costs such as your ingredients, packaging, labels, and very importantly, your own time. If you had to outsource the manufacture of your beauty products, it would cost you to hire someone to do it – make sure you include your labour costs.

Secondly, look at pricing. When it comes to pricing your own beauty products, this process can really make you question your relationship with money, as you have to begin asking your customers to pay a certain price for your brand. However, your pricing is critical to the overall growth of your business, so you need to be able to cultivate a positive money mindset. Your profit is key to growing your business, being able to afford all your overheads and reinvesting in future stock.

Step 5 – Create your retail strategy

Cosmetic Business Retail Strategy

There are dozens of retail channels you can choose from. You have to decide which ones work best for your cosmetic business. If you want to work with retailers, you must firstly decide which retail category you fit into, e.g. mass, luxury, etc. It’s easy to think that your beauty brand can be sold anywhere to anyone, but nothing could be further from the truth.

In order to determine which retail category you fit into, it is extremely important that you receive lots of brutally honest feedback about your brand, your formulations, your packaging and your price points.

We’ve seen many brands position themselves as a luxury brand with luxury prices, but without luxury branding and a luxury experience. You need to be honest with yourself in order to position yourself best for your market. A truly successful brand will have undergone multiple iterations to get where it is today. Once you know where to pitch your beauty products, you’ll be in a much stronger position to start a cosmetic business at home.

Step 6 – Create a strong PR, marketing and sales strategy

Start a Cosmetic Business at Home: sales and marketing strategy

Many beauty entrepreneurs now want to sell direct to consumer. Every single beauty brand needs a digital marketing strategy. It is no longer sufficient to sell face to face or through retail alone. If you want your beauty brand to be successful, then you will need to embed digital marketing into the core of your business. You will also need to accept that digital marketing will take up a large part of your daily operations.

In order for you to keep track of all of these different marketing activities and your overall plan, as well as the events and social pages around your new launches or seasonal events, you need to create a marketing calendar to keep you organised. All professional beauty brands have a marketing calendar and you should too. A marketing calendar will help you to remain consistent and map out your plans for the year ahead so that you do not run out of ideas.

Step 7 – Write your beauty business plan

Write your Beauty Business Plan

  • Your beauty brand vision – what do you stand for? Where do you want to take your cosmetic business?
  • Your beauty products – what are you selling? How do your products all fit together in a range?
  • Your niche and customers – who are you targeting? How will you change their life?
  • Your competitors – who else is in your market niche and how do you sit alongside them?
  • Your manufacturing strategy – how will you produce your beauty formulations? Will you do it yourself or will you work with a contract manufacturer?
  • Your retail strategy – where are you planning to sell your beauty products? Will you mainly work with retailers or will you mainly sell direct to consumer?
  • Your funding – where will the money in your business come from? Will you use your own savings or are you looking to go big and raise investment?
  • Your financial forecast – include your projections and forecasts for your beauty business.

Start a cosmetic business at home – with our help!

Do you feel like you have a mission to create a beauty brand that’s bigger than yourself? A skincare brand, haircare line or makeup range that changes people lives? Whether you are keen to start a cosmetic business at home or already thinking of growing big and outsourcing manufacturing, we help you learn how to start and run your beauty products’ business the professional way.

Enrol in our BRAND NEW Diploma in Beauty Brand Business Management – the ultimate online training programme in starting or growing your indie beauty brand. Our newest and biggest online course is a combination of award-winning teaching materials and a web summit with 30+ influential speakers drawn from the best in the beauty and business community.

Our Diploma in Beauty Brand Business Management is open for pre-term registration . Sign up for news of our next term dates. Why wait to start your dream beauty business? Find out more now! .

References (i) Wise Guy Reports cited here.

Leave us a comment

Lorraine Dallmeier

Lorraine Dallmeier is a Biologist, Chartered Environmentalist and the CEO of Formula Botanica, the award-winning online organic cosmetic science school. Read more about Lorraine and the Formula Botanica Team .

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How to start a cosmetic business and develop new products

lp-ban-woman-testing-cosmetics-wrist

Key takeaways

  • To create a safe, effective product, perform in-depth market research and take time to develop and test your product
  • Research government regulations and required permits for your cosmetic product , especially if it’s classified as a drug
  • Create a distribution strategy before you launch to ensure a smooth customer experience

If your medicine cabinet feels more like a storage unit for makeup products , or the skincare aisle is always calling your name, you’re not alone. For many people, beauty products are splurge-worthy expenses they can’t live without. The average American spends between $244 and $313 on cosmetics every month, resulting in nearly $50 billion in sales each year.

By learning how to start a cosmetic business, you can capitalize on massive consumer demand for all things beauty. Getting into the cosmetic industry can help you turn your beauty passion into revenue, and you can even fill industry gaps for groups that may not be able to find brands that fit their needs. Here’s what you need to know to develop your own cosmetic products and launch a successful brand.

How to start a cosmetic business: 11 steps to launch

The cosmetics industry is competitive. Consumers can choose from thousands of beauty brands , both in-store and online. But in an industry that’s constantly chasing the latest trend or hottest makeup line , there’s always room for new startups . With these 11 steps, you can take your own business in the right direction.

1. Choose a cosmetic product to develop

The beauty industry covers a broad range of products, from haircare and skincare products to cosmetics and perfumes. The first step to starting a cosmetic business is identifying the type of product (or products) you want to develop. For example, if you’re planning to launch your own makeup line , you might focus on developing an eyeshadow palette. If your startup is focused on haircare , you might develop a shampoo and conditioner set.

Most beauty brands launch with fewer than five products , including variations of the same formula—such as concealer shades or eyeliner colors . While you might eventually launch a broader cosmetic line , developing products can be costly, time-consuming, and complex. As a startup , launch with a few high-quality products that will appeal to your target market rather than a variety of mediocre items that could hinder your success.

2. Perform market research

Finding your niche in the crowded beauty industry is key to standing out. Market research can help you identify gaps in the current beauty market—like underserved demographics, rising trends, or unmet needs. 

As part of your ideation and launch preparation process, do thorough online research, consult industry surveys, and conduct interviews with beauty consumers to learn about:

  • The products they love and why they love them
  • The pain points they have with competitors’ beauty products
  • The beauty trends they’re following
  • How much they’re willing to spend on different kinds of products

Once your market research is complete, identify how you can meet your potential customers’ needs and what makes your products unique. For example, you could specifically focus on creating semi-permanent hair dyes for natural hair.

3. Research local and federal regulations

how to plan a cosmetic business

C osmetic products are heavily regulated by the Food and Drug Administration ( FDA ). For example, the FDA sets strict limitations on the types of color additives you can use in cosmetics, which varies depending on where your product will be applied on the body.

To ensure you adhere to federal regulations for your flagship products, first learn out how the FDA classifies your product . 

Products applied for cleansing or beautifying—like bronzers and nail polishes—are cosmetics. But those that double as a treatment—such as toothpastes with fluoride or lotions with SPF—can also be classified as drugs, which must meet stricter requirements for registration, labeling , and more. Learning how to launch an anti-dandruff shampoo brand can be more complex than learning how to start a makeup line that’s purely for beautification. 

Once you know the FDA ‘s requirements for your beauty business , research local regulations, such as permits required in your state or city. Your local Small Business Administration district office can point you in the right direction.

4. Choose a business name

After you’ve solidified your business idea, the next step is choosing your business name . Brainstorm ideas that evoke what makes your brand unique . Instead of generic names like “Makeup Co.,” aim for something more creative and descriptive, such as “True Bloom Organic Beauty.”

Once you’ve narrowed down your top name choice, make sure it’s legally available. No two businesses in the same industry can share a name in the same state—or anywhere if it’s trademarked . Your state government’s business name search tool , like the Arizona Secretary of State’s entity search , and the U.S. trademark database can help.

Doing a search on Namechk can help you choose a business name that’s available as a domain, social media username, and more. Having a consistent name across all channels is crucial for marketing, especially if you plan to operate as an ecommerce business.

In this stage, you can also start brainstorming product name ideas, which you solidify in product development .

5. Create a business plan

how to plan a cosmetic business

Writing a business plan is another key step toward building your company. A business plan helps you plan for the future, demonstrate your potential to outside lenders, and partner with retailers. 

While a business plan document largely serves to introduce you and your company, it also allows you to solidify your marketing and financial plans. As part of your business planning process, create a marketing strategy that outlines how you’ll reach your target audience . For example, to reach younger clients, you can partner with influencers like local makeup artists or promote your brand with TikTok tutorials .

You’ll also need to create a financial plan for your small business . List your expected startup costs —including product development and business registration fees—as well as monthly operational costs, such as manufacturing, warehouse rental, shipping, and digital advertising .

6. Register and license your business

To legally form your company, first decide on your business structure : Will it be an LLC or an S corporation? Your business structure impacts your personal liability and the way you’re taxed. Visit your state agency’s website or office to complete your business registration.

In addition to registering your new business in-state, you can also apply for an employer identification number (EIN), which is required for corporations, partnerships, and any businesses with employees. Even if you operate a sole proprietorship, you may need it to open a business bank account or get loans.

If your local government requires permits or licenses for cosmetic businesses, start registering for those too.

7. Get funding for your business

Learning how to start a cosmetic business often requires funding, either from financial institutions or crowdsourced resources. You’ll start incurring startup costs as you begin  product development— so it’s important to fundraise or reach out to lenders early. 

Start by totaling up your expected startup costs and your operational costs for the first six months. Consider whether you have the funds to cover these expenses. If not, you’ll need to decide how you’ll get funding for your business , whether it’s by crowdfunding, applying for business credit cards, getting bank loans, pitching to investors , or something else.

8. Begin product development

how to plan a cosmetic business

With plans laid out and funding set, you can start developing your first cosmetic product . Once you create your first product or product line, you can also solidify your pricing strategy , product branding, and more. If you plan to develop your product on your own, research how to create cosmetic formulations that are both safe and effective You’ll need to finance the raw materials , containers, and other packaging. This is a good approach for products that are easy to DIY, such as soaps and organic makeup (think items you’d find on Etsy), rather than chemical-based products like sunscreens and toothpastes.

Alternatively, you can outsource the work to a professional cosmetic scientist, which typically costs at least $1,000 per product. After your product is developed, either pack and ship it on your own or find a manufacturer to help. The Society of Cosmetic Chemists can help you find a scientist to work with.

You can also work with a private label manufacturer—which you can find on sites like Alibaba or Thomasnet —and skip costly parts of the development phase. By selling a pre-developed formula with your own branding, you’ll only have to pay per unit (wholesale prices).

Regardless of how you create your product, be vigilant about the ingredients you’re using—especially if you’re making claims like “paraben-free” or “organic”—and how you’re labeling your products .

9. Test your new product

When product development is complete, create or order samples before you build your inventory. Thoroughly test the quality of your product and ensure it does what you promise—for example, your mascara should stay on through a shower if it’s waterproof. You can recruit friends, family members, and potential customers to help you test the products. Testers should inform you of any bad reactions to your product, even if they’re minor. 

This step can ensure your product is safe, which is crucial, since cosmetic businesses can be held accountable for safety problems. Before you administer any tests, research existing safety data for your ingredients and similar formulas on the Cosmetic Ingredient Review website . 

For products that take time to produce results (such as retinol serums), the testing phase may take over a month. Some cosmetic scientists may also offer testing services for around $500 to a few thousand dollars or include it with your product development costs.

10. Create a distribution strategy

Before you launch your cosmetic business, take some time to flesh out your business model . You’ll likely have an online store , but you can also identify brick-and-mortar retailers you want to work with or local markets where you want to sell.

For online orders, outline how you will get products to consumers. Ask yourself questions like:

  • Will I pack and ship products myself or work with a distributor?
  • What software will I use to manage orders and inventory?
  • What order updates (like shipping updates or order confirmations) will clients receive?

Outline your client management strategy here as well. If issues occur during the distribution process, how will you notify customers of delays? Consider how clients can reach out to you if they need help. Write return and cancellation policies that you can display on your website.

11. Build and launch your online presence

The last step before launching your cosmetic business is ensuring customers know where to find you—by creating an engaging online presence. Start by building your online store or ecommerce site using a website builder like Squarespace . You can also create a storefront on marketplace sites like Amazon and Etsy .

To market your store, create social media profiles on platforms your target customers use. If you sell products in-person to local clients—such as at a farmer’s market, kiosk, or retail space—you can also claim your Yelp Business Page to reach customers actively looking for beauty products . And don’t forget to create appealing signage to stand out from the crowd.

Get a free Yelp Page

Promote your business to local customers.

Launch your first cosmetic line

When you know how to start a cosmetic business, you can build a lucrative brand and cultivate a loyal customer base . Successful business owners in the beauty industry prioritize extensive market research and product development for high-quality results. Be prepared to market and fund your business while managing clients with grace.

Once you’ve launched your first cosmetic line , learn how to attract more customers to your business with this step-by-step guide.

The information above is provided for educational and informational purposes only. It is not intended to be a substitute for professional advice and may not be suitable for your circumstances. Unless stated otherwise, references to third-party links, services, or products do not constitute endorsement by Yelp.

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SAMPLE BUSINESS PLAN FOR COSMETICS BUSINESS.

by brian akampurira

2020, SAMPLE BUSINESS PLAN BY AKAMPURIRA BRIAN

This plan is to set up a cosmetic shop in the name of " Briox Cosmetics Enterprise ", which will be located in Easy View Arcade Garage street Mbarara. The cosmetic shop will be a sole proprietorship owned by Akampurira Brian. I will use startup capital of 52,380,000 Uganda shillings. UGX 34,380,000 will be owners’ equity and the remaining UGX 18,000,000 will be a bank loan which will be secured from centenary bank at 10% interest rate. The key personnel at the cosmetic Enterprise will include Senior manager, buying inputs and overall supervisory work, operations and production staff, sales and marketing staff, skin therapy and hairdressing staff, record keeping and accounting, stock control and direct selling staff The key objective of the cosmetic shop will be to provide fresh quality cosmetics to our clients to enable them improve their general skin beauty, to obtain maximum customer satisfaction through continued quality production, to obtain continuous production and supply of our products to the customers, to create customer loyalty to our products such that they become well pronounced in the customer minds. To achieve our objective, the cosmetic shop will employ strategies such as: Offering quality, body skin lotions, oils and herbal cosmetics that help fight the skin diseases made from fresh fruit and vegetable which are nutritious through adequate research and proper mixture of the lotions, oils and herbal ointments to meet the standard skin contents and characteristics of customers in the market through advertisement by use of sign posts, direct selling and radio stations, offering special incentive to our regular clients, offering our cosmetics at relatively lower prices for market penetration, creating a conducive environment for our clients, employing people who understand the meaning of customer care and meaning of quality by giving them samples for use as a way of expanding our markets especially among the young children, youth and women. All this encompasses our strategies that include, communication strategy, supplier relationship strategy, marketing strategy, competitive strategy and human resource strategy. The vision of the cosmetic shop will be ‘To be the leading suppliers of quality, fresh and health skin booting cosmetics product’ Our mission will be, dedicated at improving the skin health and body look and appearance of our client. "We seek to become the recognized leader in our targeted local and international market for carrying a diverse line of in demand cosmetics including perfumes, makeup, and other accessories that will have a competitive edge towards customer satisfaction and retention at attractive prices. Our major customers will be corporate employees, students, market vendors, tourists and retailers who will be consuming a range of our products including; Perfumes 1st class, Lemon body lotion, Hair relaxer cream, Avocadoes body cream smoother and Hair glow. Our forms/ ways of distribution will include, through Retailers, distributors and wholesalers who will buy and sell in bulk to our final customers which we cannot sell to directly we shall also sell directly to the customers because we have a high customer traffic at our main outlet in Mbarara. We shall as well be using a van that will be leased to distribute to our customers who order in large quantities. In terms of our legal responsibilities, the following taxes apply to our business, sales tax, employees’ income tax, national social security fund and Mbarara Municipal Council Tax and other licenses like trading license, and Uganda National Bureau of Standards license. We shall as well need to the insurance for our business and also carry out other social responsibilities like corporate social responsibility, being environmentally friendly, and ensuring cleanliness of Mbarara town. Our products are costed and priced after comparison with our major competitor’s prices and costing information acquired through market research. We have as well carried out cash flow estimates to ensure that our business does not run out of cash. Our startup capital has been allocated to what we intend to start our business with that is renting building for two months, buying machines for mixing the inputs, Machines, leasing van, buying furniture and fittings, massage equipment, cloths and uniforms and other necessary things to start with including the employee salaries for the first two months. This plan will be effective on 1st January 2018 and that is when my business will begin in Mbarara Easy View Arcade.

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Cosmetic Business Plan Template

Cosmetic business plan.

You’ve come to the right place to create your cosmetic business plan.

We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their cosmetic companies.

Below is a a sample cosmetic business plan to help you create your own cosmetic company business plan.

Executive Summary

Business overview.

Guilt-Free Glow is a cosmetics shop located in Spokane, Washington. The company’s mission is to provide customers with high-quality, cruelty-free cosmetics. We want our customers to look and feel their best without feeling guilty about the harm cosmetics do to the environment and animals. Therefore, the shop will sell a wide variety of vegan and cruelty-free cosmetics for people all over the world to enjoy. Some of these products include makeup, moisturizers, and hair care products.

The company is founded by Kiera Smith, who has been a vegan beauty vlogger for five years. During that time, she has amassed 500,000 followers through her beauty vlogs. She has always been committed to finding products that are vegan and cruelty-free. Now that she has gained popularity on Youtube, she is eager to start her own cosmetics line. She will offer an online shop for her followers around the world but also start a shop in downtown Spokane for local residents.

Products Served

The following are some of the vegan, cruelty-free products sold by Guilt-Free Glow:

  • Makeup tools and brushes
  • Shampoo and conditioner
  • Moisturizers

Customer Focus

Guilt-Free Glow will target both online customers and customers located in the Spokane area that are interested in vegan and cruelty-free cosmetics. Since the founder has a large following on Youtube and social media, we expect most of our customers will come from her fanbase. When marketing to local residents, we will focus our efforts on women ages 15 to 65, as this is traditionally the largest customer segment for the cosmetics industry.

Management Team

Guilt-Free Glow is led by Kiera Smith, who has been a successful beauty vlogger for five years. She creates tutorials on makeup techniques and offers other beauty tips. She has always been passionate about using vegan and cruelty-free products in her videos and encouraged her followers to do the same. Since there aren’t many cosmetics companies that dedicate their whole line to these values, Kiera Smith was inspired to create her own line of cosmetics and beauty care products.

Kiera Smith will be the owner of the company and will conduct much of the marketing efforts through her own social media channels. She will hire other staff to help her with the other aspects of the business, including running the retail shop.

Success Factors

Guilt-Free Flow will be able to achieve success by offering the following competitive advantages:

  • The founder, Kiera Smith, is a popular beauty guru, and her brand and popularity will help sales and minimize marketing costs.
  • Guilt-Free Glow offers great pricing in the vegan cosmetics industry. Vegan and cruelty-free products are often expensive and unaffordable to the average consumer. Guilt-Free Glow will sell all its products at a moderate price so that everyone can buy cosmetics without feeling guilty.
  • Guilt-Free Glow will hire friendly, knowledgeable, and highly-qualified staff to help both our online and in-store customers.

Financial Highlights

Guilt-Free Glow is seeking $300,000 in debt financing to launch its cosmetics business. The funding will be dedicated to securing a retail space, manufacturing the products, and purchasing the necessary supplies and equipment for the store. Funding will also be dedicated toward three months of overhead costs, including payroll, rent, and marketing costs. The breakout of the funding is below:

  • Retail space build-out: $50,000
  • Equipment, supplies, and materials: $25,000
  • Three months of overhead expenses (payroll, rent, utilities): $125,000
  • Marketing costs: $50,000
  • Working capital: $50,000

The following graph below outlines the pro forma financial projections for Guilt-Free Glow.

Company Overview

Who is Guilt-Free Glow?

Guilt-Free Glow’s History

In 2017, Kiera Smith started her Youtube channel, which focuses on beauty tutorials and product reviews. Kiera commits to promoting and working with vegan and cruelty-free brands and educates her audience on the importance of these values for the cosmetics industry. Over the years, Kiera has found that very few cosmetics brands commit to any pledge to be vegan or cruelty-free. Therefore, she decided to start her own cosmetics line that is committed to these values.

Since its incorporation, Guilt-Free Glow has achieved the following milestones:

  • Developed the company’s branding image, social media, and website.
  • Found a retail location and signed a Letter of Intent to lease it.
  • Found manufacturers to create the cosmetic products.
  • Obtained a sales and use tax permit for use in Spokane, Washington.

Guilt-Free Glow Products

The following are some of the vegan and cruelty-free products sold by Guilt-Free Glow:

Industry Analysis

According to Fortune Business Insights, the cosmetics industry is currently valued at $287.94 billion and is expected to grow to $415.29 billion over the next few years.

This growth is due to the increasing demand for high-quality cosmetics. The target market for cosmetics has expanded substantially over the past decade, with people of all ages and genders opting to pay good money for high-quality makeup, hair care, and other beauty products. This trend is expected to continue, and the cosmetics industry will only continue to grow rapidly.

Another important trend is the increasing popularity of environmentally friendly, vegan, and cruelty-free products. Guilt-Free Glow is taking advantage of this demand and selling exclusively vegan and cruelty-free cosmetics.

By capitalizing on these trends and our founder’s increasing popularity online, Guilt-Free Glow is expected to thrive in the cosmetics industry.

Customer Analysis

Demographic profile of target market.

Guilt-Free Glow will primarily target Kiera’s current fanbase on Youtube and social media. This fanbase includes 500,000 followers, with the majority being females and under the age of 40.

The company will also target residents of Spokane who may be interested in purchasing vegan cosmetics. Traditionally, the customer segment most interested in this industry is women ages 15 to 65.

The precise demographics for Spokane, Washington are:

Customer Segmentation

Guilt-Free Glow will primarily target the following customer profiles:

  • Women ages 15-65
  • Kiera’s fanbase
  • Beauty professionals and influencers
  • Spokane residents looking for vegan, cruelty-free cosmetics

Competitive Analysis

Direct and indirect competitors.

Guilt-Free Glow will face competition from other companies with similar business profiles. A description of each competitor company is below.

Ulta Beauty

Ulta Beauty is a major retailer in the cosmetics industry, being the ultimate provider of all beauty products for millions of people across the globe. The company aims to be the most loved beauty destination of its guests and has ultimately succeeded in that mission. At Ulta, you can find any beauty brand you are looking for, such as Dior, Chanel, and Lancome. Whatever item or brand you need, you are bound to find it at Ulta.

Since 1988, Sephora has been a giant in the cosmetics and beauty industries. It’s one of the top locations to shop for all your high-quality beauty and cosmetics needs and has dominated the cosmetics industry with its global presence. With 2,700 stores in 35 countries worldwide, there are very few locations around the world where you can’t find a Sephora store to visit.

At Sephora, you can find some of the hottest and most exclusive brands, such as Rare Beauty by Selena Gomez and FENTY BEAUTY by Rihanna. Furthermore, Sephora has been recognized by Forbes as one of America’s Best Employers four years in a row and scored 100% on the Human Rights Campaign’s Corporate Quality Index three years in a row. When customers are looking to buy cosmetics conveniently and ethically, they often head to Sephora first.

The Cosmetics Company Store

The Cosmetics Company Store is an online cosmetics company that sells high-quality cosmetics brands to customers all around the world. They carry thousands of products for anyone in need of beauty products, including hair care products, makeup, and moisturizers. Customers can purchase from a wide variety of brands they love and are familiar with, including Estee Lauder, Clinique, and Aveda. In addition to having a large online store, The Cosmetics Company Store has a few retail locations in select areas.

Competitive Advantage

Guilt-Free Glow will be able to offer the following advantages over the competition:

  • Guilt-Free Glow offers great pricing in the vegan cosmetics industry. Vegan and cruelty-free products are often expensive and unaffordable to the average consumer. Guilt-Free Glow will sell all its products at a moderate price.

Marketing Plan

Brand & value proposition.

Guilt-Free Glow will offer a unique value proposition to its clientele:

  • Wide selection of cosmetics.
  • A focus on vegan and cruelty-free products.
  • Competitive prices that are more affordable than the competition.

Promotions Strategy

The promotions strategy for Guilt-Free Glow is as follows:

Guilt-Free Glow will be located in a very convenient, highly-trafficked area of Spokane that is frequented by men and women of all ages and backgrounds. The store will be in the same neighborhood as stores, restaurants, and salons. The area of Spokane is frequented by shoppers who live in the area and have disposable income to be able to spend frequently on cosmetics.

Social Media

Guilt-Free Glow will have Instagram, Twitter, and Facebook business profiles where Kiera will post frequently new arrivals to the store, featured clients who are using the products, and upcoming sales and events. The posts will be appealing with professional photographs and will engage customers with discount opportunities if they tag friends in the comments in order to grow their social media following. Kiera will also use her personal social media accounts to promote the company and its products.

Website & SEO Marketing

Kiera will reach out to a website designer to develop a website for Guilt-Free Glow. The website will be easy to navigate and include an option to purchase items online and schedule a pickup time in the store, contact information, and location. The SEO will also be managed to ensure that anyone searching “cosmetics store near me” or “Spokane cosmetics” will see Guilt-Free Glow listed at the top of the Bing or Google search engine.

Partnerships With Beauty Influencers

Kiera will partner with other beauty influencers to spread the word about her company. She will offer discount codes to the influencers’ audiences to entice them to shop for her products.

The pricing of Guilt-Free Glow will be moderate so customers feel they receive value when purchasing their products.

Operations Plan

The following will be the operations plan for Guilt-Free Glow.

Operation Functions:

  • Kiera Smith will be the Owner and President of the company. She will oversee the major operations of both the retail and online stores.
  • Kiera will hire a General Manager for the store. They will be in charge of day-to-day administrative functions, product inventory, supply orders, hiring, and training.
  • Kiera will hire an Assistant Manager to assist with product inventory, supply orders, and managing the store when Kiera and the General Manager are unable to be there.
  • The store will have 6 – 8 part-time and full-time employees to assist with stocking merchandise and customer service.
  • As the store grows and business picks up, more employees will be added to the team to keep up with customer demand.
  • Kiera will hire a Marketing Specialist and Web Designer to develop the store’s branding, logo, and social media accounts. The marketing specialist will also develop the website and manage the SEO.
  • She will also hire an Administrative Assistant to help her with the other operations tasks needed to run the company.

Milestones:

Guilt-Free Glow will have the following milestones completed in the next six months.

6/1/202X – Finalize lease agreement for 10,000 square foot retail storefront location.

6/15/202X – Begin build out of leased space.

6/30/202X – Finalize agreements with cosmetics distributors to schedule their upcoming product deliveries to the store.

7/1/202X – Kiera will meet with the web designer so they can get started developing guiltfreeglow.com

8/1/202X – Final walk-through and approval of the built-out beauty retail store.

8/2/202X – Begin social media marketing campaign of Guilt-Free Glow.

8/15/202X – The first shipment of store inventory arrives.

8/16/202X – Hire employees and begin training.

8/18/202X – Stocking and display of product inventory in anticipation of the Grand Opening.

9/1/202X – Grand Opening of Guilt-Free Glow.

Financial Plan

Key revenue & costs.

The revenue drivers for Guilt-Free Glow will come from the sales of cosmetics through the retail location and online store.

The cost drivers will be the cost of the cosmetics inventory, labor expenses, marketing expenses, rent, utilities, and overhead costs.

Funding Requirements and Use of Funds

Key assumptions.

The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.

  • Number of Initial Customers Per Month: 1000
  • Average Item Cost: $20
  • Annual Lease: $100,000

Financial Projections

Income statement, balance sheet, cash flow statement, cosmetics business plan faqs, what is a cosmetics business plan.

A cosmetics business plan is a plan to start and/or grow your cosmetics business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

You can easily complete your cosmetics business plan using our cosmetics Business Plan Template here .

What are the Main Types of Cosmetics Businesses?

There are a number of different kinds of cosmetics businesses , some examples include: Niche market cosmetics, high-end cosmetics, kids cosmetics, beauty blogger/influencer, or make-up artist.

How Do You Get Funding for Your Cosmetics Business Plan?

Cosmetics Businesses are often funded through small business loans. Personal savings, credit card financing and angel investors are also popular forms of funding.

This is true for a cosmetics business, a plan for a makeup company or a personal care products business plan.

What are the Steps To Start a Cosmetics Business?

Starting a cosmetics business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster.

1. Develop A Cosmetics Business Plan - The first step in starting a business is to create a detailed cosmetics business plan PDF or doc that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast.  

2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your cosmetics business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks so it’s important to do research and choose wisely so that your cosmetics business is in compliance with local laws.

3. Register Your Cosmetics Business - Once you have chosen a legal structure, the next step is to register your cosmetics business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 

4. Identify Financing Options - It’s likely that you’ll need some capital to start your cosmetics business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 

5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 

6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 

7. Acquire Necessary Cosmetics Equipment & Supplies - In order to start your cosmetics business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 

8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your cosmetics business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising. 

Learn more about how to start a successful cosmetics business:

  • How to Start a Cosmetics Business

Other Helpful Business Plan Templates

Ecommerce Business Plan Template Beauty Supply Store Business Plan Template Retail Business Plan Template

How to Start Your Own Cosmetics Business

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how to plan a cosmetic business

There’s something extremely satisfying about having your own cosmetics business.

Maybe it’s the instant authority it gives you as a makeup expert.

Or how popular it makes you when going out with friends.

Or it could just be the amazing discounted makeup!

Personally, I love the fact that I earn a living doing something I have an actual passion for and making people’s lives better as a result!

We help people look their best, and give them confidence as a result. I can’t even count how often people have thanked me for just doing my job. And I didn’t just sell them makeup, skincare products, or hair care products. I helped them achieve the vision that they have of themselves at their best.

Honestly, that right there makes everything worth it. I do have to admit though, getting paid for to do something that I really enjoy is a nice bonus!

Believe me. There’s never a lack of people who need help but are helpless when it comes to makeup.

Start Your Own Cosmetics Business in 12 Steps

The cosmetics industry is growing every single year. In 2015, the beauty industry as a whole brought in over $56.2 billion in the U.S. alone!  And makeup cosmetics made up 15% of that – or $8.5 billion – and is expected to rise to $11 billion by 2018.

So if you’re anything like me and really love and appreciate the power of cosmetics, maybe it’s time you invest in yourself and learn how to start a cosmetics business.

By the time you finish reading this post, you’ll understand exactly what you need to do in order to make your makeup dream into a reality!

Step 1: Learn How a Cosmetics Business Works

how to plan a cosmetic business

The first step to starting any business is to understand how it works. Fortunately, there are a few ways to do that.

You can start by studying everything you can online. Look up Sephora, MAC, and Estee Lauder, and learn everything you can about them.

Where are they from?

Where do their products come from?

How many employees do they have? What does their distribution channel look like?

Click here to download all of the 31 FAQs of starting a business in this Free Report.

Next, look for the most popular beauty stores in your area and study them, too. Get familiar with their marketing, their staffing, their product selection… basically, your goal is to learn literally everything you can about the most successful cosmetics businesses in your area!

Then – and here’s the fun part – go buy some products from them! Experiment. Play. Have fun and see what kind of magic you can pull off by giving your friends makeovers.

But the absolute best way to learn about the industry is to work in it.

Remember those stores you were studying? Go get a job at one of them! Learn their sales tactics, how they target customers , how they establish their sales projections, how they handle their ordering.

Know who their suppliers are, and what kind of prices they pay.

And learn as much as you can!

If you want to start a cosmetics business from home, then start researching which company you want to work under.

This is a GREAT option for those with limited budgets but huge social networks and people skills!

I’m not ashamed to admit that when I was younger, I was totally a Mary Kay sales rep! And you know what? I did really well there! But today, there are so many options for young entrepreneurial ladies looking to get into the cosmetics industry.

If you’re interested in starting up a cosmetics business from home, here’s a great site that ranks home based cosmetics businesses by user score, startup kit price, base commission, sales method, and product categories.

Once you’ve decided on which model you’re interested in pursuing, whether you want to open a brick and mortar cosmetics store, start a home based cosmetics business, or even create one online, then it’s time to create a plan.

RELATED: Start Your Own Cosmetic Store, A Complete Guide to Help You Run, Start and Manage Your Cosmetics Store

Step 2: Create a Plan

how to plan a cosmetic business

Why do cosmetics businesses fail?

It’s not for lack of customers. The worldwide cosmetics market has grown every single year for the last decade – including following the 2008 recession. In fact, with the exception of 2009 when the industry grew just 1.0%, the growth rate for cosmetics has never dropped below 3%.

That means that each year there are more and more customers wanting and needing cosmetics.

Which means that the real reason cosmetics businesses fail is the same reason as most other businesses – lack of a plan.

Even if you’re starting a cosmetics business from home, a business plan is so important to your success because it’s a roadmap for you to follow.

Creating a business plan is challenging, yes. But it also saves you lots of time, hassle, and money down the road. By making all your decisions ahead of time, you can make sure you’re not missing anything, and really come to understand your business.

Also, if you’re going to open a cosmetics storefront, you’ll need a business plan to show banks or investors for financing.

Your cosmetics store business plan should include an overview of your business, but should also get specific.

  • What’s the mission and objectives of your store?
  • Who is your target market?
  • What is your startup cost?
  • How much do you expect to make your first year? Your second year?
  • What does your competition look like?
  • Do you have a marketing plan?

Your business should guide you in effectively running your business plan after you’ve launched your company, so do not skip over it!

If you’re not sure where to start, Startup Jungle can help you create an expertly organized and professional business plan for your cosmetics business.

Just email [email protected], and they’ll give you the help you need.

Step 3: Discover Earning Potential

How much money does a cosmetics business make?

Well, that depends.

Different business models have different operating expenses and different earnings potential

If you’re working from home, you’ll pay a set amount for your kit, and then earn a commission based off of each product you sell.

If you’re creating an online store  then you’ll earn whatever affiliate commission you agree to with the wholesalers.

And if you’re building an actual brick and mortar store, that’s where you have the highest earning potential. But that’s also where you have the highest setup and operating costs.

That being said, the earning potential is there.

As I said before, the industry is growing. Currently, growth is at about 5% a year. But online beauty sales are growing at 20% every year!

And according to L’Oréal, the term “beauty” is one of the top 3 most popular search topics on Google!

The U.S. market alone brings in more than $56 billion a year. If you’re serious about starting a cosmetics business, the earning potential is absolutely there for the taking!

Step 4: Set a Budget

how to plan a cosmetic business

Your budget should be part of your business plan.

You should be able to plan out all startup costs and recurring expenses ahead of time so that you know how much money you have to put back into your business or into your marketing campaign. If you run out of money, you can’t operate your business and have to shut down, making your budget an important tool in your business kit.

How much does it cost to open a cosmetics business?

Well, again that depends on what type of model you run with.

If you’re opening a cosmetics business from home, your costs will be lower. Really, your only required costs will be the kit you buy from the cosmetics company.

But then there are recommended costs. Get yourself a website. And business cards.

Print flyers, if you can.

Invest in stylish, high quality rolling makeup artist travel cases.

Perhaps you’d like to invest in a local magazine and get yourself featured? Or Facebook’s local awareness ads?

If you’re creating a drop shipping company ,  then you just need to invest in creating a beautiful website and directing online traffic to your site.

As for creating a real life store, that’s a bigger operation with much higher costs.

Some costs to consider when starting a cosmetics business include (in no particular order!):

  • Business permits

You’ll have more needs, but this list should get you started.

To really understand everything, you need to go observe the most successful cosmetics business in your area and mimic whatever you can from their business.

Here’s my example here at Startup Jungle:

How to Start Your Own Cosmetics Business

Running a business can be expensive, so here are some tips to keep costs down:

  • Make sure your marketing is targeted – if it’s not working, don’t be afraid to change it
  • Schedule appropriately – labor is your highest cost, make sure not to overdo it
  • Pay attention to the little things – napkins and wet wipes add up, so think about washable towels instead to save money
  • Don’t leave the lights on – sounds simple, but utilities get expensive, so make sure you’re conserving wherever you can

Step 5: Decide Which Products/Service to Offer

This is such an exciting piece!

How do you decide what products or services to offer?

Well, again that depends on your business model. But it also depends on you!

What are you really great at? What do you have a passion for?

Basically, you’re asking yourself what is the Unique selling point? What can you offer that nobody else can? Maybe it’s you, maybe it’s your service, maybe it’s your experience…

Figure it out and create a business out of it.

Once you know what you want to sell, you need to find out what your customers want to buy. It’s far more important.

So go talk to friends, family, customers, potential customers, and even strangers on the street. Find out what they’re interested in!

Don’t just say “would you buy this mascara?”

Ask them, “what order would you rank these products” or “what’s your favorite brand of concealer”.

By avoiding yes or no questions, you can give your business a better opportunity to understand what people like best as opposed to just what people say they like. There’s a big difference.

What sells best in the cosmetics industry?

Today, people are looking for sustainable, organic, and anti-aging products.

It’s not just women looking at cosmetics anymore, but men, too.

Men now represent a huge growing market in the industry which should absolutely be focused on.

Popular products include:

  • Skin care products
  • Mineral cosmetics
  • Special effects makeup

There’s no limit to what you can find a market for. As men become more rugged, there’s even the opportunity to sell high-end beard and mustache products.

Don’t be afraid to explore, but remember to check with your potential clients first to understand if there’s a market for what you want to sell.

You can’t sell every product, or you’ll go broke simply by ordering stock. Keep in mind, many big companies have minimum orders, so when you place an order for an item, you’re anticipating being able to move every piece of your order.

When in doubt, go scout what the competition is doing!

Step 6: Decide on a Location

Where should you open a cosmetics business?

If you’re working from home, you want to have an area set up in your home which lets you display your products and host customers and guests.

But if you’re looking for a location for a storefront, you want a location with high foot traffic to increase sales. The best options include malls, kiosks, and high-end plazas.

Ideally, you want to set up your store in affluent areas where disposable income is high, prompting more sales from customers who can afford to look their best. However, if you’re competing on price, then perhaps you want to cater to low-budget neighborhoods as a discount beauty supply store. In this case, you should avoid affluent neighborhoods, but still focus on important factors such as:

  • Visibility from the street
  • Ease of access

Regardless of location, your business is best served by having multiple sales avenues. So you’ll want to explore online sales, as well.

If you’re not sure what to look for, speak to commercial realtors and see if they have any suggestions from past experience.

Step 7: Find Suppliers

What equipment do you need to open a cosmetics store?

That, as you know by now, varies based on what model you go with.

An online store will only need a web designer and a wholesale cosmetics supplier.

As a home-based business, you will have everything you need directly from your company, which is the biggest perk.

But a real world store has more needs. These include:

  • Display cases
  • Sponges, brushes, and other supplies
  • Makeup products
  • Point of sales system
  • Art and decorations
  • Security systems

You may want to explore buying wholesale directly from the cosmetics company. But some other suppliers to explore are:

  • https://www.salonsupplystore.com/collections/makeup-supplies
  • http://www.ccibeauty.com/index.html

Research what supplies you’ll need – and where to get them from – ahead of time. This saves time and hassle down the road. Don’t be afraid to shop around for the best prices.

Also, consider auctions or buying slightly used furniture and equipment to save money. Just make sure that everything is in great condition!

Step 8: Promote Your Cosmetics Business

Without customers, your business cannot survive. So it’s critical to promote your cosmetics business in order to bring in new and returning customers.

So how do you promote your business?

Well, there are the traditional, physical ways and newer, targeted digital ways. Both are effective.

Mailbox coupons and door flyers work, but they’re not targeted. So you may be wasting a little bit of money by giving your material to people who don’t need it. You also run the risk of angering people if you leave a flyer on their car or home door.

But it presents an opportunity to get yourself in front of local people who are potential customers. Don’t underestimate that.

You can also stand on a street corner offering samples or coupons to passersby who are your target market.

For more targeted methods, use the internet. Google AdWords allows you to be featured in local searches. Remember, “beauty” is a top 3 Google search term, so that’s a valuable tool. And if you want to really target your audience, use Facebook to differentiate your audience based on interests, age, and location. This is great if you’re looking for high-end buyers because you can target based on their current interests.

If you’re not sure where to start, look at what your competition is doing. If they’re successful, there’s no reason you can’t be, too!

Step 9: Create a Staffing Plan

If you’re working from home, then you can handle doing everything on your own.

But if you’re opening a store, it’s important to have help.

That’s why it’s important to have a hiring plan.

Hiring the wrong person for a position can really hurt your business.

You have to be able to trust your people to run the store even if (especially if) you can’t be there, need to know not only how many people you need on staff, but what type of people and where to find them and can protect yourself by having a potential hire demonstrate their abilities and also by interviewing with questions that will verify cultural fit.

Have a plan not just for who to hire and where to find them, but how to train them and how to staff them. Knowing all of this in advance will prevent you from tearing your hair out trying to organize everything on the fly, but also save you money by keeping you from over staffing.

Step 10: Decide on a Style/Design

how to plan a cosmetic business

Here’s another area that can be overwhelming.

Your style and design directly influence how customers feel about your business. You want to be warm and welcoming but still express your own flare and passion. Just be careful not to overdo it and risk scaring away customers.

The best way to figure this piece out is to talk to prospective customers. Get feedback from the people who would be frequenting your cosmetics business. Talk to them at existing beauty shops. See what people like and don’t like. If you’re still not sure, talk to some contractors and see what’s most commonly requested of them.

Another option is 99designs.com .

Here, you get designers competing for your prize money. For as little as $99, you get to choose from a large selection of high-quality logo options, giving you flexibility and options, and hopefully providing some inspiration.

And remember, if you’re not sure what to do, don’t be shy about looking for inspiration in other stores or even magazines.

Take your time when choosing your style. Remember, it should express you and your business, so make it appealing!

You’d also need business cards! Here are some designs you can start with:

how to plan a cosmetic business

Step 11: Create an Accounting Plan

Having an accounting plan is a must for any business.

As a business, you’ll be an employer. As such, you’d be responsible for payroll, taxes and documenting all your income. Which is why it’s so critical to have every dollar accounted for and everything in order.

Equally important, you’ll be able to project your sales more easily with proper tracking. In addition to knowing if you are on track, it helps you stick to your budget. You’ll also be able to tell if anything is missing from your store, thus, making an accounting plan part of your store’s security measures .

Here’s a few accounting software we have seen:

No one likes to crunch numbers, but that doesn’t change the fact that this is a requirement. If you’re not sure about how to move forward with an accounting plan, consult with a local accountant about either handling your books for you or offering suggestions as to how best to handle your own books.

Step 12: Get Into the Cosmetics or Beauty Community

Becoming involved in the beauty industry community is more beneficial to your business than almost any other activity you can do.

Follow your favorite brands on Instagram.

Get involved on Facebook in groups, fan pages, and communities.

It only takes one retweet, regram, or mention to get noticed by the right people.

While you’re at it, join associations!

Associations give you access to industry veterans, workshops, trade shows, and priceless information about how to best run your business. You’ll learn industry best practices, new strategies, and tips to sell your products more effectively .

An association can be the difference between losing money and making a profit!

Here’s a list of associations you may be interested in:

  • http://hbia.com.au/
  • https://probeauty.org/
  • http://dayspaassociation.com/
  • http://www.aestheticsassociation.com/

You can also explore local meetings through meetup.com!

You never know where your big break may come from, so make sure you’re actively engaged in the cosmetics community!

Here’s an infographic with useful information about the Cosmetics industry and some tips on starting a business within it:

How to Start Your Own Cosmetics Business

The Bottom Line

Opening (and running) a cosmetics business is a lot of work.

But if you do it right, it’s not only rewarding, it’s a lot of fun.

You get to be your own boss and brighten people’s lives on a daily basis!

On top of that, you’re helping them improve their confidence and making their lives happier!

Hopefully, you put this guide to use .

If this was helpful for you and you want to learn more about opening a cosmetics business, StartupJungle.com has a 21-point checklist for starting your new business . Make sure you download this if you’re serious about getting started.

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How to sell your own lotion, how to start a homemade chocolate business.

  • The Advantages of the Cosmetics Business
  • The Registration of a Food Business Establishment

Everyone wants to look good, which means that cosmetics and skin care products are always in demand. Even during economic downturns, women, in particular, are willing to splurge on a great lipstick or on an effective skin care treatment. If you are interested in starting your own cosmetics business, be forewarned: preparation is the key to success. The federal government regulates the development and sale of cosmetics, so understanding these rules will help you comply with federal regulations while you offer products that consumers can get excited about.

Select a Niche

Many small cosmetic companies operate within a particular industry niche. For example, a cosmetics company may commit to crafting fragrance-free skincare and makeup for people who have sensitive skin. Another company may choose a line of very light formulations for women who don't like to wear a lot of makeup. Do some market research and consider your own preferences: after a while, you'll get an idea of the type of cosmetic line you'd like to start.

Learn About Cosmetic Formulation

The U.S. Food and Drug Administration regulates the cosmetics industry. The FDA has rules about the kinds of ingredients you can and cannot use in your cosmetics; the kinds of claims you can make about these ingredients on your labels; and the FDA requires you to take responsibility for the safety of your products. This means that you are responsible for knowing the ingredients that go into your products, and that you ensure that your products have not become adulterated, and that they remain in compliance with federal labeling restrictions.

Another consideration is that – in some cases – a cosmetic may also be considered a drug. The FDA defines a cosmetic as a product that's intended to improve the user's appearance. A drug purports to cure or to treat a specific medical condition. If your products contain sunscreen, anti-dandruff treatments, or acne remedies, the FDA may consider them to be drugs, and that they are then subject to additional scrutiny.

If you don't have a background in cosmetic chemistry, you have a few options:

  • Hire a cosmetic chemist to work with you when developing your products. Depending on your business structure, you could hire the chemist either as an employee or as a consultant. 
  • Seek out a private label manufacturer that offers customization options. These companies are set up to craft cosmetics and skincare to your specifications. 
  • You could earn a degree in cosmetic chemistry or in a related field. Although this will require several years, it will provide you with in-depth knowledge of the products you sell.

Secure Financing and a Work Space

As you develop your business plan, consider sources of funding. You will need to have money to cover the cost of producing your product line, packaging it and then distributing it customers and retailers. These costs may include salaries, rent and fees for licenses and permits. Depending on your circumstances, you may be able to finance your business through your savings, with help from family or friends, or from a business loan.

After you have secured your financing, you need place where you will operate your business. According to the FDA, it is not a federal violation for you to operate your business out of your home. However, you will be responsible for ensuring that you can manufacture and store your products in a way that keeps them safe for public use. State and local regulations may restrict your ability to operate a business in your home. If this is so, then you'll need to find commercial space for you to work.

Check out business incubators in your area to ascertain if they have the kind of manufacturing space you need. Typically, business incubators are not-for-profit organizations that own or lease a sizeable commercial facility, and that rent out individual units to new businesses. In many instances, you'll pay below market rates to rent a space that's already set up for manufacturing, labeling and shipping products.

Obtain Permits

You'll need to work with state and local regulators to determine which licenses and permits your business will need. For example, you may need to apply for a general business permit from your state, as well as applying for specialized permit or permits from state, county, or local agencies. If you plan to sell products directly to consumers, you may also need to apply for a sales tax collection account from your state's department of revenue. The same may also be true if your municipality collects sales takes on local purchases.

If you are operating as a home business, you may need to obtain a home business license, as well as permits for your manufacturing space. Contact your city's business development department to learn more about regulations and requirements.

The FDA has a registration program for cosmetics firms called the Voluntary Cosmetic Registration Program. As its name suggests, participation is voluntary but it can provide you with valuable information about the safety and efficacy of products and ingredients.

Understand Labeling Compliance Issues

The FDA can be very specific about what you can include on your product labels. Issues to consider include:

  • Medical claims, such as the idea that your product treats or cures certain skin conditions.
  • The accuracy of ingredient lists.
  • Organic claims: The USDA regulates the use of the term "organic" on ingredient labels. 
  • Potential risks of using the product, such as the inclusion of ingredients that may increase sun sensitivity.

Develop Unique Branding

Work with graphic designers, copywriters and public relations professionals to develop a coherent brand for your products. This process can take some time, so act soon! You'll want to have things like company logos, mission statements, and marketing strategies in place when it is time to launch your business.

Select Distribution Channels

Another consideration for cosmetic-company owners is where and how you plan to sell your products. As a small company, you may decide to sell your products from your own retail store, or online, or via local salons, spas and boutiques. Many businesses choose to have a mix of distribution channels as a way of reaching more customers and of controlling costs. Once you have a distribution plan in place, you can begin to investigate ways to start selling, whether through developing vendor relationships with retailers or by opening a website.

  • Chemists Corner: What are the startup costs for a cosmetic business?
  • FDA.gov: Small Businesses & Homemade Cosmetics: Fact Sheet
  • FDA.gov: Is It a Cosmetic, a Drug, or Both? (Or Is It Soap?)
  • FDA.gov: "Organic" Cosmetics
  • Society of Cosmetic Chemists: Cosmetic Science Programs Around the World

Lainie Petersen is a full-time freelance writer living in Chicago. She has written on part-time, full-time and freelance employment for a variety of online and offline publications. She holds a master's degree in library and information science from Dominican University.

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