This article is part of our “Starting Business” series, an in-depth look at how to start a company in a particular niche or industry.
Makeup: the billion-dollar industry that is at the forefront of social media, storefronts and everyday life. It's a necessity to many, a luxury to others and an integral part of our society. But while it's an industry with many top players, there's still room for new sellers and innovative products.
Starting your own makeup line is not a walk in the park, but with the right passion, audience and dedication, it's a business that you can conquer – and with potentially impressive profit margins, too. To help guide you in the right direction, we've compiled a step-by-step guide on how to start a makeup business, including how to market, structure and operate it, wherever in the world you are.
Here is everything you need to know:
Step 1: Market Research
As mentioned, there is currently an extremely high demand for makeup products. However, there are also thousands of businesses that deliver the same service. Therefore, before you start your cosmetic journey, you will need to ask yourself a few key questions:
- What age group am I targeting?
- What price range am I aiming for?
- What does my ideal consumer look like?
- Will I be a solely online business?
- Where will I store my products?
- Who are my competitors?
- Do I have an existing social media following?
Once you've identified the answers to these questions, you'll have a rough idea of the products that you'd like to make, where you're planning on selling them, and who your target audience is. For example, if you're an already established blogger with oily skin, you could create products for men and women in your age group who also suffer from the same problem. By doing so, you've already found your niche and will have a clear business direction.
It's also worth identifying which products your competitors don't already offer, and how you can branch out and create an item that's exclusive and never seen before. While this is difficult in the cosmetic industry, it's certainly not impossible.
Step 2: Company Research
As well as market research, you will also need to conduct company research. Consider the following key elements of your venture:
According to many professionals, most makeup startups need between $75,000 and $200,000 to establish their business. These costs are primarily based on the development of your makeup line, which involves testing, creating and gathering stock of your products. You will then need to invest significantly in marketing, web design and social media to build brand awareness. Depending on whether you're going to be an eCommerce venture or a bricks and mortar store, you will also need to include costs for business rates, insurance, payroll and lighting.
Once you have calculated how much you need to start and run your business, you'll have to find a way to gather these funds, whether through business loans, crowdfunding, personal savings or private investment.
Another option is to apply for Sephora's 'Accelerate' programme, which allows new makeup entrepreneurs to learn about the industry, develop the skills they need to run their own business and also provide grants and funding for startups. The programme also gives new business owners the opportunity to pitch their ideas to high-profile investors.
To develop your own makeup range, you'll need to be familiar with the makeup industry and preferably have a makeup artist qualification. However, this is by no means compulsory: many makeup technicians are self-taught and have developed a following through social media.
If you don't have much experience in the field, you could offer your services for free and test different products on friends and family until you are comfortable and confident in your skills.
Creating brand awareness and publicity takes time, but it all stems from having a reliable network of contacts. If you're establishing a makeup brand, start attending makeup conventions, masterclasses and meetups to push your products. It's best to identify a list of makeup artists and influencers that you'd like to build a relationship with and engage in outreach marketing.
It's vital to look for networking and collaboration opportunities wherever you go. For example, you can ask local businesses to display your brochures near the paying desk or on the front window. In return, you could promote their business through your social media channels or website.
A large portion of your initial investment will be allocated to your resources. This will involve lab testing and product creation, warehouse space, shipping costs, website and logo design, as well as any other marketing costs. You should anticipate that within the first year, any profits will end up covering the startup costs that you acquired on creating and stocking your products.
Licensing / Legal
Before you start creating any makeup, you must become familiar with your jurisdiction's regulations regarding manufacturing cosmetic products (in the US, for instance, this would be dictated by the Food and Drug Administration (FDA)). This is particularly important in the cosmetics industry, where compliance and ethics are prime concerns.
You'll also need to form a legal entity in order to trade and operate. If you're opening a physical store, you will also need to check that you have the correct permits, licenses and insurance.
Step 3: Business Documentation
Completing a business plan is the first step you should take when starting a company; this plan should help you identify and outline your objectives with realistic and attainable goals.
When it comes to a cosmetic business, you will have to weigh up your startup costs, line out your marketing budget and have a clear structure on how your business will operate and turn a profit. This means that you'll need to get to grips with the technical aspects of running a business, such as cash flow management, operational costs and company branding.
Step 4: Branding
Branding is arguably the most critical part of a makeup business and is what will help you stand out from your competitors. Therefore, before you form your business, you will need to compose a strong brand strategy that utilises online and offline components. To ensure your plan covers all aspects of your brand identity, consider the following elements:
Approach: Creating brand awareness takes time, dedication and creative ideas. Therefore, before trying to hit a broad market, consider targeting a smaller audience. For example, if your product is ideal for bridal makeup, try to partner with wedding planners and advertise in wedding magazines. Refine your keywords on Google Adwords, too. This targeted approach will help you achieve fruitful results. Once you've conquered that market, you can then consider expanding your reach.
Name: Choosing the right business name is essential, not only to attract the right audience but also to avoid any legal battles later on down the line. Once you have a unique moniker, it's advisable to check if it already exists and is copyrighted. If not, purchase the web domain, snap up the social media handles and trademark the name before you begin creating your makeup brand.
Website: A well-designed website is vital for an eCommerce business. Users must be able to easily navigate through your site and purchase your product. As most products are purchased online, it's advisable to hire professionals to build and test your website before your launch your brand. Besides design and navigation, you should also invest resources into search engine optimisation (SEO) to attract the right audience online.
Even if you're business is bricks and mortar-based, you still need to develop an online presence and utilise local SEO, too.
Social media: Social media accounts are just as important as your website – if not more so! You will need a strong social presence with tutorials and professional images across all accounts. It would also be wise to invest in influencer marketing to push and promote your makeup across social platforms, such as Instagram. You could also run free competitions which can further promote your brand.
Step 5: The Legal Bit
As mentioned above, the first legal step is to register your business formally. You will likely start life as a sole proprietorship (if you're working alone) or as a partnership (if you are going into business with someone else). As you grow, it's possible to change your structure and become an LLC or even a corporation.
If you're not up-to-date on the legalities and procedures of opening and registering a business, consider using a reliable and reputable service to help you stay compliant and protect your privacy.
Step 6: Attracting Customers
Makeup products lend themselves to visual advertising, and the best way to attract customers is via social media marketing. When starting out, choose one or two networks that accommodate this, such as Instagram and Snapchat, to attract and build an audience.
Once you've identified the niche you'd like to target, do some research and develop posts around it. This could include IGTV tutorials, posts with longer captions and product breakdowns, or reshares of videos that include your product.
Building a large following on social media may take time, but always use organic methods when doing so. While sponsored posts can help to push your product, buying bots or followers is terrible practice and will almost certainly harm the growth of your accounts.
When looking for inspiration, one of the best examples to consider is Huda Beauty. It's owner, Huda Kattan, initially started her cosmetic career as a makeup artist, but after building her clientele, she decided to make her own minx lashes and sell them online. As soon as celebrity endorsers – such as Kim Kardashian – got hold of her product, her small-time business turned on its head overnight.
Following the sudden significant demand for her fake lashes, Kattan created an online blog offering tips and tricks to readers interested in makeup and skincare. She then developed lip kits and eyeshadow palettes. Over the last two years, her product range has expanded to include foundation, contour kits, concealers and brushes. She even formed a separate skincare brand in 2020 called Wishful, demonstrating what exactly is possible for prospective makeup entrepreneurs.
Indeed, as Huda Kattan proves, if you have the skills, passion and knowledge for your product and the wider industry, then the world is your oyster. The main objective is to find a niche that you understand like the back of your hand, and create a strong brand identity to ensure you have return customers and a profitable organisation.
Was this article helpful? Has it inspired you to pursue your own makeup venture? Let us know what cosmetic creation you'd like to get involved in by leaving a comment in the section below!