Last Updated on May 26, 2020
Candles add beauty and wonderful smells to homes; they’re ideal for enhancing an environment and make great gifts. If you love candles and are crafty, then you may have even tried making them in the past. But have you considered that you could turn this hobby into a business? Candle makers have the opportunity to bring their ideas to life, using their creativity to come up with something new and exciting that others will want in their homes. Best of all, you can start a small candle making business right out of your home, saving money on expenses like rent and allowing you to gradually grow the business. Think candle making might be the business opportunity for you? Read on to find out just what’s involved with this venture.
Candle making businesses usually specialize in creating particular types of candles. Some may create jar candles, while others may make specialty candles that are inspired by certain scents or places. Small businesses may focus on hand-made candles, while larger operations often make candles in big batches, using machinery to keep up with the high volume.
These businesses are run in many different ways. Smaller operations can be run out of a home kitchen, with business owners selling their inventory at local craft fairs. Some business owners open actual storefronts or shops, and some sell online. There are many different business models in this industry, which means business owners can choose to run their businesses in the ways that best complement their lifestyle and business goals.
According to IBIS World, the candle manufacturing industry experienced a 1.5 percent annual decline from 2014 to 2019. In 2019, the industry was predicted to bring in $2 billion in revenue. From 2014 to 2019, the number of businesses grew to 462, while industry employment declined to 5,116. Newell Brands, Inc. currently holds the largest market share in the industry.
While the industry declined during that five-year period, it is expected to benefit from an increased demand for candles in the coming years. Continued growth in per capita disposable income may mean that more people choose to purchase candles. Lower-priced imported candles will continue to be competition for USA-based manufacturers, meaning that manufacturers may have to get resourceful and find ways to create candles that are unique or of a higher quality to help drive sales.
The candle making industry is constantly affected by changing and new trends. According to Candlewic, fragrances, colors, jar types, and even wax formulations are all affected by trends. Sometimes, these trends evolve together – for instance, fragrances and colors are often closely linked. It’s important for candle makers to stay aware of the trends that are growing in popularity, but following trends isn’t always the best choice for businesses. Sometimes, taking inspiration from trends and then finding a way to do things differently can pay off in increased sales.
The Wooden Wick Co. reports on some trends that all candle makers should be aware of and embrace. An increased focus on sustainability is influencing all industries, including candle making. Candlemakers can embrace this trend by re-using wicks, repurposing jars, and sourcing sustainably farmed wicks and materials.
Consumers are also placing increased importance on experiences. Consumers may use candles to create experiences in their home, carefully choosing candles for their colors, the light they give off, and their scents. Using wooden wicks can further enhance this experience, since these wicks crackle as they burn.
Candle trends are sure to continue to evolve, and many of them emerge on Pinterest before they hit the stores. Candlemakers can use social media to stay aware of the new trends that they may want to incorporate into their business.
Candle making businesses will develop different target markets depending on how they shape their businesses. A business that specializes in premium candles might market to gift givers and homeowners looking for that perfect candle to elevate a home space. Manufacturers who craft candles designed to reflect the scents and scenes of a particular location will market to tourists and homeowners in that specific location.
Skills, experience, and education useful in running a candlemaking business
Starting a candle making business doesn’t require a business degree. Certain skills and experiences will make it easier, though, and can improve the business’ chance of being a success.
Candle making experience. Some previous candle making experience will be helpful. If a business owner doesn’t have firsthand experience, then an apprenticeship under an experienced candle maker can help with skill and knowledge development.
Creativity. One of the challenges in this industry is designing products that will stand out from currently available candles. Creativity is a valuable skill to have.
Attention to detail. A business owner’s attention to detail is important in providing quality control and ensuring that candles represent the business well.
Interpersonal skills. Whether building relationships with customers or with retailers, a candle maker will benefit from strong interpersonal skills.
Costs to Start a Candle Making Business
One of the benefits of getting into the candle making industry is that candle makers can start businesses on a small scale, growing them gradually. Small-scale businesses started out of the home have relatively minimal startup costs. Plan to spend about $1,000 on a small business run from your home, while a larger-scale business can cost $10,000 or more.
Common startup costs for a candle making business include:
- Equipment, like pouring pots and jars
- Inventory and supplies, like wax and wicks
- Signage (for brick-and-mortar businesses)
Steps to Starting a Candle Making Business
Step 1. Write your Business Plan
After coming up with the idea, the next step in starting your business should be to write a business plan. Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.
Step 2. Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from which include the sole proprietorship, partnership, corporation and LLC. Each type of entity has its own pros and cons such as liability exposure, costs and administrative requirements.
Related: Comparison of Business Entities
Step 3. Select your Location
While a smaller business can be run out of a home’s kitchen, as that business grows, it may be necessary to move into a larger space or storefront. Rental costs for these spaces will vary depending on the space’s size, whether it’s a retail or manufacturing space, and even where that space is located. A prime retail location will carry a higher rent cost, but it can result in valuable walk-in business and increased public awareness of the business.
Related: Choosing a business location
Step 4. Apply for Business Licenses and Permits
There are no specific licenses for a candle making business, however there are general business registrations at the local, state and federal level that a candle making business might need such as a sales tax permit, Employer Identification Number, and Occupancy Permit among others.
Step 5. Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a candle making business is another. While the cost to start a candle making business is low, getting a loan can be difficult as most of the money would go towards inventory and marketing costs. In order to get a loan, the borrower(s) will need to have good credit and be able invest 15-25% of their money towards the total start-up costs.
Step 6. Get your Marketing Plan in Place
A strong, comprehensive marketing plan can contribute to a business’ success. Many candle makers create websites and maintain active social media pages. Paid online advertising and paid social media ads may also be valuable strategies. Business owners who do some or all of their marketing themselves can save on the cost of hiring a professional marketer, stretching their budgets in the process. Marketing costs will vary depending on the type of marketing being performed.
Step 7. Get Insurance
Candle making businesses need several types of insurance to be fully covered:
- General liability insurance protects the business if a customer is ever injured while on the business’ property, like by a trip or a fall. This insurance can cover costs like legal fees and expenses.
- Commercial property insurance protects the business against the loss of property and supplies after an event, like a fire. If you are operating the business out of your home, you may review your policy to see if it covers accidents that resulted from the business.
- Worker’s compensation insurance helps to cover expenses like medical bills or lost wages if an employee is ever hurt while on the job.
Many factors can affect insurance policy costs, including the value of the business’ equipment and the number of employees that are on staff. To get the best idea of what insurance will cost, request quotes from multiple providers and compare them. Be sure to look at factors like each policy’s coverage limits and exclusions, premiums, and deductibles.
Step 8. Hiring Employees
It’s possible for a business owner to handle all of their initial candle production, but as the business grows, it may be time to hire help. Neuvoo reports that candle makers earn an average salary of $24.863 per year, or $12.75 per hour. Entry-level candle makers earn a bit less at $22,425 per year, while more experienced candle makers can earn as much as $33,826 per year.
Salaries are just one expense that comes with hiring employees, though. A business also needs to budget for workman’s comp insurance, paid time off, and health insurance contributions.
Related: Hiring your first employee
Amazon has several books that go into detail on starting and running a candle making business:
- SOAP MAKING AND CANDLE MAKING BUSINESS: The Ultimate Guide Book For Beginners To Learn Homemade Soap And Candle Making. Get Hipped On The Ideas Of Turning Your Hobby Into Business (Free on Amazon Kindle Unlimited)
- Art Of Candle Making Business Startup: How to Start, Run & Grow a Million Dollar Success From Home!
- Natural & Organic Liquid Soap Making Business Startup
- Soap Making Business Startup: How to Start, Run & Grow a Million Dollar Success From Home!
How much can you potentially make owning a candle making business?
The profits of a candle making business will depend on that business’ size, the number of employees, any specialty areas that the business focuses in, and even how the business sells candles, like selling wholesale or retailing candles directly to customers. Because of those variables, it’s difficult to specify potential profits. However, keep in mind that a business that creates unique candles or fills an unmet need in the candle market can enjoy plenty of success.
Things to consider before starting a candle making business
While creativity and an artistic mind are great traits to have as a candle making business owner, it’s also so important to turn on the analytic side of your brain when assessing your business’ finances. This can be a transition that surprises some new business owners, but having detailed, accurate financial data is essential to your business’ success. From pricing out supplies to pricing your products so that you make an appropriate profit, get involved in your finances from the beginning and make sure that you understand how your business financially operates. If you need help, consult an accountant or bookkeeper; these professionals can help you to get set up correctly, which will save you time (and possibly money) at tax time.
Starting a candle making business is a journey, so don’t expect overnight success. Plan to experiment with different designs and scents, as well as with different marketing and retail options until you find something that works for you. Most importantly, focus on creating a brand and products that are easily recognizable and that stand out as unique from other candle makers.
National Candle Association