How to Start a Candle Making Business
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? Candlemakers 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 grow the business gradually. 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 handmade candles. Some may create jar candles, while others may make specialty candles that are inspired by certain scents or places. Candle businesses may focus on hand-made candles out of materials such as beeswax, soy wax, paraffin, or gel. At the same time, 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 at a booth at craft shows and flea markets. Some business owners open actual storefronts or shops, some sell through boutiques and gift shops, while others sell online through their own website or Etsy. 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.
Starting a candle business is a journey, so don’t expect overnight success. Plan to experiment with different designs and scents and 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 stand out as unique from other candle makers.
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 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 unique candles or higher quality candles 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 be aware of trends and quickly adapt to customer’s desires. 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 homes, 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 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 selling 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.
Checklist for Starting a Candle Making Business
If you’re thinking about starting a candle business, it’s important to do your research first. Here is a checklist to help you get started.
Step 1: Write a 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.
Related: How to write a business plan
Step 2: Select a Business Entity
A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a candle making business, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
IncFile - $0 plus state fees & free registered agent for 1 year!
IncAuthority - $0 plus state fees & free registered agent the first year!
ZenBusiness - $49 plus state fees & free registered agent for 1 year!
Step 3: Name the Business
Finding the perfect name for a business can be challenging. Not only does the name have to resonate with your customers, it also has to be available to use.
Step 4: Select your Location
While a smaller business can be run out of a home’s kitchen, it may be necessary to move into a larger space or maybe even a small storefront as that business grows. Rental costs for these spaces will vary depending on the size of the space, 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.
Related: Choosing a business location
Step 5: Apply for Business Licenses and Permits
There are no specific licenses for a candle business; however, there are general business registrations at the local, state, and federal level that a candle business might need, such as a local business license, sales tax permit, Employer Identification Number, and Occupancy Permit, among others.
Step 6: 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 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 to invest 15-25% of their money towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
A strong, comprehensive marketing plan can contribute to a business’s success. Many candle makers create websites and maintain active on various social media platforms like Facebook Marketplace, Instagram, and Pinterest. Paid online advertising and paid social media ads may also be valuable strategies.
Step 9: Get Business Insurance
There are several types of insurance to consider when starting a candle making business. A few of these include:
– Product liability insurance protects a business from customer injuries that occur when using your product.
– Commercial property insurance protects the business against the loss of property and supplies after an event, like a fire (which is important as you are working with flammable materials). 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.
The cost to insure a candle making business will vary depending on factors such as the value of the business’ equipment and the number of employees 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 10: Hire Employees
A business owner can handle all of their initial candle production, but it may be time to hire help as the business grows. 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
Step 11: Set up an Accounting System
Setting up an accounting system for your candle business is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
The thought of accounting can be intimidating for a lot of new entrepreneurs. There are a number of ways of handling bookkeeping, from DIY to hiring a bookkeeper. These include:
- Pen and paper - Low expense, but difficult to track.
- Spreadsheet - Low expense, but easy to make errors.
- Accounting software - Medium expense, but owner typically inputs expenses. Some great accounting software programs include Freshbooks or Wave Accounting.
- Hire a bookkeeper - Higher expense, though very affordable at $100-$200 per month in most cases. A dedicated bookkeeper will probably save money because, in addition to handling all of the bookkeeping (so you can focus on the business), they also provide personalized tax advice and ensure the business is in compliance.
Find bookkeepers in your local area or use a service like 800Accountant.
How much does it cost 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.
Some common startup costs for a candle making business include:
– Equipment, like pouring pots and jars
– Candle making supplies such as wax, wicks, jars, molds, dyes, fragrance oils, thermometer, scale, etc.
– Signage (for brick-and-mortar businesses)
How much can a candle making business owner make?
A candle-making business’s profits will depend on that business’s size, the number of employees, any specialty areas that the business focuses on, and even how the business sells candles, like selling wholesale or retailing candles directly to customers.
Since the average price of candles can range from a couple of dollars to $20, it’s important to have several suppliers where you can watch their prices and take advantage of discounts to make the most profits. Also, keep in mind that a business that creates unique types of products that nobody else has or fills an unmet need in the marketplace can enjoy more success by charging higher prices.
While creativity and an artistic mind are great traits to have as a candle entrepreneur, it’s also important to turn on your brain’s analytic side 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 get set up correctly, saving you time (and possibly money) at tax time.
What skills are needed to run a candle making business?
Starting a candle making business doesn’t require a business degree. Certain skills and experiences will make it easier, though, and improve the business’ chance of 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.
Are there grants to start a candle making business?
It’s extremely rare to find a grant to start a candle making business. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a candle making business?
The NAICS code for a candle making business is 339999, which is categorized under All Other Miscellaneous Manufacturing.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?
National Candle Association