Max Factor was definitely onto something when he developed the first lip gloss back in 1930. Factor, who had been creating makeup for the movie industry, wanted to make a product that gave lips a neutral-colored, glossy shine.
Since then, lip gloss has been a trusty companion for many women, added to cosmetic pouches and clutches worldwide.
If you know a thing or two about cosmetics, love makeup, and the perfect pout, then starting your own lip gloss business may be a fantastic and realistic option to follow a passion and earn an income at the same time. Read on for an overview of the lip gloss business and the steps to launch your own brand.
A lip gloss business involves developing, producing and selling lip glosses. This includes coming up with lip gloss flavors, deciding on packaging, labeling and marketing your products. Many entrepreneurs start small by making lip glosses at home and selling online or at local markets. As your business grows, you may work with a cosmetic manufacturer for mass production.
There is, however, more than one way to start your own lip gloss business. For example, you may decide that you want to create your own lip gloss brand and set up a private label lip gloss company. Or you may choose to work as an affiliate or start your own e-commerce business and sell existing, popular brands.
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Lip Gloss Industry
The U.S. lip gloss industry is projected to generate $4.7 billion in 2023, which is down slightly over the last five years, though the market is expected to increase over the next five. This growth is driven by rising consumer demand for long-lasting, moisturizing lip glosses. Social media trends and influencer collaborations are also propelling the popularity of lip glosses. Major competitors include Coty Inc., Estee Lauder Companies Inc., and The Clorox Company.
In recent years, the cosmetics industry has seen a shift towards natural and organic ingredients. Consumers are becoming more conscious about the products they use, leading many lip gloss brands to formulate their products with healthier, eco-friendly ingredients. Additionally, personalized and custom-made lip glosses are gaining popularity, offering opportunities for businesses to cater to individual customer preferences.
Whether you decide to be a distributor of lip gloss or a manufacturer, your target market remains broadly similar. Segments may include:
- White-collar workers and professionals who are looking for subtle lip gloss tones with minimal pigmentation
- Teenagers and tweens who are into more popping gloss colors, perhaps with added flavors
- People who prefer a completely natural and environmentally friendly product or one that is not tested on animals
- People who suffer from sensitive skin or allergies
- Makeup professionals
Steps To Start A Lip Gloss Line
Starting a lip gloss business involves much more than crafting beautiful shades. There are several steps to follow, such as defining your unique selling proposition that sets you apart in the market, developing a formula, registering the business, and more. Follow this checklist to learn more!
Step 1: Assess the Market
In the early stages of conceptualizing your lip gloss business, this step allows you to gauge the demand for your product, understand your target audience, and assess the competition in the marketplace. This knowledge helps determine whether there’s a viable market for your lip gloss line. Also, by learning from potential customers, you can make informed decisions about your product offering, pricing strategy, and marketing efforts, thus reducing risks and increasing the likelihood of success.
There are a few ways to begin this research:
- Surveys and questionnaires: Allows you to collect direct feedback from a targeted demographic. It’s a straightforward way to understand potential customers’ preferences and expectations.
- Social media analysis: Engaging with audiences on platforms like Platforms like Instagram, Facebook, and TikTok can provide insights into what the market is responding to. Observing trends, hashtags, and consumer discussions can be eye-opening.
- Competitive analysis: Understanding what other brands offer helps identify gaps in the market and carve a niche for your lip gloss line.
- Online forums and blogs: Platforms like Reddit and beauty blogs can be treasure troves of information on consumer opinions and unmet needs in the lip gloss sector.
- Google Trends: It helps in understanding the popularity of certain search terms over time, giving you an insight into market trends and consumer interests.
Step 2: Write a Business Plan
Developing a business plan is the next step when starting a lip gloss line. A business plan is like a roadmap for your business. It helps you know where you are going and how to get there.
Here are the main things you should talk about in your business plan:
Understanding the market: This is where you discuss who will buy your lip gloss and why. Show that you know a lot about the lip gloss world and that your business has what it takes to be a part of it.
How you will sell your lip gloss: This shows how you plan to let customers know about your lip gloss line. Detail your branding, pricing, advertising, and sales strategies.
Money matters: Here, you want to examine how much it will cost to start the business, along with the projected income and expenses.
Related: How to write a business plan
Step 3: Develop Formulas
Developing your own lip gloss formula is a key step in creating a unique product line. Start with in-depth research on the different ingredients available and used in lip gloss production and research lip gloss recipes and cosmetic ingredient suppliers. Common ingredients in lip gloss include castor oil, coconut oil, beeswax, vitamin E, and essential oils for flavor.
Once you’ve chosen your ingredients, it’s time to create your formula. Start with a base recipe and adjust the quantities of each ingredient to achieve the desired consistency, color, and flavor. It’s important to keep detailed notes on each version of your formula so you can track changes and improvements. While there are many formulas that you can source online or through a private label manufacturer, it is worth coming up with a unique formula of your own so you can stand out from competitors.
After creating your initial formula, test the product. Apply it to your lips and note the texture, how it feels, how long it lasts, and any other characteristics. Based on this feedback, adjust your formula as needed. This process may take multiple iterations until you find a formula that meets your expectations. Also, it’s advisable to have formulas evaluated by a lab to confirm they meet cosmetic guidelines.
If you don’t have the background, working with an experienced cosmetic chemist is key; plus, they can help with sourcing reputable and reliable suppliers for ingredients and manufacturing.
Step 4: Source Funding
Securing funding is an essential step in starting a lip gloss line. Understanding the various sources of funding and their requirements can help you select the best option for your business.
The primary source of funding for most lip gloss entrepreneurs is their personal savings. While bootstrapping and starting small is common, personal savings may not be enough to cover all startup costs, so other funding sources may be necessary. Here are some common funding sources for a new lip gloss line:
Friends and family: Reaching out to your circle and borrowing from friends and family is a source of funding. This option can be more flexible and affordable than traditional financing. However, mixing business with personal relationships can be tricky, and treating these loans as business transactions is important. Agreements should be put in writing to avoid misunderstandings and protect relationships.
Microloans: If your funding needs are low or if you can’t access credit through a lender, microloans could be a viable option. These are small loans typically offered by economic development organizations. Some microloan programs also provide business training, making them a valuable resource for new entrepreneurs.
Lenders: Banks and credit unions are common sources of business funding. They typically require borrowers to invest 15% – 25% of their personal funds towards the total cost of the project, have a good credit score, and offer sufficient collateral. If a bank considers the loan too risky, they might use an SBA loan guarantee to secure the funding.
Step 5: Register the Business
Every business needs to be licensed and properly registered. This will ensure that you’re operating legally and can help you avoid any legal issues down the road.
Here are some key steps you’ll need to take:
Choosing a business structure: The first step is to decide on the legal structure of your business. The four main types are sole proprietorship, general partnership, corporation, and Limited Liability Company (LLC).
- Sole proprietorship: This is the simplest form of business structure, it’s quick to set up and has lower costs. However, the owner is personally liable for all business debts and liabilities.
- General partnership: This is similar to a sole proprietorship but involves two or more people. Each partner shares responsibility and liability.
- Corporation: A corporation is a separate legal entity from its owners, providing them with personal liability protection. However, corporations are the most complex and costly to set up and require ongoing administrative work.
- Limited Liability Company (LLC): An LLC combines the advantages of a corporation and a sole proprietorship. It provides personal liability protection and has fewer administrative requirements than a corporation.
Related: Comparison of business structures
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:
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Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.
Obtain business licenses and permits: Specifically, for a lip gloss line, you will want to review the Food & Drug Administration (FDA) information for startups and home-based cosmetic businesses.
There are also general local, state, and federal business registrations, such as a local business license, sales tax permit, and Employer Identification Number (EIN), potentially among others to obtain as well.
Labeling requirements: The Beauty Business Journal states that a line will need to ensure that its products adhere to national and local labeling guidelines. A business owner will need to work with the county, national, and local regulatory bodies to identify any applicable cosmetics licenses. These licenses will vary depending on location, as well as if the business follows a direct-to-consumer model.
Step 6: Set Up Production
Once the business is registered, the next step is finalizing the formulas and setting up your production process. There are two main paths to choose: doing it yourself or having a private label manufacturer handle the production. Each decision has its pros and cons, so let’s look into these closer.
Finding Suppliers and Making Your Lip Gloss
When you decide to find suppliers and set up production yourself, you are pretty much building your lip gloss line from the ground up. Considerations when doing it yourself include:
- Control: You have full control over everything – the ingredients, the formula, and how your lip gloss is made. It’s like cooking your favorite dish at home; you know exactly what goes into it.
- Unique products: You can create something completely unique to your brand. If you have a special recipe or a unique idea for your lip gloss, this is your chance to bring it to life.
- Time-consuming: Doing everything yourself will save you a lot of expense, but can take a lot of time. It’s a big responsibility to manage all the parts of making your lip gloss.
- More effort: It’s not just about making the lip gloss; you will also need to find all the right suppliers for your ingredients, which can take a lot of work and research.
Using a Private Label Company
Going with a private label company is like having a helping hand to get your lip gloss line started.
- Easier and faster: This way is generally easier and faster. The private label company already knows how to make lip gloss, and they can help you get your products ready much quicker.
- Less control: The downside is you have less control over the details of your products. It’s a bit like buying a cake from a bakery instead of baking it yourself; you can’t control every ingredient that goes into it.
- Pre-existing formulas: Often, these companies have pre-existing formulas that you choose from, which means your lip gloss might not be totally unique. It’s a bit like customizing a cake that the bakery already knows how to make.
- Professional guidance: The good thing is that these companies have experience, and they can guide you in making choices that work well, saving you from making mistakes.
There isn’t really a right or wrong answer, but it’s about choosing what fits you best; do you want to craft each detail yourself, or do you prefer a quicker, more guided route? It’s a big decision but a fun one because it’s a big step in making your lip gloss business dream come true!
Step 7: Create a Marketing Plan
There are many ways to market your lip gloss business.
For starters, you will need someplace for people to buy from. Selling to friends and family can be a great low-cost way to test the waters, along with setting up a booth at a local farmer’s market. Having an online shop on a platform like Shopify and/or selling on Amazon or creating an Etsy store can be a great way to let people purchase your lip gloss from outside your local area.
To get people to your product, you can start by creating a social media presence and promoting your products on popular social media platforms like Instagram, Facebook, Twitter, Pinterest, and YouTube, and also working with beauty-related blogs or influencers. You can also distribute samples to local beauty stores and spas or participate in trade shows and other events.
With a little creativity and hard work, you can get your lip gloss business off the ground and start generating some buzz.
Step 8: Prepare to Launch!
Starting a lip gloss line is a big task, but you’re almost there! We’ve covered some of the major steps to take when starting a lip gloss line, but there are a few more steps to take before launching your brand. Every business will be different, but here are some of the more common things to take care of.
Business insurance: This is like a safety net for your business. If something unexpected happens, having insurance means you don’t lose all your money. For example, product liability insurance can protect you if a customer claims that your lip gloss caused them harm. We recommend getting at least three insurance quotes, including local insurance agents and online providers like Coverwallet or Hiscox to get the best coverage and price.
Setting Up bookkeeping: This is a way to keep track of all the money coming in and going out of your business. You can do this yourself using software like Wave Accounting (FREE) or Quickbooks or get someone like an accountant to help you.
Opening a business bank account: Create a special bank account just for your business. This helps you see exactly how your business is doing money-wise.
Setting pricing: Decide how much to sell your lip gloss for. Think about how much it costs to make them and what people are willing to pay for them.
Accepting credit cards: This is especially important if selling locally, but make sure people can buy your lip gloss with a credit card. This makes buying easier for them, and you might sell more! Some popular providers include Square or Stripe.
Joining Industry Associations: There are groups where lip gloss and cosmetic business owners meet and help each other. Joining groups like the Independent Cosmetic Manufacturers and Distributors (ICMAD) or the Independent Beauty Association can give you good advice and help you learn more about the business.
Common Questions When Starting A Lip Gloss Line
How much does it cost to start a lip gloss business?
When starting a lip gloss line, expect an initial investment of approximately $3,000 to $10,000 to cover all the startup costs. This includes:
$100 to $500 for business registration.
$1,000 for basic lip gloss making supplies like ingredients, containers, labels, and mixing tools.
$500 to $2,000 for an initial deposit on a commercial kitchen rental or shared cosmetic manufacturing space, depending on your production approach.
$1,000 to $3,000 for product liability insurance.
$500 to $3,000 for initial marketing expenses like logo design, website, and product photos.
How profitable is a lip gloss line?
The profitability of a lip gloss line can vary greatly depending on factors such as the scale of the business, the pricing of the products, and the costs of production and overhead expenses.
Let’s consider a small-scale lip gloss line for our example. Assume that you produce and sell 500 units of lip gloss per month at a price of $10 each. Your monthly revenue would be $5,000 (500 units * $10/unit).
The cost of producing a lip gloss can range from $1 to $2 per unit, including the costs of ingredients, packaging, and labels. Let’s take the higher end of this range for our calculation. So, your cost of goods sold (COGS) would be $1,000 per month (500 units * $2/unit).
Subtracting COGS from revenue gives us the gross profit, which would be $4,000 ($5,000 – $1,000).
Next, subtract your monthly operating expenses such as rent, utilities, insurance, marketing, and other costs. Let’s say these costs total $1,500 per month.
So, your net profit would be $2,500 per month ($4,000 – $1,500), or $30,000 per year.
This is a simplified example and actual profits can vary based on many factors. It’s also important to remember that it may take time for a new business to become profitable.
What skills are helpful in running a lip gloss business?
Creativity and curiosity: If you are a creative person with an entrepreneurial streak and an interest in cosmetics, developing your own lip gloss business sounds like a great fit.
Before you do that, we recommend you do your research. What is your target market? Who is your competition? For example, lip gloss falls under FDA regulation. Do you know what ingredients you need to make lip gloss, where to get them, and how to scale your production?
A great way to get a taste of lip gloss production is to get yourself a lip gloss starter pack.
Marketing and communication knowledge: Lip gloss and cosmetics, in general, are very visual industries. It’s ultimately all about enhancing a look. So your marketing material, your company’s logo, website, social media posts, and everything should have strong visuals, consistent branding, and a message that connects with your target audience.
Business management skills: Whether you will run a business manufacturing or distributing lip gloss, business management skills are always valuable. Accounting and pricing skills will be especially useful, as is competency in using e-commerce platforms.
You will need to be able to price your products, work out profit margins, and ensure your accounting is in line with tax regulations.
What is the NAICS code for a lipgloss business?
The NAICS code for a lipgloss business is 446120.
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?