Finding that perfect makeup takes time, but what if that product that’s ideal for you doesn’t exist yet? If you’re creative, have a great idea for quality makeup products, and also have an entrepreneurial spirit, then starting a makeup line of your own could be an exciting and rewarding career move. It won’t be easy – this industry is competitive – but new and unique ideas that meet an existing need in the industry could be well-received. If you’re considering starting a makeup line, read on to find out more about what’s involved in this journey.
Makeup lines deliver specialized products to consumers. A makeup line might focus on one element of the cosmetics industry, like skincare, while other lines might encompass a wide array of makeup options including eyeshadow, lipstick, concealer, and more. Most makeup lines are sold in a variety of stores, including pharmacies and big box retailers, but online sales do make up a portion of the industry, too.
The makeup industry is highly competitive, with many larger brands dominating the market. Thanks to evolving trends, though, there is space for independent, smaller makeup lines – but great branding and marketing are essential in spreading the word about these new brands. Many consumers become loyal to a particular line, meaning a business needs to not only deliver a quality product, but then follow up with a great user experience and additional products to win over customer loyalty.
According to IBIS World, the United States cosmetic and beauty product manufacturing industry experienced a 3.6% decline in profits from 2015 to 2020. That decline was partially due to an increase in competition, but the COVID-19 pandemic also led to a 7.4% decline in just 2020. As of 2020, the industry reached a market size of $43.1 million. A total of 3,878 businesses employed 51,291 staff.
The good news is that the industry is expected to grow from 2020 to 2025. Improving consumer confidence and an increase in disposable income and consumer spending should drive that growth. Some industry components, like skin moisturizers and deodorants, are considered to be essential items, so their sales should be unaffected by the pandemic.
The cosmetics industry is rapidly changing, thanks to many evolving trends. Common Thread Collective notes that online cosmetics purchases are becoming more common, but in the United States, 81% of market purchases still occur in stores. Drug stores and pharmacies continue to be the most popular shopping destination for buying cosmetics in America, with mass merchandisers and online purchases being the second and third most popular options, respectively.
While online sales may not have taken off yet, Common Thread Collective predicts that online sales could account for 48% of all cosmetics sales by 2023. This is encouraging for smaller makeup manufacturers, particularly because L’Oreal, Unilever, Procter & Gamble, and Estee Lauder Companies accounted for 81.7% of worldwide cosmetics sales in 2019.
Quality could be key to gaining online sales. Sixty-four percent of buyers who valued quality over price were more likely to buy online. Retailers who offer exclusivity and a unique product to shoppers could encourage these online sales.
Like most other industries, the cosmetics industry has also had to adapt to the increased demand for natural, organic, and clean products. Clean beauty and organic makeup are in high demand right now, and the natural cosmetics market should roughly double from 2018 to 2027. Fragrance-free products made with natural ingredients and essential oils should see particularly strong sales.
Most makeup lines will market toward adult women, but depending on the specifics of your line, your target market may slightly differ. A specialty line might market to teens, senior women, women in their 40s, eco-conscious women, and more.
Skills, Experience, and Education
Starting a makeup line doesn’t require a business degree, but certain experiences and skills can be helpful.
Cosmetology degree. An education in cosmetology serves as a great background when starting a makeup line. This education provides a business owner with detailed information on how makeup is used, the qualities that make the best products, and important safety and handling best practices, too.
Cosmetic chemistry knowledge. While not required, a background in cosmetic chemistry will allow a business owner to formulate and develop their own products. Business owners who don’t have a cosmetic chemistry background should plan to work with a cosmetic manufacturer to help with product development or hire a cosmetic chemist as a consultant or employee.
Knowledge of industry trends. An awareness of the products that are most in demand, the qualities that consumers seek out in products, and the colors that are most popular at the time will help a business owner to create a line that’s relevant and popular.
Branding and marketing knowledge. Branding is a huge part of a makeup product’s success. A business owner who has branding and marketing knowledge can handle part or all of this process themselves.
Attention to detail. Whether developing products or working on branding, attention to detail matters in every aspect of this business.
Customer service skills. Strong customer service skills will help a makeup line to stand out. Positive buyer experiences can increase the chances of customers buying from the line again.
Amazon has several books on starting a makeup line that may be helpful
Costs to Start a Makeup Line
The cost of starting a makeup line can be significant, especially if the business owner cannot perform the chemistry development themselves. A small makeup line of ten products can cost $60,000 or more, while a larger makeup line can cost upwards of $150,000.
Common startup costs for a makeup line include:
- Product development and manufacturing
- Inventory of product ingredients
- Packaging design and production
- Website development
- Product photography
- Shipping supplies
Steps to Starting a Makeup line
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
It may be possible to initially store inventory in a spare room in your home, but as a makeup line grows, it will be time to rent commercial space. A climate-controlled space is a must for most makeup products. Rent costs will vary depending on the size, location, and amenities available at a space.
Related: Choosing a business location
Step 4. Apply for Business Licenses and Permits
A makeup line owner will need to obtain certain business licenses and permits. These permits and licenses can vary based on the state and town where the business is located.
Makeup is highly regulated, so in addition to standard business licenses and permits, a makeup line will need to adhere to additional regulations. Beauty Business Journal states that a line will need to ensure that its products adhere to national and local labeling guidelines, so a business owner will need to work with 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 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 makeup line is another. 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 6. Get your Marketing Plan in Place
Marketing is an essential element of developing and releasing a makeup line. Common marketing techniques include social media marketing, online advertising, print advertising, direct mail, and more. Marketing costs will vary depending on the type of activity performed.
Step 7. Get Insurance
A makeup line will need several types of insurance for full coverage:
- General liability insurance helps to protect the business against medical bills and other fees that could result if a customer is ever injured by the makeup.
- Commercial property insurance can help to protect the business in case its inventory, equipment, or building are ever damaged in an event like a fire.
- Workmans comp insurance helps to cover expenses like medical bills that the business might face if an employee were ever injured while working.
Insurance policy cost will vary depending on the insurance provider, but factors like the value of a business’ equipment and inventory will also affect cost. To get the most accurate idea of potential insurance costs, request quotes from multiple providers. When comparing those quotes, consider not only how the premiums differ, but also how the deductibles, policy exclusions, and coverage limits compare.
Step 8. Hiring Employees
Depending on a makeup line’s business model, it may be necessary to hire some employees. According to Zippia, a cosmetic chemist makes an average of $62,202 per year, though salaries can range from $46,000 to $83,000. Zippia reports that business assistants, who could help with everything from securing accounts to shipping products, earn an average of $42,000 per year. A business may also need to hire branding consultants and website developers, though this is often done on a freelance or consultant basis.
In addition to staff salaries, a business will need to budget for other costs that come with hiring employees. These expenses may include workman’s comp insurance, unemployment insurance, and paid time off.
Related: Hiring your first employee
How much can you potentially make owning a makeup line?
Makeup line profits can vary significantly depending on the line’s specialty, business model, and profit margins. To increase your line’s chances of success, focus on coming up with a unique and desirable product, and working to deliver that product in multiple ways, such as selling it both in stores and online.
Things to consider before starting a makeup line
The makeup industry is highly competitive, and a new line will be going up against well-established major beauty brands. When planning out your line, look for something that you can do differently to stand out from the competition. This might be organically sourced ingredients, makeup designed to work with specific health conditions, or a unique approach to makeup that hasn’t been explored yet.
Navigating the cosmetics industry can be a challenge. If you don’t have an existing network of professionals who you can turn to for help, consider looking for a mentor who can help to guide you through the process. A well-versed professional who’s established in the industry may be able to help you find manufacturing and retail contacts, potentially saving you time and money.
American Cosmetic Association
American Cosmetic Manufacturers Association
Independent Beauty Association
Personal Care Products Council
Professional Association for the Beauty Industry
Society of Cosmetic Chemists