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How to Start Your Own Beauty & Cosmetics Business [Complete Guide]

A variety of colorful beauty and skincare products sit in jars on a white surface and are viewed from above.

Thinking about starting your own beauty or cosmetic business? Well, now is the perfect time! Recent reports show the beauty industry is booming—meaning your dreams could quite possibly become a reality. Online buying is projected to make up 48% of all beauty sales by 2023, and global beauty industry revenue is expected to top $716 billion by 2025.

With the growth of social media and online data sharing, it’s easier now for consumers to do their own research into beauty and cosmetic products. The result is an increased interest in ingredients, skincare, makeup routines, and the desire to find products tailored to unique consumer types.

This is where you come in: you are someone who has found a need in the beauty industry and formulated the right solution. Your product fulfills a unique desire and you want to get it out into the hands of consumers. But how do you go from just an idea to a product someone is eager to add into their daily beauty routine? Insurance Canopy is here to help guide you there.

Creating your own product and building it out into a business can be a lengthy and complicated process, so we might not touch on every step you need to take. Every brand is different and needs to take their own approach, but hopefully this guide can be a great starting point.

With that, let’s get into how to start a beauty and cosmetic line in 7 steps.

Various beauty product ingredients are places in jars and set on top of a woof table with labels next to them.

How To Start A Beauty & Cosmetic Business

#1 Establish Your Product & Price

To get started, you need to be able to answer some key questions:

  • What is my product?
  • Who needs this product?
  • Where can you buy my product?
  • Why would someone want to buy my product?

This helps you establish your niche market. For example, let’s say the “ what” is a hydrating face serum that helps reduce adult acne without drying out your skin. The “who” would be 25-35 year old women who struggle with adult acne but have dry skin so normal acne products irritate them. The “where” could be on your own product website. The “why” is because your product is reliable yet sustainable, and customers can get recyclable refills of the product mailed to them each month.

One of the hardest parts in establishing your product is figuring out what makes you stand out from the competition. As of 2022, there are over 104,830 beauty, cosmetic, and fragrance businesses in the U.S. By really defining your product and doing competitive research, you can start to find your ideal customer and find your place in the market. It will also help you later with your branding and marketing efforts.

Part of your industry research should be looking at competitor’s prices. Or if you’re the first on the market with this product, seeing what is similar. This helps you have a good price range of where you want your product to end up.

To come up with a more precise price per product, you will need to calculate the cost to make one batch of product (the production, branding, marketing, shipping, etc.). This helps you know how much you would need to make off one batch just to make your money back. You then want to add in the amount of money you want to make, include fixed costs (the cost of your website per month), and get a total. Divide it by the number of products in your batch and you’ve got a good estimate on the price per product.

A women leans over a table where she is making homemade beauty supplies and pricing her product.

#2 Test Your Products

Your product is not made for everyone, therefore not every person will react the same way to your product. Some may have allergic reactions, skin damage, or even find different fabrics (such as clothes, towel, or bedsheets) damaged from using your product.

In fact, one of the most common product claims we see at Insurance Canopy are from manufacturing defects—meaning during production, something faulty happened to the design or functionality of the product leading to broken or malfunctioning parts. This can lead to cuts, stains, choking, and more. Because the product has your business’s name on it, a consumer could hold you responsible to pay for the medical bills, repairs, or emotional damages.

One way to help you avoid these kinds of accidents is through product testing. This helps you know what types of warnings or instructions to include with your product. You can also see how well your product’s design and functionality performs. The time to find mistakes and correct them should be before your product ends up on the market.

Product Liability Insurance is designed to help lower or eliminate the cost of claims you receive as the owner of a beauty product. See what Insurance Canopy can do for you today! 

A woman tests out new beauty products to be sure they are safe, and she insures them with product liability insurance.

#3 Establish Your Branding

Now that you’ve figured out some key product details, you can start working on some of the creative stuff. This includes picking a name for your product, creating a logo, and designing your packaging. You can do a lot of the graphic design work on your own using sites like Canva, or you can hire a freelance branding specialist to help you out.

Branding specialists can help you establish a voice for your brand. It’s reflected in your website copy, social media posts, product packaging, and even the imagery and graphics you use. While you’re busy handling the business operations, it can be nice to have someone working on the customer-facing side of your brand.

#4 Set Up Your Shop

Whether you sell fully online, in-stores, or a mix of both, you will need a website and social media channels. This is how people hear about your brand, learn more, shop online, and connect with your business.

You can build your own website with software like WordPress or Squarespace. While it can take some time, creating your own website gives you the freedom to choose the design, copy, and feel of your brand. It’s good practice to have a functioning, well-branded website for customers to turn to for more information about your business, your purpose, and to shop for products.

Your website can also drive traffic to your social media pages, and vice versa. Social media is how you can build your brand awareness. It’s a great way for potential customers to see your products in action, watch tutorials, read testimonials, and find links to purchase. Choose social media platforms you think best suits your brand, and where you know your ideal audience can be found.

A person's hands hold a smart phone over a pink background and is testing out the purchase product feature on their new website.

#5 Register Your Business

With a large part of your business’s foundation laid, you can register it with your state or local government. This can involve getting a federal tax ID, trademarking your business, filing for a patent, registering as an LLC, and more. The U.S. Small Business Administration has a complete guide to registering your business and how to find your local agencies.

#6 Create A Marketing Plan

Marketing is how you get your products seen by the people who will buy them. It can be tricky, and can require a lot of time, but it is a vital part of every business. It involves both paid and organic strategies to grow your presence online and in-stores.

Some of our top tips for marketing a beauty business are:

  • Adding testimonials to your website
  • Have a content calendar for your social media channels
  • Reach out to micro influencers to promote your product
  • Make your website copy SEO friendly
  • Run ads on social media
  • Collaborate with local businesses, like spas and hotels
  • Offer promotions and discounts
  • Customize your product packaging to be photo-worthy

The trick is finding strategies that fit your brand and are effective with your audience type. Don’t be afraid to test new ideas and see what works! Marketing is constantly evolving, what works this week may not be useful for you three months from now.

Have a blend of tactics that are flexible and others that are tried and true. For example, check out trends on TikTok or popular hashtags on Instagram to get your content noticed more. It’s a great way to try new types of content and find new customers. But, also have consistency with regular email newsletters and yearly sales. These are the things that can help you make a new customer a recurring customer.

A women sets up her Facebook profile for her new business and gets ready to do a live product demonstration.

#7 Find A Distributor

To help you get your product out to more consumers, you can work with a wholesale distributor. These businesses can buy your products straight from you or the company manufacturing them and sell them to other businesses. They play a key role in connecting products with store owners. Check out these 10 tips to help you find a wholesale distributor!

You can also look into getting your product placed in subscription boxes. This works well if you think your product has a continuous demand that will fulfill a recurring need. Typically a subscription customer will have a profile of specific needs. If your product fits that, it can end up in their box. Start by reaching out to subscription box businesses in the beauty and cosmetics industry and learning more about the requirements to be a supplier.

A variety of beauty and cosmetic product samples sit in a pink monthly subscription box on a pink background with a pair of hands opening up the box.

Frequently Asked Questions

There is a lot that goes into starting a business, and we only briefly touched on part of it. One of the best things you can do is find a mentor who can help you along the way. They can offer you support and connect you with people in the beauty industry who may be able to help you grow your brand.

In the meantime, here are some common questions you may have when researching how to start a makeup and cosmetic line.

How much does it cost to start a cosmetic business?

This really depends on how much work you do yourself, how many products you plan to develop, and who you partner with. Some people start their own beauty business from their home while others outsource the entire process to a team of professionals.

Formula Botanica made a quick quiz to help you estimate the time and money you could spend on starting your cosmetics business. The U.S. Small Business Administration also offers resources to help you calculate your startup costs. Ultimately, it’s up to you to decide how much you want to invest!

Can I make and sell my own beauty products?

Yes! In the Small Businesses & Homemade Cosmetics: Fact Sheet, the FDA states, “It’s not against the law to manufacture cosmetics in your home. Keep in mind, however, that it’s your responsibility to manufacture products in an environment that will not cause them to become adulterated.”

You are responsible for making sure your homemade products are safe and properly labeled for consumer use. There are some labeling requirements and ingredient guidelines for cosmetic products the FDA requires you to follow if you sell your products in stores, online, or door-to-door.

A young girl poses with makeup for her phone as she prepares to share this new product with all of her followers on social media.

What license is needed to sell cosmetics?

No, the FDA does not currently require anyone to have licensing to sell cosmetics. However, your local or state authorities may have requirements you need to be aware of. This is something you can ask about when you are registering your business.

What does cosmetic mean?

According to the Oxford Dictionary, a cosmetic is a product or treatment applied to the body, mostly the face, with the intent to restore or improve one’s appearance. This can include products such as:

  • Makeup
  • Lotions and serums
  • Paints and polishes
  • Cleanser
  • Hair care
  • Oral care
  • Face masks
  • Perfumes
A group of people sit around a table full of beauty and skincare products they make as part of their own business.

Protect Your Products With Insurance Canopy

Last year we insured hundreds of beauty and cosmetic businesses—and this year we can insure you too. We work with beauty entrepreneurs like you to help you cover the cost of claims, meet insurance requirements for manufacturing and sales, and confidently grow your business.

You don’t plan on having your products lead to harmful or damaging accidents, but you can be prepared with the right insurance policy. See how you can protect your beauty and cosmetic products, and start safeguarding your business’s finances, with Insurance Canopy.

Get a free beauty product insurance quote by starting an application today!

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