Updated: 24.09.24
Embarking on the journey to create your own beauty brand is an exciting yet challenging adventure. As an indie brand founder, you need more than just passion and creativity; you need a clear vision and a robust business plan.
This plan serves as your roadmap, guiding you through the complexities of launching a cosmetics company. But where do you begin, and what should your business plan include?
In this blog post, we’ll break down the ten essential steps every aspiring beauty entrepreneur must take to craft a successful business plan. Whether you’re dreaming of launching a beauty empire from your home or taking the first steps in your entrepreneurial journey, this guide is for you.
View this post on Instagram
Our step-by-step video guide below is based on the business planning exercises we provide as part of our Diploma in Beauty Brand Business Management. The diploma is an extensive, six-module course that teaches you how to start a cosmetic business at home and build a beauty brand from scratch. Pre-enrol to find out more about this diploma and our other award-winning courses.
Step 1: Why your beauty business needs a plan
Writing a business plan isn’t just a checkbox task; it’s your roadmap to success. Before diving in, ask yourself why you’re crafting this plan. It’s more than a document—it’s your guide to launching and growing a thriving beauty business.
Although writing a business plan might seem daunting, it’s crucial to focus your energy, time, and resources on achieving your goals. Your plan is not just for investors; it’s a strategic tool for decision-making and ensuring smooth day-to-day operations.
Take the time to build your business plan, as it involves essential groundwork: discovering your vision, defining your brand, identifying your market, understanding competitors, and mapping out a financial plan. Each step prepares you for success and ensures you’re ready for what’s ahead.
Step 2: Defining your brand mission and vision
Before you dive into designing your beauty brand’s logo or packaging, take a step back and consider why you’re in business in the first place. Your vision and mission are the guiding lights of your brand, and they should come first.
Your vision statement is about your bigger dreams and how you want to make a difference in the world. It’s not just about selling organic products; it’s about the impact you want to have. For instance, at Formula Botanica, our vision is to make natural formulation as commonplace as cookery.
Your mission statement is how you plan to achieve that vision. It should be practical, active, and specific. For us at Formula Botanica, our mission is to “teach the world to formulate,” which we accomplish through our online courses.
Crafting your vision and mission isn’t a quick task or a generic exercise. These statements are the heart of your beauty business, defining why your brand exists and how it serves your customers. Take the time needed to get them right before moving on to the next steps. Total clarity here is crucial, as these statements will guide everything else you do.
Step 3: Defining your niche and customers
Having a clear vision and mission is great, but without knowing your niche or target market, your beauty business might not get off the ground. Understanding exactly who you’re selling to is crucial. You need to know who they are, how they live, and how they shop. This might seem tedious, but this is a crucial step.
Once you identify your target customer, everything becomes easier. You’ll know which marketing messages resonate, what they’re looking for, and how to effectively reach them. Your niche can’t just be ‘organic’ or ‘natural’—those markets are saturated. Instead, explore untapped niches like skincare for women over 50, athletes, or teenage boys.
While you don’t need to follow every trend, thorough market research is essential. Identify your niche and position your brand strategically within the market. Find out about the latest market trends below:
Beauty news: your exclusive guide to the top 10 ingredients for 2024
Step 4: Detailing your beauty products
Your business plan must clearly outline your initial products, their unique selling propositions, and how they meet your target customers’ needs. This might sound straightforward, but many beauty entrepreneurs face costly challenges when they change direction after launching. Often, introducing new products can distract from the essential tasks of marketing and sales.
When you’re formulating natural skincare or haircare, it’s easy to get carried away with a wide array of products. But remember, as a business, you need a cohesive lineup that resonates with your audience and offers a compelling sales proposition. Your products should work together seamlessly as part of a beauty routine that solves your customers’ problems.
You don’t need a massive product range to make a splash in the market. In fact, launching with a single, standout ‘hero’ product can be incredibly effective. Focus on how your products complement each other, and consider the growing trend of sustainable consumption—think about creating a versatile product that delivers multiple benefits.
Step 5: Researching your competitors
Your competitors should have a prominent place in your skincare business plan. While your unique perspective and experiences as a founder give your brand a distinctive edge, keeping an eye on the key players in your niche is essential—especially at your product range’s price point. Understanding your competitors not only keeps you sharp but also provides crucial insights any potential investor will want to know early on.
Researching competitors can be challenging, especially when their websites are filled with PR jargon that doesn’t reveal much. But don’t let that deter you.
Dive deeper by looking for interviews with their founders and following them on social media. Competitor research can reveal opportunities for your brand to thrive and uncover strategies to boost customer loyalty and growth. By understanding what works for them and what doesn’t, you can identify their strengths and weaknesses, which helps you position your brand more effectively.
However, don’t become obsessed with your competitors. Instead, check in on their activities every few months. Your goal isn’t to mimic them but to shape your own brand narrative. If you have clarity on your mission, vision, niche, and target customer, you’re already on solid ground.
Keeping tabs on the market is simply smart business practice and can guide you to make informed decisions that enhance your brand’s position.
Step 6: Determining your manufacturing strategy
Your manufacturing strategy is a key part of your business plan. Decide whether to produce your beauty products in your own lab, partner with a contract manufacturer, or use private-label products. Each option has its pros and cons and should align with your brand’s mission and vision. Consider whether you plan to stick with your initial choice or switch models as you grow. We cover all this in detail in our Diploma in Beauty Brand Business Management.
Each manufacturing model affects crucial aspects like distribution, logistics, financing, and retailer contracts. How many units do you plan to produce annually? Which model aligns with your ambitions and lifestyle?
Your manufacturing strategy directly impacts your overall business model and operational strategy.
There’s no one-size-fits-all answer, but understand the implications of your choice. While making products at home in small batches might seem ideal, many entrepreneurs face rapid growth and need to quickly transition to outsourced manufacturing to meet demand.
Consider your vision, time, staffing, and financial situation carefully, as this decision is critical to your success.
Step 7: Determining your retail strategy
We’ve seen many indie beauty entrepreneurs think they can sell direct to consumers from their website alone. But to do this successfully, you need to be a skilled digital marketer—or hire one.
While selling directly from your site allows you to keep all the profits, getting your products stocked in stores and online retailers can significantly boost your brand’s visibility. Retailers have established customer bases, while you’ll need to build brand awareness from scratch.
Your work in defining your niche, target customers, and product range should guide you in choosing the right retail partners. Consider where your brand fits: mass, “masstige,” premium, or luxury categories.
Which retailers do you want to stock your products, and what are their profit margins? How will these margins affect your manufacturing model and financial forecasts? Should you work with distributors, especially overseas, and how do their margins impact your bottom line?
Address these questions in your business plan. You don’t want to be stuck figuring out how to sell your products once they’re sitting in boxes in your living room or warehouse!
Step 8: Outlining funding options
We might have left finances to last, but securing funding is a thread that runs through your entire business plan. Every decision you make has financial implications, and a firm grasp of your finances is essential for a successful beauty brand.
Your business plan should outline the various funding options available to you, from “love money” from friends and family to bank loans and crowdfunding.
Consider both short-term and long-term funding strategies, and be prepared to answer potential investors’ questions. Show them why you and your business are worth investing in. We cover finances in the following posts:
How to start a cosmetics business from home
How much does it cost to start a beauty business?
Step 9: Learning about financial forecasting
If you’re reading this, you are likely thinking of starting an indie beauty business. Writing a business plan in your first year is crucial, especially if you’re pre-revenue or pitching to investors. Even without sales, you can highlight key market data and your brand’s potential.
Begin your financial forecast with a timeline showcasing milestones such as launch date, key achievements, brand development, current stage, and investments raised. If you’re already selling, include details of investments, sales, and financial projections.
Don’t forget to factor in hidden expenses like retailer promotions. Stores often expect you to contribute to product promotions, and cash flow is vital. Waiting for retailer payments can lead to cash shortages, halting operations if funds are tied up in stock and you can’t buy materials or fund promotions.
Financial forecasting is integral to your daily business operations, making it essential to regularly update your business plan. Keep a close eye on profit and loss, and track trends monthly. Learn about financial forecasting, and consider hiring an accountant to prepare for day-to-day operations and investor discussions.
Step 10: Using your business plan
Congratulations on completing the first draft of your business plan!
Now comes the most crucial step: using your plan effectively rather than letting it gather dust in a filing cabinet. Your business plan is a living document, a roadmap to revisit and adjust as you measure your business’s health and performance. It’s not just for impressing banks and investors at the start.
So, how should you use it and how often? Here’s a quick guide:
- Weekly: Keep an eye on your competitors and market trends. Have things changed that might impact your product range, pricing, or development? While you need time to establish your market position, use your plan to monitor shifts and avoid knee-jerk reactions.
- Monthly: Review your financial forecast. Compare your budget against actual sales and expenses to see if you’re on track. Whether you’re ahead or behind, this gives you a clear benchmark for your business’s health and guides your next steps.
- Annually: Reassess your mission, vision, and niche. Was your initial research accurate? Has your brand and product range proved its concept? A mastermind group or mentor can help you evaluate necessary changes to your core statements. Base these decisions on sound financials, too.
Formulate your future
We hope these insights have provided you with a solid foundation for starting your beauty business. If you dream of creating a brand that’s bigger than yourself—whether it’s a skincare line, haircare range, or makeup collection that transforms lives—we’re here to help you turn that vision into reality. Learn to formulate your own products and bring your brand to market with confidence.
Pre-enrol now in our Diploma in Beauty Brand Business Management – the ultimate online training programme for launching or growing your indie beauty brand. Think of it as a Beauty Brand MBA, combining award-winning teaching materials with insights from a web summit featuring 30+ influential speakers from the beauty and business world.
Or why not pre-enrol in one of our formulation courses in skincare or haircare and change your life through natural formulation? All our courses are easy, fun, empowering and life-changing.
FAQ
Start-up costs for a beauty business can vary greatly based on your goals and circumstances. If you choose to outsource, be prepared for higher initial costs, as most contract manufacturers require large minimum order quantities. Branding and packaging can also add up, especially if you’re targeting the luxury market.
Writing a business plan can help you navigate these expenses and plan your finances as your business grows. You can start on a smaller budget by making products at home to sell at local markets. Identify your personal goals and lifestyle needs to estimate your start-up costs effectively.
Indie beauty is booming, and more skincare entrepreneurs are finding their niche in the market. However, simply being “natural,” “green,” or “organic” isn’t enough to differentiate your brand. To stand out, focus on how your products address specific consumer needs and solve real problems. Avoid trying to be everything to everyone. Writing a beauty brand business plan will help you refine your ideas, define a viable product offering, identify your target customer base, and determine your route to market.
Join us at Formula Botanica, where tens of thousands of students and followers take our free and paid online courses to learn how to formulate organic skincare and haircare for themselves or to sell and also how to set up a beauty brand and business.
Leave us a comment
Liz was Formula Botanica’s Content Coordinator between August 2020-2024. Liz worked as a professional blogger, journalist and site developer for many years and was also part of the Formula Botanica student community. Read more about the Formula Botanica Team.
