How much does it cost to start a beauty business?

When you start thinking about becoming a beauty entrepreneur, one of the first questions you’ll try to figure out is: how much does it cost to start a beauty business?

Once you head into Google or social media groups, you’ll receive lots of conflicting advice which will just confuse you further – a brand might tell you that you can start with just $100, a coach might tell you that you need $50,000 to launch, whereas a beauty industry exec might tell you that you need a minimum of $1m to get started.

So we decided to demystify the question “how much does it cost to start a beauty business?” and give you the definitive answer.

… but in reality, there isn’t a definitive answer. The truth is that you can start a beauty business with $100, or $50,000 or $1m.

For that reason, here at Formula Botanica, we don’t advise that you need any specific amount to get started – instead, you have to determine what works for you and your situation and we help you on the way, regardless of what funds you have.

So to help you answer the question “how much does it cost to start a beauty business?”, I’ve compiled 7 questions that I recommend you ask yourself before you start an indie beauty brand.

1. Are there any tasks/jobs that you don’t want to do?

I often tell the story of the first time I tried to do my own tax return. I spent the entire time in tears because it was so complicated.

After I’d submitted it, I swore I would never ever again do my own tax returns. So I haven’t. Even when money was tight, I made the decision that it would save me so much time and stress that it was worth every single cent to get someone else to do it.

You will have similar tasks in your business that you don’t like doing. Make a list of those tasks and get an idea of how much it will cost you to outsource them from day one.

If you don’t outsource anything, then your main investment will be your time and you will save money. This approach will, however, take you longer to launch your beauty brand and you’ll have to learn a lot of new skills very quickly – and be honest with yourself: you might not be great at everything.

How much will it cost to outsource tasks for your beauty brand?

Do everything yourself: free
Outsource some tasks: $
Outsource many tasks: $$

2. How fast do you want to launch your beauty business?

Many of the indie beauty entrepreneurs I meet want to launch quickly. They feel immense pressure about starting a business in a crowded marketplace and think that getting their brand out quicker will help them beat the competition.

Launching quickly will require you to have all the elements in your beauty business finalised faster than you might be able to achieve working alone, which means that you’ll need to get a lot of outside help – which costs money.

The reality is that it is better to go slowly, because going fast won’t necessarily make your brand any better.

It’s better to take the time to get your formulations exactly right and create a strong brand – if that takes an extra year or three, then there’s nothing wrong with the decision to take your time.

Remember: slow and steady wins the race.

How much will it cost to launch quickly?

Take as long as you need: $
Launch within 2-3 years: $$
Launch within a year: $$$

3. How many formulations are you launching your beauty business with?

When asking how much it costs to start a beauty business, you’ll firstly need to determine how many formulations you’ll be selling and how much stock you have to sell.

It’s better to launch with a small number of formulations and build your brand off the back of your initial launch. I see a lot of brands that want to launch with dozens of products, but it’s better to start with a capsule range – maybe even one product – to start with.

Keep in mind that you’ll not just be making your formulations; you will most likely also be manufacturing samples, which also requires an upfront investment.

Not only will launching with one formulation test the market with your business idea, but you’ll also constantly have something new to talk about every time you launch your next formulation. And most importantly, it will save you money.

Regardless of whether you make your own formulation (such as the ones we teach in our Diploma in Organic Skincare Formulation or Diploma in Organic Haircare Formulation) or get someone else to do it, creating a beauty product will take time and money.

You will need to invest in ingredients, you’ll need to invest in testing and safety assessment and you’ll need to invest in lots of iterations of the same formulation to make sure it’s the very best version you can create. You’ll also need to invest in packaging and labelling. The fewer products you launch with, the lower your upfront costs.

How much will it cost to start your beauty brand with lots of formulations?

Launch with 1-2 formulations: $
Launch with 3-5 formulations: $$
Launch with 5+ formulations: $$$

4. Who is going to manufacture your formulations?

Once you’ve decided which formulations you’re launching with, you’ll next need to create a manufacturing plan. Will you manufacture your own products or will you outsource manufacturing to a company or lab?

The most successful beauty brands are those which dedicate a significant amount of their time to marketing and selling their products, which means that you probably won’t have a lot of time to manufacture your formulations if you intend your beauty brand to go global (unless you outsource marketing to someone else!).

Manufacturing can be very helpful for scaling a beauty business quickly, but it also means that you have to invest larger sums of money upfront to purchase stock. You’ll then need to sell that stock quickly, before it expires.

Most manufacturers set a Minimum Order Quantity of 1,000 – 5,000 units per product, which will cost a lot more than making those formulations yourself in small batches.

How much will it cost to manufacture your formulations?

Manufacture everything yourself: $
Manufacture most (but not all) products yourself: $$>
Outsource manufacturing: $$$

5. How good are you at designing your beauty brand?

Designing a formulation can be the most fun part of starting your beauty business, but have you considered how you’re going to design your brand itself?

And I’m not just talking about your logo or website, I’m talking about your story, your ‘why’, your voice, your overall brand experience and much, much more.

It takes time to develop your brand and it is often the biggest sticking point for many beauty businesses – I’ve seen so many beauty brands lose out on retail opportunities, investment and sales because their brands don’t quite cut it in comparison with their competitors.

If you are prepared to dedicate to the time to learn how to design your beauty brand (using the skills in the branding component of our online Diploma in Beauty Brand Business Management), then you might not need to invest in third-party help.

However, if branding is not your strong point (or something you’ve never done before), you may want to consider bringing in an expert to help you get it right.

How much will it cost to design your beauty brand?

Design your own brand: free
Outsource elements of your brand design: $
Outsource the entire brand design: $$ – $$$

6. Where will you be selling your formulations?

I meet a lot of beauty entrepreneurs who think they will start an online shop with their gorgeous formulations, maybe buy a few Facebook ads and then the orders will flood in.

Unfortunately, this is not how digital marketing works. The reality is that you’ll also need to find retailers to work with. Selling through ads alone is possible, but it can cost a lot of money and, without expert help, it’s easy to get wrong.

In order for your beauty business to sell its stock, you will need a sales strategy that combines your own website sales together a robust digital marketing strategy together with relationships with online and bricks & mortar retailers.

It will take effort to build up relationships with retailers, but new natural beauty retailers continue to rise up as consumer interest continues to grow, which offer opportunities for indie beauty brands around the world.

How much will it cost to sell your formulations?

Selling online + through retailers: $
Selling online only: $$
Selling through retailers only: $ – $$

7. Will you initially start your beauty business as a side hustle or aim to go global?

Finally, when answering the question “how much does it cost to start a beauty business?”, we want you to think about your definition of success and your overall business model.

Do you intend to keep your beauty brand as a side hustle, do you want it to grow into a small enterprise that can support you (and perhaps your family) or do you intend for it to go global?

If you want to go global as quickly as possible, then you’ll need a large upfront cash injection. However, if you intend to stay in your day job and have your beauty brand as a side hustle, then you can most likely afford to start small and use part of the income from your day job to start your beauty brand and keep it afloat. You might then choose to grow your beauty brand organically and put any earnings straight back into the business.

Whatever you decide, we recommend that you determine your overall business model and think about your definition of success before you get started.

How much will your beauty brand cost in upfront investment?

Side hustle: $
Small enterprise: $$
Global brand: $$$

Take the Formula Botanica Beauty & Money Quiz

Find your own answer to the question “How much does it cost to start a beauty business?” by taking our fun quiz.

We hope you found these questions helpful and that you now have a better idea of how much it costs to start a beauty business.

Did you get mainly $ or $$$ when you answered our questions?

Did your answers match your projected costs for starting a cosmetics business at home?

Have you prepared a budget to go with your beauty business plan?

Depending on your answers, you’ve no doubt seen that you can start a skincare, haircare or makeup business (or any other type of cosmetics business!) with $1000, $50,000, $500,000 or $1,000,000.

There is no right or wrong answer when trying to determine how much it costs to start a beauty brand. The right cost is the amount that it costs you to start the brand you’ve always dreamed of.

Remember: there is no set cost for starting an indie beauty brand. The only person who can determine how much you should spend to start your beauty brand is you.

However, there are many ways of saving costs on your journey of becoming a beauty entrepreneur, so we recommend avoiding common mistakes and learning from the best in the business by enrolling for our Diploma in Beauty Brand Business Management.

Enrolment is open during our term times in January and July each year, and you can also join our International Organic Skincare Entrepreneur Program intake. Pre-register now for our next enrolment period.

Leave us a comment

comments

Lorraine Dallmeier

Lorraine Dallmeier is a Biologist, Chartered Environmentalist and the CEO of Formula Botanica, the award-winning online organic cosmetic science school. Read more about Lorraine and the Formula Botanica Team.