You will need a clear vision, a well-written business strategy for beauty items, and to have invested some money, time, and effort as the founder of a start-up beauty brand. However, what should be included in that crucial business plan and how do you even begin writing one?

We’ve outlined the ten essential stages that aspiring beauty entrepreneurs must take in order to draft a business plan for a cosmetics company in this blog post. Anyone asking how to launch a home-based beauty business should read this since it will help you understand the necessary considerations and steps to take in the planning process.

Being a cosmetics business owner demands a high level of organization. A solid business plan that guides you through each of the essential elements of your cosmetics company is required. The fact that your business plan does not have to be as large as a thesis is a comfort. Actually, the shorter it is, the better, since you will be able to read it and find yourself coming back to it later.

A 10-STEP GUIDE FOR BUSINESS PLANNING WITH BEAUTY PRODUCTS

Step 1: Why Your Beauty Business Needs a Plan

Setting a challenge for yourself to question yourself why you are drafting a business plan in the first place is the first step. Making the formalities of a business strategy for a cosmetic product is pointless. You have to embrace the idea of business planning in its entirety.

We are aware that the idea of drafting a business plan may appear intimidating. However, because it concentrates your efforts, time, and resources on a specific goal—launching a successful beauty business as well as making sure it has the ability to flourish over the long term—your business plan is an essential and crucial strategic document.

Your company plan should be kept on display for possible investors rather than being filed away in a filing cabinet. It is a resource you should use each time you need to make a big decision. Your strategy helps you make decisions and streamlines the day-to-day operations of your beauty business.

Writing a business plan will take time because it encapsulates the extensive preparation that must go into identifying your vision, determining your brand’s “why,” what you will sell, where you will sell it, who your competitors are and where the market gap is, and how you will raise the necessary capital. It also involves creating a comprehensive financial strategy using estimates for items like sales.

Step 2:Mission and vision of your beauty brand

Numerous budding businesses in the beauty industry have rushed into creating their branding before even figuring out why they are in business. Prioritize your vision and objective before branding. These two quotes, which are frequently misunderstood and disregarded, serve as the cornerstones of your company.

Let’s define them first. Your loftier goals are embodied in your vision. You don’t just want to create organic formulas that you can market to customers. Your vision statement outlines the impact you hope to have with your beauty brand. In a nutshell, our goal at Formula Botanica is to normalize natural formulation on par with cooking.

How you plan to accomplish that goal is outlined in your brand mission statement. Our goal at Formula Botanica is to “teach the world to formulate.” Our example demonstrates how the mission is active and practical, outlining how we plan to achieve our vision through teaching and our online courses.

You are not writing dull, generic, catch-all statements when you develop your brand’s vision and purpose statements. Developing the purpose of your beauty brand and the ways in which it benefits your clientele is also not a fast, haphazard process. Taking the time to carefully craft your vision and mission statements will pay off in the long run, since they serve as the cornerstones of your cosmetics company. Wait until you are completely clear on the next steps before proceeding.

Step 3: Your target market and clients

Having a vision and mission statement is great, but if you don’t know who your target customer is or where your place is in the beauty industry, you may not even have a business. You’ve undoubtedly heard this advise a hundred times, but you really do need to know to whom you will be marketing. You must comprehend this kind of person, their lifestyle, and their purchasing habits.

Selling suddenly gets easy and everything falls into place once you know who your target consumer is. You are aware of your target market’s preferences, needs, and best ways to reach them with marketing communications. You must have a niche when launching your beauty goods company, and it cannot be “organic” or “natural.” In the beauty sector, there are a lot of unexplored markets. Some examples are skincare for teenage boys, skincare for sports like runners and swimmers, and skincare for women in their forties.

Make a list of bullet points describing your target client, such as their holiday habits, place of residence, other products they possess, and main skincare concerns. Be succinct but precise. Focus on a single individual; this is known as your brand’s “avatar.” Even though it may seem laborious, once you have that individual squared away in your head, everything in your company will revolve around satisfying their wants. Just make sure that your niche is actually filled.

In April 2019, we covered a few trends from In-Cosmetics Global in Paris. While we’re not saying you have to follow every beauty industry fad, you should conduct in-depth market research to help you position your brand and goods appropriately.

Step 4: Your Cosmetic Items

Your business plan must include a description of your first product or products, its value proposition, and how they cater to the demands of your target market. This may seem easy to accomplish, but trust us when we say that we have witnessed nascent beauty entrepreneurs spend astronomical amounts of money changing their minds about goods shortly after they are launched. Adding new products to your lineup is frequently a means of sidestepping the challenging work of marketing and sales.

When you learn to design natural skincare products, you tend to produce a wide range of items without giving much thought to how clients might use them as part of a beauty routine or as a range. Thinking like a company requires you to have a clear understanding of what you are offering and the value your products bring to your target market.

One product can serve as the launch vehicle for a business, and there are well-known instances of beauty firms that have only one “hero” product in their lineup. Consider how the items in your range will complement one another. Additionally, considering concerns about sustainable consumption, consider how a single product might serve as a multipurpose example of a unique selling proposition.

Your range will affect your bottom line, therefore you must choose which goods to start with first and which will result in a minimal viable range that fits both your needs and your consumers’ budgets. Your cosmetics line must, above all, show that it belongs in the market and enhances the lives of your customers.

Step 5: Competitors

Yes, your skincare business plan should include a section on your rivals. Since you are the brand’s creator, you inherently bring your distinct viewpoints and life experiences to the table, making your beauty business uniquely yours. That being stated, you should pay particular attention to the influential people in your area and at the price point of your product line. Any investor will want to know this information up front and early on. It also keeps you alert.

Researching your competition can occasionally be frustrating because their websites may contain PR-speak and not much information. To learn more, look for interviews featuring the founders and follow them on all social media platforms. Competitive analysis can assist you in pinpointing opportunities for your brand to flourish as well as provide you with more efficient means of enhancing client loyalty and expanding your company. Observe their actions to determine what works and what doesn’t for them. Make a note of their advantages and disadvantages so you can improve. Additionally, you must understand how to place oneself in relation to your rivals.

Although you shouldn’t become fixated on your rivals, keep tabs on their activities every few months. Your goal is to steer the discourse around your beauty products, not to imitate them. Once more, you are in a good place if you have clarity on the preceding steps: purpose, vision, niche, and customer. Being aware of market developments is merely sound business sense.

step 6: Your manufacturing strategy

A significant portion of your business plan is your manufacturing strategy. You must choose between utilizing a contract manufacturer, making your own beauty items in your own (home) lab in accordance with Good Manufacturing Practices (GMP), or going with private label goods. It is imperative that you specify your preferred path at launch and indicate if you intend to switch models later on.

Depending on your goals and objectives, each model has advantages and disadvantages that could affect critical areas of your company, including finance, logistics, distribution, and contractual duties to stores carrying your brand. How many product units do you plan to produce annually? Which model best fits your lifestyle and aspirations as an entrepreneur? Your manufacturing model and business model are interdependent, as you can see. Your overall company plan, the amount of capital you need to raise, and the way you run your day-to-day operations will all be shaped by having an ultimate goal in sight.

There’s no right or wrong answer here, but make sure you understand the consequences of the path you choose. While creating tiny, handmade batches of your own products at home may seem ideal, we have spoken to several beauty entrepreneurs whose businesses grow well beyond their wildest dreams. They then have to catch up in order to find and finance manufacturing that is outsourced in order to avoid disappointing retail stockists. This is a crucial section of your business plan where you should think about your mission and values, hiring employees, managing your time, and your general financial position.

Step 7: Your retail plan

Many independent beauty business owners believe they can sell directly to customers through their websites. You will need to hire someone to become a skilled digital marketer or make the investment yourself in order to pull this off. Since you keep all of the profits yourself, it can be initially alluring to want to sell straight from your website. While merchants have a ready consumer base and can help you sell more products and establish your brand, you are unknown and will need to start from zero. This is why having your products listed in stores and online stores may result in lower profit margins.

Which merchants best fit your brand should be evident from the work you have done so far in establishing your niche, customers, competitors, and product range. Will your brand be appropriate for premium, luxury, mass, or so-called “masstige” retail categories? And which merchants are you hoping to carry your line? What are their expected margins, and how does this affect your financial projections and manufacturing model? Will you additionally collaborate with distributors in specific areas, particularly foreign ones? If yes, how does this impact your profit margin?

Step 8: The Funding

Although we saved the best for last, obtaining funding for your company is a major concern throughout your whole business plan. As you’ve seen, there are financial ramifications for every action you take. As we stated in our article on how to launch a home-based cosmetics business, managing a profitable beauty brand requires having a good grasp of money. It’s good business practice to have solid plans in place for obtaining funding at different points in your company’s lifecycle.

The various financial sources that you will have access to in the future, including bank loans, crowdsourcing, and “love money” loans from friends and family, must be covered in your business plan. Both short- and long-term funding sources must be considered. It is imperative that you comprehend and anticipate the questions that prospective financiers may have, and that you prove in your business plan that both your company and you are a worthwhile investment.

Step 9: Your financial forecast 

It is very likely that if you are reading this, you are considering launching an independent beauty company. Since business plans should ideally be created during the first year of a beauty company’s existence, you might require one when you’re courting investors or be pre-revenue when you write one. Even if you haven’t made any sales yet, you may still present some important data about the size of your market and the potential of your brand.

A timeline outlining your milestones, including when you started, your major accomplishments, any brand or packaging development, and your current stage (i.e., are you developing a product and how much have you invested or raised so far) should be included in the introduction to your financial forecast. If you are already making sales, you can demonstrate the amount of money that has already been invested in the business, as well as your sales and return figures and projected financials.

You will have to account for costs that you had not considered. One “hidden” expenditure that many beauty entrepreneurs overlook is the requirement to pay for promotions run by shops. Retailers typically anticipate your participation in their product promotions. A business’s cash flow, especially one that is effectively selling, is everything. You can experience financial difficulties while you wait for stores to reimburse you. Due to this time lag, your regular operations may come to a complete stop if all of your cash is locked up in inventory and you are unable to pay for promotions, seasonal marketing, or the purchase of additional raw materials to maintain production.

As you can see, one of the main reasons you should regularly review your company plan is that financial forecasting is all about your day-to-day operations. Your profit and loss statements need to be monitored, and you should map out any monthly trends. Acquire as much knowledge as you can about assessing the financial health of your company and financial forecasts. Having this information verified by an accountant or other financial specialist can help you be more prepared on a daily basis and when discussing your finances with prospective investors.

Step 10: Actual action for your plan

Give yourself a congratulations. You’ve successfully completed the first draft of your roadmap, or business plan. The hardest part of all, though, may be ahead of you: putting your company strategy to good use rather than putting it in a file cabinet. This is a strategy to review, tweak, and evaluate the performance and state of your company against. Presenting this paper to banks and other investors at the outset of your business venture is not a good idea, after all.

So, what specifically needs to be checked for, and how often? Let’s look at a few instances of topics you should review.

First, every month, you should review your financial projection. Check the comparison between your budget and actual sales and expenses. Are we moving forward as planned? In either case, you will have a standard by which to evaluate the state of your company right now. You’ll find this knowledge useful as you proceed.

Next, review your rivals and the state of the market as a whole. In what ways have things changed, and how might this impact your development, price, or product line? Recognize that building a name for yourself in your area takes time. Reactions that are hasty can be expensive. But keep an eye on things with your plan.

Your mission, vision, and niche are a few examples of topics you should assess every year. Did you conduct proper research before writing the plan? Have you validated the idea behind your brand and line of products? You can work through any adjustments you believe are essential to your core statements with the assistance of a mentor or a mastermind group of like-minded business founders, even in other sectors. Once more, consider things carefully before making any financial decisions.