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How To Start a Skincare Business

Female customer searching medicine on shelf from rack at pharmacy. Young woman is holding smart phone. She is wearing jacket at medical store.

Are you passionate about skincare? Do you have unique ideas for new products? Why not launch your own skincare business?

Skincare is a rapidly expanding industry. Studies predict that the worldwide skincare industry could exceed $189 billion by 2025.

How can you get a share of this saturated market? With proper research and planning, you can launch your skincare line and enjoy the profits of your new venture.

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Know Your Customers

Knowing what your customers want can help you develop successful skincare products. Determine who you want as a customer and find out what appeals to them. Are they looking for organic products with natural ingredients? Sustainably sourced or clean ingredients? Are they more concerned with anti-aging or concealment of past skin damage? Target your products to your customers.

Know the Trends in the Market

In addition to your initial research, keep up to date on the beauty industry and skincare market trends. Skincare is a rapidly evolving industry. Hyaluronic acid to fight aging, niacinamide to calm inflammation, and retinol to even out skin, once unheard of, are now all the rage. Make sure you are incorporating the latest trends of the marketplace into your product line.

Create Your Skincare Product Line

First, do extensive research on the skincare products you offer. Will you address trouble areas such as acne, dry skin, or oily skin? Will your products help anti-aging or protect from sun damage? Will you have an extensive line or one hero product?

How you stand out against your competition is a critical step in creating your brand. What ingredients will you use? Will you have a special ingredient that makes your product stand out? Can it be used on sensitive skin?

Second, determine how to create the products. Are you making your formulas or hiring a chemist to develop your skincare products? You may consider enlisting a “private label" company to manufacture your products and give them your ingredient preferences.

Protect Your Product Line

Your formulas are proprietary, so you should take steps to protect your work from your competition. An original skincare formula is intellectual property and is subject to patent protection. Consult with a lawyer specializing in intellectual property to safeguard your products.

Create Your Brand

Almost as important as your product is the brand you create. You should invest time and money into perfecting an image that will captivate your customer base. Create labels, packaging, and logos that are appealing to your target audience.

One caveat when labeling your skincare products, you cannot make false or misleading claims. For example, you cannot claim to cure a disease. The FDA has specific guidelines on claims made on cosmetic and skincare product labels.

Your brand name, logos, and slogans are also intellectual property you can protect under trademark law. Again, an attorney specializing in intellectual property can guide you in what steps to take in protecting your brand.

Research Your Manufacturing Capability

Once you have developed your formulas and product lines, how will you scale them to a large customer base? Determine if you will manufacture your products in-house or outsource to a manufacturing company.

If you outsource with a skincare manufacturer, make sure you negotiate a contract on your terms. Spell out what ingredients they should use and where they should source the ingredients.

  • Where is the manufacturer located? Are they convenient to work with (i.e., are they in another time zone)?
  • What other customers do they have in the cosmetic, beauty, and skincare space? Will they compete with your products?
  • How is their customer service? Can you talk to some of their clients to find out their experiences?
  • What is their ability to scale up if you have a sudden surge in business?

When you enter into an agreement with a manufacturer, having a business attorney review the contract terms is helpful. They will advise you of any concerns that could cause future problems.

Write a Business Plan

Any business needs a well-thought-out business plan, and the skincare business is no exception. A comprehensive business plan will outline your customer base, competition, funding needs, costs and expected profits, and how you plan to implement your ideas.

Banks or investors will want to review your business plan before giving you money. Therefore, it is good to have a developed business plan to get the cash you need for your business.

Promote Your Products

Promote your skincare products with social media. Use YouTube, Instagram, or Tiktok to highlight the advantages of your skincare line. Throw skincare parties to demonstrate your products and allow potential customers to sample them.

Link up with influencers (or, in this industry, "skinfluencers") to recommend your skincare products to their fan base. Often you provide the influencers with free products they can sample and talk about on their social media. Do your research first to make sure your promoters are in line with your brand.

While promoting the benefits, be careful of any claims you make. The Federal Trade Commission regulates truth in advertising.

Protect Yourself from Liability

Because your products may potentially affect a consumer negatively, you want to avoid personal liability. Two critical ways to protect yourself are through forming a corporate entity and getting product liability insurance.

Corporate Entity

Forming a corporate entity, either a corporation, limited partnership, or limited liability company (LLC), separates your business profits, losses, and liabilities from your personal assets.

You can register your corporation with your Secretary of State.

Product Liability Insurance

Product liability insurance protects you from claims consumers make for defects of or damages your product. Because your product goes on the skin, you will want to make sure you are not liable for personal injury claims.

Make it Legal

In addition to forming your company through a corporation or LLC, you should obtain any business licenses or permits to operate your business. Contact your local and state license boards to find out the requirements.

Get an Employee Identification Number (EIN) to file taxes on your business. You can file for one online with the Internal Revenue Service (IRS).

There is a lot to know to set up your business legally. If you want to take the guesswork out of forming your business, consider using our trusted, simple-to-use online business formation tool. We'll walk you through the steps of creating your business and help you meet all the legal requirements.

Get Professional Advice

Launching a successful skincare company is challenging. Get your business off to the right start by consulting a local business attorney. Not only can they advise you on how to set up your company correctly, but they can also protect you from liability and safeguard your products and your brand from competitors.

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