Starting a skincare business can be exciting, but it’s important to remember that success won’t happen overnight.

A business plan is essential for laying out your goals, identifying potential challenges, and creating strategies for success. This document will also come in handy if you are seeking funding from investors or banks. Additionally, having a strong business plan can help you stay organized and on track with your goals as your business grows and evolves.

Without a clear plan in place, it’s easy to get overwhelmed and lost in the day-to-day tasks of running a business. So before diving into launching your skincare line, make sure to spend some time developing a solid business plan. It may seem like extra work upfront, but it will pay off in the long run.

Related: How to write a business plan

Coming up with the perfect name can be a struggle. One approach is to start thinking about the main benefits or selling points of your products. Are they organic? Anti-aging? Ecologically friendly? If this fits, you can incorporate words or phrases relating to those qualities into your brainstorming sessions.

It can also be helpful to look at names of successful skincare lines for inspiration, just make sure to stay away from copycat titles.

Another approach is to focus on the key benefits or unique qualities of your products. For example, a nourishing facial oil could be called “Nurture,” or a brightening serum could be called “Illuminate.” Another option is to choose a name that evokes the feeling or experience you want your customers to have while using your products. “Elevate,” “Indulge,” or “Renew” are all options that convey luxury and rejuvenation. Alternatively, you could opt for a more literal name that directly describes your product, such as “Facial Cleanser” or “Anti-Aging Moisturizer.”

The important thing is to choose something that accurately represents your brand and what sets it apart from other skincare lines.

Related: Tips on naming a business

A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.

When deciding on which business entity is best for a skincare line, it normally comes down to the sole proprietorship and Limited Liability Company.

A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
 
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.

That leaves the sole proprietorship and LLC.

The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.

Related: Guide to forming your LLC
 

One important and often most time-consuming step is finding the right supplier for your ingredients and packaging. It’s important to do your research and find a reputable supplier that will help support your new business. Be sure to look at minimum order quantities and small batch processing to be sure your products are profitable.

To find potential suppliers, consider reaching out to small skincare brands that you admire (and aren’t going to compete against) and asking for recommendations. You can also attend trade shows and networking events to connect with potential suppliers in person.

There can be specific regulations for skincare businesses to be aware of.

For starters, the Food and Drug Administration (FDA) doesn’t license cosmetic firms, however, they do regulate the ingredients of cosmetics under the Federal Food, Drug and Cosmetic Act (FD&C Act). Under this law, cosmetics must be safe for consumers, and they must be properly labeled and not deceptive. 

There are also certain color additives and ingredients that are prohibited or restricted by FDA regulations.

Products can be registered under the Voluntary Cosmetic Registration Program (VCRP).

In addition to cosmetic-related regulations, there are general licenses and permits that may be necessary. Requirements vary by state, but commonly a skincare line will need a local business license, sales tax permit, and Employer Identification Number (EIN).

Related: Common business licenses, permits, and registrations by state

Starting a skincare line can be a rewarding venture, but it can also come with costly start-up expenses. One option for financing your business is to take out a small business loan.

Many banks offer loans specifically for startups, and the application process is relatively straightforward. Another option is to raise funds through crowdfunding platforms such as Kickstarter or Indiegogo. You can set a fundraising goal and offer rewards such as discounted products or personalized thank-you notes to incentivize potential investors. Finally, consider approaching family and friends for financial support. They may be willing to invest in your dream and becoming a successful entrepreneur.

Related: Finding the money to start a business

Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
 
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.

When it comes to marketing a skincare line, the most important thing is demonstrating the effectiveness of your products.

Before launching any campaigns, make sure to gather feedback and testimonials from satisfied customers. These can be used in advertising materials or even incorporated into an influencer partnership or on social media platforms. It’s also helpful to offer sample sizes or discounted starter kits to give potential customers an opportunity to try out the products before committing to a full-size purchase.

In addition, focusing on an specific aspect or target audience (such as anti-aging or men’s skincare) can help consumers understand the unique benefits of your line and how it stands out amongst competitors.

Finally, don’t underestimate the power of word of mouth and customer referrals; consider implementing a referral program as part of your marketing strategy. Overall, careful consideration and promotion of your products’ results will ultimately drive sales for your skincare line.

Related: Low-cost ideas to market a new business

When starting a skincare line, it’s important to make sure you have the right insurance coverage in place. First and foremost, product liability insurance will protect your business from any potential lawsuits arising from the use of your products. If in addition to products, you will be providing any services, a general liability policy will cover any losses if a customer were harmed on location. Additionally, if you have employees, worker’s compensation insurance is usually required.

Related: Types of insurance your business may need

While every business needs to have some kind of accounting system in place, skincare businesses have some unique considerations. For example, tracking inventory is important for any business, but it’s especially crucial for a skincare business to accurately keep track of expiration dates on products. In addition, many skincare businesses sell physical products as well as services such as facials and peels, so a reliable point-of-sale system can be essential for properly tracking sales and revenue.

Ultimately, the specific accounting system a skincare business chooses will depend on factors such as their size, budget, and specific industry needs. Working with a professional accountant or financial advisor can help ensure that the right system is chosen and implemented correctly.

Related: Setting up the accounting for your business