For Beauty Buyers

Building A Business Plan for Cosmetics Companies: From Brainstorming to ROI

A business plan for a cosmetics company can serve several different purposes. If you are just starting out, a business plan can set out the goal of your business, however, if your company is well established, a business plan can also be used to showcase your unique selling point (USP), or how a new product can improve the lives of your target customers.

It’s also an important document if you want to seek outside investment, as you will need to show investors that you have thought out every aspect of your business and that it is a viable proposition.

Creating a business plan for a cosmetics company is not easy, which is why we’ve put together a handy article to walk you through the different steps.

New Companies: Create your mission statement

There’s a reason why you decided to start a cosmetics company, and you need to be able to clearly communicate that reason in your business plan. You need to show people who you are (your values), how you will operate, and what you want to achieve.

Maybe sustainability is important to you, so you plan to use recycled materials to create your packaging. Or you want to use sustainably sourced, natural ingredients that are not only environmentally friendly but also help overcome skin complaints such as acne or rosacea.

This is also where you need to communicate your niche, which should be based on market research. Maybe you plan to create all-in-one products for anti-aging, or you want to target emerging markets. This is also a good time to scope out your competitors and ensure the market isn’t already overcrowded.

Established Companies: Define your target audience

As the industry changes and your audience evolves, your product’s appeal will change. Likely, your product won’t appeal to everyone, but once you’ve defined who you want to target, you can start making decisions based on that information. For example, if you want to target Gen Z then you might need to not only use vegan ingredients but also sell your product at a lower price point.

This step is where you create buyer personas, which should explain who your customer is, where they shop, what magazines or news sites they read, what sites they spend the most time on online, and where they live.

This decision will also affect the distribution and where you will sell your products. Will you sell through Amazon and other marketplaces or in drug stores or high-end department stores? If you plan to aim different products at different target audiences then you need to articulate that within your business plan.

All Stages of Business: Hone in on your brand

Once you’ve defined your target audience then you can use that information to create a strong, recognizable brand. This encompasses everything from your brand name, color pallet, packaging (materials, colors, size), and the way you communicate with customers.

If you’re launching several products or ranges then you need to think about how they will all fit together under the umbrella of the overall look and feel of your brand.

Think about product development

This is the time where you need to make decisions about creating your product. Some questions you need to answer at this stage include:

  • How and where will you develop your formula?
  • How long will it take to create the final product?
  • Will you outsource your manufacturing?
  • What regulations do you need to take into account?

Forecast your finances

At any stage of your business, you want to always keep your finances in order. Financial statements should include all costs, from sourcing ingredients to formula creation to manufacturing and packaging and distribution, and then marketing your product. This should also include predicted sales and revenue based on the price of your product and market demand.

It’s important not to rush your business plan, as this document will influence many key decisions throughout your fiscal year.

Want to learn more?

As a company with original products and as a contract manufacturer, Schwartz Natural Cosmetics is an expert in cosmetic manufacturing. Get in touch with us to review your contract manufacturing needs, or to ask about our wholesale products. We can even send you samples of our products upon request. Talk to us to learn how you can gain from over 50 years of experience.

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This blog post is for educational purposes only.