If you’re looking to launch a business in an industry that’s poised for growth, starting a beauty supply company could be a good option. The beauty industry is currently a billion-dollar industry and is expected to grow 11.3% by 2026. Here are five steps to take when starting a beauty supply business.
[Read more: Startup 2021: A Weekly Guide to Starting a New Business]
Decide what type of business you’ll start
The first step is to decide on the type of business you want to run. Most people choose to either start a brick-and-mortar business or launch an e-commerce business. There are pros and cons to both options, and the right choice for you really depends on your customer base.
For instance, two-thirds of millennials prefer shopping on an e-commerce platform instead of visiting a physical store. In comparison, just 41% of baby boomers prefer to buy products online. So if you plan to cater to a younger audience, focusing on e-commerce may be the way to go.
[Read more: How to Open a Successful Online Boutique]
Find out what licensing and permits you’ll need
There are certain licenses and permits you’ll need before you can get started. The exact requirements will depend on the state you live in and your legal business structure. But at the very least, you’ll need to apply for the following four licenses:
- Retail seller permit: This license allows you to legally sell products for tax purposes. You can apply on your state government’s website.
- Business operation license: This license allows you to do business in your state and costs between $50-$100. You’ll have to renew this license annually.
- Certificate of occupancy: This permit is only necessary for brick-and-mortar businesses. It demonstrates that your property is fit to conduct business in.
- Federal EIN: You can apply for an employer identification number (EIN) for free on the IRS’s website.
A business plan outlines the products you plan to offer, explains how you’ll stand out from competitors, and includes a marketing plan.
Choose the type of products you’ll offer
Next, you’ll decide what kinds of products you plan to offer your customers. You can get ideas by checking out Google Trends or fashion blogs and magazines to see what types of products have a high level of interest.
In the beginning, it’s a good idea to focus on just a few different types of products. Focus on one particular niche, like cruelty-free makeup, and as you begin to build a customer base, you can expand into other areas.
Determine how you’ll distribute your products
Another important factor to consider is how you’ll distribute your products. For instance, if you don’t want to hold inventory, you may want to operate a dropshipping model.
With this business model, a customer will place an order online, and you’ll send that information directly to the supplier. From there, the supplier will ship the products directly to the customer. This is an easier way to operate your business, but you will have less control over the quality of the products and mistakes made during shipping.
You can also choose a manufacturing option, where the products are manufactured specifically for your business, and you own the legal rights to sell those products. However, it can be challenging to find the right manufacturer to partner with.
[Read more: 5 Things You Need to Know About Dropshipping]
Come up with a business plan
And finally, you’ll need to outline a detailed business plan. Writing a business plan can be tedious, but it’ll give you a lot of clarity about your business and will be helpful if you ever seek out investors or apply for a small business loan.
A business plan outlines the products you plan to offer, explains how you’ll stand out from competitors, and includes a marketing plan. If you’re not sure where to start, you can download a free business planning template from the SBA.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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