Starting a soap making business can be exciting and stressful all at once. You’re about to embark on a journey that will turn the hobby you love into a business you can grow and develop.
Setting up any new business requires a definite plan and specific goals to make sure you have all your bases covered. The good news is that there’s a huge potential in the soap making business, so if you start things on the right foot, you could see some great success.
So, if you’ve been making and selling soap as a hobby for a while, now, and are ready to go to the next level, let’s go through some of the critical steps to turn your hobby into a business.
Create Your Brand
There is a lot of competition in this industry, but a strong brand can help you stand out from the crowd.
Your brand doesn’t have to be extremely complex, and when you’re just starting out, you can get by with a few elements. Specifically:
- Your business name – It should be memorable and relevant and available to use as your website’s domain name as well as on your social media accounts.
- Your logo – This should be simple and usable on your products and marketing assets.
- Your unique selling point – What makes you different? Super high-end materials? Unusual soap colors? Affordability?
All of these elements will need to carry over throughout all your marketing and production efforts. Your brand is your “character,” and it’s how your customers will get to know you.
Choose Your Business Structure
When you’re just making a few bars for friends and family, this probably never entered you’re mind. When you go pro, though, you need to form a legal entity to protect yourself from personal liabilities.
Sole proprietorships and Limited Liability Companies (LLCs) are the two most common structures for new businesses in this industry.
You will also need to register for taxes, based on what state and federal laws apply to you, and potentially get an Employer Identification Number (EIN). You may also want to look into business insurance, especially if you’re going to hire some employees.
Determine Where You Will Sell
Will you sell your products through local shops? Festivals? Your Website? Etsy? eBay? Amazon? All of the above?
Trying to sell through too many outlets at first can be a little overwhelming, so it’s best to choose one or two online outlets along with your own website until you have the hang of them. Your website is a critical tool for brand recognition, so keep it updated, but one of these other marketplaces can help reach people who are searching for products just like yours.
Getting your products into a physical location will require some legwork and networking, and it can be difficult to find an “in” at many places. But if you do, you may discover that it is a reliable partner for your business.
Determine What You Will Sell
You need to do research and see what is selling or see what is in demand and build your product line based on that information.
Usually, in the soap making business, this is going to be a matter of trial and error, since not many new entrepreneurs have access to major data processing tools. But, as you see what works and what doesn’t, you can develop your products based on those discoveries.
Still, some of this can be done before you start your business by researching the competition. What are they doing? What can you do better?
This doesn’t mean you have to follow every trend, though.
There is a market out there for just about anything. Tiny alligator shaped soaps? Why not. Nothing but high-end ingredients that drive the price up to 100 dollars a bar? Some people would settle for nothing less.
It may take a little extra work to connect with that such specific customer bases, but once you do you can have a lasting and potentially lucrative relationship with them.
Find Your Suppliers
You may have been able to get the necessary materials at your local shops to cover your soap making hobby, but your soap making business is going to require a lot more materials on a consistent basis. You’ll need a constant supply of oils, fats, packaging, colors, scents, and more. So make sure you have an account with suppliers who can meet your needs.
You’ll also need an equipment manufacturer that backs up their products and can help you determine what you need and how you can use it more effectively.
Prepare for Manufacturing
It can be a real challenge to manage your production levels and make sure you can meet the demand without producing too much. At least it would be if you were still making all your soap by hand.
If you are going to go into business making soap, increased production efficiency is going to be critical.
You’re going to need a way to speed the process, make sure the mixtures are always in the right ratios and consistencies, and that waste is minimized.
The best soap making equipment includes diffuser pumps, mixing pumps, or wax melters, depending on the method you use to make your soap.
This will require some investment on your part to expand your business this way, but the potential returns are huge. They say you need to spend money to make money, and it’s very true here. When you invest in reliable equipment, you’ll build a brand around high-quality products while significantly increasing the number of bars you can create in a day while reducing the costs and time required per bar.
You may not have gotten into the soap making business to deal with numbers, but your success is going to rely on taking a serious interest in them now.
It’s critical to know and understand all of your costs and all of your income. How much are you paying for your ingredients? Can you sell at a competitive price point and still make a profit on every bar?
We mentioned the need for sound investments above, and this is how you’ll make sure those investments are paying off.
And let’s not forget that the government is going to want their share, and so you need to make sure your accounting practices include collecting and paying sales tax correctly.
Accounting isn’t for everyone, though. So, don’t be afraid to look into professional accounting help.
Know the Laws
Different states have different laws and regulations regarding the manufacturing and selling of cosmetics. This can affect how you market your products and even how you make them.
These regulations are there to prevent fraudulent claims and to protect consumers in general. So make sure you are fully compliant with them all and that you obtain any state permits and licenses that may be required to operate a soap business.
There are two organizations that are important to this process. The FDA, because they regulate the cosmetic industry, and the Handcrafted Soap and Cosmetic Guild, because it is a trade organization that can provide a lot of help in the technical areas of running a business. Of course, the Small Business Administration (SBA) can also offer some help and guidance.
Understand that Your Hobby Is Now a Business
Soap making, as a hobby, was something you could do when you wanted and for who you wanted.
Soap making, as a business, has deadlines and orders that need to be fulfilled and customers with serious expectations.
Now, you’re not just making soap all the time. This is important to remember.
Now, you’re running a business.
You are still making soap, but you’re doing it on a much larger scale. You’re also marketing that soap, tracking expenditures and income, maintaining a website, networking with others, buying ingredients/inventory, and more.
Don’t let that worry you, though. This may be a business, but it’s a business where you get to express your creativity and create new things all the time.
You get a chance to share your creations with the world and build a community of regular customers who can’t wait to see what you come up with next.
It’s not going to be the same as when you were doing it just for fun.
But it just might be better.