There are countless beauty brands available on the market, and these numbers seem to be ever-increasing. However, the growth of these beauty brands has shone a light on one major issue within the beauty industry — not every person has the same hair care needs as the next. This opens doors for brands to easily crop up and offer a specific product targeted to consumers with particular needs when starting a hair care business.
Starting a Hair Product Company
Social media and the internet have made it easier than ever for small companies and sole proprietorships to realize their sales goals without significant overhead or even the need for bulk ordering. This means that people who have their own homemade formulas can find a market for them in a way that was never accessible before. Even accounting and payments can be made online through a variety of social media applications.
If you have a great idea or already have a product, it’s worth considering starting your own business for hair care products. As long as the products you make don’t include components owned by another interest (for example, adding a leading conditioner brand to your conditioner product), you should be able to proceed. Consider other health and drug regulations, though, before attempting to sell homemade cosmetic products.
These considerations should include FDA and cottage industry laws. Depending on your jurisdiction, you may or may not be allowed to make hair products containing certain ingredients. You also will need to list your ingredients on your product label to be compliant with FDA regulations.
Company Mission Statement
Mission statements are an expression of the values that mean the most to you and your company. Different companies have different mission statements that they want everyone involved with the company to support. It's important to have a mission statement before you finish setting up your company so that you can stay true to that purpose in all decisions you make for the business.
What values are important to you? How would you convey that? To get started with this section, you may have to look at some other companies’ mission statements to get an idea of how they read.
For instance, you might say, “Active Woman believes that all people deserve great hair, regardless of their schedules. Look fabulous doing whatever it is that fills your day. Our mission is to provide high-hold, non-drying hair care that will leave you looking your best, all at a reasonable price!”
Legal Structure of Your Business
There are a number of important decisions to make when it comes to setting up a business. How's your hair care business classified? Whether you’re a corporation, sole proprietorship or an LLC, you'll need to be sure you are following all applicable laws when it comes to structure your business, filing taxes, paying employees and dealing with a board of directors.
As a small business selling hair products, it is a good idea to structure as a corporation or LLC to protect yourself from liability. In addition, this will safeguard your personal assets in the event of a lawsuit.
Brick and Mortar vs. Online
Deciding whether to sell in person or online is a difficult decision, and one that can shape the direction of your business. If you choose to sell online, you will need a solid supply chain in place so you can properly warehouse, ship or distribute and manufacture your products. Considerations such as whether to offer free shipping and how to accept returns without a retail location will also come into play.
Conversely, there are many aspects of an online-only business that may prove simpler in some ways than a brick and mortar store. For instance, you could theoretically operate a hair product business out of your home, with no separate warehouse or office space paid for. You would just need to ensure you abide by all applicable cottage industry laws when it comes to making products in your home.
Retail locations are wonderful because they can get happenstance foot traffic that is much harder to come by online. That said, renting a location can be expensive, and buying a storefront even more so. You'll need investors, a loan or significant profits before you are able to set up shop in town or at the mall. Be sure to carefully analyze your business process and available income before deciding how to proceed.
Identifying a Target Customer
Before determining how you will sell your product, you will need to identify a target customer. What is their age? Do they live alone or with their family? How can your products or services serve them and solve their problems (in this case, hair care issues).
Who your target customer is will impact how you market and sell your products. If you are targeting millennials, for instance, you might choose to sell exclusively online. If your hair care line is designed with older women in mind, you might instead choose to sell through salons. In either case, market research into your target's demographics will be very useful.
Conducting Market Research
Market research is an ongoing process for any business, and there should be numbers involved to make things easy to track and apply. If you have the data, you also want to consider historic, currently used and projected marketing data for your products.
You'll also need to take a thorough look at your competitors, including their performance in the past, marketing efforts and projected profits. Along with this research, highlight the competition’s strengths and weaknesses. Then, provide your proposed response to those strengths and weaknesses.
Market research might involve speaking to or surveying your target customer in an effort to determine what they are looking for in a hair care product. In this way, you can determine what might sell well. You should also ask questions related to price points and how your target customer would like to purchase your items — in person or online.
Advertising, Distribution and Organization
Before you begin to sell, you should have a detailed plan that speaks to how you will introduce your products to the market and how you intend to promote your brand. Consider the costs involved with your proposed advertising plan. Be sure to have a well-designed budget and stick to it.
You should also take a look at your distribution strategies. How are you going to get your products to your customers? Do you intend to ship internationally? How do you plan to set your product logistical chain in motion? This includes sources, labor expenses and the number of employees you think you'll need.
You should also decide how you intend to run the organization. Are you looking toward international growth or are you thinking about staying small? Will you rely on a board of directors? It's important to determine these things before moving forward.
Finances and Budgeting
Ir's critical that you focus on finances and budgeting when starting a hair care business. Ideally, your budget should be developed by a professional accountant after you’ve done all of your market research and set your primary goals.
Determine how many, if any, employees you can afford to pay, what sorts of licensing you might need to pay for and how much your products will cost to source and produce. Don't forget to include information about the costs of shipping, distribution and advertising. If you plan to have a retail location, allow for that expense, as well.
Hair Product Business Plan
Writing a business plan is essential if you’re going to turn your hobby project into a legitimate business. The business plan serves as a methodology to incorporate all of your plans for your product and document how you'll achieve each aspect of launching your company. It should include:
Executive Summary for Business
If you are writing a business plan or trying to find investors for your hair product business, you might need to write an executive summary. This document should be short – ideally, no more than a page. Your executive summary should also be easy to scan and be separated into easy-to-manage sections. This may even be the only thing that some of your prospective investors read, so be sure it's concise and well-written.
If you're not comfortable writing a clear, concise summary, consider speaking with a business consultant or writer. There are many freelance writers and other consultants who may be able to give you what you need as far as your executive summary goes.
There are a few significant pieces of information that you should always include in any executive summary. The first of these is your business name and location. Be sure that whoever is considering investing in your business knows who and what they'd be supporting.
Product Overview for Investors
If you are courting investors, you should also have a canned product overview at the ready where you describe what your product is. If you’re looking to start a full line of hair care products, outline each briefly. In addition, it would be helpful if you had samples to go along with your business proposal to give potential investors a tangible thing to hold.
Consider an introductory paragraph that explains the essence of your business. For a hair care business, you might say something like, “I’m Joyce Smith, and my new hair care company is called Active Woman. As a busy mother of two and an attorney, I can’t always find time to style my hair, but this product keeps my hair looking amazing, and I want to share it.”
You should also include a company description in any document provided to potential investors. It doesn't need to go into the lower-level details of your structure. It should remain high-level while still giving enough information to explain who you are, how your company will operate and any of your future goals for expansion. Your company description should include your legal structure and company history.