How to Start a Body Butter Business

Body butter has gained popularity over the last decade, boasting many benefits to the skin, including potential anti-aging benefits. A homemade body butter business can be a great side hustle or even a full-fledged business if you partner with a white label manufacturer to produce your recipes under your own brand name.

But before you go shopping for ingredients, you’ll need to understand the recipe for a successful business. Fortunately, this step-by-step guide has you covered with all the business insights you need to launch a lucrative body butter business.

Step 1: Decide if the Business Is Right for You

Pros and cons

Body butter industry trends

Industry size and growth

• Industry size and past growth – The global shea body butter industry was worth $2.07 billion in 2021.((https://www.grandviewresearch.com/industry-analysis/shea-butter-market))
• Growth forecast – The global shea body butter industry is projected to grow 6.8% annually through 2030.

Trends and challenges

Trends

• Demand is growing for uniquely scented body butters, often created using essential oils.
• More data is showing the benefits of body butter for sensitive skin issues, which is driving up demand.

Challenges

• As the popularity of body butter grows, the industry is becoming more competitive.
• Body butter products and labelling must comply with FDA regulations.

How much does it cost to start a body butter business?

Startup costs for a body butter business if you’re going to make it and package it from home range from $2,500 to $6,000. Costs include ingredients, packaging and labeling materials, and a marketing budget.

Alternatively, you can find premade body butters from manufacturers that you can sell under your own brand name, or you can find a manufacturing partner that will work with you to manufacture your recipes. Going the latter route will come with a more significant cost. 

You could start small making your body butters at home, and once you’ve gained some traction, find a manufacturing partner. 

When you’re making your body butters from home, one interesting sales option could be to open a mall kiosk. That would add to your startup costs but could bring in more revenue.

You’ll need a handful of items to successfully launch your body butter business, including: 

• Butters, oils, fragrances
• Packaging and labeling materials
• A mixer

How much can you earn from a body butter business?

Prices for body butter vary and can range from $10 for seven to eight ounces up to $40 or more for the same size. These calculations will assume that you can produce one container for $4 and will sell it for $15. After all your other costs, such as marketing costs, you should have a profit margin of about 60%

In your first year or two, you could sell 100 items online per week, bringing in $78,000 in revenue. This would mean $46,800 in profit, assuming that 60% margin. 

As you gain traction and find a manufacturer, sales could climb to 1000 items per week. At this stage, you might have an inventory storage and shipping facility and hire staff, reducing your margin to around 25%. With annual revenue of $780,000, you’d make a tidy profit of $195,000.

What barriers to entry are there?

There are a few barriers to entry for a body butter business. Your biggest challenges will be:

• Breaking into a competitive market
• Finding a white label manufacturer

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Step 2: Hone Your Idea

Now that you know what’s involved in starting a body butter business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research could give you the upper hand even if you’ve got the perfect product. Conducting robust market research is crucial, as it will help you better understand your customers, your competitors, and the broader business landscape.

Analyze your competitors 

Research body butter businesses to examine their products, price points, and customer reviews.

• Make a list of body butter businesses that offer similar products. 
• Review your competitors’ products – their features, pricing, and quality – and marketing strategies.
• Check out their online reviews and ratings on Google, Yelp, and Facebook to get an idea of what their customers like and dislike.
• Identify your competitors’ strengths and weaknesses. 

This should identify areas where you can strengthen your business and gain a competitive edge to make better business decisions.

Why? Identify an opportunity

You’re looking for a market gap to fill. For instance, maybe the market is missing a business that sells lavender scented body butter, or a body butter sunscreen business. 

You might consider targeting a niche, such as body butter for eczema.

Once you choose a niche, you’ll need to develop your product recipes. Consider offering a choice of scents in whatever niche product you choose. 

How much should you charge for body butter?

Your prices should be based on market prices, but also on your costs to make or manufacture your products.

Once you know your costs, use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

You’ll need to determine the type of target market you want to attract, and design your products and packaging accordingly. For example, if you want to attract a higher end market so that you can charge higher prices, you’ll want to make high quality products and design more elegant packaging. 

Where? Choose your business premises

In the early stages, you may want to run your business from home to keep costs low. But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out an inventory storage and shipping facility. You also might be considering renting a mall kiosk space to sell your products. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Body Butter Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “body butter” or “shea butter”, boosts SEO
• Name should allow for expansion, for ex: “LuxeLather Creations” over “BodyBloom Essentials” and “ButterBliss Botanicals” or “SilkySkin Elixirs”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead and reserve your business name with your state, start the trademark registration process, and complete your domain registration and social media account creation. 

Your business name is one of the key differentiators that sets your business apart. Once you pick a name, reserve it and start with the branding, it’s hard to switch to a new name. So be sure to carefully consider your choice before moving forward. 

Step 4: Create a Body Butter Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Summarize your body butter business plan, highlighting key aspects like your target market and revenue projections.
• Business Overview: Provide a concise description of your body butter business, including the types of body butter products you offer (e.g., scented, organic, vegan).
• Product and Services: Detail the specific body butter products and related services you provide, such as custom formulations, packaging options, or gift sets.
• Market Analysis: Analyze the demand for body butter products in your target market, considering factors like consumer preferences, skincare trends, and potential competitors.
• Competitive Analysis: Identify and assess competitors in the body butter industry, highlighting your unique selling points, such as natural ingredients or eco-friendly packaging.
• Sales and Marketing: Outline your strategies for promoting and selling your body butter products, including online sales, partnerships with retailers, and social media marketing.
• Management Team: Introduce key team members responsible for running the body butter business, emphasizing their experience in skincare product development and marketing.
• Operations Plan: Describe the day-to-day operations of your business, covering areas like product manufacturing, quality control, inventory management, and shipping.
• Financial Plan: Present financial projections, including startup costs, revenue forecasts, production expenses, and expected profitability for your body butter business.
• Appendix: Include supplementary materials such as product samples, customer testimonials, and details of your ingredient sourcing.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to body butter businesses. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your body butter business will shape your taxes, personal liability, and business registration requirements, so choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts. Here’s how to form an LLC.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation. Read how to start a corporation here.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have. 

Form Your LLC

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN. 

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Venture capital investors take an ownership stake in exchange for funds, so keep in mind that you’d be sacrificing some control over your business. This is generally only available for businesses with high growth potential.
• Angel investors: Reach out to your entire network in search of people interested in investing in early-stage startups in exchange for a stake. Established angel investors are always looking for good opportunities. 
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a body butter business. You might also try crowdfunding if you have an innovative concept.  

Step 8: Apply for Body Butter Business Licenses

Starting a body butter business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your body butter business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.  

You may want to use industry-specific software, such as Craftybase, or NetSuite, to manage your inventory, orders, and payments.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Create a website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Your customers are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. 

Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now” or “Order”. This can sharply increase purchases. 

Online Marketing

Here are some powerful marketing strategies for your future business:

1. Social Media Engagement: Leverage platforms like Instagram and Facebook to showcase the benefits of your body butter, engage with followers through interactive content, and run giveaways to increase brand awareness.
2. Influencer Collaborations: Partner with beauty influencers or skincare experts to review and endorse your body butter, as their recommendations can significantly impact potential customers’ purchasing decisions.
3. Educational Content: Create informative content on the benefits of natural ingredients in body butter, emphasizing how your product stands out. This can include blog posts, infographics, or short video tutorials.
4. Limited-Time Offers: Introduce exclusive promotions or limited-time discounts to incentivize first-time customers and encourage repeat purchases.
5. Packaging Appeal: Invest in attractive and eco-friendly packaging that not only protects your product but also enhances its visual appeal on shelves, making it more likely to grab consumers’ attention.
6. Customer Testimonials: Encourage satisfied customers to share their experiences with your body butter. Genuine testimonials create trust and serve as powerful word-of-mouth marketing.
7. Local Events and Pop-Ups: Attend local markets, fairs, or pop-up events to give potential customers a chance to feel and experience your body butter firsthand, fostering a connection with your brand.
8. Subscription Services: Introduce subscription boxes or services to create a consistent revenue stream and keep customers engaged with your brand over time.
9. Environmentally Conscious Branding: Emphasize your commitment to sustainability and environmental responsibility, as consumers are increasingly drawn to brands that prioritize these values.
10. Collaborate with Spa and Wellness Businesses: Partner with local spas, wellness centers, or gyms to offer your body butter as part of their services or retail offerings, expanding your reach to a relevant audience.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your body butter business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your body butter business could be:

• Luxurious hydration for your skin with our handcrafted, all-natural body butters.
• Indulge in a sensory escape with our lusciously scented and deeply nourishing body butters.
• Experience the silky smoothness of our whipped body butters, leaving your skin irresistibly soft.

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a body butter business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in body butter for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in body butter. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a body butter business include:

• Packagers/Labelers – prepare products for shipping
• Marketing Lead – create and implement marketing strategies
• General Manager – inventory management, accounting

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Body Butter Business – Start Making Money!

The body butter market is growing, presenting a wonderful opportunity for the creative entrepreneur. A body butter business can easily be started on a small scale, and grow over time – there’s no limit. You could even expand into other skin care products and eventually have your own skin care line. 

Now that you understand what’s involved, you’re ready to mix up some recipes and get your successful body butter business off the ground!