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How to Start a Lip Gloss Business

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Published on November 11, 2021

Updated on August 11, 2022

How to Start a Lip Gloss Business

How to Start a Lip Gloss Business

Lip gloss has been popular since it’s invention in 1930 by Max Factor for the movie industry. Originally made just to create a shine on the lips, new types of lip gloss have emerged over the years with color, flavors, and even ingredients for plumping the lips. If you are interested in starting your own business and are passionate about cosmetics, a lip gloss business can be started with very little money and has great potential for healthy profits.

Starting a business is never easy. It takes work and time to make your business shine. The first step is to educate yourself about what is involved so that you know what you’re getting into. This step by step guide will help to prepare you to begin your entrepreneurial journey.

Fast Facts

Investment range

$850 – 7,800

Time to build

Less than 1 month

Industry trend

Growing

Revenue potential

$12,500 p.a.

Profit potential

$150,000 p.a.

Commitment

Flexible

Step 1: Decide if the Business Is Right for You

Photo of attractive puzzled girl look empty space arms palms show cons pros isolated on blue color background

Pros and Cons

No business is perfect. A lip gloss business has pros and cons that you need to weigh to decide if it’s the right path for you.

Pros

  • Flexibility – You can run your business from home and set your own hours
  • Low Startup Costs – You can start your business for a very small investment
  • Profit – Margins are relatively high, and your profit potential is unlimited
  • Fun! – You can be creative and build your own unique line of lip glosses

Cons

  • Competition – It’s a very crowded space so you will need to differentiate yourself
  • Finding a supplier – You will need to find a supplier or manufacturer for your products if you grow beyond making your lip gloss yourself
  • Inventory management – You will need to learn how much product to keep in stock because holding inventory means your cash is tied up

Industry trends

In 2020 just over 122 million women in the United States used lipstick or lip gloss, according to German data company Statista.[1]https://www.statista.com/statistics/286746/usage-of-lipstick-and-lip-gloss-in-the-us-trend/ That number is expected to grow to over 124 million by 2024. From 2020 to 2027 the global lip gloss market is expected to grow 4.7% per year to reach $4.3 billion, according to global research company Market Research Future.[2]https://www.marketresearchfuture.com/reports/lip-gloss-market-10385

Product trends include super shine lip glosses, as well as non-sticky lip gloss. At the end of 2020, Google searches for non-sticky lip gloss were up 90%, according to InStyle magazine.[3]https://www.instyle.com/beauty/makeup/lipstick-trends-2021 In the new age of masks, the trend has become lip stains that lip gloss can be applied over when masks come off.

How much does it cost to start a lip gloss business?

Startup costs range from around $800 to almost $8,000 with an average of just over $4,000. On the high end, the largest expense is website development, but you can start by selling your lip gloss on online marketplaces such as Amazon or Etsy. Your initial supplies to make lip gloss vary based on how large or small you want to begin.

Start-up CostsBallpark RangeAverage
Setting up a business name and corportation$150 - $200$175
Licenses and permits including a frequency license$200 - $300$250
Insurance$100 - $500$300
Business cards and brochures$200 - $300$250
Website setup$0 - $3,000$1,500
Initial marketing budget$100 - $500$300
Lip gloss starting kit$100 - $3,000$1,550
Total$850 - $7,800$4,325

How much can you earn from a lip gloss business?

The cost to make a lip gloss is estimated at $2.50, while the same lip gloss can be sold at a retail price of $5, resulting in an 50% profit margin. High end lip glosses can sell for much more, up to $40 or more. For larger cosmetic companies, profit margins are around 80%. You can use the Step By Step profit margin calculator to calculate your actual profit margin once you determine your specific costs and pricing.

In the early stages, if you sell 5000 units in a year at $5 each, you will bring in $25,000 in annual revenue. This equates to $12,500 in profit (50% margin).

As your brand gains recognition, sales could climb to 50,000 units a year. At this stage, you would rent a commercial space and hire staff, reducing your profit margin to around 30%, but you also may be able to command a higher price. If you sell 50,000 units at $10 per unit, you will bring in $500,000 in revenue, and $150,000 in profit.

What barriers to entry are there?

There are very few barriers to entry for a lip gloss business. Your biggest challenges will be:

  • Competition – You will have to be creative and have unique products to differentiate yourself from your competitors.
  • Manufacturing – If you want to go the manufacturing route, you will have to locate a manufacturer.
  • FDA regulations – If you make your own lip gloss, you will need to make sure that your ingredients comply with FDA regulations.

Step 2: Hone Your Idea

Why? Identify an opportunity

Examine the lip gloss market to determine what other companies are selling. Do you see anything that is missing or rare? Look for new trends where there may be an opportunity. It could be a certain texture or look, such as glitter, or creative colors.

What? Determine your products or services

Determine what products you want to offer in your lip gloss line. Create a list of colors or types of lip gloss. You may do some experimentation making your glosses and come up with 10 colors or other variations that you want to offer.

How much should you charge for lip gloss?

The average price of lip gloss is around $5 but prices can be much higher. In the beginning, you will probably need to be at the lower end of the price range, but you may be able to increase your prices later as you gain brand recognition.

Who? Identify your target market

You need to know who your market is, so that you know where to find those people. For example, you may decide to offer glittery lip gloss which will probably attract a younger market, and you can most likely find them on social media sites like Instagram and TikTok.

Where? Choose your business premises

In the early stages, you may want to operate your business from home to keep expenses relatively low. But as your business grows and operations intensify, you will likely need to hire workers for various roles. You may need to rent out a production facility to manufacture your products. If you have a manufacturer, you may still need an office for your staff to work in. Find commercial space to rent in your area on Loopnet, Craigslist, Crexi, and Commercial Cafe.

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
Should You Start a Lip Gloss Business

Step 3: Brainstorm a 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
  • The name should be relevant to your product or service offerings
  • Ask around — family, friends, colleagues, social media — for suggestions
  • Including keywords, such as “lip gloss” or “lip shine”, boosts SEO
  • Choose a name that allows for expansion: “Jim’s Cosmetics” over “Jim’s Lip Gloss”
  • Avoid location-based names that might hinder future expansion
  • Use online tools like the Step by Step business name generator

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 at a web cataloging site such as NameChk. 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 with domain registration and social media account creation. And if you’ve exhausted all your creative juices but still don’t have a business name, don’t stress! Instead, check out our business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Step 4: Create a 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: Brief overview of the entire business plan; should be written after the plan is complete.
  • Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
  • Product and Services: Describe your shop’s services in detail.
  • Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
  • Competitive Analysis: Analyze main competitors, assessing their strengths and weaknesses, and create a list of the advantages of your services.
  • Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
  • Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
  • Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
  • Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
  • Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan yourself before, it can be an intimidating task. Consider hiring an experienced business plan writer on Fiverr to create a professional business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

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 offer real advantages when it comes to a lip gloss business.

If you’re willing to move, you could really maximize your business!

Choose your business structure

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

Here are the four main options:

  • Sole proprietorship – The most common structure for small businesses makes no legal distinction between company and owner: you get to keep all the profits, but you’re personally liable for all debts.
  • Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses.
  • Corporation – 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.
  • 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.

We recommend that most new business owners form an LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can quickly and cheaply form an LLC using ZenBusiness’s online LLC formation service (it can take as little as 5 minutes). They will check that your business name is available before filing, submit your Articles of Organization and be on hand to answer any questions you have about the company formation process.

Business structure comparison infographic

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: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
  • Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund an entrepreneur’s vision.
  • Personal: Self-fund your business via your savings, the sale of property or other assets, and support from family and friends.

Step 8: Apply for Licenses/Permits

Starting a lip gloss 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, health license and permit from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.

If you are making your own lip gloss, you will need to check FDA regulations to make sure that your ingredients are in compliance.

You may also need state-level licenses 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 country governments or contact the appropriate person to learn more about your local requirements for a lip gloss business. You could also use the SBA’s guide to identify your state’s requirements.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties. 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.

For peace of mind and to save time, 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 you to make sure you’re fully compliant.

Step 9: Open a Business Bank Account

Before you start making money, you will 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 lip gloss 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 consider your options to choose the best plan that works for you. Once you choose your bank, you’ll need to bring your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and any other legal documentation that proves your business is registered.

Step 10: Get Business Insurance

Asian woman check health insurance documents or various accidents and return value with the calculator While searching for information on law firms, consult the website before making a decision

Business insurance is an area that often gets overlooked yet is 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 any 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.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.

You can create your own website using services like WordPress, Webflow, 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.

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. We examine several of them below.

Marketing

Some of your business will come from online searchers, nevertheless you should invest in marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.

Once your website is up and running, make sure you link to your social media accounts and vice versa. Social media is a particularly good way of promoting your business because you can create engaging posts that advertise your products:

  • Facebook: Great platform for paid advertising, allows you to target specific demographics, like men over age 50 in the Cleveland area.
  • Instagram: Same benefits as Facebook but with different target audiences.
  • Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales.

Accounting

  • Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
  • If you are 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.

Equipment

You’ll need a handful of different items to successfully launch your lip gloss business. Here’s a list to help you get started:

  • Lip gloss base and other ingredients
  • Tubes
  • Labels

Step 12: Build Your Team

If you’re starting out small from a home-based 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 lip gloss business would include:

  • Production Assistants – Make and package lip gloss
  • Office Manager – Scheduling, managing staff, ordering supplies
  • Marketing Lead – Social media marketing, SEO, content creation, and any other marketing efforts for the company

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 or Facebook. You can also use free classified sites like Jobs and AngelList. 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: Start Making Money!

Focus on USPs

Unique selling propositions, or USPs, are the unique 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 ___ 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.

Some signature USPs for your lip gloss business could be:

  • Colors you can’t find anywhere else
  • Lip gloss so smooth you won’t know it’s there
  • Stand out from the crowd with super shine
USP venn diagram

Kickstart Marketing

Take advantage of your website, social media presence and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:

  • Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as being the 10th customer on Black Friday.
  • Optimize calls to action (CTAs) – Experiment with text, color, size, and position of calls to action such as “Buy Now”. This can sharply increase purchases.
  • Signage – Put up eye-catching signage on your website
  • Flyering – Distribute flyers in your neighborhood and at industry events
  • In-Person Sales (IPS) – Offer your products at local markets, trade shows

Consider a Niche

You should consider creating a niche for yourself by specializing in a certain aspect of your industry. This could jumpstart your word-of-mouth marketing within your niche market.

Build Affiliate Relationships

Affiliate marketing is advertising in which you compensate third parties (i.e. your affiliates) in order to generate traffic to your website. You can develop long-term relationships with these affiliates and generate traffic for each other on an ongoing basis.

Wrapping it up

Starting a lip gloss business can be a great way to have fun and make a healthy profit, and you don’t need a fortune to get started. You can work from home when you start and use your creative talents to make a great product. Lip gloss has a large market and is a growing industry, and a small lip gloss business can potentially become a large company. Check out our Step By Step business tips page for helpful articles on starting a business. You have all the information that you need at your fingertips now, so get started on your journey to building a successful lip gloss business!

Lip Gloss Business FAQs

How much does it cost to start a lip gloss business?

The great news is that it takes very little money to start a lip gloss business if you start small. You can buy lip gloss making kits for as little as $100, make your lip gloss from home, and sell them on online marketplaces without having the expense of developing a website. You can also market for free or for very little on social media sites.

Do I need an LLC to start a lip gloss business?

You can have any kind of business entity to start a lip gloss business. You can start as a sole proprietor if you choose, and you don’t have to register your business with your state. An LLC, however, gives you personal liability protection and has tax advantages over a corporation.

How can I make a lip gloss business successful?

Lip gloss is competitive market, so you need creative and quality products, attractive packaging, and an effective value proposition that reflects your USPs. To grow, you will also need to put together an effective marketing plan and have a budget to execute your plan.

What licenses do I need to start a lip gloss business?

You don’t need any specific licenses for a lip gloss business, but you made need certain licenses to do business in your state and municipality. Check with those government offices to see what is required. You also need to make sure that you comply with FDA regulations.