How to start a skincare business

Starting a skincare business takes a lot of planning and dedication. But the more thorough you are at the beginning, the more likely your business is to succeed. If you’re not sure where to start with your new business venture, this guide is for you.

We’ll cover the following:

• Skills needed to start a skincare business
• How to start a skincare business from scratch
• How to create your skincare products
• How to market your skincare business

Running a successful business takes a specific skill set that varies between industries and business types. We’ve listed the main skills you’ll need to start a skincare business below.

Starting a skincare business where you make and sell the products yourself requires a good knowledge of how skin works. You need to understand skin structure, physiology and needs to help you develop effective formulations for your products. 

You’ll also need the ability to determine what makes a good cosmetic formula. For example, what ingredients are necessary to create different types of emulsions, balms, gels and toners? Also, when do you need to add preservatives to a product to make it last? A good cosmetic formulator knows the answers to these questions. 

Whether you’re making your products from scratch, following simpler DIY recipes, or buying ready-to-sell products, you need to be a good communicator. Decent communication skills will make it easier for you to speak to customers, suppliers, and other people your business comes across. 

There’s no point in creating amazing skincare products if no one knows they exist. The beauty industry is highly competitive, so you need to know how to differentiate yourself from your competition and convince customers to buy from you over other brands. 

Knowing how to brand and promote your business and products is a key skill you need to grow a successful company.  

Another key thing you need to start a skincare business is an understanding of the skincare industry. It’s always evolving and changing, so it’s crucial to keep up with any trends you can hop on to attract more customers to your brand. 

This section will outline the different steps you need to take to start your skincare business.

The first step is to decide if you want to run your business as a sole trader, a limited company, or if you want to set up a partnership? 

Sole trader businesses are simpler to set up, but a limited company looks more professional and gives you limited liability for any debt you incur while running the business. On the other hand, limited companies require more accounting and tax work than sole trader businesses do.

You also need to choose a business name. While you can use your own name to trade, you may want to choose a separate company name if your plan is to expand. Start by checking the Companies House register to ensure your chosen name isn’t already taken.

Self-employed people need to notify HMRC that they will manage their own tax and National Insurance contributions. As a self-employed person, you’ll also need to submit a Self Assessment tax return every year if you make over £1,000 from your business income.

Limited companies also need to register for Corporation Tax, and if your business is likely to turn over £85,000 or more annually, you must also register for VAT.

Once you’ve set up your business, you need to look into what the current market looks like and figure out how your products can fit into it. 

You can use skincare industry data from government sources like the Cosmetic, Toiletry and Perfumery Association Ltd. (CTPA). Information from trade organisations and publications within the cosmetics industry is also useful when conducting your market research.

Conducting market research also helps you identify who your ideal customer would be and how you can best get their attention. For example, selling body lotions to older men requires a completely different approach to selling acne cream to young women.

Finding your perfect spot in the market also requires knowledge of what other skincare brands are up to. Researching your competitors involves looking into other brands that are actively trading, including the products they sell, how much they charge, how they promote themselves, and so on. 

Scour company websites to see how your competitors talk about themselves and read reviews on Trustpilot or other service directories to find out what their customers say. Websites like Glassdoor are also an excellent way to find out what employees think of the business.

A business plan helps ensure that you hit the ground running when starting your business. Writing a business plan helps you budget for startup costs, identify likely roadblocks, and determine what resources and supplies you’ll need. 

You use a business plan to determine the ultimate goal you have for your skincare company, like if you want to stay local or become a global company. You should also include whether you’ll want a store for your business or just sell your products online.

Use your business plan to create your business goals and set objectives along the way to help you stay on track and measure your success. Learn more about business goals and objectives.

If you set up as a limited company, you legally have to open a separate business current account to separate your business finances from your personal ones. 

Sole traders and partnerships don’t legally have to open a separate business account, but we still recommend it for the following reasons:

• Makes it easier to monitor cash flow (money moving in and out of your business)
• Makes tax returns easier to prepare since your business and personal transactions are separate
• It looks more professional and trustworthy

The Countingup business current account has built-in accounting software that allows you to save time and stress on bookkeeping tasks. 

Once your business is all set up, it’s time to develop your product line. Follow the steps below to get started.

If you try to focus on too many products at once, you risk overwhelming yourself. The best way to ensure you get off to a good start is to select a key product (or hero product) to be the main one you sell. Once you’ve perfected your hero product, you can start working on supporting items to expand your product line. 

For example, say your hero product is a rosewater-based moisturiser that suits all skin types. In that case, you can expand your product line by adding a moisturiser for dry skin and sensitive skin. It’s best to start small and work your way up to a large product line rather than attempting to do it all at once.

Starting a skincare business could be as simple as buying ready-to-sell products to sell to customers or as complicated as making each formula from scratch. The process you choose will depend on your experience, skill level, available time and budget. 

These are the options you have:

• Make them yourself – you can certainly blend simple lotions and lip balms at home,  but make sure you carefully test and document your process so you can maintain a consistent formula. You also need to follow local regulations. 
• White or private labelling – With white labelling (or private labelling), you use the same formula and manufacturer as other skincare brands, only with some variations and different packaging. There’s no need to test new formulations over time, making white labelling a great option if you want to quickly go from idea to finished product.
• Manufacturing – Here, you create and develop your formulas from scratch in a manufacturing facility. Many manufacturers produce products for multiple brands in the same space. As such, manufacturing is a more accessible (but expensive) option for new brands.
• Curating and re-selling – Going for this option means you skip the manufacturing process altogether and instead buy wholesale products from different brands. You could sell vegan brands, locally sourced products, creams for specific skin types, etc., and bring a curated shopping experience to your customers. 

Next, you need to decide how much you’ll charge for your products. Your prices affect your entire business, from cash flow (the balance of money entering and leaving your business) to profit margins and what expenses you can afford.

Ensure your prices also fit with your niche and the types of skincare products you sell. For example, you can set higher prices if you sell high-quality, all-natural lotions. On the other hand, if your products are more generic, you’ll need to charge lower prices.

You need to choose prices that are reasonable enough that customers will pay them but still allow you to cover manufacturing costs and other expenses.

No sense in having a great skincare business if no one knows about it. Here’s what you need to do to market your skincare business effectively:

The first step to effective marketing is to create a memorable brand that reflects the personality of your business. Branding is key to making your company stand out and creating something customers will remember. 

At a minimum, your brand should include:

• A unique logo that helps you stand out
• A colour scheme that represents your identity
• A memorable brand name and mission statement
• A set of values to help you target customers

Competitor research comes in handy when you need inspiration. Simply look at what other brands are doing, making notes of what you like and don’t like, and use that to start building your brand.

Marketing your brand and products without knowing who you’re targeting is like throwing out messages in a bottle. You won’t know who’ll read them or if anyone reads them at all. 

Taking the time to identify your target audience (learn more about it here) will allow you to tailor your message and methods to reach them. 

When you know your target customers, you can create a marketing message that will resonate with them. Every big brand has a memorable catchphrase attached to its name. For example, Nike has Just Do It, McDonald’s has I’m Lovin’ It, and so on. 

The beauty brand bareMinerals has had one clear message for its target audience since its founding in 1995, which is Clean Without Compromise. Their products have always been cruelty-free beauty, and free of parabens, formaldehyde, and other chemicals often found in their competitors’ products.

Spreading the word about your new business requires you to grow your social presence. Use social platforms to share tips, announce new products, comment on important social issues, and engage with your audience.

The best platforms for skincare brands are usually Instagram, YouTube, Pinterest, and TikTok. All these platforms are full of people sharing beauty and skincare tips and hacks, so you might even be able to find an influencer to help promote your products. Learn more about influencer marketing. Of course, which platforms you focus on depends on your audience. 

Once your business gets going, and money starts rolling in, you need to charge customers for your products. You can learn more about how to make an invoice and how to avoid and fix common invoice mistakes in our guides.

Starting a business takes a lot of time, focus, and hard work. The last thing you need is to waste hours dealing with a bunch of financial admin. 

That’s why thousands of business owners use the Countingup app to save time on their financial management and focus on growing their business. Countingup is the business current account and accounting software in one app. It automates time-consuming bookkeeping admin for self-employed people across the UK.

With automatic expense categorisation, receipt capture tools and cash flow insights, you can confidently keep on top of your business finances and save yourself hours of accounting admin, so you can focus on starting growing your makeup business. Find out more here.