Start a cactus leather business by following these 9 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your cactus leather business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a cactus leather business?
There is only one viable cactus leather company right now, Desserto, and there is no information available about their startup costs. It is reasonable to assume that your startup costs would be significant just to develop and manufacture your vegan leather product, and that’s not including the costs of starting a cactus farm. Needless to say, you will need funding from lenders and/or grants to get your business started.
What are the ongoing expenses for a cactus leather business?
There are many ongoing expenses for a cactus leather business, including purchasing cactus, shipping cactus to the manufacturing facility, labor, and research and development. You can expect to spend a significant amount of the research and development of your product, as you are producing something virtually new. But even when you have a product you are satisfied with, you will likely still want to continue your research and development to improve your product and create new products.
Who is the target market?
Several industries are eager to incorporate vegan leather into their products, including the auto industry, the fashion industry, and the furniture industry. While you could potentially target one of these markets, if you have a quality product, there is no reason why you shouldn’t target all of them.
How does a cactus leather business make money?
A cactus leather business makes money by selling cactus leather to various customers, including apparel manufacturers, auto upholstery companies, shoe companies, and other businesses that have a use for vegan leather.
How much can you charge customers?
It’s difficult to get a clear price on cactus leather because as of now, there is only one company selling it. The company claims that the cost of their product is similar to the cost of animal leather. The cost of a full hide of leather ranges between $200-$500, although there can be a lot of variation in cost based on the product.
How much profit can a cactus leather business make?
With the vegan leather market projected to grow to $85 billion in just a few years, there is plenty of profit to be made in the industry. Cactus leather is so new, though, that there are no figures available to determine how much profit this type of business can make. Given that there are very few truly plant-based alternatives to leather – with most vegan leathers made out of petrochemicals – it is likely that a high-quality cactus leather will be very profitable.
How can you make your business more profitable?
You can make your business more profitable by generating more demand for your cactus leather. Right now, only a few niche industries even know that cactus leather is a possibility for their material needs. If you can increase awareness through savvy marketing, you could greatly expand your customer base. Imagine if you could create a plant-based leather and become the sole supplier for a major shoe manufacturer or auto upholstery manufacturer. Your profits would increase drastically.
What will you name your business?
Choosing the right name is very important. Read our detailed guide on how to name your business. We recommend checking if the business name you choose is available as a web domain and securing it early so no one else can take it.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your cactus leather business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
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How to promote & market a cactus leather business
The leading cactus leather manufacturer, Desserto, built a customer base by contacting fashion designers and auto manufacturers to let them know that they had a vegan leather product. It’s a good idea to go directly to your target market when possible. Advertising in trade journals and industry-specific magazines is a good idea. Try to get the attention of popular online outlets so that they write a story about your product as well.
How to keep customers coming back
Customers will keep coming back if you deliver a high-quality product that performs in the way they expect. Your cactus leather needs to be durable, biodegradable, and have a pleasant texture. It also needs to last long enough to justify its use. If it falls apart in a year, manufacturers won’t consider it a viable option.
Customers will also need you to meet their supply needs. Try to only make promises that you know you can keep.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
Start A Cactus Leather Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
Starting a cactus leather company is not for the faint of heart. Although the first company to produce this material is generating a lot of excitement in the apparel industry, it is still just getting off the ground. You need to have a passion for animal welfare, the environment, and textiles if you want to be successful. You will also need to be prepared for an uphill battle, as you will have to develop your own process to produce quality vegan leather out of cactus.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a cactus leather business?
A typical day at a cactus leather business includes checking on your cactus farm and your cactus leather production facility. Depending on where your focus is at the time, you may be spending the majority of your time establishing your cactus farm. Or, you may be working with your team to develop and manufacture your cactus leather product.
What are some skills and experiences that will help you build a successful cactus leather business?
There are at least two key skills that are required to start a cactus leather business – farming and textile manufacturing. You may be able to source your cactus from a cactus farm, in which case you would not have to handle the farming yourself. Arguably the most important thing is your ability to produce a convincing leather substitute from cactus. Your product has to be close enough to leather to be attractive to your target markets.
What is the growth potential for a cactus leather business?
The growth potential for a cactus leather company is substantial. According to LiveKindly, the vegan leather market is expected to be worth $85 billion by 2025. Cactus leather is just one of several different types of biodegradable vegan leathers set to take over the vegan leather market. Currently, synthetics are the best option for new vegan leather – and synthetics are not biodegradable and bad for the environment. If you can establish a cactus leather business now, you will be getting in on the ground floor of the vegan leather movement.
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Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a cactus leather business?
Making connections with people who have the skillsets you require is a necessity when starting something as innovative as a cactus leather business. Chances are, you don’t have every skill that’s needed to grow cactus, harvest it, then craft it into leather. The founders of Desserto sought out experts to test their product and hone in on the exact composition that would serve their needs.
How and when to build a team
Cactus leather manufacturing is not the kind of business to start if you want to go it alone. You need a team to help you with all the various tasks required to produce a desirable product. That means you will need to make a plan for what kind of team you require from the outset and include the costs in your business plan when seeking funding.