Start a candle making 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 candle making business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
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 candle making business?
Depending on local zoning laws, you will probably be able to start your business at home, using your own kitchen heat source and utensils. A starters’ kit of products can be purchased online at many sites including Candle Science and CandleChem. Your candle ingredients shouldn’t cost more than a couple hundred dollars to start. This includes:
- Paraffin, gel, soy, beeswax or other wax
- Jars, tins or other containers (but keep in mind that you won’t need containers if you’re solely marketing pillar candles)
- Essential oils for fragrance
- Coloring agents
- Packaging supplies
- Shipping costs of raw products in and finished products out
Other start-up costs will include web development, which can cost zero to a couple hundred dollars, depending on your skills in the area, and at least a reasonably good camera. If you plan to exhibit your products at various shows and festivals, a booth can cost $100 a day and you’ll have gasoline and related travel costs.
You should also first talk with an insurance agent. Since there’s some potential for fire accidents, it’s important that you make sure your operation is insured for fire and also that you have a fire extinguisher on your premises. You should also have an initial discussion with a lawyers to see what your local requirements are for licenses or permits.
What are the ongoing expenses for a candle making business?
The business revolves mostly around the various forms of wax, your containers and color and fragrance additives. Once you’ve started small and proven your business model will work, you can buy these products at lower per-unit costs in bulk. For instance, wax can be found for as little as a dollar a pound when bought in 25-lb quantities. Wicks can be bought by the 100-ft. spool. Containers, including glass jars, mason jars and tins, can also be found in bulk quantities.
Who is the target market?
Your end customer is anyone who wants candles. Some individuals have pragmatic needs—such as for illumination in the event of power blackout—while others are looking for more of a sensory experience. Other great customers include churches that use candles for decoration of prayer offerings, or retailers who want to add a dramatic effect to their showrooms.
You might also appeal to resellers who can buy your merchandise in bulk. These will include store owners in your local area or beyond. You might meet such customers at arts and crafts trade shows.
If you like meeting your customers face to face in a venue where they can fully experience the aesthetics of your products, consider renting booths in arts and crafts shows, flea markets, festivals and fairs and related environments. Entrepreneur Magazine has this informative article about selling at arts and crafts shows.
How does a candle making business make money?
Candlemaking businesses sell to candles either directly to consumers, or indirectly through resellers, such as boutiques, gift shops and other arts and crafts retail venues. Candlemaking is a very general field, so create differentiation through the kinds of candles you sell (pillar, floating, votive, tea, etc.), or through the quality of your offering. Experiment with scents, colors and molds to create something with a unique appeal and worthy of premium pricing.
Furthermore, constantly be on the lookout for raw material suppliers at the lowest possible cost for maximum profit margins on your sales. Also consider associated products or types of candles to expand your target audience.
How much can you charge customers?
Your products might sell for as little as a few dollars apiece or as much as $20 or more. Your pricing will depend on the quality and breadth of your product line, your audience, marketing strategy and competition. If your strategy is to be the lowest seller, make sure you’re getting your raw materials at very competitive prices and that you know exactly what your competitors are charging at all times. You’ll probably want to buy wax, wicks, coloring agents, scents and other materials in bulk, to take advantage of maximum per-unit savings.
If your goal is to sell a more premium product line, price is of less concern as long as your products stand out aesthetically. You’ll also want to consider deep discounts on pricing if you find a retail reseller who can move a lot of your merchandise.
How much profit can a candle making business make?
Profit margins of 50 percent or higher are very possible. Cost of materials is not particularly high, but make sure you can fully invest the time required to make your business profitable.
How can you make your business more profitable?
Once you become adept at the basics of candle making, consider branching out in the types of products you offer. For instance, you can increase cost and profit potential by learning how to mold or carve candles to any shape. Or start marketing fancy oil lamps using liquid candles. Also look at such associated sensory products as scented soaps and incense. In some cases, you can learn how to make these additions to your growing product line, or find out where to buy them for resale.
If you have a studio with necessary space, consider offering candle making classes. In this endeavor, you might approach your local community center or community college to see if they’d be interested in adding your class to their curriculum.
And finally, is your business successful enough that you can think about franchising the model? Start by reading this informative article on steps to franchising a business.
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.
After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google's G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC prevents you from being personally liable if your candle making business is sued. There are many business structures to choose from including: Corporations, LLC's, and DBA's.
Form Your LLC
Read our Guide to Form Your Own LLC
Check out the Top Business Formation Services from our friends at StartupSavant.
You should also consider using a registered agent service to help protect your privacy and stay compliant.
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?.
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.
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: You can get $300 when you open a Chase Total Business Checking® account with qualifying activities. Learn 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.
State & Local Business Licensing Requirements
Certain state business permits or licenses may be needed to go into business as an Ebay entrepreneur. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
In addition, certain local licensing or regulatory requirements may apply. For more information:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
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.
How to promote & market a candle making business
Your most important step is figuring out the audience you wish to attract. Is your typical customer a pragmatic shopper only into cost savings, or is she more interested in the sensory experience? If your customers are the former, be able to boast competitive pricing. If the latter, you should have a beautiful presentation of your product line and make sure your use of colors and fragrances are appealing.
Consider establishing a presence on such online marketplace platforms as eBay, Amazon and Etsy. You’ll find a lot of competition at these sites, so keep your prices as low as possible.
There are many additional arts and crafts sales platforms, though not as well known as Etsy (and therefore potentially less populated with competitors). These include ArtFire, Big Cartel and Craft Is Art, among many others. Here’s a list of 14 potential alternatives.
How to keep customers coming back
Your goal is not only to draw customers, but to make repeat customers of them. Since candles are disposable items that need to be replaced frequently, your existing customer relationships can be lucrative over time. So make sure you satisfy their needs, that they enjoy the quality of the products they get from you and that they know how to contact you when supplies run low.
That’s why it’s important that every order contains easy contact information, whether it’s your website, email address or phone number (or all three). You might include a business card or label with this information as part of the packaging. When meeting customers in person, such as during crafts shows or flea market encounters, make sure buyers and lookers alike get your business card. And try to get their names and permission to add them as subscribers to an email newsletters you send out perhaps before prime candle-buying times such as year-end holidays or Mother’s Day.
STEP 9: Establish your Web Presence
A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Start A Candle Making 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?
The ideal candlemaker should love the craft of candle making and have skills involved with sales and marketing. Candlemakers can begin modestly—in the kitchen and storage space of your home or apartment, and with a limited budget and inventory. Since candles are often thought to be commodity products, you must constantly seek ways of branding your line to differentiate yourself from competitors. Showcase your product line attractively through excellent image photography, a strong online presence and savvy sales skills.
What happens during a typical day at a candle making business?
Here are some of your key responsibilities as a candlemaker.
- Ordering and storing the raw products you’ll need, including wax, wicks, containers, essential fragrance oils and colors
- Constantly researching and reaching out to possible sales venues online and/or in the physical world
- Creating and regularly updating your website and pages on the sites of arts and crafts dealers
- Meeting or making contact with your customers, whether online or in personal encounters
- Creating your candles and related products as needed
- Photographing your product line to maximum advantage so that your merchandise looks appealing online
- Promoting your business through Facebook, Instagram and other social media outlets
What are some skills and experiences that will help you build a successful candle making business?
Most start this business as hobby candlemakers. You should love the aesthetics of making candles and related items and know how to brand your business. You should know the basics of ecommerce and how to establish an online presence. Display presentation skills are important both online (in the quality of your photos and your written product descriptions) and in physical displays if you sell from booths at shows.
Personal sales ability is critical if you plan to sell your product line in person, either to customers directly or to resellers. You must believe in your product and be able make others catch your enthusiasm.
What is the growth potential for a candle making business?
A typical full-time successful candlemaker might gross $25,000-$50,000 per year. However, you could exceed this amount by selling to a major reseller. Also, consider franchising your business once you’ve grown successful enough that others might want to emulate your business model.
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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.
How and when to build a team
Candlemaking is a business that can easily be undertaken alone. But perhaps your goal is to get so popular that you require help with crafting, selling and/or shipping your products. Start with bringing on friends or family members as needed, such as to meet seasonal surges in sales. Don’t bring on permanent full-time help until you’ve seen enough sales cycles to know that you’re likely to have business throughout the year to comfortably meet payroll. Also, check with your accountant to learn all the hidden costs associated with employees.