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Start an organic hygiene products 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 organic hygiene products 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 long it will take you to break even?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening an organic hygiene products business?
A lot of the cost of starting this type of business is for product formulation, manufacturing, and testing. Owners who do not have a background in formulating cosmetics can purchase existing formulations or pay someone to develop a unique formulation for them. Costs can range from hundreds to tens of thousands of dollars depending on the formula's complexity and its ingredients. After formulation, products need testing which cost hundreds more. Finally, they need to be manufactured, bottled, and shipped. The average costs per unit is between two and three dollars.
Another expense will be getting your products organic certified. Certifying a product as organic is a long and expensive process which can cost thousands of dollars each year to renew per product.
The typical startup cost for an organic hygiene product business is around $15,000 per product. This is in addition to all the other normal start up any other business requires.
Potential organic hygiene products business owners who want to start a company more inexpensively, should look into working with private label hygiene companies.
What are the ongoing expenses for an organic hygiene products business?
The ongoing expenses include manufacturing, shipping, rent, labor, insurance, and yearly recertification.
Who is the target market?
The target market for organic hygiene products is middle and upper class women who care deeply about their health and the environment and are willing to pay a premium for an organic alternative to national brands.
How does an organic hygiene products business make money?
These businesses make money by selling products straight to the consumer or distributing through a wholesale process to stores.
How much can you charge customers?
When it comes to how much consumers are willing to spend on organic hygiene products, the sky is the limit. Essential Wholesale & Labs, a private label company, suggests companies charge retail customers 5 to 6 times of the cost of the finished product and wholesale customer half of that price.
How much profit can an organic hygiene products business make?
Retail profits margins are around 80% and wholesale profit margins are half that. Of course, not all of that is profit, but it is possible to make millions of dollars selling organic hygiene products.
How can you make your business more profitable?
Owners of organic hygiene products can expand their product line to include a wide range of products including hair care, skin care, and feminine hygiene products.
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 organic hygiene products 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: Find the right bank for you, read our review of the Top 5 Banks for Your Small Business
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.
Federal Business Licensing Requirements
The FDA does not currently have strict regulations on the production of personal hygiene and personal care products; however, legislation has been put in motion to introduce such regulations, so it is important that you stay alert of new regulations in the personal care products industry.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate an organic hygiene products business. 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.
For information about local licenses and permits:
- 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 an organic hygiene products business
The target market for organic hygine products are typically tech-savvy, so reaching out to them through social media and online ads is a good option. Owners can utilize inbound marketing techniques to draw traffic into their online store and expose them to their line of products. Taking steps to establish your brand's commitment to sustainable, health-conscious, and eco-friendly values will help customers trust your company as a go-to resource for all their hygienic needs.
How to keep customers coming back
Business owners can gain new customers for their products by offering free samples and complimentary makeovers at political and social events. Supporting ecological and social causes can help to generate a positive public image for your business and solidify customer loyalty.
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 An Organic Hygiene Products 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?
Most successful organic hygiene products business are run by people passionate about the products they sell and who are actively involved in a healthy and sustainable lifestyle. There is no room to for phonies in this business, since your customers will be quick to identify unwholesome ingredients that may have found their way into your product line. An organic hygiene product business demands a full-time schedule, so owners need to have a deep dedication to the business even if it is only a second source of income.
What happens during a typical day at an organic hygiene products business?
It can be very complicated to run an organic hygiene products business. There are a lot of moving parts. The largest of these parts is the manufacturing phase. The size and scope of manufacturing depends on the type and the amount of products a company requires. Since businesses usually outsource manufacturing duties, many owners spend a good portion of their days talking to manufacturers about their orders. The rest of the time, owners split between marketing to businesses and customers. Smaller companies tend to sell directly to customers either online and through retail stores. Larger companies have the brand recognition and inventory to sell wholesale.
What are some skills and experiences that will help you build a successful organic hygiene products business?
Marketing is critical in this industry. It is important to understand the marketplace and know how to market to this unique niche of customers. The more experience owners have in marketing, the better they will be able to position their brand. It is very helpful to have a background in formulating and manufacturing organic hygiene products, but it is not essential. Many owners decide to outsource development and production or to purchase and relabel third-party products.
What is the growth potential for an organic hygiene products business?
The overall growth of the industry is huge. Experts predict the industry will be worth close to 16 billion dollars by 2020. New brands entering this saturated market will need unique products and effective marketing to claim their share of sales.
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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 an organic hygiene products business?
Business owners should start small and grow slowly. Owners need to speak with their customers to ask for their opinions on which new products are worth developing. There is a lot of competition in this market and expanding too quickly can use up the capital necessary for marketing. Offer an unique selling proposition for the brand to make it stand out.
How and when to build a team
A team is essential from the start of this kind of business. Try to hire employees who are socially active and environmentally aware, since these kinds of people can be excellent brand ambassadors for the company.