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These days people are living healthier lives. Most of us are trying to eat better, reduce waste, recycle more and use natural products. An organic hygiene products business is perfectly positioned to provide people with all-natural soaps, shampoos, cosmetics, and feminine hygiene products.
Who is this business right for?
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 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.
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.
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 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 steps to start an organic hygiene products business?
Once you're ready to start your organic hygiene products business, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your organic hygiene products business is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your organic hygiene products business keeps your finances organized and makes your business appear more professional to your customers.
- 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.
- 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.
- Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
- 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.
- Establish a 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.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Where can I 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.
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 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.
Recommended: Get started with local advertising for your business with a $300 credit from Yelp.
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.
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.
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.
Maintain Personal Asset Protection
Don’t think that just forming an LLC, or any other type of business, will save your personal assets in case of a lawsuit or other matter by itself.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your LLC is sued. In business law, this is referred to as piercing your corporate veil.
Two of the simplest steps that will protect your business, and yourself, are to:
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.
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.
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.
What are the ongoing expenses for an organic hygiene products business?
The ongoing expenses include manufacturing, shipping, rent, labor, insurance, and yearly recertification.
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.