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As a soapmaker, you'll formulate soaps and perhaps other personal cleansing and beauty products according to your own recipes. You will market your offerings along sales channels that might include ecommerce, farmers markets, arts festivals, wholesale placement in spas and boutiques, and even door-to-door sales. You'll explore a range of options to see where you can find a loyal customer base.
Who is this business right for?
You should have an interest in crafting a handmade product, and a knack for discovering scent combinations that your customers will love. You must have strong sales and marketing instincts and a talent for finding and maintaining good customer relationships.
What happens during a typical day at a soap making business?
Your day will basically be split between production, sales and marketing, and logistics. Here’s what a typical business day might involve:
- Making soap and associated products per your sales needs
- Posting to your website and social media, photographing your latest products, meeting new customers, vendors and possible partners or associates, and investigating new ways of promoting your product line
- Packaging and shipping orders, paying vendors, placing raw goods orders and investigating new vendor sources, managing employees (if you have any), paying bills, and otherwise running your small company.
What is the target market?
Most of the market for handmade soaps consists of women, but some handmade soap companies have also found success marketing male-oriented soap scents. You might seek customers who appreciate the quality and luxury of your product, or those who only buy organic or vegan products. Your customers will notice the difference in quality between your soaps and those available on a common store shelf.
How does a soap making business make money?
In most cases all of your income will be derived from the products you make or sell. Here's a web article that goes more into material costs and profit potential.
What is the growth potential for a soap making business?
It’s not unrealistic to be able able to make a bar of soap for a dollar in materials that you sell for five dollars. And you could fairly easily prepare 100 bars of soap a day for sale. Even more if you had more help and a very efficient operation. But will you have customers for all of that production? There’s almost no limit to the potential if you can creatively and effectively market your goods and find a receptive audience.
What are some skills and experiences that will help you build a successful soap making business?
Lots of people make handmade soap today. Your success depends on your ability to formulate products that are unique and discernibly superior to the competition in some ways. This superiority may come in the form of perceived differences in pricing, ingredients, aroma, texture, or simply attractive packaging. You must also be creative in promoting your business and keeping your products top of mind with customers.
What are the costs involved in opening a soap making business?
If you have a kitchen or workspace and a few basic kitchenwares, you’ve got a good start. Soapmaking isn’t an expensive business to get into, but there are some basic investments you’ll need to make.
Ingredients -- $200 or more. Soaps are made from lye and fats or oils. That’s the starting point, but your unique recipe is what will make you stand out. You could use coconut oil, olive oil, almond oil and a whole host of fragrance oils, extracts and natural additives for superior feel, fragrance and lather qualities. You might start with only one or two basic recipes to contain materials costs and simplify production when you start out.
Soapmaking equipment -- $300 or more. The type of soapmaking you undertake will determine your equipment needs. There are four basic types of production -- hot process, cold process, rebatching and melt and pour -- and each process requires different equipment. But whichever way you go, you’ll also probably need soap molds and packaging and shipping materials. You’ll find numerous online vendor sources for your basic ingredients, additives, tools and accessories, including this site.
Marketing tools -- $750 or more. A professional-looking website with attractive product photos is very important to your business. Your web customers can’t feel or smell your products, so they must be able to perceive the high quality in terms of what they see online. That means it’s worth the investment of a graphic designer and web developer who can help you get the most out of your logo and digital presence. Your graphic imagery will be carried through in your packaging and labels to express your passion and commitment to product excellence. Here’s an example of a handsoap website with a professional and inviting look.
Professional services -- $200 or more. Does your state and community allow you to operate this type of business from your home? Hold a brief meeting with a lawyer before you hang out your shingle.
Professional association -- $100 annual membership in the Handcrafted Soap & Cosmetics Guild (HSCG). This organization can provide training, support, and valuable networking opportunities for small-quantity soapmakers.
General liability and product liability insurance -- $265-$375 a year. You’ll also find this through the HSCG.
What are the steps to start a soap making business?
Once you're ready to start your soap making 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 soap making 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 soap making 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. Save 15% when you create a business website with Weebly.
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 a soap making business?
Start your soapmaking as a hobby in your spare time. Experiment with fragrances and textures and give your products to friends and family for honest critiques. This is how you’ll iron out kinks in product quality and production. Even when you’re ready to sell your products, do it on your off hours at first rather than quitting your job and investing everything you have in your new business.
While you’re experimenting with recipes, you can also try out different ways of marketing your product line. See which social media garners the most interest. Rent a booth at a farmers market or festival that’s not too costly or far from home and learn how to communicate one-on-one with prospects and find out which products, product displays, and venues work best.
And finally, look at numerous competitor websites and digital sales channels. Arts and crafts sites such as Etsy are extremely popular with soap sellers -- but is that an advantage? Try to explore sales channels that aren’t quite so competitive so you stand out more.
How to promote & market a soap making business
Look for points of differentiation. For instance, consider making a bar of soap that’s larger than usual or formulated to last longer. Perhaps you could sell a six-pack of smaller-size sampler soaps so your customer can affordably try your entire product line and pick favorites. Discover an infrequently used fragrance or additive for texture that makes your soaps unique. Once you’ve found an idea that works, promote it in your website and on social media.
Also, if you’re exhibiting your soaps at shows, bring some unwrapped examples of your complete product line so customers can hold them, see what they actually look like, feel their textures, and enjoy the varied scents.
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How to keep customers coming back
Remember, you’re selling an aesthetic experience. Make your logo, the look of your labels and packaging, and the name of your product line resonate with customers seeking a modestly priced luxury experience. One advantage is that the more your customers love your offering the quicker they’ll go through it and need more. Make sure you stay in contact with your customers, and that they know how to reach you. Ask all of your customers for email addresses, and get their permission to send out a monthly e-newsletter or catalog. It is important to refrain from irritating anyone with too many salesy emails, but a monthly newsletter can help customers stay up to date with all of the new things you offer. As you grow, you might add a toll-free phone number for orders.
How and when to build a team
You’ll have plenty to do with your business, in terms of production, marketing, even such mundane tasks as loading and unloading merchandise and setting up your booth displays at shows. If your income allows it, start with a part-time employee -- maybe a friend or family member -- and see if your workflow allows more paid help.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a handmade soap business. In addition, many states have various rules regulating the production of cosmetics and other body care items. 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 more 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.
Labor safety requirements
It is important to comply with all Occupational Safety and Health Administration requirements.
Relevant requirements include:
- Employee injury report
- Safety signage
Certificate of Occupancy
Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
- If you plan to lease a location:
- It is generally the landlord’s responsibility to obtain a CO.
- Before leasing, confirm that your landlord has or can obtain a valid CO that is applicable to a soap making business
- After a major renovation, a new CO often needs to be issued. If your place of business will be renovated before opening, it is recommended to include language in your lease agreement stating that lease payments will not commence until a valid CO is issued.
- If you plan to purchase or build a location:
- You will be responsible for obtaining a valid CO from a local government authority.
- Review all building codes and zoning requirements for your business’ location to ensure your soap making business will be in compliance and able to obtain a CO.
Trademark & Copyright Protection
If you are developing a unique product, concept, brand, or design, it is prudent to protect your rights by registering for the appropriate trademarks and copyrights.
The nature of legal requirements in distance education is ever changing, especially in regards to copyright laws. Here is a frequently updated resource, which can help keep you aware of the legal requirements.
How much can you charge customers?
Your products might retail for five or six dollars a bar. This is more than your customers will pay for mass-produced supermarket soaps, but the perceived value of your production is high. Also, you can arrive at other price points by discounting for multiple purchases, selling multiple-bar packages, and expanding your product line. Check the websites of nearby competitors to see what they’re charging and decide how that will affect your pricing. Will you charge more to connote a more premium product line or charge less and make up for less per-unit profit margin with more volume?
What are the ongoing expenses for a soap making business?
Your largest ongoing expenses will be the consumable product ingredients you’ll need for ongoing production. If you’ve priced your offering wisely, your expanding variable costs will be more than offset by an increase in sales.
How much profit can a soap making business make?
There are a few famous soapmakers who started much like you. Consider, for instance, Burt’s Bees. Others in your business keep it part-time, and somewhere between a crafts hobby and a modestly profitable business. As with a lot of home-based businesses, you can go as far as your commitment, creativity, promotional savviness, and hard work take you.
How can you make your business more profitable?
Many soapmakers expand their menu offering to include other kinds of soaps (goat’s milk soap is one exotic example) or complementary products. Candlemaking is a natural extension, especially for soapmakers already using a hot process. Others get into home fragrances, lip balms, hair care products, and even pet products. To consider expanding your own product mix, focus on what else would appeal to your customer base.
Many businesses seek to raise their overall profits by driving down the cost to produce the goods. Issuing larger batches at a time is a cost effective way to maximize your profits.