How to Start a Soap Making Business
The majority of people who start a soap making business began their venture with a hobby. They enjoyed making homemade soap for family and friends.
If you’re ready to get serious about making soap as a business, you’ll have to up your game.
Here’s some business advice – you’ll have to spend focus on the business end when you start selling. Soap makers wish they could spend all their time making soaps but should spend the majority of their time working on ways to sell soap.
Why You Should Consider Starting a Soap Business
Soap making is fun. You can be creative with molds, ingredients, scents and colors.
You can start your soap making business at home.
It’s not expensive to get started making handmade soap.
There are tons of soap formulas which you can tweak.
How Much Does It Cost to Start Your Soap Business?
Many soap makers start small from home, with a minimal product line at a cost of about $1,000. You most likely have some basic equipment needed for a small operation, such as a microwave, blender and mixing kettle. You can save money using equipment you already have.
Soap making can be done two ways – cold process or hot process. With both, the basics are the same – you mix an alkali with fats or oils. Just as it sounds, with the hot process you cook the soap, which makes it easier to add scents and colors. Most soap companies use that process.
You’ll need better equipment to turn out larger batches. Expect to spend from $14,000 to $28,000 starting a soap making business. That number varies depending on whether you can start from home or need to rent/buy space.
Starting a Soap Making Business in 20 Simple Steps
1. Research the Competition
There are many other soap makers already in the business. Before you start your own soap making business, you need to learn who they are, what they make and where they sell.
Also consider the competition you’ll get from the manufacturers making commercial soaps for the big box stores. Acknowledge that people can buy soap very cheaply. How is yours going to be so special that they’ll spend more to get it?
2. Choose a Niche
Choosing your niche and knowing your target market are closely related. It’s important to realize that just because you absolutely love a certain soap you make, doesn’t mean there’s a market ready for you.
Today, small businesses specializing in homemade soap making are focusing on using natural ingredients, which is just what the consumers want. To your natural soaps you can add tweaks in the manufacturing process that make your handcrafted soap unique – such as embossing it, adding specific herbs, mixing in essential oils or coconut oil.
3. Know Your Target Market
Are you going to sell to local store owners, or conduct much of your business in online stores?
Most businesses, not just soap making, carefully consider the demographics for their buyers. To be a successful soap maker, you’ll need to do a mix of both – sell local and via an online store on the web.
4. Name and Brand Your Business
Make sure the name you take isn’t already taken, or very similar to another business that makes homemade soaps.
Also, be careful not to limit yourself as your business grows, because of the name you’ve chosen. For example, “Linda’s Lavender Luxury Bars” doesn’t allow Linda to expand to other scents.
Your logo you design is extremely important. It will most likely be stamped or printed on your shipping materials and packaging. It should be easily recognizable, as a consistent brand with a distinct style and color.
5. Create a Soap Making Business Plan
Every profitable business has a plan with all the features needed:
Mission Statement – Why the business was started.
Executive Summary – Who’s who in management.
Type of Entity – Business Structure
Development of Sales Channels
Membership in Groups – Such as the Handcrafted Soap and Cosmetics Guild.
Management plan for expansion balanced by cash flow
Business plan for expansion by reaching new customers.
6. Look into Small Business Grants
There are several sources for possible grants:
United States Chamber of Commerce
Amazon – Amazon recently launched a program called the Black Business Accelerator for their sellers. There are other programs for those who are marketing handmade crafts.
7. Form a Legal Entity and Register Your Business
Most common for the soap making business is the Limited Liability Company, or LLC. That’s because an LLC will protect your personal assets.
Other choices include a Partnership or Corporation.
8. Open a Business Bank Account
You’ll need a business bank account and credit card separate from your personal bank account and credit card.
9. Look into Licenses and Permits
You’ll need the standard stuff, such as an Employer Identification Number (EIN) in order to file sales tax. You’ll also need a Business Operators Permit. Before you start making soap in your home, you need to check to see if you meet local zoning requirements.
Because you’re selling something people will use on their bodies, you’ll need to pay attention to cosmetics regulations in your state, which will spell out what you need to do in order to meet the standards of the consumer product safety commission.
On the federal level, you’ll need to meet FDA regulations. For example, all the ingredients must be listed on the label.
10. Buy the Necessary Equipment
Before you spend money on small equipment, consider being bolder. You’re in this, right? Save your blender for smoothies, and buy commercial grade equipment:
Large metal bowls
Large metal mixing kettles
Personal gear such as goggles (you’ll be working with an alkali and hot materials), spoons, measuring cups, thermometers, gloves and scales.
11. Find Ingredients Suppliers
Many soap makers say this is one of the most critical and difficult steps. But let’s face it – if you don’t have the supplies, you can’t make the soap.
You’ll need oils, such as fragrance oils/essential oils, and (depending on your recipes) olive oil, coconut oils and/or shea butter.
Soap base – you can choose to buy this pre-made.
Molds – You can buy already for soap use or find other items that could be used as molds for soap.
Scents and colors (pigments)
Packing materials for shipping and/or display
12. Plan Your Accounting System
You’ll need an easy way to track income and expenses. Some suggestions are Quick books, Intuit, or Zoho products.
13. Design Your Packaging
On your website and social media accounts, you’ll need really great descriptions and ever better photos. Unless you’re a good photographer, you may want to hire this service.
Social media marketing may be your best source for developing a loyal customer base, which is directly related to how much profit you make. You don’t want to scrimp on attractive packaging and photos of your finished product line.
14. Get Insurance
One of these types of policies may be necessary for your soap business:
Business Insurance – whether you’re home based or manufacturing from another location.
General Liability Insurance
Product Liability Insurance
Errors and Omissions Insurance
15. Plan Where You Will Sell Your Soap
Many get their start by selling at farmers markets or craft fairs. From there, judicious use of a business card will lead those customers to your social media platforms.
You can also try online marketplaces such as Etsy shop and Amazon Handmade. Read the fine print so that you understand the terms of those agreements. Overall though, selling through Etsy or Amazon opens the door to you contacting thousands of buyers.
You can reach out to brick-and-mortar locations such as stores, Spas, hotels, Inns and more.
16. Create a Website
Your website should be extremely professional with beautiful design, informative product descriptions and brilliant photography.
Helpful tips for creation of an interactive website:
Hire a professional to link your website to search engines – this is called search engine optimization.
Include a space for announcements, such as your plan to sell at an upcoming farmers market or craft fair.
Include a space for customer testimonials.
Sell from your own website.
17. Get Your Taxes in Order
As previously noted, you’ll need an EIN so that you can pay sales tax.
You’ll also need to file business taxes. Most small business owners do this quarterly.
Tax requirements vary by state and can be confusing. It may be best to hire a professional.
18. Hire Staff
You’ll also need your EIN if you hire staff. You may not need to hire staff right away. You may consider hiring a graphic designer, to make sure your products are presented very professionally. It’s not necessary to hire people with soap making experience – you can train them.
19. Make Your Soap
This is the part where you get to have fun. You can use existing soap recipes or tweak them using scents or colors that you prefer.
Remember that handmade soap has a perceived value of being better than other soaps. Make sure that your soap lives up to this ideal.
20. Market Your Business and Expand
Here are four awesome ideas for marketing and expansion:
On your website, create a monthly “soap subscription” that people can purchase for themselves or purchase as a gift.
Use Etsy Soap.
Partner with a school club or charitable entity and supply your soaps (at a discount) as part of a fundraiser.
Diversify – Make a specialty soap for pets, such as dogs and cats. It’s already being done, with great success.
Now You Know How to Start a Soap Business, Get Started Today!
Are you ready to start your own business? Will it be a successful business selling handmade soaps?
Remember that you don’t need much space, or money, to get your start.
This article, “How to Start a Soap Making Business” was first published on Small Business Trends