How to Start a Soap Making Business - Small Business Trends

2022-03-25 09:55:23 By : Ms. Catherine Fang

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.

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.

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?

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.

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.

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.

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

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.

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.

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.

You’ll need a business bank account and credit card separate from your personal bank account and credit card.

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.

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:

Personal gear such as goggles (you’ll be working with an alkali and hot materials), spoons, measuring cups, thermometers, gloves and scales.

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 an easy way to track income and expenses. Some suggestions are Quick books, Intuit, or Zoho products.

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.

One of these types of policies may be necessary for your soap business:

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.

Your website should be extremely professional with beautiful design, informative product descriptions and brilliant photography.

Helpful tips for creation of an interactive website:

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.

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.

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.

Here are four awesome ideas for marketing and expansion:

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.

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