How to Start a Lip Gloss Business

Lip gloss has been popular since its invention in 1930 by Max Factor for the movie industry. Originally made just to create a shine on the lips, new types of lip gloss have emerged over the years with color, flavors, and even ingredients for plumping the lips. If you are interested in starting your own business and are passionate about cosmetics, a lip gloss business can be started with very little money and has great potential for healthy profits.

Starting a business is never easy. It takes work and time to make your business shine. The first step is to educate yourself about what is involved so that you know what you’re getting into. This step-by-step guide will help to prepare you to begin your entrepreneurial journey.

Step 1: Decide if the Business Is Right for You

Pros and cons

No business is perfect. A lip gloss business has pros and cons that you need to weigh to decide if it’s the right path for you.

Lip gloss industry trends

At the end of 2020, Google searches for non-sticky lip gloss were up 90%, according to InStyle magazine.((https://www.instyle.com/beauty/makeup/lipstick-trends-2021)) 

Industry size and growth

• Industry size and past growth – Research firm Statista values the US lips cosmetics market, which includes lip gloss, at more than $3 billion.((https://www.statista.com/outlook/cmo/beauty-personal-care/cosmetics/lips/united-states)) 
• Growth forecast – From 2020 to 2027, the global lip gloss market is expected to grow 5% per year to reach $4.5 billion, according to global research company Market Research Future.((https://www.marketresearchfuture.com/reports/lip-gloss-market-10385)) 

Trends and challenges

Trends in the lip gloss industry include:

• Rising demand for organic or natural ingredients in lip gloss
• Product trends include super shine lip glosses, as well as non-sticky lip gloss
• In the new age of masks, the trend has become lip stains that lip gloss can be applied over when masks come off.

Challenges in the lip gloss industry are:

• Awareness of toxic substances in lip gloss is hindering industry growth
• Proliferation of counterfeit products

Consumer spending

• Average consumer spend – US women spend between $26 and $50 each on lipstick and lip gloss in a year.((https://www.statista.com/statistics/733592/women-s-yearly-lipstick-and-lip-gloss-expenditure-in-the-us/))
• Potential customer base – More than 120 million US women used lipstick and lip gloss in 2020. The number is predicted to increase to almost 125 million in 2024.((https://www.statista.com/statistics/286746/usage-of-lipstick-and-lip-gloss-in-the-us-trend/))
• Average prices – A lip gloss is sold for at least $5.

What kind of people work in the lip gloss market?

A beauty advisor can advise customers on what kind of lip gloss to buy.

• Gender – 93% of beauty advisors are female, while 7% are male.((https://www.zippia.com/beauty-advisor-jobs/demographics/#gender-statistics))
• Average level of education – 34% of beauty advisors hold a bachelor’s degree and 32% have a high school diploma.((https://www.zippia.com/beauty-advisor-jobs/demographics/#degree-level-types))
• Average age – The average age of an employed beauty advisor is 41 years old.((https://www.zippia.com/beauty-advisor-jobs/demographics/#age-statistics))

How much does it cost to start a lip gloss business?

Startup costs range from around $800 to almost $8,000 with an average of just over $4,000. On the high end, the largest expense is website development, but you can start by selling your lip gloss on online marketplaces such as Amazon or Etsy. Your initial supplies to make lip gloss vary based on how large or small you want to begin.

You’ll need a handful of different items to successfully launch your lip gloss business. Here’s a list to help you get started:

• Lip gloss base and other ingredients
• Tubes
• Labels

How much can you earn from a lip gloss business?

The cost to make a lip gloss is estimated at $2.50, while the same lip gloss can be sold at a retail price of $5, resulting in a 50% profit margin. High-end lip glosses can sell for much more, up to $40 or more. For larger cosmetic companies, profit margins are around 80%. 

In the early stages, if you sell 5,000 units in a year at $5 each, you will bring in $25,000 in annual revenue. This equates to $12,500 in profit (50% margin).

As your brand gains recognition, sales could climb to 50,000 units a year. At this stage, you would rent a commercial space and hire staff, reducing your profit margin to around 30%, but you also may be able to command a higher price. If you sell 50,000 units at $10 per unit, you will bring in $500,000 in revenue, and $150,000 in profit.

What barriers to entry are there?

There are very few barriers to entry for a lip gloss business. Your biggest challenges will be:

• Competition – You will have to be creative and have unique products to differentiate yourself from your competitors.
• Manufacturing – If you want to go the manufacturing route, you will have to locate a manufacturer.
• FDA regulations – If you make your own lip gloss, you will need to make sure that your ingredients comply with FDA regulations.

Related Business Ideas

If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.

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Step 2: Hone Your Idea

Now that you know what’s involved in starting a lip gloss business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Why? Identify an opportunity

Examine the lip gloss market to determine what other companies are selling. Do you see anything that is missing or rare? Look for new trends where there may be an opportunity. It could be a certain texture or look, such as glitter, or creative colors. 

You might consider targeting a niche market by specializing in a certain aspect of your industry.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

Determine what products you want to offer in your lip gloss line. Create a list of colors or types of lip gloss. You may do some experimentation making your glosses and come up with 10 colors or other variations that you want to offer.

How much should you charge for lip gloss?

The average price of lip gloss is around $5 but prices can be much higher. In the beginning, you will probably need to be at the lower end of the price range, but you may be able to increase your prices later as you gain brand recognition. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

You need to know who your market is, so that you know where to find those people. For example, you may decide to offer glittery lip gloss which will probably attract a younger market, and you can most likely find them on social media sites like Instagram and TikTok.

Where? Choose your business premises

In the early stages, you may want to operate your business from home to keep expenses relatively low. But as your business grows and operations intensify, you will likely need to hire workers for various roles. You may need to rent out a production facility to manufacture your products. If you have a manufacturer, you may still need an office for your staff to work in. Find commercial space to rent in your area on Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “lip gloss” or “lip shine”, boosts SEO
• Choose a name that allows for expansion: “Jim’s Cosmetics” over “Jim’s Lip Gloss”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: Brief overview of the entire business plan; should be written after the plan is complete.
• Business Overview: Overview of the company, vision, mission, ownership, and corporate goals.
• Product and Services: Describe your shop’s services in detail.
• Market Analysis: Assess market trends such as variations in demand and prospects for growth, and do a SWOT analysis.
• Competitive Analysis: Analyze main competitors, assess their strengths and weaknesses, and create a list of the advantages of your services.
• Sales and Marketing: Examine your companies’ unique selling propositions (USPs) and develop sales, marketing, and promotional strategies.
• Management Team: Overview of management team, detailing their roles and professional background, along with a corporate hierarchy.
• Operations Plan: Your company’s operational plan includes procurement, office location, key assets and equipment, and other logistical details.
• Financial Plan: Three years of financial planning, including startup costs, break-even analysis, profit and loss estimates, cash flow, and balance sheet.
• Appendix: Include any additional financial or business-related documents.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist at Fiverr to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to lip gloss. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your lip gloss will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using ZenBusiness’s online LLC formation service. They will check that your business name is available before filing, submit your Articles of Organization, and answer any questions you might have. 

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund an entrepreneur’s vision.
• Personal: Self-fund your business via your savings, the sale of property or other assets, and support from family and friends.

Bank and SBA loans are probably the best options, other than friends and family, for funding a lip gloss business. You might also try crowdfunding if you have an innovative concept. 

Step 8: Apply for Licenses/Permits

Starting a lip gloss business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as, health license and permit from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.

If you are making your own lip gloss, you will need to check FDA regulations to make sure that your ingredients are in compliance.

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you will need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your lip gloss business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to consider your options to choose the best plan that works for you. Once you choose your bank, you’ll need to bring your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and any other legal documentation that proves your business is registered.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet is vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks. 

You may want to use industry-specific software such as Ecwid, BrandCrowd, and visualretailplus to manage point-of-sale system and inventory, sell on online platforms, and more.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Marketing

Some of your business will come from the casual passerby or online visitors, but you should still invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness. 

Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products: 

• Facebook: Great platform for paid advertising, allows you to target specific demographics, like men under age 50 in the Cleveland area. 
• Instagram: Same benefits as Facebook but with different target audiences.
• Website: SEO will help your website appear closer to the top in relevant search results, a crucial element for increasing sales. Make sure that you optimize calls to action on your website. Experiment with text, color, size, and position of calls to action such as “Buy Now”. This can sharply increase purchases.
• Google and Yelp: For businesses that rely on local clientele, getting listed on Yelp and Google My Business can be crucial to generating awareness and customers.

Kickstart Marketing

Take advantage of your website, social media presence, and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:

• Competitions and giveaways – Generate interest by offering prizes for customers who complete a certain action, such as 10% off for every purchase of 3 lip gloss products.
• Signage – Put up eye-catching signage at your store and website. 
• Flyering – Distribute flyers in your neighborhood and at industry events. 
• In-Person Sales – Offer your lip gloss at local markets and trade shows. 
• Post a video – Post a video about your product. Use humor and maybe it will go viral!
• Limited edition – Offer a one-time version of your lip gloss.
• Start a blog – Start a blog and post regularly. Change up your content and share it on multiple sites.
• Paid ads on social media – Choose sites that will reach your target market and do targeted ads.
• Influencer marketing – Pay people with large social media followings to promote your lip gloss. You can find micro-influencers with smaller followings and lower rates.
• Testimonials – Share customer testimonials about how they love your lip gloss.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism. They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.

You can create your own website using services like WordPress, Webflow, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your product meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your lip gloss business could be:

• Colors you can’t find anywhere else
• Lip gloss so smooth you won’t know it’s there
• Stand out from the crowd with super shine

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a lip gloss business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in cosmetics for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in lip gloss. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

If you’re starting out small from a home-based office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a lip gloss business would include:

• Production Assistants – Make and package lip gloss
• Office Manager – Scheduling, managing staff, ordering supplies
• Marketing Lead – Social media marketing, SEO, content creation, and any other marketing efforts for the company

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn or Facebook. You can also use free classified sites like Jobs and AngelList. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Start Making Money!

Starting a lip gloss business can be a great way to have fun and make a healthy profit, and you don’t need a fortune to get started. You can work from home when you start and use your creative talents to make a great product and market it. Lip gloss has a large market and is a growing industry, and a small lip gloss business can potentially become a large company. 

You have all the information that you need at your fingertips now, so get started on your journey to building a successful lip gloss business!