Soap has all the makings of a promising business: consumers use it every day, it's easy to make at home, and the ingredients are inexpensive. The formulation is flexible, allowing soap makers to get creative and customize their products to make them stand out.
Isabella Lin, founder of online soap company Fizzy Soaps, uses imaginative design and social media marketing to create a recognizable brand. She started selling soaps that resemble milkshakes and bubble tea in her 2018. Her TikTok videos of her soap making process have gained hundreds of thousands of followers. As a result, products are often sold out at Isabela.
Learn how to start your own online soap business, how much it costs to start, and how to market your brand prominently.
How long does it take to start a soap business?
The basic ingredients for homemade soap are inexpensive, so you should be able to launch your first product line for around $1,000. As your business grows, your material and labor costs will also increase. Some of the initial costs associated with a soap manufacturing business are listed below.
- material. Most handmade soaps are a combination of lye and fats or oils. Some soaps contain additional ingredients such as humectants, essential oils, and dyes. The material you choose will affect your initial cost. Premium fats like olive oil and coconut oil are more expensive than mass-produced canola oil.
- Device. The most common methods of making soap at home are hot and cold processes. The hot process requires cooking the soap mixture, while the cold process allows it to harden naturally over time. Both use many of the same tools. To get started, you'll need a soap cutter, a regular or immersion blender, a microwave or slow cooker, an alkaline mixing container, and a soap mold.
- marketing. Even if you're starting small, it's a good idea to budget for the cost of purchasing a domain name and creating a website. Marketing costs vary greatly depending on whether you create your website yourself or work with a designer. You may also consider hiring a photographer to take product photos for your e-commerce store.
- Transportation costs. Shipping costs include at least shipping and shipping materials.
- business insurance. Depending on the type of business you're starting, you may need to purchase different types of business insurance.
How to start a soap business in 9 steps
- Create a business plan
- Decide how to categorize your business
- Differentiate your product
- brand your business
- Procure materials and ingredients
- make soap
- determine the price of soap
- Obtain appropriate licenses and permits
- sell soap
Before you start creating, set aside some time to focus on the financial and practical aspects of your homemade soap business. It's not as fun as soap making, but follow these steps to build a solid foundation for your business.
1. Create a business plan
A successful soap manufacturing business starts with a solid business plan. Take the time to write down your business idea, come up with a name you like, and get the necessary insurance. Calculate material costs to understand how much capital is spent on each bar of soap. This will help you track your profits later.
Consider who will buy your product, how you will differentiate it, and where you will sell it. You can sell your handmade soaps online, in person, or both. In addition to opening an online store, you can also sell your soaps through online marketplaces like Etsy. Opportunities to sell soap directly include applying to set up a stall at a farmers market or contacting local store owners to see if they are interested in carrying your product.
For financing, consider looking into small business loans in your area or looking for small business grants through the Small Business Administration (SBA) or other organizations.
2. Decide how to categorize your business
Choose how to classify your business for tax purposes. Many small businesses choose to form a limited liability company and apply for incorporation. Once you establish your business as a legal entity, you can open a business bank account and apply for a business credit card. Keeping your business income and expenses separate from your personal finances can save you money and time when filing taxes with the Internal Revenue Service (IRS).
3. Differentiate your product
There are also many commercially available soaps. Why do customers choose to buy your product? Try developing an angle that makes your product unique. This may be an element of the soap itself, such as a unique design or unusual ingredients, or it may be a marketing strategy, such as a handwritten love letter on the inside of the package.
Isabella Lin creates unique products, scents, and shapes that help Fiji Soap stand out from competitors such as soap cookies, body butters, and sugar scrubs. Products are categorized by scent, making it easy to find your favorite.
4. Brand your business
Create a recognizable brand that communicates your values. Brand elements include website design, product names, and marketing language. Aim to establish a consistent aesthetic and tone that resonates with your target market.
Packaging is another opportunity to incorporate creativity and design into your products. Eye-catching packaging that matches your brand's aesthetic can attract potential customers and increase the perceived value of your product. For example, a company selling natural soaps might choose to use naturally dyed packaging and handwritten fonts, while a product designed for children might choose bright colors and graphic fonts. I don't know.
5. Raw materials and materials
Compare prices between vendors before purchasing materials. You may save money by buying supplies in bulk or purchasing multiple products from the same vendor.
Consider how often you will need to order or reorder supplies and allow for lead time to make your soap. Suppliers may not always have what you need in stock, so it's a good idea to have a backup supplier on hand. Having materials on hand means you won't be late on orders or miss out on sales due to inventory shortages.
6. Make soap
Choose your favorite soap making process and complete your recipe. Experiment with different fats, fragrance oils, and decorating techniques until you end up with a product you love. Consider how much product you want on hand when you start accepting orders. You don't have to have a year's worth of inventory at a time, but it's a good idea to have some ready-to-ship inventory.
To find out which type of soap is most popular with your customers, consider producing different small batches and seeing how each one sells. Then adjust production based on the best-selling items.
7. Decide on the price of soap
When determining the price of a product, first calculate the cost and time it will take to manufacture the product. Conduct market research to understand your competitors' prices and choose the price that's right for you. Even if the materials are cheap, handmade soaps take time and care to make. Remember to compensate yourself for the effort.
When pricing your soap, don't forget about packaging and shipping costs. You can offer free shipping to customers who meet your purchasing criteria, or you can build shipping into your pricing.
If you sell at a local store, the retailer may ask for a wholesale price that is lower than the retail price. Make sure the wholesale price includes the cost of materials and time so you can make a profit from retail sales.
8. Obtain appropriate licenses and permits
Soap licensing requirements and regulatory agencies vary depending on the intended use. Pure soap is defined as a combination of lye and fatty acids for cleaning purposes and is regulated by the Consumer Product Safety Commission, but does not require a marketing license.
Soap companies that make health and beauty claims are classified as cosmetics or pharmaceuticals and are regulated by the Food and Drug Administration (FDA). The Small Business Administration has resources and business advice to help you understand the regulations and licensing requirements in your area.
This is also a good time to look into the business licenses you need to sell to different states. As an e-commerce business, you may need to obtain a license and charge online sales tax if you sell to out-of-state customers.
9. Promote soap
It's time to tell the world about your beautiful soaps. Many small business owners choose to start marketing through websites, social media accounts, and email lists. For search engine optimization (SEO) purposes, make sure you thoroughly and accurately describe your products on your website. Specifically, it's difficult to rank high in searches for the term “soap,” but it's possible to rank high for “blueberry-scented soap shaped like a tuba.” there is.
Social media marketing is also a valuable tool for small business owners. Creating content about the soap making process for social media is a way to reach potential customers organically. Using social media platforms to increase brand awareness can help your products stand out and build a loyal customer base.
FIzzy Soaps uses a successful organic strategy to reach new customers through TikTok videos. The videos, which have more than 700,000 followers, focus on the soap-making process, giving fans a chance to learn how their favorite products are made.
Fizzy Soaps will also answer questions from viewers and explain the tools they use as part of their production.
Consider what kind of content will attract customers and encourage them to share with their audience.
Frequently asked questions when starting a soap business
Can I sell soap without a label?
If your soap is sold purely as a soap and does not claim any health or beauty benefits, you do not need to provide an ingredient label.
Do I need FDA approval to sell soap?
It depends on the intended use of the product. Products that meet the regulatory definition of soap and are sold purely for cleaning purposes do not require FDA approval. Soaps marketed as having moisturizing or other benefits are classified as cosmetics and are subject to FDA approval.
Is it possible to start a soap business on a small budget?
The basic raw materials for soap are cheap. It is possible to start a soap business on a low budget if you start with a small amount.
Do I need a physical store to sell soap products?
You don't need a physical store to start selling soap products. In addition to opening an e-commerce store and selling on online marketplaces, soap makers can also sell their products at pop-up venues such as farmers' markets and street fairs.
Do I need soap making experience to start a soap business?
If you have a passion for soap, you don't need any professional experience to start a soap making business. Anyone can learn the basics of soap making online and use creative marketing to make their products stand out.
