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How to run your own handmade soap business
Have you ever thought of turning your soapmaking hobby into a business run from the comfort of your own home? You don't need premises, you can work hours to suit your family and lifestyle, you work at your own pace.
Before entering into the world of self-employment, you need to ask yourself a few simple questions:
- Are you motivated?
- Are you dedicated?
- Are you willing to put in the hours?
If you are working at the moment, it may be wise to work on your soapmaking business in your spare time until it is established. To leave behind a paid job with a regular wage when you first set up would not be my choice. There are costs involved in setting up any small business at the start, therefore, my suggestion would be to carry on working to enable you to cover your initial costs and then you can quit your job when your business has started to bring you in a profit.
Steps to setting up your small business
Some business owners are naturals when it comes to sales and marketing, but it can be quite daunting when starting up on your own. Running your own handmade soap business takes time and organisation, whether using traditional or melt and pour methods. These are my tips for setting up your own soapy business.
- Organisation is the key to operating a small business. You need to be able to prioritise in order to get tasks done in time. Keeping paperwork, orders, and invoices filed correctly is so important to keep everything ticking over.
- Keep a check on the finances. Every small business has to incur costs at the beginning to buy stock etc, but when you start selling your soaps, you need to make a profit in order to succeed. Always plan ahead and work within your budget, and keep monthly profit and loss accounts. You don't need to be an accountant, it only involves simple bookkeping. (There are several PC based applications to help you achieve this.)
- Open a separate bank account for your business. This will enable you to keep an eye on how your soap business is doing. It will also make it a lot easier when completing your accounts.
- Research your market - find out who and where you will sell your product to. It may be that you want to start small at markets and fairs, home parties, handmade internet stores where you can set up your shop, your own website. Start small and think big, but do your research carefully.
- Pricing your soap - take into account the price of your soap, ingredients and time taken to make each bar. A simple way to keep your prices realistic is to add the cost of all your ingredients and multiply it by 3.
- Find out if there would be any grants or funding available to you. You should try at your local Government Small Business Funding, or check out your local Small Business Gateway or Start up Schemes.
- Suppliers - check out all the local suppliers to ensure that you are getting the best value for your money. Buying items in bulk usually saves money in the long term. Check the delivery costings also as there are some good deals around with various suppliers.
- Start up Costs - Ensure that you plan your initial outlay. There are several factors to take into account before you can simply embark on business:
- Initial soap making supplies
- Public Liability Insurance
- Soapmaking Licence (there are laws pertaining to each country regarding the selling of cosmetic products for skin, so be sure to conform to these laws and obtain the relevant licence.)
- Rental payments for stalls.
- Initial small cash float.
Think up a catchy company name and logo. Once you have thought of one, register it with Companies House at www.companieshouse.gov.uk. This is the official UK government site for setting up company names. Here you can register the company and choose a domain name, even if you don't intend having your own website at this time, the name can be taken at this stage for a relatively small amount of money.
Once you have your company name, it would be worthwhile setting up an email address with a similar name to the company name.
When your business is ready to set up, you will have to inform the Inland Revenue for tax purposes. There is lots of useful information and advice on small businesses and taxation on the UK government website www.hmrc.gov.uk/startingup
Without a clear plan and long term objectives, this could mean the difference between success and failure. If you have never written a business plan, there is no need to worry as there is plenty of help available on the net. A business plan is easier when split into 3 sections:
- Where you are at the moment.
- Where you intend to be.
- How you will get there.
In the first section, you should state the history of your business, your premises used (home), your product and the market you are aiming it at. You also need to state who your customers are, your competition and the equipment. Explain in more detail and expand on these points.
The second section should cover your objectives, goals and any funding that will be required and what it will be used for. Again you will need to go into more detail and explain what your aims are and mention the capital that you are putting up yourself.
The third part of your business plan should cover how you will reach your goal, and in this section you should write about how you will market and advertise your business. Include your projections for profit and loss to show how you will reach your target.
Presentation is crucial for business plans and after all the effort you will have put in, it should look professional. Ensure that you use good quality white paper, and type it up rather than having it written. By putting your plan in a folder, will make it look good and keep it in perfect condition.
Have a friend or family member look over your plan, as they could pick up on an error which you may have missed.
How to identify your market
One fact is that everyone uses soap, so it is a product that there is a demand for. When starting out there are many possibilities as to how and where to sell your soaps.
- You may want to start off by selling to family and friends, asking them for their opinion and collecting important feedback.
- Organise a home party where you can sell your soaps at a hosts house.
- Market fairs and fetes are a great way of selling your products. This usually involves paying a rental for a table and you sell your soaps, retaining all of the cash. Check out the website for handmade fairs and craft events coming up in your local area.
- Internet Sites selling handmade items is another option. This involves setting up your own shop on a site(s) and selling to customers. There is usually a fee to pay on each sold item, usually in the region of 3% of the purchase price. The shop banner and profile is designed by you and the site manages the shop, advising you when a sale has been made. It is a great way of selling if you don't want the hassle of setting up your own website straight away. Some internet sites that sell handmade goods are:
Etsy - www.etsy.com
Folksy - www.folksy.com
Misi - www.misi.co.uk
My Own Creation - www.myowncreation.co.uk
ArtFire - www.artfire.com
Ebay - www.ebay.co.uk or www.ebay.com
These are just a small selection of sites where you can sell your products, check out the internet for a full list of internet shops.
Advertising is about getting your company recognised in the market place. Some online companies like Vistaprint can make you up business cards for the price of the postage and packaging. If you are creative, you can make your own business cards to put in with your soaps.
Think about making up some flyers to put in with your product, and put these out in your local area, e.g. Library, community centre, local shops and gift boutiques. If you are planning to do farmers markets, fairs or fetes, it may be an idea to put a leaflet or flyer with your product. Your flyer should be informative, if you use only local or organic products, say so on the leaflet. It's all about awareness and letting people know why your product is better than the rest.
Taking out an ad in the local newspapers may work to your advantage and get you noticed.
Check out your competition.
Being in business for yourself can be quite daunting without the right tools. Knowing your competition is key to being able to sell your own soap products successfully. Research the types of soaps your competitors are selling, how their pricing structure is set and what makes their best sellers popular. Research as much as you can and keep your own products up to date by offering different scents and new products regularly.
Be the best you can be
Once you have had some good feedback and regular sales, you may feel that you would like to branch out. One way of achieving this is to approach some shops and speak to the owners about the possibility of selling a range of your soaps. It is best to approach retailers by telephone and make an appointment to see them, this will ensure that you will be given the opportunity to take some samples along and give you both the opportunity to discuss plans and costings.
Start small and perhaps contact some gift shops, boutiques and garden centres. Your soaps will have to be of the highest standard, competitively priced and attractively packaged. The product that you are supplying will need to stand out from the crowd in order to sell.
What else goes with soap?
Once you have experimented with your soaps and come up with a range of top quality scented soaps, you may want to think about ways to optimise your earnings by having a variety of goods on sale rather than just bars of soap.
You could make cute little soaps in various colours and shapes to sell in packs as favours e.g.
- little ducks, teddies etc for baby showers
- bells or hearts for wedding showers
- flowers, cupcakes, stars etc for birthday party favours
Perhaps sell little gift baskets containing a selection of your soaps with a flannel, candle, small towel and sponge. They could be themed for babies, pamper sessions, valentines - the possibilities are endless.