Cosmetic Business Plan: Get started on your Beauty Business

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The cosmetic industry has become an indispensable part of an individual’s lifestyle. It has figuratively taken a whole new turn to beauty lies in the eye of the beholder. Even after a roller coaster ride of 2020, this business has only seen a change in business models, structures, and strategy.

With a whopping expectancy of $716 billion growth by 2025, this industry has star-marked itself in every household around the globe. The beauty industry is gigantic that doesn’t show a trace of slowing growth.

But that is not all that lies beneath. The cosmetic or beauty industry has brought revolutions starting right from home. It has developed a feeling of inclusivity of every gender, class, colour and breaks the barriers of the lasting stigma of society.

But to know about products and brands is not just enough. The understanding of industry dynamics is equally imperative if you wish to start a profitable cosmetic business anytime in the future.

Cosmetic Market in India

Demographic growth, continuously improving economic and social conditions, and developments in India’s manufacturing and digital sectors have made India an attractive destination for startup investors. Improving the quality of life in India immediately increases the level of self-care, with an estimated growth rate of [9.7% from 2018 to 2023], before the outbreak of the pandemic.

Bulk cosmetics is India’s strategic industry sector The cosmetic industry in India has a market value of over $11 billion, followed by hair care and personal care products with a stable market value of over [$3 billion]. The product has also been shown to be most resilient to pandemic outbreaks and financial hardship caused by state restrictions and months of lockdown. Meanwhile, the categories most relevant to socializing and living outside the home – cosmetics, perfumes, and products that prevent sun exposure – suffered the most.

Cosmetics is the industry best adapted to the current social conditions in the country. In the first month of 2020, the sales declined. Manufacturers started to focus on new consumer habits that were ease of absorption and durability. Offering durable, quick-drying, and transfer-free products could open up opportunities for companies selling colour cosmetics, especially lip and face makeup brands. These categories have benefited significantly this year as transparent masks become more prevalent.

Creating a Business Plan for Cosmetic Business

For many, indulging in cosmetics products is a luxury and a privilege, not a right. Hence, the profit margin for such products can be much higher than typical everyday essentials as people are willing to pay more.

Despite the growing demand for cosmetics, you need a plan to expand your footprint and take full advantage of serious business opportunities.

Think of the business plan as a strategic document that defines where you should focus your resources, time, and energy. In general, the program gives you a clear idea of the game and the goals you want to achieve.

This tool will come in handy when you need to make crucial business decisions down the road. For most serious entrepreneurs, a business plan helps make day-to-day business easy.

Executive Summary

Having a clear vision of how to position your brand in the market is of paramount importance. Further, having a clear, thorough, and well-researched business plan makes a huge difference to how you plan on making an entry into this industry. Business plans can seem simple but include complex methodology to excel.

A business plan should head to tow have everything in it. Right from the market analysis to weigh the pros and cons to the success stories to learn. If you plan to start a business in any sector, a detailed plan is what you require before anything else.

Market Analysis

Over the past five years, the demand for cosmetics has increased by over 60%. The anticipated growth in the cosmetic market attributes to the growing income, which leads to the increase in purchasing demands of the consumer.

The emergence of online retail and the inclination of youth towards cosmetics is a driving factor for increased demand. Alongside, a rise in consumers’ awareness and preference about advanced skincare products that can help them enhance, nourish and replenish their skin. It tends to raise demand in the cosmetic market.

Customers are becoming more aware are choosing sustainable, organic, and nature-friendly products.

Some of the key trends that can be seen this year are:

  • Blue light sunscreen: Screen time does not only affect an individual’s eyes but also their skin. Applying a blue light sunscreen will not only help you outdoors but help you indoors from the screens. Companies are taking ahead this initiative and formulating sunscreens.
  • Skincare over makeup: Skincare will supposedly be on people’s radar. Over the pandemic, women especially have been gaining interest in skincare and applying minimal makeup. Brands have also been gauging more at skincare.
  • Sustainability: Consumers are becoming sustainably conscious and want their brands to do the same. They are looking for using products that can be reusable and refillable. It is to make companies aware of the overconsumption practices and on a large scale enable them to reduce it through sustainable packaging.
  • Personalization: Beauty personalization has been set to gain momentum as all the consumers are highly educated. They are well aware of what works for their skin and what does not. This changing need of consumers for more custom and specific formulas and personalization in the beauty industry will continue to increase in 2022.

Mission and Vision

Define your mission and vision before branding. Your brand mission statement is what your customers want to achieve through your beauty brand. Your vision is the way to your big goals. Your mission determines why your beauty brand exists.

This is an exercise at the beginning of writing a beauty product business plan. You have to figure out what you’re trying to do with your beauty brand and why you’re building it.

You should see yourself and your customers as having a mission. What does your brand do, for whom, how, and why? Your vision is linked to your mission, but also to your big goals and dreams. The brand’s vision is not to produce organic formulations to sell to anyone. Instead, your brand vision is about your big dreams and how you want to make a difference with your beauty brand.

Your beauty brand’s uniqueness is defined by your vision. Look into the future and think about what you want to achieve and define what you want to offer your customers.

Strategy for Manufacturing Cosmetic Products

If you are thinking to be in business for the long run, then manufacturing products in-house is the way to go rather than drop shipping or playing the middleman. For this, you need a tactical manufacturing strategy.

The first option is to set up a lab and manufacture products in person. The next option would be to hire/contract a manufacturer to work on making products on your behalf. It is, however, essential to have a thorough model to ensure the smooth functioning of a business.

Both the options have their pros and cons. One might be easy to manage with quality assurance but could be financially challenging as well. On the other hand, hiring a manufacturer can be cheaper to get started if you have lower capital to invest.

It is essential to plan on vital aspects like logistics, finances, and contractual obligations and make sure it works well for your business and is on par with the vision and mission.

Retail Strategy

Retail is the recommended business model for many entrepreneurs to choose when selling beauty products through their stores. The separate flagship store only sells beauty products from certain brands, such as all  Lakme or Chambor products. Because beauty brands advertise themselves extensively and most brands are well-known, this type of business model of selling a specific brand’s products helps to build a loyal and loyal customer base and build the identity of the business. But what this business lacks is a choice that customers may want to pay attention to.

Again, nothing is more important than developing a retail strategy that fits your product niche. At this stage, you know your target audience, your competitors, and, most importantly, the scope of your chosen product. With this in mind, deciding where your makeup will fit naturally shouldn’t be an obstacle. A solid retail strategy is essential to the success of your cosmetics business plan.

Competitor Analysis

Cosmetics is a highly consumer-related item. Therefore, a new company must research the market environment with a competitive spirit before entering the market.

There are no second thoughts about big bulls in the cosmetic industry. It is always essential to understand the SWOT of your competitors from the industry.

Strengths, Weaknesses, Opportunities, and Threats are prominent elements that can help you determine the steps you need to take ahead for a successful business.

The cosmetics industry has a rapid growth rate. Demographics of young minds for this industry make it promising. The cherry on the cake is the advanced tech adopted to create strong brands.

What can pose a threat to the industry is the significant environmental impact it creates, uncertain regulation and political cinemas, and the emergence of various global brands in the market.

Before entering the market, it is essential to understand our competitors in the industry. Hindustan Unilever Ltd is one of the largest players in the market. Along with P&G Home products Pvt Ltd, Dabur India Limited, Lotus Herbals Pvt Ltd, L’oreal India Pvt Ltd, and many more.

Product and Services Offerings

How do you decide which product or service to offer to your customers? This is a very interesting part of the plan. While creating a business plan, you make a business model and your service and product offerings completely depend on that. You need to put down what you are best at, basically, get a unique selling point that will grab your customers’ attention.

Men have become a huge part of this industry which you should keep in your mind while putting your business plan. There are numerous products in the market, as men are becoming more rugged, the opportunity to target your audience is ever higher.

Don’t be afraid to research, first make sure there are markets you want to sell with leads. You can’t sell all items, just place an order and you’ll go bankrupt. Many large companies have minimum order quantities, so when you order an item, you expect to be able to move all parts of the order.


One of the biggest challenges while starting a business is choosing a location. It is one aspect that entrepreneurs take with a pinch of salt. It is often a challenging aspect for a startup.

Location is often a neglected aspect, but others believe that even if a product is marvelous, it will not help if your location is at the wrong place.

The factors that you need to keep in mind while selecting a location for your business are:

  • Demographics – Demographics plays a crucial role in the kind of product that you offer your customers and their status.
  • Style of operation or psychographic – Whether business operation might be formal and elegant or casual and kickback.
  • Proximity to market and foot traffic – It is necessary to ensure that your store is not tucked away in a corner of this array of shops. Online businesses also need to have high-traffic areas to function.
  • Accessibility and Infrastructure – The business must be easily accessible to you, customers, and even suppliers. Also, setting up a business on a busy street would do no good. So ensure to set it up a km away from it.
  • Competition – Apart from your customers, ensuring where your competitor’s business lies is also essential. A nearby competitor shop will only make the marketing job tougher, so choose a location wisely.

Staffing Plan

Having a trained workforce is essential today. An organized cosmetic business needs a skilled team of skilled employees who know the protocol at their fingertips. When a business is successful, it is the number of customers that strengthens it. By employing a team of trained staff, especially in the beauty industry, you can be confident that the quality of service will be maintained. For regular customers, not only the atmosphere but also the quality of service is important.

As mentioned earlier, in order for the entire team to be dedicated and professional, an effective training program must properly nurture raw talent. Entrepreneurs often think that hiring an experienced professional will solve the problem. Sometimes it can be difficult to train an experienced person and prepare him for a new company’s protocol. Slight differences in gears can damage the watch’s movement. That’s why it’s essential to develop the perfect workout to shape the players on your team.

Go Where Your Consumers Are

Beauty e-commerce has changed the phase of doing business in recent times. They are striving towards the path of digital transformation like every other sector. India’s online beauty and personal care expect a whopping reach of $4.4 billion by 2025.

Digital transformation is driving people in the world today. People are heading towards shopping online, comfortably in their seats. How different can this make a brand in its competitive space? The way forward for a beauty e-commerce business would require planning and strategizing. Websites must be user-friendly, memorable, and attractive to the eyes. It should be comfortable and easy for a user to navigate through the website. Using machine learning and Artificial intelligence for development can help proceed with the automation.

Setting up an online business isn’t just enough; it also needs to cater to the needs of your target audience. And how different can it be made in comparison to others?

Pointers that need to be taken into consideration while building an online presence are

  • Personalization
  • Online Beauty Community
  • Video Tutorials, Challenges
  • Peer reviews
  • Smooth and Smart shopping experience
  • Alerts, and much more

Financial Analysis

If your goal is to start a cosmetics business empire, it may not be necessary to have a million dollars in capital. However, having the tools to keep your business going is as important as having a solid cosmetics business plan. Assuming you already have capital, the next step is to analyze the financial impact of various key actions, including manufacturing and retail strategies. The idea is to manage your money and keep things going broader and smoother.

There are numerous ways to fund a company.

  • First, you can choose a safer option and rely on a loan from a friend or family member.
  • Second, you can rely on financial institutions like banks for the coveted resources.
  • Third, you can choose to involve investors and split your profits.

The most important thing is to have a financial plan that keeps your business doors open without significantly impacting your bottom line.

101: Range of products in the cosmetic industry

To a subtle mention, the Indian cosmetic product market is to grow at a CAGR of 4.23% during a forecast period of 2020-2025. But what people fail to understand is the range of products that contribute to such a development.

The range of products is diversified and varies in its use and structure. For better understanding, given below are the product categories that can consist of your cosmetic journey.

  • Skincare: Skincare, in simple terms, is the practice of maintaining and enhancing an individual’s physical appearance with varied skincare products like a cleanser, moisturizer, serum, sunscreen, and more. They surprisingly are set [to contribute around $5,033.7 million by the year 2027 with a registered CAGE of 9.5% from 2021-20217]
  • Haircare: Hair is an emotionally driven topic for consumers in the market. It isn’t just essential for our appearance, but our overall hygiene. It contributes to healthy hair that boosts confidence. Thus, brands like MamaEarth, Khadi, Biotique, and more provide the best available hair care products.
  • Makeup: This category goes without a second mention of it. Makeup consists of various products like foundations, creams, lipsticks, eyeliners, and much more that are used and contribute to a better appearance of an individual. It is a confidence boost, and no wonder; it is India’s billion-dollar market. Nykaa is India’s leading e-commerce cosmetic brand, has earned a revenue of Rs. 18.5 billion in the financial year ending of 2020
  • Bodycare and perfumes: Often a neglected part that carries greater importance. As important as physical appearance is, taking care of your body and smelling good is essential. How one does it; depends wholly on their choice. But they have signified benefits like tension relief, flushing off toxins, healthy and glowing skin, enhancing mood, and boosting confidence

Cosmetics Entrepreneur’s Success Stories

Sugar Cosmetics

Sugar cosmetics was started in 2012 by two IIM alumni, Vineeta Singh and Kaushik Mukherjee. At a time with humungous players dominating the industry. Sugar took its birth. It has shown exponential growth over the years and has become a key player in the cosmetic industry. They started as a D2C brand (Direct to Consumer) and quickly ventured into offline trade. They have over 2500+ outlets in around 130 cities as of today. The company hit by the pandemic recovered and created a stir through its social media. Their social media following stands at about 1.9M followers. Sugar cosmetics are different from their competitors; in the terms of, affordability, newness, and colour pigmentation the products and this is what makes them stand out from the rest.

Kay Beauty

One of the leading ladies of Bollywood and her stint in entrepreneurship has garnered a lot of recognition and appreciation. Katrina Kaif started her beauty brand Kay Beauty in a tie-up with Nykaa in 2019.

She has been closely working with Falguni Nayar’s omnichannel since the beginning. The business is termed a ‘passion project’ by Kaif is also a reflection of herself. The products are available in all Nykaa stores entailing 50+ outlets across India and the online app.

Juicy Chemistry

Juicy Chemistry was founded in 2014 and is a Coimbatore-based brand that believes in nature’s goodness in skincare and body care products. They believe that every question of the skin lies in the answer of nature. It was born out of Pritish and Megha Asher’s diligent ability to question everything about a beauty brand.

They have made their products 100% organic and have gained customers from around 22 countries. These products do not only benefit humans but also plants.


A detailed guide covering the basics of a cosmetic business plan. We hope our advice will help you develop or improve your current strategy.

There are three important things to remember while strategizing. First, this is not a standard guide suitable for all businesses. Just because you’ve written a business plan and you don’t get the results you expect doesn’t mean you lose everything. Make an individual plan. Second, mistakes are an essential part of growing as an entrepreneur. It helps to identify areas for improvement. Third, it’s always a good idea to always seek professional help from experts in your field, especially when your business is starting to thrive.

This post is also available in: English



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