Welcome back to my 3-part “Cosmetic Manufacturing Options for Your Skincare Startup” blog series. If you’re just joining me, and haven’t read the first two parts of the series, here they are for your convenience:
- Click HERE to read Part 1: Contract Manufacturing.
- Click HERE to read Part 2: Private Label Skincare.
Those are both great options if you want to outsource your skincare manufacturing. However, if you are a skincare startup, you might find that it’s more feasible for you to handle your own cosmetic manufacturing. Today in Part 3, we’ll cover what you need to know if you want to manufacture your own skincare products.
What does manufacturing your own skincare entail?
It simply means that you–or people who work for you–manufacture your skincare products within your own organization. That might mean making your own skincare products in your kitchen or a dedicated area of your home, or it might mean renting a space that provides you with enough room for formulation, manufacturing, packaging, storage, and fulfillment. There are in between options as well! Manufacturing your own skincare products is something that for some people may seem daunting, but in all reality, can be the best solution for skincare startups, especially if funding and resources are limited.
The pros of manufacturing your own skincare products:
The most important pro is that when you make your own skincare products, you have full control over every step of the process. You choose which ingredients go into the products, how much of each, and where/how they are sourced. Whether your ethos is fair trade, or finding locally produced ingredients, it’s your decision. You can also grow many of your own herbs and use them to make your own herbal infusions, extracts, infused oils, etc. You also get to decide the look and feel of product, scent, packaging, etc.–and you also have the ability to make changes anytime.
You also have far more control over your costs and profit margin, since you choose which ingredients to buy, where to buy your ingredients and packaging, and in what quantity.
Want to make more profit? Lower costs by simplifying your formulations, using less expensive carrier oils (many of the less expensive ones carry similar nutrient profiles as more expensive ones), more stable raw ingredients that don’t go bad quickly, or buying in bulk. If your budget is extremely limited when you’re first starting, you might need to order ingredients in lower quantities which initially costs more. However, once you get to the point where you can buy in bulk quantities from the source (which is often the case with hydrosols, essential oils, carrier oils, butters, etc), your cost sharply decreases. This is also the case with your packaging, shipping supplies, etc.
You have full control over quantities and freshness of your products. You have the flexibility to make what you need, whenever you need as long as you keep your ingredients in supply. That way, you don’t have to worry about things like delayed shipments, or running out of product before your replenishment arrives.
You will never have to worry about your manufacturer or private labeler reformulating, closing, discontinuing your products, raising prices, raising minimums, etc. You get to be in charge of those decisions, and those choices can be based on your business’ sales and customer feedback, rather than someone else’s numbers or demographics.
You own your own formulations, and there is no risk of someone else carrying the exact same formulations as you. Your clients HAVE to get their products from you.
You can also create custom skincare products for your clients. You can offer it as a VIP service, or you can find ways to offer customizations with your own bases. Learn more about custom skincare here.
The cons of manufacturing your own skincare products:
As much as this was a pro, it is also a con: you are responsible every step of the process—ingredient selection, sourcing, type of formula, look and feel of formula, scent, packaging, safety/sanitation, testing, marketing, regulatory, etc. You have to be very organized with your inventory and batch records. If there is a problem with a supplier, then you have to find an alternative to make sure that production can keep running smoothly. If things are going well, then you get to pat yourself on the back! However, when something goes wrong, you are accountable, and have to solve the problem. The buck stops with you!
Ingredient sourcing can be challenging at times. Sometimes certain ingredients are not available due to poor harvest, import issues, or other supply chain issues. If you are ordering from overseas suppliers, shipping can be expensive, and there’s always the risk that your order might get stuck in Customs. Your suppliers can increase their minimum requirements, prices, or shipping at anytime, which can affect your cost (which is also the case with the first two options, but it affects them less since their costs per unit are so much lower). While it’s possible to get most ingredients you want through middleman distributors, there can be a pretty significant jump between their maximum quantity and a direct supplier’s minimum.
You assume all liability. You have to make sure that you have the right insurance policies in place to protect your business, raw materials, physical products, workspace/storage space, etc. You are also responsible for things like voluntary product recalls, should a batch go wrong. You are also responsible for making sure that your labels, product descriptions, and marketing materials are legally compliant. This is also the case when you get your products made elsewhere, but often the lab/house will provide verbiage that you can use. You also need to make sure you have the correct business licenses as a manufacturer, and not just a retailer. Check your local and state laws, and be sure you have a good business lawyer, bookkeeper, and accountant to help you stay compliant and accurate with your taxes.
It can be a lot of work! Time management skills and organization are essential, otherwise it is very easy to get overwhelmed–this is why it’s one of the very first things I teach in Create Your Skincare Pro. Many of my students who make their own skincare products have a “batch day” each week, or each month where all they do in their business that day is make product. Then they handle other aspects of the business on other days. You also might need to hire more help for things like labeling, inventory, and fulfillment.
You have to make sure you have enough space for your work area, storage of both raw ingredients and completed products, packaging, shipping supplies, etc. The spaces where you make your products and where you store your ingredients and products need to comply with the FDA’s Good Manufacturing Practices. Should you ever get inspected by your local or state officials, or the FDA, that is a big part of what they will be looking for.
Who should manufacture their own skincare products?
While this option is ideal for skincare startups, since you can start slowly and upgrade your operation as your business grows, many seasoned and even large skincare businesses prefer to keep their manufacturing in-house. This option is best for people who are detail oriented, organized, keep excellent records, good management and team communication skills, have extremely high standards for quality, and want the flexibility to grow at their own pace.
This option is also ideal for people who don’t want to be at the mercy of someone else’s schedule, who want to be able to have a thorough understanding of what’s in the products and where those ingredients come from, and who want to have options that don’t fit into “the box” of what a private label house or contract lab can offer.
This is the best way to start, in my opinion, because when you start slowly, and grow your brand based on your own sales and direct feedback from your customers, you run less risk of having to discontinue products that don’t sell well. Once you have a suite of products that are proven bestsellers, with repeat customers and rave reviews, you then have the option to keep your manufacturing in-house, or outsource to a contract lab. The reason you can do that though is that you own your formulations. It is much more difficult to start with private label skincare, and then upgrade to contract manufacturing since you don’t own the private label formulations.
Whichever option you choose…
You are still responsible for making sure that your business and marketing are compliant and protected. You will likely need to hire help, whether that’s in the form of contractors or employees, and you also must make sure that your website and e-commerce platform is safe and secure.
Now that you have a better understanding of contract manufacturing, private label, and manufacturing your own skincare products, you can take an honest look at your budget, business model, space, and other available resources, and make the best choice for you.
Do you need help starting or growing your herbal skincare brand?
I can teach you that in Create Your Skincare Pro. You will also learn about ingredient selection, ingredient sourcing; as well as how to set your business up for success, market, and sell your products.
If you would prefer a more private learning experience, or you would like my help on a specific project or formulation, I also offer private formulation and brand consulting. Learn more and book your appointment here.
Do you have questions about cosmetic manufacturing options for your skincare startup?
Go ahead and ask in the comments below, or I invite you to attend a live, virtual Herbal Skincare Tea Time Q&A call on Fridays at 2pm EST. RSVP HERE.