Posted: Wed 1st Jul 2020
Formula Botanica CEO Lorraine Dallmeier joined Enterprise Nation founder Emma Jones to talk about what it takes to build a successful beauty and wellbeing business.
Formula Botanica is an accredited online school that specialises in organic skincare, haircare and beauty. Its popularity has soared during lockdown and it's due to enrol its 10,000th student next week.
We've included some of Lorraine's best advice below, but it's worth watching the full Lunch and Learn video if you're interested in creating your own beauty brand.
What are your basic tips for starting a beauty business?
The first step is to think about the type of business you're trying to create. Lorraine works with thousands of indie businesses with different ambitions - some want global domination and some want to sell at the local market. Defining what success means to you will help you to understand the experience and requirements of your business.
Lorraine recommends thinking about your brand at an early stage too. Most beauty businesses will focus on the formulations first and brand second, but she advises taking a different approach.
"It's easy to create and then think about who you're going to sell to. But you need to think about where you're trying to go and who you want to target. That way, you won't end up trying to retrofit your products that you love into a brand that doesn't quite work with it," she said.
How much does it cost to start a beauty business?
The cost of starting up can vary hugely. Again, it depends on the type of business you want to create and how quickly you want to launch.
"If you're going for global domination, you can spend millions. If you're selling at a market, you can probably use your own savings. Virtually everyone says 'I want to launch tomorrow', but if you're in a rush then it's going to cost a lot of money," Lorraine explained.
Think about how many formulations you want to start with. Launching with a full makeup range or products that cater to different hair and skin types will be costly; everything will need to be tested and go through safety assessments.
It's also important to think about what you might need to outsource. Lorraine meets a lot of indie brands that only want to sell online, but most don't realise that there's a digital skill set that will need to be outsourced.
What are some key mistakes to avoid?
Lorraine believes that there are four common mistakes beauty founders make.
1. People design formulations for themselves
"Everyone thinks it's easy to create a lip balm and sell it. But you really have to think about who you're targeting and how you'll help them. You're missing the step of thinking 'is this something that the market wants to buy?' You need to formulate for a range of customers, not just yourself," she said.
2. They don't ask for feedback
It's natural for family and friends to test early products, but it's vital to organise tester panels too. If you want your product to be the best it can be, you need to be prepared for brutally honest feedback.
3. Branding is done in-house
Beauty vendors often do branding and print labels in house, but this doesn't result in the polished products that retailers want to see.
"It's worth investing in branding. Your products will attract more attention if they're beautifully branded and designed. Unless you're a graphic designer, think about outsourcing it."
4. They focus solely on online sales
"A lot of beauty brands think they should only sell online because they'll get higher margins. But retailers do have a role to play. They will get your product in front of an audience that wouldn't have heard of you otherwise," Lorraine said.
Do customers engage more with brands that express opinions?
Sharing opinions and showing your personality online can help to draw customers in.
"We hit 60k followers on Instagram yesterday. The best thing you can do is be yourself and have opinions. I see beauty brands that behave like corporates and it's bland. They don't talk about why they started or what drives them or what their passion is. Weave yourself into your social media and people will start to follow you," Lorraine advised.
Lorraine cites BYBI Beauty as a great example of a business that engages its audience. They have strong opinions about sustainability and regularly talk about their packaging and manufacturing processes.
"People really connect with BYBI Beauty. They pick out topics that really matter to their followers because people think, 'I want to align myself with a brand that feels the same way I do'. I really want to see people put their opinions out there. Remember, people follow people."
How can a beauty brand stand out with a limited marketing budget?
The beauty market is crowded, but Lorraine explains that most brands start out targeting the same customer. There are plenty of opportunities if you can find an untapped niche.
"The majority of beauty brands say, 'I'm going to create a brand for women in their thirties who have busy lives and work in the city'. It's rare to hear about a beauty brand that targets women who are in their eighties or visually impaired or have certain religious beliefs," she said.
"That will make you stand out and get the press talking about you. There are so many opportunities out there for brands to target that one customer that feels like there isn't a product for them."
How can I find great packaging that isn't too expensive?
The right packaging can be crucial for a brand, but it's a challenge when you're working on low minimum order costs. Everyone wants packaging that's beautiful, sustainable and feels luxurious which, Lorraine admits, often isn't in the UK.
She recommends trying to partner with another beauty brand, which is something many business owners in Formula Botanica's Facebook group do.
"We run a big Facebook group called Skincare Entrepreneur Mastermind. We often see people club together with other beauty brands and bulk order ingredients or packaging."
What beauty trends do you see coming up?
It's a fast-moving industry and there's a new trend almost every day. Lorraine thinks the best thing to focus on at the moment is sustainability. Many of the big players are already investing in sustainability - L'Oréal, for example, has committed to reducing its carbon emissions.
"The indie sector isn't keeping up. I want small brands to start thinking about sustainable manufacturing, shipping, packaging and ingredients. If you can tick the boxes for naturals and sustainability, you're in a sweet spot," she said.
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