Entrepreneurship in times of pandemic; Let’s take a look at the cosmetic industry opportunities
“I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not trying.” -Jeff Bezos, founder and CEO of Amazon
We have all ever dreamed of being our own boss and have our company, but there is always the question, in which sector should I start my business? Here I present to you a promising option, THE BEAUTY AND COSMETICS INDUSTRY.
The cosmetic industry is growing very fast. Several factors, including the rise of independent beauty brands, the increasing demand for organic products, and the growing interest in sustainability, motivate many entrepreneurs to look for new opportunities in the beauty space and seek insights into starting a cosmetic business. Thus, the global beauty industry is valued at US$532 million annually. The United States is the market that consumes the most cosmetics worldwide, with a share of around 20%, followed by China with 13% and Japan with 8%; projected growth is expected to increase at a compound annual growth rate of 5% to 7% to reach or even exceed US$800 billion by 2025.
Even in the current pandemic situation, with the global economy expected to shrink in the short term, the cosmetic industry has a high prospect of succeeding in the middle of this challenging economic moment. In the book “The Over-Spent American” (1999), professor Shor proposed the theory of the “Lipstick Effect”, her hypothesis says that in times of economic crisis, consumers will continue to enjoy high-end cosmetics, little luxuries, that gives them an emotional boost, while sacrificing spending on higher-priced luxury items. Besides, you can understand more the impact of the COVID-19 pandemic on the cosmetics and beauty care industry by reading the article published by Isabelle Essoe.
For these reasons, this could be the proper time for entrepreneurs who want to start their beauty or cosmetics business to set off their beauty industry adventure. That being said, creating a cosmetic business comes with its own set of challenges, mainly if careful planning and a correct business model are not considered.
If you’ve never had a business before, the idea of starting one of your own can seem scary. Fortunately, many other entrepreneurs have already done so, so you can capitalize on the wisdom they gained from their successes and failures. That is why I have decided to do an exhaustive search of the experiences and advice of entrepreneurs in the cosmetics industry and combine them with my own experience in entrepreneurship by creating GelWear, an Ecuadorian startup that markets eco-friendly diapers. You can follow us on our social media Facebook, Instagram, and Twitter to learn more about GelWear.
I will not deny it; starting your own business is highly stressful and practically demands a great deal of time and attention, but following the proper steps can become a great experience both personally and professionally.
Planning is essential to create a successful venture, as this way, you will have a guide for making the right decisions. I have collected the fundamental aspects that you must include in your business model plan, including carrying out a correct market study, defining the product you are going to sell, creating a budget and clear milestones, and finally presenting your idea to experts and possible investors:
1. Carry out a correct market study; you have to consider and analyze the cosmetic sector and its behavior in recent years. The demand for cosmetic products in the geographical area you want to establish your business. Also, you have to determine your main competitors, including their weaknesses, market, and strategies.
2. Once you know the market well, it’s time to target the audience. You have to determine which segment of the population you want to persuade to buy your products. This is essential because it will give you the key to determine the cost of your product and the marketing strategies; thus, you need to include a detailed analysis of consumers, including their sociodemographic characteristics such as gender, age, purchasing power, economic status, tastes and consumption habits.
3. Define the correct products. A cosmetics business can span many product categories; that is why you must define which of them are the ones you are going to sell. You make this definition based on market research so that you can offer the products preferred by consumers.
4. Set your budget and make your milestones. This is one of the most critical steps to create a successful business. It is essential to plan the money carefully you will need to invest and the different milestones you will fulfill in the following months and years after getting the required investment.
5. Finally, once you have your portfolio, you can present it to possible investors and experts in the field of business and cosmetics. Even if you do not get any investment, you will get huge feedback to improve your portfolio.
Based on my experience, I strongly suggest that once you have a solid business model draft, you should apply to startup accelerators and seeds capital investments; almost every country has at least one program to support entrepreneurs, and also there are international accelerator programs that support high-level startups helping you to polish your business model and contact investors.
There is no map, secret, or key to success; entering the entrepreneurship world is an uncertain adventure. However, hard work, dedication, and above all, learning from mistakes can lead you to turn your idea into the next successful cosmetics company.
Danziger, P. N. (2019, September 1). 6 Trends Shaping The Future Of The $532B Beauty Business. Forbes. https://www.forbes.com/sites/pamdanziger/2019/09/01/6-trends-shaping-the-future-of-the-532b-beauty-business/?sh=5cd0f0af588d.
McKeon, R. (2021, February 9). Cosmetics Business - How To Start A Makeup Line. Beauty Business Journal | The Business of Beauty. https://beautybusinessjournal.com/cosmetics-business-how-to-start-a-makeup-line/.
Ovans, A. (2015, January 23). What Is a Business Model? Harvard Business Review. https://hbr.org/2015/01/what-is-a-business-model.
Ramli, N. S. (2015). Immigrant Entrepreneurs on the World's Successful Global Brands in the Cosmetic Industry. Procedia - Social and Behavioral Sciences, 195, 113–122. https://doi.org/10.1016/j.sbspro.2015.06.417
Ridder, M. (2020, December 1). Topic: Cosmetics Industry - Statistics & Facts. Statista. https://www.statista.com/topics/3137/cosmetics-industry/.