Does It Really Take $1.5M To Build A Beauty Brand?

Does It Really Take $1.5M To Build A Beauty Brand?

Julie Fredrickson, co-founder and CEO at Stowaway Cosmetics, told Vogue Business that it costs at least $1.5 million to fund the first 12 to 18 months of a beauty brand. In this edition of Beauty Independent’s ongoing series posing questions to beauty entrepreneurs, they ask 13 founders and executives: Do you think it costs $1.5 million to fund the first 12 to 18 months of a beauty brand? View a few responses below and read the full article here.

 

KRISTEN O’CONNELL CORSO
Founder, Florapy

Can it cost $1.5 million to fund 12 to 18 months for a new beauty brand? Absolutely! If you are launching more than one SKU and are using accredited manufacturing facilities, more likely than not these types of manufacturers will demand a high minimum order quantity, which leads you with a lot of cash invested in inventory.

Furthermore, if you plan to supply to the big retailers and need things like a third-party fulfillment center and EDI capabilities, your monthly operating costs just went up a few thousand dollars. This is the traditional way that a brand has historically been born.

The great thing about indie beauty and very entrepreneurial founders is that they find ways to manufacture in-house or work with facilities that are willing to accommodate small scale. This allows for minimal investment, and also the ability to be agile and abandon quickly what doesn’t work.

HEATHER URQUHART
CEO and Founder, Huna Apothecary

It doesn’t take even close to $1.5 million to fund a beauty brand startup for the first 12 to 18 months if you’re willing to put in the sweat equity, that is. We’ve built our organic beauty brand by bootstrapping every aspect from the ground up. We’re a family business. We have no debt.  No loans. No investors yet. And we’re revenue positive. As the founder and CEO, I still own 100% of the company shares.

We’ve taken the road less traveled and raised capital in alternative ways, mainly through pitch competitions and government grant funding. For the first 12 to 18 months of launching a beauty brand startup, it takes extreme dedication, intense hard work, borderline crazy passion, unquestionable commitment, and approximately $150,000 to $250,000 in capital funding. That figure will quickly increase if the startup decides to hire more talent or outsource help.  For example, we still manufacture all of our products in-house. We grow some of our own ingredients on our family-owned acreage.

SYLWIA WIESENBERG
Founder, Bawdy Beauty and DOPE Naturally

Can you start a brand with less than that? Absolutely! Most small brads struggle to get $200,000 in funding, putting much of their expenses onto credit cards, mortgaging themselves and taking incredible bets on what they believe in. In order to do it properly by the book with what large companies would consider a traditional business plan, you need that kind of money, but you can also go a more modest way and significantly cut the cost.

Here is what I suggest: Founders not paying themselves salaries. Outsource IT and find very talented people for half of that. Outside NYC, for sure, you can find a young person who will help you with IT at a much lower cost. Operational overhead it is way too high. Everything you do the first 12 to 18 months is on budget. All your expenses have to be limited and carefully calculated.

Read what other beauty entrepreneurs think on Beauty Independent’s No Stupid Questions column.

It’s never too early to start planning for investment and meeting with investors. Start the conversation now and join us next month at BeautyX Capital to meet and network with the right people in the right setting.