What You Should Know Before You Turn Your Soap Making Hobby Into A Business (From Those Of Us Who Have Done It)

You start making something as a hobby, discover that you really enjoy it and begin wondering whether you could make some money from it. Before long, you have bought ingredients and CPSR's, designed labels, created a range and announced that you are open for business.

I suspect many of you will identify with this scenario and there is nothing inherently wrong with starting that way. Most of us do. The problem is that it is very easy to launch into the enjoyable parts without thinking about the bigger picture. You make the products you fancy making, choose packaging you like and add something new whenever somebody tells you it would be a good idea.

The difficulty is that this can leave you with a business that is expensive to run, difficult to explain and even harder to grow.

My first product range was far too random in the early days.

When I first started my own business, I knew that I wanted it to be centered around dogs, and as a dog groomer I had a specific interest in dog grooming products. But I didn't know enough at that stage to appreciate the value of a strong niche - and 'dog stuff' is not a niche.

I sold some dog themed stationery, dog soap, paw balms, bandanas and various other things. I thought it would be nice to have a dog product business, but it was not particularly clear to anybody what I actually did, who I did it for and why I was any different to buying from a high street shop or online.

I planned to attend local events and I had a good ecommerce website. One thing I did get right was knowing that I wanted to sell online and eventually get into high end boutiques and wholesale. Because of that, I had my labels and packaging done professionally from the beginning.

What I had not given enough thought to was having a clear niche. As soon as I became clearer about that and dropped all but the dog grooming and skincare products, everything changed quite quickly.

You would think I may have learnt from my mistakes but I didn't. Later, I decided to introduce a range of products for people. My thinking was that customers could buy something for themselves at the same time as buying for their dogs.

Instead of testing the idea with one or two products, I committed to a range of five or six products with around four different variants of each. It created a huge amount of work. Some customers were enthusiastic, but there were not enough of them. I hadn't done enough market research, and I certainly hadn't appreciated that plenty of my people, who happily spent money on their dogs, would not necessarily spend money on themselves.

The idea was not completely unreasonable, but my idea of how popular it would be was. I regretted that move fairly quickly and stopped, but it taught me a lot. 

A range needs to make sense

These days, I regularly see what I would describe as piecemeal businesses. They have skincare products to fit everybody and anybody and none of it 'matches' or is made for a specific customer avatar. Somebody suggested an idea, so it was added.

Individually, there is nothing wrong with any of it. Together, at a market or event however, it can look more like a car boot sale than a business with a purpose.

This also makes it difficult for potential customers to understand what the business is known for. If you cannot explain clearly what you sell, who it is for and why somebody should buy it from you, your customer is unlikely to work it out for themselves.

Handmade natural skincare is not a niche. I repeat this phrase a lot but it is so true. Handmade natural skincare is what thousands of businesses are selling. A niche might be just lip balms. It could be skincare made using honey from your own hives, goat’s milk products from your own goats, products for women going through the menopause or a bright, modern range created for a younger customer base. 

The niche comes from who the products are for, what connects them and what makes the business distinct.

Think about the bigger picture before choosing everything else

I now teach people in my Soap Business Bootcamp to think about the bigger picture right at the start of their business journey. That does not mean every decision has to be fixed forever. Businesses evolve, and yours probably will too. It means giving some thought to what you would like the business to become at the beginning though. Things like...

Is being organic important to you?

How important is environmentally friendly packaging?

Do you want to sell online, at local markets, through wholesale stockists or through a mixture of all three?

Do you want a pocket money business, or would you like it to replace a full time income?

Do you want to be stocked locally, or would you like your products to be sold around the country?

These decisions affect far more than your marketing. They can influence your business name, packaging, pricing, production methods and the products you choose to make.

If you only want to sell occasionally at a local craft fair, making labels at home may be perfectly adequate. If you want to build a full time business, your time becomes one of your most valuable resources. In that situation, I may look at outsourcing printing, labels and packaging wherever possible. Those are jobs somebody else can do. Your time may be better spent making products, finding stockists, creating content or dealing with customers.

Think five years ahead

I am always encouraging people to think about where they want to be in five years. You don't need a rigid five year business plan. However, you do need to consider whether the decisions you make now will make life easier or harder later.

How quickly can the product be made?

Could you make one hundred units rather than ten? You may only be making ten bars of soap today, but it is entirely feasible that you could need one hundred or two hundred in the future, for just one wholesale order. 

You don't need to know exactly how you will produce them. You should at least be able to imagine that it would be possible. If a product is very complex, fiddly or relies on individual moulds, it may never be cost effective to produce in larger quantities. The easiest form of scaling is being able to make more product in roughly the same amount of time.

If I were starting my own business again, the one thing I would change from day one would be my choice of soap making method. Looking back I have no idea why I thought hot process soap would be the best option - needless to say I don't do it any more. It worked for me in the early days, but it is virtually impossible to scale efficiently.

Other things to consider...

Would you need a larger workshop?

Could the recipe be made in larger equipment?

Would the packaging survive being transported to stockists and sitting on a retail shelf?

Can the product be priced in a way that leaves room for wholesale?

Too many ingredients create more work than you may realise

An overcomplicated range does not only make production harder, it also means buying ingredients that may only be used in one or two products. You may never use enough to benefit from purchasing in larger, cheaper quantities, but you still need to monitor the stock, store it correctly and keep all the relevant documentation.

The more ingredients and recipes you have, the more complicated your Product Information Files become. Stock control becomes harder, ordering becomes more time consuming and there are more opportunities for production mistakes.

I have seen businesses where every soap recipe is completely different. That might feel creative in the beginning, but it can become confusing when you are trying to produce several batches quickly. Using fewer base recipes and repeating ingredients across the range can make assessments, stock control and production much simpler.

That does not mean your range has to be boring. You might have a core range of five or six soaps and introduce two or three seasonal products each quarter. A balm business might have four permanent products and one seasonal addition.

You could also offer a smaller, fixed range for wholesale or white label customers, even if your retail range is broader.

The aim is not necessarily to have as few products as possible. It is to make sure that the range can be managed, produced and understood.

Design for the customer, not only for yourself

I understand why you may begin with products you personally like. The difficulty comes when personal preference becomes the main reason for every business decision.

A business owner needs to ask more questions. Things like...

Does the product fit the existing range?

Will it appeal to the customer the business is trying to attract?

Is it likely to be profitable?

Can it be made efficiently?

Could it be sold wholesale?

Will current stockists understand where it fits?

Does it use ingredients and packaging that are already in the business?

You do not and should not create a new product every time somebody says, 'You should make this.' Take it from me, one enthusiastic person is not market research.

Think like a business owner from the start

Thinking like a business owner means making decisions in the best interests of the business, rather than only doing what you fancy.

Of course it does include the enjoyable work, such as developing products and choosing packaging, but it also includes pricing, bookkeeping, marketing, emails, blogging and social media. You won't love all of those things but some or all of them will still need to be done and all that side of things takes much longer than making products.

It also means pricing properly from the beginning. A common problem is not that the product could never be profitable because the price was set too low at the start. 

The business then grows around that price. Customers become used to it, and the owner later discovers there is not enough margin to offer wholesale, pay for help or cover the time required to make gift sets and more complex products.

You need to know what the product genuinely costs, including your time, packaging, overheads and the less obvious costs involved in running the business.

A website is important when it fits the plan

I would not force everybody to build a website. Some people genuinely only want to sell at a handful of local events to make a little extra pocket money. They may dislike technology and have no interest in selling online. In that case, a website may not be necessary.

However, if your plan includes online sales or approaching stockists, I would suggest you put a professional website in place from the beginning as people will ask whether they can find you online. Stockists will want to see how the business presents itself, what the products look like and whether there are any customer reviews.

When I started, I chose Shopify because I knew that online selling would be an important part of my business. The checkout was already in place, I could add a blog and the main structure was there. I only needed to populate the template (which was still a lot of work). That was the quickest and easiest option for me. I know there are other platforms available but I don't have any experience of them.

What probably matters more is understanding that building the website is only the beginning. I guarantee that you can build and publish a beautiful website but you won't make any sales and won't receive any visitors to it in the early days. Regular online sales require a lot work behind the scenes and for a long time. That may include search optimisation, content, email marketing, social media, publicity, recommendations and enticing previous customers back.

Looking professional does not mean pretending to be bigger

We all start small, but you don't have to shout about it. Customers do not necessarily know how small a business is if the branding, packaging, labels and website look professional.

I paid for professional labels and packaging from day one because I knew where I wanted the business to go. That decision served me well. I did later change my branding because the original version was too bland and did not give me enough flexibility to use different colours across the range. I am glad I changed it, but I do not regret the original design because it worked at the time.

What I would like you to take away from this is that looking professional doesn't need  you to have a huge range, a large workshop or a team of staff. You can be a one person band and still be professional.

I often say that you should behave and speak like the business owner you expect to be in five years, rather than continually presenting yourself as somebody who has only just started.

That doesn't mean pretending to have experience or capacity that you don't have (although neither do you need to shout that you don't). It means taking the business seriously enough to make considered decisions from the beginning.

You do not need to decide everything now

I don't think you need to choose one fixed business model before developing your products. You may start with a website and markets, then realise that you hate attending markets (that was me) and would rather focus on wholesale. You might discover that a subscription model works well, or that regular white label work gives you the stability you want.

Businesses change as you gain experience or your life changes and mine looks very different now to how it looked 10 years ago. The important thing is to start with a cohesive range, a clear customer and some understanding of what you want the business to become. You can change direction later. It is much easier to do that when you have not already created a monster containing dozens of unrelated products, ingredients and packaging options.

I hope you have found this helpful. Many of the points in this article came from a recent Soap Suite call, where members were able to share honestly what they had learned, what they would change and what they wish they had known earlier. That kind of practical experience and support is exactly what the Soap Suite is about. Having a group of soap and skincare business owners around you who understand the challenges, can help you think things through and may save you from making a few expensive or time consuming mistakes of your own. If that sounds useful, you can find out more about joining the Soap Suite here.