Small Business Risk Management: What You Need to Know Before Launching Your New Beauty Brand
New beauty brands seem to be popping up on store shelves and scattering throughout social media feeds every day. Entrepreneurs, celebrities, and influencers are launching beauty brands at a rapid rate. Although the barrier to entry for beauty brands is lower compared to other brands, launching a new company always comes with risks.
The current inflationary environment and a looming economic recession seem to be cause for extra concern — especially when it comes to launching a brand. In fact, a Business.org survey of small businesses found that 60% are concerned about the financial health of their business because of inflation, and 89% of small business owners have already had to increase the price of their products or services since the pandemic began in 2020.
These financial strains are top-of-mind for business owners and leaders. Strains such as these inform and drive business decisions. For entrepreneurs launching a brand, financial impacts are always being considered, whether it is the rising prices of ingredients, packaging costs, marketing budgets, etc.
There are ways to mitigate cost just like there are ways to mitigate risks when launching a company. Founders are finding ways to launch new beauty brands every day. So not all hope is lost! Here are three tips for small business risk management.
1. Conduct small test runs on Amazon to gauge consumer interest.
Rather than creating a brand website or another point of distribution, many brands are turning to Amazon to launch their company and products. This is a great way to mitigate risk because it requires much less financial investment. Think about it: You can put 50 of each SKU on Amazon to test the consumer response whereas if you launched on your website, you might instead purchase 500 per SKU and run the risk of little or no distribution.
By conducting small test runs on an eCommerce site like Amazon, it allows you instant access to consumer feedback. Once your product is on the marketplace, buyers can write reviews just as fast as they receive your product. Pay close attention to those customer reviews. Listen to what your consumers have to say and adapt your product or service.
Launching on Amazon allows entrepreneurs to start small and adapt early on.
2. Start small: You don’t need a huge collection or thousands of pieces per SKU.
Your brand’s launch does not have to include every product under the sun. Take beauty brand Anastasia Beverly Hills as a prime example of this advice. Anastasia Soare first launched with her infamous brow collection. Now, the company has more than brow products, launching contour kits, cream bronzers, and more over the years.
Don’t overdo it. Start with your core product. It’s hard. You may be Googling, “how to compete in a saturated market.” Our advice? Identify the white space in the market you want to tackle and start there. But start small.
3. Find a Cosmetic Manufacturer who can be a supporting partner for you.
Even the most senior founders realize that you won’t know everything about navigating a business. Having a good team within your CM helps. You want to find a CM who will stand the test of time with you and your business. Think of qualities you value in a manufacturer and team, such as honest communication, transparent pricing structures, clear timelines, and so on. Use these to find the right CM for your business!
Having a risk management plan for small business is key. Launching a new beauty brand comes with its challenges, but it is possible. Use these tips to move forward in your new company’s launch.