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Home » How To Start A Fragrance Oil Business How To Start A Fragrance Oil Business

How To Start A Fragrance Based Business

Be Your Own Boss or Work From Home!

DIY businesses are extremely popular. Starting a fragrance based business, whether just body oils, fragrance oils, incense, bath and body products, soaps, or all of the above, etc., is surprisingly quite simple. The toughest part, and the most valuable part, will be finding the most cost-effective suppliers. However, in planning your start-up, there are just a few key questions to ask yourself?

Where do you want to sell?
What do you want to sell?
How do I price my products?
How do I promote my business?

WHERE DO YOU WANT TO SELL?

This is fundamentally one of, if not the most important thing to consider. This will help you decide what you want to sell, how to price your products, and how best to promote your business. Where you decide to sell could ultimately determine the fate of your business and obviously how much money you potentially make. Keep in mind that you do not need to be selling high priced items in a high end boutique to make the most money. Many people sell in flea markets and their profits far outweigh what they could possibly make in a high end store because of the foot traffic alone. Similarly, the reverse is true. However, you will want to tailor your business around what environment you would feel most comfortable and where you can work most effectively in promoting your product.

It will also determine if you need a business license and if so what kind. For most venues, a DBA (Doing Business As) and/or a resale certificate is all you would need to start as a sole proprietor. However, some events may require all or neither. We recommend getting them anyway as the process is easy and having them will eliminate headaches for you in the future. Go to your county clerks office or search online for your state to see how to apply for one. Every state has their own fees and requirements, but they are very inexpensive -- usually less than $100. Your venue will also determine if you should have product liability insurance.

Scout your prospective venue to see if there are others selling what you have in mind. Are there many that sell similar items? If so, you may want to diversify into more products or not enter it at all. It is rare that you would want to skip on an event however, because there are many ways to sell, market and promote fragrance products, even with competition nearby. Think of ways that your business can be different. Popular areas include the following:

Flea Markets, Swap Meets, Craft Fairs, Street Fairs, Farmers Markets
Malls, Shopping Centers
Trunk Shows, Consignment

Storefront
Online
Mail Order, Catalog

Flea Markets, Swap Meets, Craft Fairs, Street Fairs, Farmers Markets

Each one has a coordinating or management office for contact. If you scout your venue beforehand, you may want to ask any vendor or representing agent for a name and/or number to speak with someone about securing a spot. Typically, all it requires is for you to look at the event calendar, decide on your dates, and then pay for a spot. Sometimes a business license or resale certificate is required and product liability insurance is usually not an issue (check your state/county requirements). Usually, the spots are of a certain size, 10' x 10' or so. You will need to find out what size the spaces are so that you can plan your layout of product accordingly. An example setup would typically be the following:

  • A canopy or tent (EZ-UP makes a solid one for about $150-$200 from Sports Authority or Costco or online)
  • 2 or 3 fold-up tables around 2' x 4' or so (e.g. Walmart)
  • Merchant account and "knuckle-buster" (manual swiper) for credit card transactions
  • Makeshift or store bought shelving units
  • Signage for your shop and promotions
  • Decorations
  • Product
  • Cash Box

Malls, Shopping Centers

Malls and Shopping Centers have a management office. You can stop in and ask if they have any availabilities in the way of stores or even kiosks. Perhaps they have something becoming available. A kiosk in a mall is a good way to get started, see what the demand is for your product and whether or not you want to make this a long term investment. They are also low maintenance in the way that all of the hardware is provided (shelves, cover, counterspace, phone lines, outlets, etc.). Some malls or centers require a percentage of sales as well along with the rent, so be sure to ask if this is done and work this into any negotiations for rent or deposit. This will require a business license and/or resale certificate and you will definitely want to look into what kinds of insurance you will need (commercial and/or product liaibility). You will also need to set up a bank account and merchant account (with terminal) so that you can process credit card transactions and likely have to purchase a cash register.

Trunk Shows, Consignment, Product Displays

A good way of eliminating overhead, but still getting sales and getting your name recognized is to find a retailer who would consider an event like a trunk show, placing your items on consignment, or perhaps even carrying your product line permanently. The same certificates are usually, but not always required, DBA/resale etc. Trunk shows usually span a few days at a time and are planned in advance to promote the event. They usually occur in specialized mid-to-high end stores, around special events, and do generate a lot of buzz. Since the overhead is next to nothing with the exception of rent and or a percentage of sales, your only concern is to supply your product and perhaps a table or two. A big advantage is that your physical appearance there shows an affiliation with a reputable retail outlet. Depending on the size of the event, you may wish to have a merchant account and terminal for credit card processing. Placing your items on consignment is very similar in that your overhead is next to nothing and typically the rent of the store space is absorbed by the sale of your product. The retailer will require a percentage of any sales, but the appearance of your product there shows in a way that they endorse your product. Finally, having your product or product line permanently displayed in a retail store (i.e., a supermarket or department store) is very profitable for all of the reasons above. Some retailers will opt for a consignment type arrangement at first and some will just purchase your products outright in bulk (for bulk prices, remember to stick to margins you can handle).

Storefront(s)

Being the most costly of all options, this to many is also the most rewarding. Many dream of having their own store and just like renting an apartment or house, renting a storefront works the same way. The only differences are that you will definitely need a business license and commercial insurance (including product liability), it will likely be for a longer lease period, and it will likely be more expensive. Here too, some property managers may require a percentage of sales above rent, so you may want to ask and consider for any negotiations. You will also need to set up a bank account and merchant account with terminal so that you can process credit card transactions along with a cash register and obviously your store interior design elements.

Online

Selling online eliminates a lot of the overhead of having a brick and mortar shop and usually it only requires a DBA (Doing Business As) filed. Depending on the size of your venture, you will want to explore your insurance requirements, product liability in particular. The majority of your time will be in developing your website (one with a good shopping cart), or your auction (Ebay, Yahoo, etc.) and then promoting it well within the search engines. As with any other commercial business, you will likely need a merchant account or at the very minimum a paypal account (www.paypal.com). Paypal also offers payment processing services, so if you do not have or don't want to pay for a merchant account, you may want to look at Paypal which will allow you to be able to process all credit cards, e-checks, etc. Some helpful starting points:

  • A domain name and registered with a reputable registrar (e.g., GoDaddy)
  • A merchant account or paypal account with virtual terminal (e.g. Linkpoint, Authorize.net)
  • An SSL (secure sockets layer) certificate for processing sensitive information
  • A shopping cart that can handle payments effectively (e.g., zencart, oscommerce)
  • Decorations
  • Product

Home Parties, Mail Order, Catalog

This approach will be the lowest cost of all and the bulk of your costs will be put towards materials used for printing your catalog, and order forms. You will need an effectively designed catalog and a user friendly form for ordering. After collecting the completed order forms, you place your order with your supplier and have the items shipped to you for distribution or dropshipped anonymously to your customer (if that option exists). Remember, to dropship anonymously, because you DO NOT want your customer to know who your supplier is. Trade secrets are what makes a business successful.

WHAT DO YOU WANT TO SELL?

There are several options available to anyone wishing to get into the fragrance based business. However, you do need to decide how much labor you want to put into your products and how diversified you want your product line to be. Do you want to make candles or soaps? Do you want to make incense? Do you want to strictly sell body oils, are willing to buy in larger quantities and split and re-pour into smaller containers? Do you want to scent and sell lotions and other body products? Do you not want to do ANY work and have items dropshipped directly to your customer? There are many instructional materials available online and we also have DIY (Do It Youself) materials online at Save On Scents (DIY Tools). We also offer dropship and basic private labeling services (this will expand in the near future to custom/logo and graphic work and small runs) which for many is preferable because it involves no inventory or overhead. Many sell more than one item and are successful. Our recommendation is to start with fragrance oils marketed as body oils and burning oils and make incense (easy) for resell. You can start with as little as $150-$200 for a good selection of 20-30 fragrances. Your markup on such items can range from 300%-600%, even at flea markets or swap meets!

HOW DO I PRICE MY PRODUCTS?

A good mark up (or margin) for any venue is at least 2 1/2 to 3 times your cost. What you do to determine your final price is calculate every single item and labor that goes into your product. For example, if you are making candles, you want to add the cost of your wax, wick, colorant, fragrance, holder, labor, utilities and packaging. Multiply it by 2 1/2 and you can derive a final price. This markup or margin is used to pay for your expenses, rents, electricity, man-hours, etc. and if priced correctly should give you a nice profit afterwards.Of course, the more you can sell your product for the better -- the more profit you have. As a business owner, you have to decide what margin you can live with and be happy, but for a viable business model, one that could last for a long time and even expand, a decent margin is AT LEAST 2 1/2 times your product cost.

HOW DO I PROMOTE MY BUSINESS? (Coming Soon)

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