If you do decide to go ahead you will soon come to realize that you are not alone. According to IBIS world there are over 500 cosmetic and toiletry manufacturers in Australia and while some of these manufacture their own brands, many contract manufacture for people just like you. It is difficult to get exact figures outlining the lifecycle of privately owned Australian brands but a little bit of general research shows that around 50% of all new businesses fail in the first year. Further, in the cosmetics industry, out of the remaining businesses a high percentage fail in the first three years due to a combination of cash flow issues, poor marketing focus, inadequate investment in R&D and innovation, poor understanding of the brand, lack of understanding of the market, distribution problems and inefficient regulatory support. If you are starting to think that having the award winning brand idea and logo was the easy bit then you would be right.

So let's work through the list of typical trouble spots to see if we can stack the decks in our favour.

1) R&D Innovation.

The cosmetics industry is driven by innovation which in turn is driven by the global fashion market. It is unusual for a small brand to have in-house product development and so much of that work is outsourced either to a contract manufacturer or to a private consultant/ consultancy. While either of these scenarios helps the small brand owner get good quality products onto the market, they will only succeed if the brand owner has understood and has been able to interpret the needs of the market to the formulator. Otherwise you risk having products that don't fit the market. So, the key to success is for the brand owner to spend some time each season re-evaluating the brand and how it fits into the ever-changing landscape that is the cosmetics industry. The brand owner then needs to sit down with and fully brief R&D staff in the direction for new innovation. The R&D team are only as good as your information so take the responsibility and enjoy! This can be the fun bit as you get to see your dreams turned into money-making reality.

2) Regulatory Requirement.

Regulatory requirements are another significant hurdle for small and medium sized brands. Many of the laws enforced here are adopted from the EU and as such many self-starter brands opt to follow the EU requirements so as to tick all of the boxes. However this is by no means mandatory and so what is a small brand to do? Working backwards from the finished product on the shelf your customers need to understand the following:

The basic what, why and how?

What is your product (including what is in the product in most cases an ingredients list in percentage addition order, largest first is required. INCI or common names and not tradename or names that you have made up), why do people need it and how do you use it? It is your responsibility to answer these openly and honestly and to have to hand evidence to support the claims that you are making. For example, if you are saying that your product helps the client to protect themselves from the sun to the tune of SPF 20 you will need to have test data to prove this. But if you are claiming that your bubble bath has an uplifting aroma you will probably be OK with nothing more than your ingredients list. Why the difference? The first example 'SPF 20' is an objective claim that can be proved or not. The second is subjective which means that some people will agree and some won't. Ingredient suppliers, contract manufactures and independent consultants will all help you get your facts, figures and story straight but the bottom line rests with you. It is your brand, they are your claims, and it is you that the ACCC will want to talk to if it all goes wrong.

The measurements.

The weights and measurements act applies to cosmetics and is non-negotiable. On top of that you may choose to add ether an expected shelf life or a time-after-opening guide to the packaging. None of these are mandated by Australian law and the evidence required for a 'shelf life' is different from product to product. However, if you do make a claim or guarantee on your packaging you must have the evidence to back it up. If in doubt, ask a professional.

3) Marketing.

Some of the most successful privately owned brands are not those set up by hairdressers, beauticians or cosmetic chemists. They are the brands fronted by marketers and it is for good reason. When you step into the Australian cosmetics industry you step into a crowd and the only way to stand out in that crowd is to pop your head up in the right place, at the right time and in the right outfit. Don't make the mistake of being either a one-trick-pony or an 'I like it so everyone else will' brand owner as the world will move and you won't be able to. A good brand owner is passionate without being overly emotional this is a business, the brand is not your baby even though you love it and spend hours nurturing it. A good brand owner understands their competition, the competitive landscape and has a strategic plan rather than a few ideas on an old napkin. Independent brand owners often fail in this area as they can't afford to get anyone to help them market their product they would rather just have sales. But marketing is essential and does lead not only to sales but to long-term strategic partnerships, positioning and prestige. Whether you are minute, small or fair to middling you need to make social media your friend. Getting into blogging, twittering, face booking, surveying and any other social media hang-outs will help you keep it real in the 'my brand vs. the world' wars.

4) Money Money Money.

No small brand ever has enough of this so if, when you first dreamt of having your own brand that dream included a yacht, endless summer holidays, private masseuses and champagne lunches think again. Yes those things do come to some and there is no reason for you not being one of the chosen few but this is the exception rather than the norm.

The most common mistake that start-up brands make is to treat their new found career as a bit of a play thing. Entering the cosmetics industry is serious stuff and no matter how much fun it is and sounds, every minute spent in it should be backed up by a business plan worthy of showing your bank manager. In business the general rule of thumb (or sanity check) has to come externally. Just because your dad told you that you always were good with money and that all of your best friends promised that they would ONLY buy their make-up from you doesn't mean that you have a business.

Banks, business accountants, business coaches/ mentors, the Australian Tax Office and a quick TAFE course may all help save you a small fortune. Invest in educating yourself early for best results.

5) Distribution Channel.

There are many ways of getting your product to market in the cosmetics industry ranging from independent and selected retail through to mass retail, destination purchases (day spa, medi-spa etc) to online, party plan to pay TV however, if you haven't got your head around the above steps you will fail miserably here.

It is not uncommon for a brand owner to spend hours of time and thousands of dollars getting their packaging and on-pack text right. None of that matters of course if you don't have the right boxes ticked to catch the eye of a distributor/ distribution channel partner.

A good rule of thumb in the distribution world is that the bigger the player, the more hoops you will have to jump through to get approved and the more squeezed you will be for margin. Please remember that EVERYONE wants to get into Myer or David Jones but unless you have your 2 year shelf-life data, claim substantiation, advertising budget, cash flow, brand platform (website that more than 4 people and a cat look at) and basic regulatory compliance boxes ticked you will be wasting your time.

There is no easy way to make millions of dollars but if you are anything like me, you don't care about that. The cosmetics industry is fun, fast and flashy and as there is a space with your name on it, it would be rude not to take up the offer.

The cosmetics industry isn't rocket science but it does require a business-like approach, focus, a little careful research and a healthy dose of passion to help you succeed.

Just remember that it is your brand, your vision and your beautiful future. We will help you but you have to own it so ask questions, do your research and treat it like the business you want it to become.

It's your brand after all and you deserve the best

Amanda Foxon-Hill

10 October 2011