7 Ways to Fund a Small Scale Makeup Line

A small-scale makeup line is great for both established businesses and those getting their start. Regardless of where you are in the journey, you still need to have the proper funding to cover research, development, and marketing.

Options to fund a small scale makeup line include:

• Business loans
• Personal loans
• Small business loans
• Home Equity Loans
• Grants
• Crowdfunding
• Investors

The funding method you choose depends on your capabilities and what is most comfortable for you. Keep reading to explore requirements and expectations, as well as a few tips for maximizing your funding adventures.

Financial Loans

The most obvious choice for funding a small-scale makeup line is obtaining a loan, but you may not be aware of all the options out there. The most popular ones include:

• Business loans
• Personal loans
• Small business loans
• Home equity loans

Regardless of the type of loan you choose, expect to pay fees for interest, processing, and managing the loan.

The type of loan that works best for you depends on the financial needs of your business venture and your financial situation. Business or personal credit may come into play, and you should have a well-developed business plan that includes a breakdown of financial needs and projections.

Business Loans

Look to your local bank, large banks, or online banks for business loan opportunities for your small scale makeup line.

You should speak with a loan officer at the institution prior to applying to make sure you understand their requirements. Many lenders want you to have a certain number of years in operation, and they may need certain figures included in your financial projections.

Banks usually evaluate your business credit to determine loan eligibility, but personal finances and credit can come into play. Make sure you check in on these figures and have any required proof of income when you review your application.

Personal Loans

If you do not meet the requirements of a business loan, you can still look to personal loans and lines of credit to fund your small scale makeup line.

This works better if you have a long-term relationship with the lender, so look to your personal bank before considering external lenders (if you already have a good relationship with them).

While you may not need a business plan, showing the worthiness of the investment might pay off in the end. You should at least have good credit and proof of your ability to repay based on your current financial situation.

Personal loans are not as friendly with terms and rates, so make sure you compare all the options available to you before settling for these conditions.

Small Business Loans

Small business loans are not quite loans; they are a guarantee from the federal government that the lender will receive their money, lightening the proof burden for certain individuals.

These loans do not lift requirements such as years in operation, but they are helpful with smaller scale ventures that do not have the financial prowess as billion dollar corporations.

Check in with your local branch office of the U.S. Small Business Loan Administration to inquire about micro-lending initiatives in your area. These are usually more favorable to small businesses, and you can also find resources related to constructing a business plan or budget for long-term success.

Home Equity Loan

If you have a sizable amount of equity in your home, you can choose to use it to cover certain costs in launching a small scale makeup line.

There are several red flags you cannot ignore with this option. It puts your home at risk and it restricts your ability to sell the home until the loan is paid off.

Before you pursue a home equity loan, make sure you evaluate the short-term benefits of your venture. This option is best for investments with a more immediate pay-off.

Grants

Grants are free money, but they are not easy to obtain. Not only do you need a strong business plan, but you should hire a professional grant writer to get an edge over your competition.

The grant process is intense, and it does not always pay off. If it does, you can fund your small scale makeup line without worrying about repaying that amount.

There are plenty of places to find grants, including government sites. The opportunities are more extensive for marginalized groups, but there are grants that fit almost every situation.

Crowdfunding

Crowdfunding is a general term that refers to allowing the public to crowd together and fund your needs (in this case, a small-scale makeup line).

You can look to friends and family to start, but many businesses branch out to public funders after running that initial round. You can choose to offer a reward for these donations, but the most important aspect of crowdfunding is constructing a story that people believe in.

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Friends and Family

If you have friends or family that are interested in investing in your venture, you can explore the possibility of allowing them to aid funding. Keep in mind that this has the potential to harm your relationships in the future, and it adds an extra challenge.

Make sure you do not skip the legal process for this investment. The terms for both parties need to be recorded, along with an agreed upon interest rate and the terms of repayment.

Crowdfunding Campaigns

You can run a campaign on a crowdfunding site like Kickstarter or IndieGoGo to further your reach. These places allow everyday people to invest in the ideas that they believe in.

As stated, for better success you need to be able to sell your product. Prototypes are nice, but people are more likely to part with money if they believe in your success. Unlike traditional investors, figures are not great at capturing attention and providing product worth.

You can revisit these sites as needed to develop your brand.

Investors

Investors have plenty to offer beyond funding, including:

• Networking benefits
• Corporate knowledge
• Marketing expertise

You may or may not be subject to repayment conditions, but most investors require you part with a certain portion of your business. This is not ideal if you want complete control over your decisions or the chance at 100 percent of your profits, but it can cultivate a powerful mentoring experience.

Tips to Fund a Small Scale Makeup Line

Regardless of which option you choose to fund your small scale makeup line, these tips can benefit your financial goals.

In short:

• Good press is the best press, and it pays off.
• Your focus should be on networking.
• Facts are your friends, and they help you grow your fanbase.
• Unusual funding sources should not be overlooked.
• Large investors are usually a poor deal.

Keep reading to dig deeper into these tips.

Take Advantage of Good Press

“All press is good press” does not count when you are looking to fund a small scale makeup line. Investors are not fans of liabilities, and they want a positive public image before they give you a dime.

Investing in public relations endeavors can improve your chances of success and draw investors to you.

At the very least, keeping your street clean improves your chances of getting the funding you need.

Focus on Networking

Just because someone cannot offer you funding does not mean they are useless in your financial endeavors.

If you can learn how to focus on networking, you increase your chances of coming into contact with beneficial investors or individuals that can help your makeup line launch strong.

Use Facts to Create a Fanbase

Now more than ever, facts ‌sell makeup. It is not just about how it looks, feels, and smells, but about what the makeup can do for you.

Look for facts that can help sell investors (and the public) on your makeup line, including health benefits and sustainability.

It only makes sense that these facts can give you more of an edge in the numbers game.

Look Into Unusual Funding Sources

With beauty especially, investments come from unusual services. While some investors dislike off the wall ideas, style thrives on trends. Everyone wants to have a part in the next best thing.

Do not be scared to reach out to people who believe in these ideas, even if they are not major financial heavyweights.

The Largest Investor May Not be the Best

Do not jump on the largest offer, especially if you have not combed through the terms.

These are usually too good to be true, and you may owe investors more than you are comfortable parting with.

The size of the investment is attractive, but it usually indicates that your idea will pay off big time–and you will lose a good chunk of those rewards to contractual obligations.

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Frequently Asked Questions

How much does it cost to launch a small-scale makeup line?

The cost for a small-scale makeup line launch sits at about $15,000, but expect this number to rise and fall. You need to consider hard costs, such as legal fees, licenses, and product development, as well as fluid costs like marketing.

Do I need a business plan for all funding options?

Most funding options require a business plan of some sort, and developing one is essential to create a well-rounded figure for your financial request. Even if your lender or investor does not ask for a business plan, you might want one for personal use to keep your business on track.

Can I fund my ‌small scale makeup line on my own?

You can fund a small scale makeup line on your own, but make sure you understand your budget. You risk using your funds with little to no return, but gain the security of owning all your profit in the long run.

To learn more on how to plan your own makeup line business click here!

Please note that the contents of this blog are for informational and entertainment purposes only and should not be construed as legal advice. Any action taken based on the information provided in this blog is solely at your own risk. Additionally, all images used in this blog are generated under the CC0 license of Creative Commons, which means they are free to use for any purpose without attribution.