The beauty industry is one of the most exciting and popular industries to start a small business. When you’re ready to take charge of your career and build a beauty brand from the ground up, there’s a lot to consider, and it can be overwhelming at times.

Like many entrepreneurs, starting a beauty brand often begins with self-funding, but it can only take you so far. Once your business has a solid foundation, it’s time to consider funding to move to the next stage of building your brand. 

Funding is one of the most crucial aspects of starting a business. It can be done at any stage, from the initial startup phase to just building and growing your current business. You need funding to create your products, develop marketing and branding, hire a team, and so much more. Yet it’s one of the biggest challenges you will face when building your business, and it’s tough to know where to start.

Raising Capital for Your Own Beauty Business 

When funding your business, there are a lot of options to consider. Acquiring funding usually takes a lot of work upfront to start with building your ideas and creating content, a website, deciding on your business structure, and more. While it’s a lot of work upfront, building your dream beauty brand is worthwhile. When choosing a funding option, you always want to consider your risks and be sure to choose the right path. Here are a few common paths to funding your beauty brand.

Self-Fund

If you have the money in your savings or are building your beauty brand while working a full-time job, you can use the funds you have to build your business. By funding your business upfront before taking on any major investors, you avoid growing debt before your business becomes profitable.

Bootstrapping

Bootstrapping is a popular option for new business owners where in order to save money, they choose to do much of the work on their own. This can often lead to burnout, so you want to be sure to know when it’s time to bring on more help so you don’t become overwhelmed. A well-thought-out business plan and sticking to a solid budget can help you stay on track when you self-fund your beauty business.

Crowdfunding 

Crowdfunding has been a major way to secure funding for any small business across all industries. It’s a great way to test out marketing, branding, and get insights on demands for your products before they even hit the shelves. Platforms such as Kickstarter or Indiegogo allow you to raise money to build your brand and offer rewards to the people who invest. Rewards can be early access to free products, and you must be prepared to fulfill these orders once you launch. 

While crowdfunding is a great way to raise money, it’s also a lot of work promoting and marketing your brand. Before you begin crowdfunding, you have to establish a presence through social media and a website. Once established, it can take time and some upfront funds to get traction in getting your brand’s name out there.

Angel Investors 

Angel Investors are the type of investor that uses their personal money to fund new small businesses. By partnering with an angel investor, they can offer much more than the funding you need. Often, they provide mentorship and networking opportunities that are invaluable in a thriving beauty industry. Instead of paying back the money loaned, angel investors ask for a small percentage of your business in return for the startup funding, and often, if your business fails, you aren’t required to pay back the money. 

There are a lot of great resources to get you in front of angel investors, but it’s important to know that it takes a lot of time and effort. From building a compelling pitch deck to delivering an inspiring elevator pitch, you might have to pitch dozens, if not hundreds, of times before securing funding. 

Venture Capitalists 

Venture capitalists are similar to angel investors who provide capital to startups and funding to early-stage businesses with the potential for high growth. Venture Capitalists are firms that exchange equity in your business for the funding you need to continue to grow. VC firms are more likely to work with established businesses with a track record of successful sales before they risk their funds.

Friends and Family 

 Often entrepreneurs and business owners will turn to friends and family to ask for funding to start a business or help grow their existing small business. When asking to borrow from friends and family, you want to have a clear agreement in place to ensure the relationship is not fractured over unrealistic expectations. By clearly communicating your needs, plans, and expectations from the money borrowed, you can protect your relationships as you grow your beauty business. 

Bank Loans

Bank loans have been a go-to funding option for many businesses throughout time. Securing funding through a bank loan can save you time and effort from having to raise funds through crowdfunding or pitching to potential investors.

When acquiring a bank loan, you need good credit to ensure your rates are lower and you can get enough money to start your business. You’ll likely be asked to use another asset to secure your like, such as your home, inventory, or car, which increases the risk on your end. 

Small Business Administration

You might be able to acquire funds through government programs. The Small Business Administration also offers a grant program with a guarantee for partial repayment of your loan, up to 85%. This guarantee gives banks more incentive to take a risk and provide you with a loan to fund your beauty business. The SBA program offers attractive rates, but it is often hard to qualify, and it can take a long time for the application process.

Many opportunities are available to help you achieve the necessary funding to start or build your beauty brand. With the funds acquired, you can work to build your reputation and brand name in the beauty industry and achieve your dreams of owning a successful beauty business.