If you’ve always had a flair for creativity and design, you may have thought of starting your own candle business. A candle business can be a great way to combine your talents and skills in a way that is both creative and profitable.
A candle business can also be a great business to start on just a part-time basis. You can begin by only working part-time but then as the business expands and grows, you can choose to make it a full-time endeavor.
In this article, we’ll go over the key steps involved when looking to enter the candle-making business.
Research the Candle Market and Your Competitors
The first step when starting almost any business is, to begin with, market research. This will allow you to fully understand the market that you plan on getting involved in. Through this research, you’ll learn which types of candles are most popular and which ones your possible competitors are currently selling.
Much of this research can be conducted online through searches and finding various candle stores that are already selling the types of candles you may be interested in producing.
What you want to look for are specific trends in the candle market as well as which candle stores sell specific types of candles. For example, if you find openings in the market for the type of candle that you would like to sell and you notice that other stores are not offering this type of candle, that may be a great opportunity for you to break into the market.
Design Your Brand
After conducting your market research, you are ready to start designing your candles in the style that you have found to have the most potential for success.
Depending on the style of candle you’ve chosen to produce, this will have an impact on the rest of your brand image. For example, if you’re designing candles meant for relaxation, then you’ll want your whole brand to convey a very calming and relaxed theme.
This type of branding image should extend into all aspects of your business. This includes your website and all marketing materials as well as your packing and shipping materials.
When it comes to branding your business, you want customers to feel like they are getting an entire experience when they shop with you. This means that all contact they have with your business, whether it be through the website or handling the product itself, should all convey the same brand message.
Create a Business Plan
This next step is just as crucial as all the ones that have come before, and it involves creating a business plan. A business plan is a carefully thought-out document that acts as a roadmap for your business and how you intend to run it.
This includes the type of products that you’re going to sell, how you’re going to sell them, your marketing plans to reach your target market, and your strategy for obtaining new customers, along with what their experience will be when interacting with your company.
You will then use this business plan as a guiding principle for all the decisions you make going forward. Having this founding document or business plan helps to keep your business on track as you expand and make decisions in the future.
For example, in this case, your business plan will include information that you learned and decisions you made during your market research. This will include details on how you plan on differentiating your candles and your brand from possible competitors.
Register Your Business
By this point in the process, you should know what type of candles you’re going to sell and what the name of the company is going to be. That means the next step is to officially register your business.
If you plan on selling your candles locally then this may mean that you also need specific business permits in your city or county. If this is the case, a great place to start to find this information is to contact your local Secretary of State’s office. This is the government agency that often deals with commerce in your area, and they’ll be able to provide you with information regarding local permitting to sell your candles in your town or city.
Choose a Business Structure
Choosing the correct business structure is an important step when building any business from the ground up.
You have a few choices in this regard and the most popular one for a new business is often a sole proprietorship. However, other options may make more sense for your specific situation.
For example, a Limited Liability Company (LLC) can be set up similarly to a sole proprietorship, but it can also offer certain tax advantages as well as liability protection for the owner’s personal assets.
You also have the option of being structured as a class C Corporation (C-corp) or class S Corporation (S-corp), although that does involve more paperwork that is sometimes not necessary for a small business that’s just starting.
If this part of the business sounds complicated and overwhelming that’s where doola can help. doola offers complete services that help small businesses figure out the best business structure by handling all the registration and paperwork for both federal and state requirements.
Once registered as a business entity like an LLC, you can easily open a business bank account and obtain a business credit card. Keep in mind when applying for business insurance, being registered as a proper business entity will also be necessary.
Source Materials and Supplies
Now it’s time to get to the most fun part of starting a candle business, and that’s producing the candles that you’ve chosen to specialize in. You’ll need to find sources for all of your raw materials and equipment necessary for producing candles. This will include things like wax, wicks, scents, molds, wax melters, and jars.
A good place to find sources for your materials is from arts and crafts supply wholesalers. Depending on how many candles you plan on producing, you may be able to get discounted prices when buying materials in bulk which can help to increase your profit margins.
You can also look for materials at local art supply stores. You’ll generally pay a higher price for your materials but there should still be enough to make a good profit margin when your candles are sold.
As you expand, it’s always important to make sure you are trying to source your materials for the lowest price possible while still maintaining quality and keeping in consideration the cost of production as well.
Determine Pricing for Your Candles
Now you should have all the raw materials you need to start manufacturing your candles. That means it’s a good time to start deciding what your final pricing is going to be. Although you likely touched on this topic earlier in your business development, it’s now time to finalize those prices now that you have the exact cost of your raw materials.
There are a few different ways you can calculate this. For starters, you will want to look at the total amount you spent on raw materials and then calculate how many individual candles you can make with those materials. Then divide the total cost of the raw materials by the number of candles you can produce, and you will get your cost per candle.
You will need to decide on your markup for each candle now that you know how much each one costs you to manufacture. A general rule of thumb for retail is to start with double the original cost as markup. For example, if a candle cost you $10 to produce you should start with a baseline for the cost to sell that candle at $20. Of course, this is just a starting point, and you’re not required to price your candles in any way that you are not comfortable with.
If your candles take a lot of labor and custom work, then you’ll probably want to charge a higher amount than just simply double what your raw materials cost to incorporate the amount of effort and time you put into each candle.
It’s also important to note that any pricing model you use will also have to cover shipping expenses if you plan on offering customers free shipping, and your operating expenses on top of just the raw materials. Your operating expenses are those costs that aren’t directly related to producing the actual product but are still a cost to the business. In this case, operating costs can be things like your web hosting and other monthly costs that are required to keep your business operating.
Secure a Place to Produce Candles
If you’re just starting you’ll likely be designing and producing your candles at home. If you’re starting with more ambitious plans, you may be looking to rent a storefront or studio to produce your candles.
If starting from home, it’s important to make sure you set aside an area where you can work consistently and without distraction.
If choosing to rent a storefront or studio, make sure that you have enough resources to cover monthly expenses until you can start earning revenue from your candle sales. It may take you several months after you launch your business until the revenue can cover your operating expenses like rent on a storefront.
Remember, even if you do use a storefront, it’s always a good idea for almost any business to also have a website where customers can purchase their products. It adds an extra revenue stream. Many customers just enjoy being able to shop online if they are unable to visit your store in person.
Create a Marketing Plan Unique to Your Candle Business
A marketing plan is vital for a new business because if customers don’t know about your product or service they can’t spend money with your company. Your marketing plan should take into consideration your target market, the type of products you’re going to sell, and how you plan on reaching those customers.
One of the more common marketing channels for small businesses that are just starting with a limited budget is to use social media for a majority of their early marketing.
Set up social media accounts on popular social platforms, like Facebook and Instagram, and post there regularly announcing new product launches, seasonal products, and sales. Include non-product posts too that are interesting to your potential customers so that they find your social media accounts to be enjoyable to follow. Remember, you don’t have to use every post to sell one of your products.
Set Up Your Store
For most people, just launching their store will mean setting up an e-commerce website. Thankfully this process has become much easier in recent years and there are many options available that don’t require you to know any computer code at all. Sites like Shopify and Squarespace allow you to create an e-commerce site to sell your products by simply dragging and dropping different elements to build your site.
If the technical part is not your strong suit, you can always hire someone to build your website for you; however, for any updates or changes to your site, you’ll probably need to hire that same person or another person to do it. So keep in mind the additional costs if you plan on adding new features or products to your site regularly.
Set Up a Payment System
Just like the various website-building platforms mentioned in the earlier section, there are many payment processors that you can use to accept payments from your customers. These include platforms like PayPal or Square, which can be easily integrated into your site. Most of the major e-commerce website platforms have these integrations already built in.
Build Your Candle Customer Base
Make sure to use all of the tools available either through your web hosting platform or through your payment processor. Capture customer emails so that you can keep them informed of new products or special promotions.
Also, consider a newsletter that customers and potential customers can sign up for to keep informed of your latest creations and sale events.
Take the Next Step Toward Starting Your Candle Business Today
If you’re ready to put your creativity and design skills to work, make sure to start at doola for the fastest and easiest method of creating your candle business.
Our small business tools are a one-stop shop for your business registration and bookkeeping needs. We make the process of running your business easy so you can focus on what you do best, making candles.
How much does it cost to start a candle business?
A small candle business can be started for as little as a few hundred dollars. The raw materials for candles are often inexpensive, and other expenses like website hosting or packing materials are often low when just starting.
Is candle making profitable?
Yes. The markup on candles can be high compared to other areas of retail. This leaves plenty of profit margin to run a successful business.
What are the legal requirements for selling homemade candles?
Selling candles will require the same permits as most other retail businesses. There are also simple labeling requirements regarding which ingredients must be listed on candles. You find more information on the FTA website regarding fair labeling practices.