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How to Start Handmade Soap Business in India

Handmade Soaps are a really niche market to tap into especially if you are a stay at home mom looking for home business opportunities. This is a business which can be started on the side and which you can grow over time.

How to Start a Handmade Soap Business in India? Learn how to make soaps, learn how to incorporate essential oils, colours, fragrances, herbs in soaps. Practice in small batches,test the products and once you have perfected the process you can take the next steps.

  • Think like a Business Owner
  • Get Licenses
  • Get Financing
  • Hire Staff
  • Market your Products
  • Start a Shop

Handmade soaps can be a fun and exciting venture but it does require a lot of research and there are legalities involved in India if you want to start a business.

So how much does it actually cost to start a soap making business and do things right? What do you really need to start the business the right way and start getting real, paying clients through the door right away? Read through this post for that.

Before we dive right into the process of soap making, I want to share the legalities I looked up in India which are required for small business owners and for hand made personal care items.

Licence for Soap Making

There are no specific courses or licenses for soap if you do not plan to sell it large scale. Just making them for yourself and friends is okay. If you are expanding your business and go commercial you need to apply for a licence.

Here are all you might need for your handmade soap business. In fact, these are applicable to handmade skin care business and any other business.

Note: I am not a lawyer. I have researched a lot online to get this information to help simplify the process for you. Always contact a lawyer when in doubt,

  • FDA Approval
  • Government clearances
  • Drug Control Board
  • Weight and Measurement Board
  • NOC from Pollution Control Board
  • SSI Registration

FDA Approval

Licence from FDA ( Food and Drugs Administration) for hand made cosmetics which has to be approved by Central Licensing Approving Authority.

Handmade Soap is used for cleaning hands hence falls into the category of cosmetics as per Drugs and Cosmetics Act 1940 and Rules 1945 – Section 3 (aaa). This means you are entering the personal care space in India which requires approval.

Handmade and factory made cosmetics manufactured need permission and licens from Drug Control And Environmental Regulations.

The necessary laws are Federal Food, Drug, and Cosmetic Act (FD&C Act) and the Fair Packaging and Labeling Act (FPLA).

For all such licences and information on how to proceed consult with a lawyer. You can also meet local health officials.

They are the ones enforcing these laws and can assist you.

Trade Licence

Another license to be acquired is the trade license. This can be obtained from the municipal corporation. This licence allows you to carry on trade at premises.

Organic Certification

If the soap has organic ingredients you need to get Organic certification.

Another interesting thing I found online is that to obtain these licenses you must have had chemistry as a subject in 12th or have a diploma in pharmacy. You need to check with your lawyer or the State Drug authorities ( they issue the license) or the local health officials.

Another way to obtain a license if you have no degree in chemistry or pharmacy, you tie up with a chemist who has the license. The Chemist can produce the products for you.

Soap making involves lye a chemical and a process called saponification. Lye is a dangerous chemical. There are safety concerns regarding handling lye, using it. You cannot simply discard any waste into the drainage. I guess that is why they are stressing on having a chemist or pharmacist on board.

Since this is a cosmetic business you must charge GST of 28%.

Another source of information would be to contact institutes which have courses in cosmetology. They can guide you in this process.

Shop Licence

If you plan to have a physical shop you would require a licence under shops and establishment act.

Basically you need to register your business, you need a VAT registration as well.

Other Important Documents

Trademark – If you do not want your name copied it is important to obtain a trademark registration.

Trademark registration ensures that your brand name is never copied. You have built that brand and you do not want others to take credit for it nor sell spurious products under your brand name.

eCommerce Business Legal Issues– Register a Domain name and trademark it from a National Registry.

As per Section 43A of the Information Technology Act, 2000 you require a Privacy policy else you can be sued. Basically, the privacy of the people coming to your website needs to be safe and they need to know if you are collecting data or storing their personal information.

Your eCommerce portal must have a Terms and Conditions page.

How to start a Soap Making Business at Home

Soap making can be a fun adventure especially if you love to experiment with essential oils, fragrances, herbs and colours. The first step would be to understand the soap making process.

Look for courses in soap making locally. I tried contacting a few government agencies and came up with some government training. These are for helping you get started with a business. These are not for soap making.

There is an intiative in Kerala by the government which teaches soap making and encourages people to sell the soaps.

Training for Soap Making in India

Do you know there are no official diplomas and courses available in India. I was searching for some official training but couldn’t find anything official. There are 3 places which can help you with your business.

NSIC – National Small Industries Corporation

NSIC support micro, small and medium enterprises MSMEs Sector. They help with marketing, technology finance. They help with the procurement of raw materials and even finance yor small business procurement.

Every state has multiple offices, check their website to find an office nearest to you.

Website: nsic.co.in

KVIC – Khadi and Village Industries Commision

They promote self reliance among poor, employment through saleable articles. They have workshops and mentors to guide with starting a small business.

Website: kvic.org.in

Swadeshi Soap Making Training Program

This initiative is priced at just Rs. 200 and after the 3 day course you will learn how to start making soaps and selling them. They use direct marketing to sell the soaps. If you sell soaps in a shop you require a license.

The course teaches how to make Toilet Soaps, Washing Soaps, Detergent Powder, Dish Washing Powder, Cleaning Liquid and Liquid Soap.

The soaps are vegan made with coconut oil, glycerin and are 100% Natural.

Website: swadeshikerala.in

How much does it cost?

Inititially you will be just researching and learning the soap making process. There aretwo process the cold soap making and the melt and pour soaps. As a beginner you can get sample bottles for quite less.

Once you decide you want to grow the business and actually sell soaps you would require an investment of upto 1 lakh for raw materials and equipment.

The Costs involved would be

  • Fee for registering it as a Business
  • Insurance, licences and other registration and NOC costs
  • Shop Rent
  • Soap Making Equipment and Supplies ( Rs. 1 lakh)
  • Website including Domain, hosting, eCommerce site development ( Rs. 50000)
  • Business Cards, Flyers, Advertisements ( Rs. 50,000)

Equipment Needed to Start a Soap making Business

Soap making business requires space. You can work in small spaces but ideally you must have a seperate space. Many people get started in their kitchen and on their dining table.

Once the orders start pouring in though you will find it very difficult to manage it like this.

These are the tools and equipment you need to get started at home

  • A microwave (you can also use a double boiler)
  • A microwave
  • soap moulds
  • containers to pour soaps from
  • gloves, eye protection
  • label makers or printer and software
  • wrapping sheets and plastic wraps

The Production Process Involved in a Soap Making Business

There are many YouTube videos about Soapmaking. The pioneer in this is SoapQueen. She started this when she was 16 years old and at the age of 24 she had a business selling a million dollars worth of soap supplies.

She teaches on YouTube and you can use these videos as a reference to get started.

She has videos on two types of methods of soap making and then she also teaches how to make bath bombs and speciality soaps.

In India we might not get all these supplies. I have heard from soap makers that they import the raw materials. In such a case your investment costs will be higher. It would make sense to buy in large quantities rather than sample bottles.

You can also consider reselling soaps. There are many wholesale suppliers especially in USA. Purchase large quantities and resell them.

Platforms for selling Handmade Soaps

You can start selling locally and then expand online. There are many entrepreneurs who have started selling via Instagram and Facebook.

Friends and Family – If you are a social person and are comfortable selling in person, this is the best way to start. Give a few samples initially to have your products tested. Ask for feedback and work on improving the quality of soaps.

The handmade soaps especially the herbal, organic soaps can be expensive. You must educate your buyer in order to help them understand why they need to spend Rs.200 on a soap, when they can easily purchase a soap for Rs. 20 in the supermarket.

Slowly the Indian market has started shifting towards organic products and people are willing to spend money on such products which before were considered luxury items.

Facebook, Instagram and WhatsApp – I have seen a lot of Entrepreneurs selling on Instagram. They use WhatsApp and Facebook also, tapping into a niche which big brands cannot penetrate.

Selling Soaps on Instagram

  • Create a Business Profile or Account
  • Change the Profile picture ( use a logo)
  • Share pictures of your products, skin issues or problem areas and natural solutions, behind the scene images of your workshop
  • Use hashtags for each post. Use a combination of hashtags having a large number of posts, medium and small hashtags
  • When you save a post make sure you add the alt information ( alt text for image)
  • While saving the post share on Facebook and Twitter also. There is an option when you try to save you can enable share on Facebook, Twitter and Tumblr. Say yes.
  • Instagram does not enable URLs so edit your profile URL and link out the URL your post is about.
  • Embed your URL after the first line of your Instagram post. This is needed for Twitter and facebook .
  • Once published share it to our story.

Selling Soaps on Facebook

Facebook is very picky on how a business can use their platform. Never promote your products on your personal profile.

To promote your business create a Business page. Name the page the name of your Business. Select the category of business, enter all information such as website, address, phone number.

Add a profile image preferably a logo. Update the page header.

Don’t’s

Do not put your website name, phone number or any contact information in the Facebook header image. It is against Facebook Terms and Conditions.

You can only share these in the allotted spaces on the Facebook Page.

Facebook owns Instagram, so when you create an Instagram account you can link to the Facebook Page you created.

Here is howto share a post on Facebook

  • Share product images, posts addressing skin issues or other issues which your product can solve or control
  • Behind the scenes videos and images of your workshop and products
  • Cross share Instagram posts
  • Facebook Lives – Go Live and talk to your audience from your soap workshop.

Local Fairs – Many entrepreneurs start their business and hone their marketing skills by setting up small kiosks at local fairs.

They are very popular and I heard from a lady who sells soaps that people buy twice as many soaps and skin care products at fairs. That is because they know the shop will not be around for long.

Hospitality Chains, Beauty Parlours and Spas – My friend used to supply her products to homestays, bed and breakfast and spas. They always are on the lookout for good products for their customers. Hotels also include them in their welcome gifts for their customers.

Some will take a 20% cut on sales, some charge a fixed fee. Check with your local hotels.

Retail Space in Malls – Many entrepreneurs are taking up kiosks on weekends. Malls provide kiosks and you can take one just for the weekend. Make the products during the week and setup your shop on the weekends.

I heard asoap maker who did just this and was approached by a big retail chain whether she could supply the soaps for their shops.

Westend, Reliance and many others are always on the look out for good quality products which they can display at their stores.

Reliance and Big Bazaar – You can approach these companies as they are always tying up with small entrepreneurs in an effort to give their customers fresh and new products.

Sponsor Events – You can sponsor a beauty pageant, a fashion show, local meetups and runs. Event planners are always looking for sponsors. Sponsorship could be in kind or in cash. Your brand gets noticed and you get a lot of visibility.

Somethings to keep in Mind

Mindset – Invest in courses which help you change your mindset. You are no longer a person who is working on a hobby ( making soaps), but you are now an entrepreneur.

Entrepreneurs need to learn to keep themselves motivated, learn marketing and selling skills and need to understand how to keep accounts.

Most entrepreneurs find it difficult to ask for money, they also have difficulty in pricing the products to make a profit.

Life skills coaching, reading books will help you shift your mindset so that you can be confident in taking your business ahead.

Pricing – Soap makers who are into specialty soaps feel very guilty in charging money. This is a fact and cannot be ignored.

Usually they are unsure about what to charge so they look for formulas for charging a price. One I came across was to take the cost price of product and charge twice if selling as a wholesaler and price it at 4 times if you are a retailer.

This method fails because you must look into many things for coming up with a selling price.

  • Cost of ingredients
  • Labour Costs
  • Costs for your licensing, Registration
  • Rent
  • Packaging, Shipping, Labels
  • Marketing Costs
  • Your salary and salary of employees
  • Utility Bills

Yikes, that can be a lot. But if you do not add all these in, you will never make any profits. Most Entrepreneurs forget to pay themselves. This has to be made a priority.

Poverty Mindset – While setting a price people ask themselves, will I buy a bar of soap at that price? If they feel uncomfortable they do not price it high.

This is a poverty mindset. You are not making the soap for you. You are making the soap for your customer. You want a customer who can afford the soap for the benefits it provides.

The poverty mindset has to go. You need to get out of your own way if you want to make money in your business.

Focus on one Product – If you want to generate a passive income you cannot focus on one product only. What if the market dries up or competition enters the market.

You must diversify. Expand horizontally so that you can make more sales and make more income.

As an example, you can sell soaps and lotions, face creams, face wash to the same customer. Having these products around can result in more sales.

You can have discounted offers, spa bundles, coupons and buy one get 50% off vouchers to provide the extra nudge.

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