How regular people are launching beauty brands and making millions transcript

If you're starting a beauty brand because it's your passion, you probably will not succeed. And I'm not saying that to discourage you. I say that because 15 years as a cosmetic chemist and brand strategist, I've watched hundreds of brands launch and most of them quietly disappear within their first 18 months. And it's not because the founders were not talented and it's not because the products weren't good, but it's because nobody really told them the truth about what it actually takes.

I've helped clients launch brands that have collectively done over a hundred million dollars in revenue and I've personally launched hundreds of products into the market. And I built and sold my own skincare brand before I started consulting on others how to do the same. So when I tell you that regular people, not celebrities, not influencers, not heirs to beauty empires, are absolutely building brands and making millions of dollars, I really mean it because I've seen it.

But they're not doing it in the way that the internet tells you. In the next 20 minutes, I'm going to show you the actual math, the actual mistakes, and the actual decisions that separate the brands between the ones that build wealth and the ones that end up as expensive inventory in a storage unit. One of the biggest lies that beauty founders tell themselves is that if I can afford to make the product, I can afford to start the brand.

But no, making the product is not the same thing as funding the business and that's going to be a concept that we repeat throughout this video because I really want you to understand that. And this is actually the reason why very polished looking brands can disappear off the market 12 months after launching. So I had a client come to me a few years ago and she had a total budget of around $40,000 and I told her, "Okay, we can do this, but we have to be incredibly smart with our strategy.

You know, it has to be a single SKU launch. Um you can do custom product development, but that means developing very low inventory in the beginning and we need to retain most of that budget for marketing. So being very crafty on brand identity, on website, and using all the resources that you have." But she had very good taste, very expensive taste, and wanted the best of the best. She wanted custom packaging. She wanted to work with an uh an expensive branding studio, and she ended up spending that $40,000 just to get to launch day and only had, you know, really $1,000 left to actually market it.

So, she launched, she had that initial kind of organic traction from her network and some, you know, initial efforts with product gifting, but then her budget really ran out. She couldn't afford to collaborate with influencers. She couldn't afford to create the social proof that she needed for her website and her product pages and her organic social media. She had no money left to keep the brand visible, and so after 3 months, sales essentially came to a halt.

She had to then go get an even bigger loan just to fund the marketing side of the business. So, the lesson of this story is you cannot spend all your capital upfront on product, on inventory, on on getting to launch day. The real work begins, and a lot of that budget needs to be spent on actually marketing and telling people about your product through your funnel. So, in this case, the product was not the problem. The product was amazing, but the capital plan really created issues.

So, if you want to launch a real brand in 2026, you need to consider custom product development, professional branding, inventory, and enough marketing runway to figure out how to sell your product effectively. So, I personally would not budget less than around $75,000 to $100,000. And I like to use this analogy of opening a pizza shop, you know, if you are going to go and open a pizza shop, how much money would you need?

Around the same amount of money, you know, 75 to 100k. You need to get all the equipment, you need to do the staffing, you need to have a marketing budget, you need to pay a lease, you need to, you know, set up the infrastructure for the business in itself as well. And that's a really realistic budget for really setting up any kind of business. And if you want to launch like a three SKU product line, very polished with good runway, you know, somewhere in that 100 to 200 K range is going to be your friend.

That number makes a lot of people uncomfortable, but I'd rather you understand the truth rather than sell you a fantasy. Okay, so where does all the money go? So, product development first, you have custom formulations, stability testing, preservative challenge testing, dermatologist testing, if you're doing consumer perception studies, or any kind of clinical instrumentation, a lot of your budget is going to go into that to get the product where it needs to be.

Of course, you have options like private label and white label. I've discussed those in other videos, but here we're just focused on, you know, building assets that that are going to be more valuable to the brand long term. So, for custom product development, you're really spending tens of thousands of dollars across multiple SKUs if that's if that's what you're doing. So, then inventory and packaging next. Now, of course, this depends on your MOQs that you're ordering with.

Any kind of nice packaging that has printing on it, you know, those MOQs are around 5,000 to 10,000 units each. And you could assume maybe 50 cents to a dollar per unit. So, that is, you know, packaging is one thing, and then multiply that across how many SKUs you have. Then you have your actual inventory. Now, if you're manufacturing in the range of, you know, let's say 1,000 units, your product cost is going to be a lot higher than you're doing than if you're doing it at scale at say 5,000 or 10,000 units.

So, your per unit just for the fill, your batch fill assemble could be, you know, $7 to $10. And then if you're doing it more at scale, you might be more in that $3 to $6. Sometimes even less, it really depends on the product and the ingredients that go into it. But for three products, let's say, you know, my product is costing me for 5,000 units, $25,000 per product. So, that, you know, right there is $75,000 worth of inventory.

Of course, you can do it with less, um but again, your per unit cost increases when you do so. Okay, then you have your brand assets. So, think your brand guidelines, your campaign photography, your website, your email flows, and creating any kind of pre-marketing materials that you're going to need to fill up your organic socials and your website and product pages. This can be anywhere from $8,000 to $30,000 to $75,000 in itself.

It depends on who you're working with and it depends on Really, this is where with a lot of founders we can save because oh, they are graphic designers. Oh, they have, you know, their brother makes websites. Like, that's a place where a lot of the time will try and be a little bit more bootstrapped and and work on a shoestring budget. But, if you're going all out, you know, that can that is a whole investment in itself.

And then, the bucket that everyone underestimates, which is marketing. A lot of founders spend everything they have to make the brand look the best that it does and then they get to that point of launch and they have nothing left for marketing. It's kind of like if you were going to build a luxury hotel in the middle of the desert, you know, gorgeous walls and finishes, marble everywhere, and then you didn't actually build a road for anyone to get to that hotel.

So, nobody knows about it and nobody can actually get there. It's the exact same thing. You've got the perfect product, amazing results, uh beautiful packaging, beautiful website, and you have no means of letting anyone know about it and actually acquire customers. Beauty is really not uh build it and they will come category. There is tons of options on the market and you need to be loud and you need to be proud about what you've built.

There's just too much noise. There's too much competition and there's honestly too many good products that are already out there. So, you really have to step up and tell people and show people why they should switch to your product or that you're solving a problem that they haven't had a product really meet their needs for before. Okay, now let's talk about your SKUs. Do you want to launch with one hero or do you want to have multiple products?

Now, there's so many case studies on having that kind of one hero SKU launch. And while I definitely believe that from a like foundational point of view and you know, where are we really going to be bringing people into the brand, sometimes it doesn't make sense from a unit economics perspective. For most regular founders, a single hero, let's say $48 serum, just doesn't leave enough room in the first order to really support customer acquisition.

So let me explain. Let's say at the end of the day that $48 serum costs you landed $19. Now, that would be all the costs included. So that's your packaging, your formulation cost, your pick and pack fees, freight, duties, taxes, shipping, all of that. That's how much it costs you to get it to the customer. And your customer acquisition cost is let's say $40. You're advertising on Meta or on TikTok. At $48, you're you're losing money on every single order.

But when we have more products to bundle, you know, we could get that $48 serum up to around $100 average order value if you also have a supporting cleanser and a moisturizer, for example. Now, you don't always need that, but we need to think about it from a cash flow perspective. A lot of brands that are backed by let's say venture capital or private equity, they have a very aggressive growth model and they're okay losing money essentially on first orders.

But as an indie brand founder, you have to understand how that works. So it really comes down to really high retention and understanding, you know, kind of not the lifetime value but the annual repeat purchase rate and annual value of your customer. Cuz if you're losing money on the first order, but then they're going to come back in 6 weeks and spend money without you having to reacquire them, then now you're making money.

So as long as you can afford that kind of cash flow situation, you're going to be fine. But a lot of people don't budget for that either. I got a little ahead of myself, so we're going to dive into the numbers with a lot more clarity in this next section, but in summary, what I really want you to take home from this, can I afford to fund the business, not just the product, and can I afford to fund it long enough to figure out how to sell it properly?

And that is a completely different question. And once you understand that answer, then you really need to need to get clarity on how that money is going to flow through the business, and that's what we're going to dive into now. Okay, this is where founders get fooled. They think that sales just means success, and sometimes they do. But sometimes it means that money is flowing through the business very quickly and not really staying there at all.

Okay, so let's run some numbers. What I was trying to talk about earlier, we're actually going to whiteboard it out cuz I think that'll help. Okay, so you're going to launch your hero serum at $52. Good price point, you know, prestige for sure. And your landed cost when it gets to the customer is $19. So this is your product, your packaging, all of your shipping, pick and pack fees, and like all the fulfillment associated with it.

So, you're profitable. Okay, so you have $33 in profit. Yay! This is going really well for you, but we forgot about marketing and we forgot about our customer acquisition cost. Average across like all industries is $40, but I will tell you right now for the skin care and beauty industry, it's a lot higher, but we're just going to use the average just so that you can see how quickly this gets out of control. Cost of customer acquisition, this could be on Meta, it could be on TikTok, it could be a blended cost of customer acquisition if you're working with influencers or creating UGC content.

So this is really everything all together. Let's say it's $40. To sell your product to someone, you are negative $7. Well, that's not very good, is it is it? You're literally paying people to take your product away for free, essentially. This does make sense, even though it doesn't look like it. You're losing $7 on every new customer that you acquire. And a lot of founders would see this and they would panic. But you shouldn't panic yet because this is first order math.

I want you to remember that, first order math. And first order math is rarely how a beauty brand or beauty business actually makes money. So we're going to we're going to bring this back up to the top. And there's two ways to approach this. One is with more SKUs and bundling. So let's run through that scenario first. And just keep in mind this negative $7 first order. Okay, so let's say you offered that same customer a bundle, okay?

So you have your $52 serum and then, you know, you've added a moisturizer and a mist, okay? Let's say so we've increased that to total bundle, the value is now $94. Okay, that's a bigger average order value on this situation. We still have, uh, obviously our cost of goods sold and now it's increased as well because we do also have more products in the bundle. So let's say it's gone from $19 to $32, okay? What is that?

Six. Okay, so now we're $62 in profit and our cost of customer acquisition remains the same, minus 40. Now we're left with $22 in profit. So now you're profitable on first orders and that's why bundling and increasing average order value can be super super valuable. So we went from losing money on our first order to making money on our first order. Then there's another scenario that I want you to consider as well and this is called lifetime value.

Typically we relate it more to annual value of the customer because we want them to buy more than once. Now it's really hard to know what this is and it's going to be different for every business, but a lot of brands do rely on lifetime value to actually scale aggressively and become profitably profitable later in their journey, which is why cash flow and having that marketing runway without relying on it as cash coming into the business is really, really important.

So, let's use the scenario where we've got the $52 product. We were losing $7 on every single order, right? But, on average, someone is going to order around 2.4 times a year. So, we can multiply this by 2.4. 52 * 2.4 is 124.8. Now, we also need to multiply out our cost by that much. So, 19, we're going to use our $19 scenario again, * 2.4 $45.06. Okay, so that leaves us with $79.20 profit, right? And we only paid to acquire that customer once.

So, we have our $40. So, now, over the year, we are profitable $39.20. So, this is good unit economics, but you have to be able to get to a point where you can afford to lose money to then make money through retention. There's kind of two different ways to approach your cash flow, and those are the two most common that we'll do. So, now I hope that you've kind of had that visual of there's really two ways to think about your cash flow.

And if you're not really considering both of them, that's when we can fall into a bit of issues with how we're going to acquire customers, how much we can afford to acquire customers, and how aggressive we can be with our product strategy. So, you either plan to be able to afford to lose money on a first order, and know that your product is good, you're going to have good retention, and you're going to make that profit from that customer a little bit later.

Or, you do need to make money on the first order, which means you need to have a high average order value, and typically we do that through additional SKUs that support the hero. Because you can do $500,000 in sales, and you can be not making any money. It is very, very common. In growing a physical inventory-type business, like it is with consumer product goods, like it is in beauty, you buy inventory before you sell it.

All of that cash is tied up. And typically, you're buying ads before that revenue actually cycles back. And if things are going really well, you're probably actually going to end up investing in inventory before you've got all of that cash back and all that liquidity associated with it. So, brands can really grow, and they can grow aggressively, but they can feel broke. And that's normal. When it becomes dangerous is when the founder does not understand why, and they don't understand the cash flow cycle that they're in.

So, the shift that I want you to think about is I want sales to I want healthy business economics. Because a million dollars in revenue with very weak margins and a poor customer retention rate is not a healthy business, and it's really not as transferable. And this becomes really important when you start thinking about the type of business that you actually want to be in. And we will come back to that. Once you understand your numbers, the next temptation is to go everywhere and anywhere as fast as you can.

So, let's say you mastered Meta and organic uh founder kind of forward content. Now you're like, "Ooh, let's do TikTok. Let's go on Amazon. Let's go retail. Let's start working with more influencers." And it becomes really scattered. So, I want you to think about your customer acquisition channels as singular events and singular strategies that you really need to master before moving on to the next one and diluting yourself and diluting your budget.

In the beginning, your job is not to be everywhere. Your Your is to prove that you can sell your product in one repeatable way. And for most brands, that's going to be direct-to-consumer e-commerce led strategies through one customer acquisition channel. It could be meta advertising, it could be organic social media content, founder-led content. It could be working with creators. That could be literally the strategy.

Creators, affiliates, maybe it is TikTok Shop. It could be a community-first strategy, an education-first strategy, but you need to nail it down to something fairly singular. Because when you focus your energy in one channel and funnel, it's really going to teach you who your buyer actually is and what type of messaging actually converts into sales. What kind of creatives really get people to click or have higher retention rates.

What objections are coming up before the purchase. What kind of offers are really getting people to buy right away. And it's going to help you understand what that customer journey actually looks like. And this is really where regular people, regular founders can really win. Because beauty is really not about shelf presence or celebrity ambassadors anymore. It's about a very strong clarity in your positioning, product-market fit, solving real problems that people actually have, very strong creative strategy, and really disciplined execution.

And those are all skills that you can acquire. They are not lottery tickets. I worked with a founder once that really thought she had to be everywhere all at once and diluted her time across multiple different marketing funnel strategies activities. She was running meta ads, she was doing organic TikTok, she was constantly doing pop-ups. And she was also pitching wholesale all the time as well. So, she was scattered.

And none of it was really working well because it also none of it really related to one another. And none of it really had her full attention. So, we cut everything except for meta because she did have a good return on ad spend. So, we put more energy into that and then just focused on TikTok organic creative from her personal brand. And what ended up happening is her classic customer acquisition dropped by almost 50% because there was focus.

We had the ability to test more creatives. We could do more variations. We could utilize the organic strategy to then funnel that into meta, and it became an ecosystem of further and further clarity and more and more success. So, after that, then we did introduce an additional channel. She loved the pop-ups, she wanted to do them. So, we did pop-ups again, and because there was a very strong online presence, those pop-ups actually did convert into more sales and a bigger customer retention and ended up making making sense ultimately because there was that foundational funnel that we were working from and getting people to go into.

And different channels behave really differently. Like meta, it is expensive. It's expensive to create the to create the content for it. It's expensive to test. It's expensive to win, but it is really really reliable. And I truly believe that every business can scale on meta. It just takes a lot of effort, and it takes a lot of money, too. TikTok is a newer advertising platform, and it is different in meta that you need to have a really really strong creator community essentially to win on there.

It is known for a lower cost of customer acquisition, but I find it a lot more variable in the results that you can actually get from it. So, a lower cost of customer acquisition does not necessarily mean that your your business will do well there or that it'll benefit in the long run. Each Each platform really has its own internal strategy, its own pros, and its own cons. So, the question you should be asking yourself is not, well, which channel is trending right now?

You know, where am I seeing the most wins from other brands? The question really needs to be, which channel can I understand and master and create a repeatable purchasing cycle and funnel for for me to execute on and scale that platform. Because if you cannot sell the product in a very clear, repeatable way, adding more channels and more confusion will not fix your business. All it does is it hides the problem. So, once one channel works, you earned the right to expand.

And how you decide to expand will decide whether you build a stronger business or a complicated mess. Expansion is where a lot of founders will break what was actually working before and they have to redo it again. So, you have 3 months of really great traction on your e-commerce website and now you're like, "Yeah, I'm ready to go Amazon. I'm ready to approach retailers and I'm ready to launch 10 new SKUs." And that's too much too early, for sure.

Every new SKU, every new product that you introduce into your lineup needs to do at least one of the three things I'm about to mention. It either needs to raise your average order value so that you're going to become more profitable on each order that you're getting and you can really support the cost of customer acquisition. It needs to maybe improve retention. So, maybe it has a higher touch point product. Like, let's say I'm going to introduce a lip gloss that people are going to buy they want to buy once a month.

And the hero product they only need to buy maybe every two to three months because it just takes longer to use it up. Or, it needs to solve the next obvious problem that your same customer, your same avatar is going to have. And that's it. It needs to do one of those three things. So, increase AOV, increase retention, or solve the next problem for the same avatar. Not introducing new customers into the mix. Not trying to please more people.

Use your customer, see what other problems they might be having and solve something for them. You should not be launching new products because you get bored or because one of your competitors did it or because something is trending on the market. Those are not good reasons. So, if your hero product is really bringing them into the brand and is your best seller and is creating that brand awareness for you, your supportive products and your next products need to essentially help them build out more of that routine.

Buy a bundle of something or come back sooner. So, I had a client that wanted to launch six more products in their second year. And yes, they were doing really well. Their hero product had a retention rate of around 40% and then they had kind of a support of product that had a retention rate of about 20%, which is not bad, but it's not great. And so, when we were looking at, you know, just the whole business essentially, the next move was not to introduce six new products and really confuse the marketplace and confuse the customers and also create a lot of inventory risk for her.

The right move was to add an additional SKU that was going to increase average order value, that was a great bundle companion, and that also was going to be something that would have a really high repeat purchase rate and a more frequent repeat purchase rate than the product that would had the 20% retention. So, that single product moved revenue in such a positive direction way more than adding six SKUs would. It's really important because a single product can really, you know, catapult the business.

Some Some product line expansion can kill it from a cash flow perspective, an inventory perspective, and just creating confusion for your brand in the marketplace. Retention is something that people get a little bit confused at. They think it's all about like brand loyalty programs and points and all of this. No, it's about creating a product that is so good that in that people see results from that they have to come back.

They can't get it anywhere else. They are now loyal to you because of that product. That's what I want you to think about when it comes to retention. You don't want to be This is a quote from someone. I don't remember who, but you don't want to be in the sales business. You want to be in the resales business because it's very expensive to be in the sales business. You're constantly paying for customer acquisition. You want to keep selling stuff to the people that you already paid to get into your funnel, into your network because that sale is essentially now free.

Um, we want to have a really high retention when it comes to the beauty industry. That's how we're really going to scale the business long-term. Brands that are doing 20, 40 million and have customer retention rates of 5 to 10% are just dying with their cash flow, and I've seen it multiple times. When retention improves, everything gets better. Your lifetime value of your customer is going to go up. You can tolerate a much higher cost of customer acquisition, which means that you can outcompete your competitors as far as how aggressively and how much you can spend to acquire a customer.

I want you to think about this, for example, a like a medical dermatology clinic, you know, their lifetime value of a customer can be sometimes, you know, $5,000 to $30,000. So, they can afford to essentially pay two $2,000 to acquire customers very, very aggressively. Um of course, in product-based businesses, our lifetime value of a customer is probably not going to be that much unless your products are insanely expensive.

But, the more that we can retain them and feel confidence in our retention, the more are we going to afford spend up front to get that customer. So again, when you improve your retention, your forecasting can get a lot cleaner, and the business starts feeling more like a machine and less like a struggle, and less like just, you know, winging it. And that really is the difference between a brand that is grinding it out, you know, great top line, really bad internal uh cash flow, and one that is able to scale and scale profitably.

This is the chapter that most founders never get to because they're in survival mode. The founders that are building real wealth with their beauty brands think about this from year one. Some founders want a profitable founder-led e-commerce brand, lean team, strong margins that pays them well and gives them creative creative freedom. And that is a very valid goal, and that is how a lot of seven and low eight-figure brands operate forever.

And then some founders want to build really fast, funding, retail, scale, exit. But those two businesses are really not the same at all. Outside capital that comes with the latter example really builds a lot of pressure within the business. And, it really changes all the decisions that you make for it. Funding really is a tool. It is not a trophy. So, when you take outside capital from venture capital or private equity, it becomes essentially a pressure cooker.

And, some people want that. And, that is the whole strategy. Fund it, scale it, exit very quickly. For some people, that's just not the right path. And, I would say retail is kind of the same here. A lot of people glamorize it. They want to be on the shelves of Sephora. But, retail is not just more sales and more awareness. It is completely different margins, completely different pay cycles, a lot more operational demands.

And, honestly, it's very expensive. Retail really works best when it already knows who it is, who it sells to. It has that kind of brand equity already built up through their e-commerce, through their organic social media, through their advertising. And, it's just the logical next step to scale, to reach more people, but they already have that brand awareness built in. Walking into a Sephora meeting with a brand that has only been doing e-commerce for 6 months is going to be a really, really tough from an operational point of view if there is not that outside funding to support what is required to be in retail.

And, if you ever want to sell the company, you need to build something that is transferable. This comes down to the kind of brand identity of it. It cannot be tied solely to the founder. There has to be a brand actually built around it and a community and a whole vision built around it as well. You need high customer retention, and you need to own your intellectual property. You need to have very clean supply chains, and it needs to be transferable to the operational team that will take it over at exit.

And, acquirers do not buy what's trendy and hype. They buy quality businesses. You need to have the good margins. You need to have strong operations. You need to have that brand differentiation. You need to have brand equity. So, if you are looking to build something for exit, think about how you make that transferable from day one. So, what are you actually trying to build? A profitable lifestyle business, a funded growth stage company, a future acquisition target, or a multi-generational brand?

Each one has a different five-year plan, and each one is completely valid. Scaling is not about doing more random things. It's about building the infrastructure around what already works. Okay, so if you're going to take one thing from this video, let it be this. Regular people are absolutely launching beauty brands and making millions of dollars doing it. But, they are not doing it by treating their brand like a side project.

They are starting with enough capital to give it a real chance. They understand their numbers. They have a strong product architecture, and they focus on one sales channel before they're adding more. They're expanding strategically, and they care about retention as much as acquisition. And when they're looking to scale, they're scaling towards a goal that they've actually defined. And that's how real brands are built.

It's not by chasing aesthetics first, and it's not by launching 10 products just to look impressive. And it's definitely not relying on luck, and it's definitely not assuming that your passion is enough. Passion can keep you committed, but it's not going to replace capital, and it's not going to replace strategy, and it's not going to replace skills. So, the big difference between brands that really do scale and make it, and the ones that just their inventory is collecting dust, it is discipline, it is clarity, it is not giving up, and it is understanding the math behind the business.

So, you do not need to be a celebrity to win big in beauty, but you need to build like an operator. So, if you found this useful, please do subscribe to my channel. I am a cosmetic chemist, and all we do here is talk about starting beauty brands, launching products, cosmetic chemistry, industry insights, all of that good stuff. And I hope you enjoyed this, and I'll see you in the next one.