Small size– Ksh. 30,000
Large Size-Ksh. 50, 000 to 300, 000.
A number of factors determine the amount of capital needed to set up the cosmetic business. The factors include: location (determines rent to be paid), the starting stock, target market (determines the variety of stock to be purchased) and the preferred set up of the cosmetic. Basically, a simple cosmetic shop stocked with few of the popular fast-moving brands of cosmetics would require an initial capital of approximately Ksh. 30, 000.
However, the capital does not include other expenses such as rent, renovations, and licenses. Nonetheless, in some rural and peri urban areas, some entrepreneurs kick off their cosmetic venture with a capital of Ksh. 40,000 inclusive of rent and other expenses. Further, if you need a middle-size business stocked with a wide range of popular products would mean digging deeper into your pockets. Some of such businesses in Nairobi started with an initial capital Ksh. 300,000.
Running a cosmetic business does not require special licenses. The only mandatory license is a single business permit. The license can be obtained from the relevant county government offices. The fee charged depends on the size of the business, the county government at stake and location within the county. Generally, the annual fee ranges from Ksh. 3,000 to Ksh. 15,000.
There are minimal barriers to entry into the cosmetic business market. The minimal barriers can be in terms of capital, suppliers and processes. Nonetheless, opportunities exist in the market. Further, some of the products have attractive margins that make the business a lucrative venture.
Major rival businesses for a retail cosmetic shop include the supermarkets, informal traders like hawkers and other vibrant players in the designated location.
Suitable location for the enterprise.
- A site with large percentage of targeted clients.
- A site in which established cosmetics do not offer variety of products to its clients.
- A site whereby there are no dominant cosmetic shops or supermarkets.
- A site with economies of location.
- Where there exists price competition majorly contributed by economies in sourcing, cost management among other factors.
Products in the market.
There are different types of products in the market.
- Original – genuine products from the original manufacturer distributed via official channels.
- ‘Backdoor’ original– genuine original products from the manufacturer but distributed through unofficial channels.
- Original but independently distributed – it occurs mainly with international brands that are not officially represented in the country.
- Generics – cosmetic products with the same ingredients as the original one but with different brand names.
- Fakes – it refers to counterfeit products. Most of these products are common but expensive such as perfumes.
Revenue from the business varies depending on various factors. Some of the determining factors include location, variety of products, marketing strategies, price, source and type of products, and service.
Significant success factors
Location– suitable location with high traffic of people.
Variety– offering a broad range of products contributes towards meeting the various needs of targeted clients. Hence, bringing in lots of customers meaning increased income and high profits
Service – Good customer service and right tools.
Pricing – Charging fair prices will attract more customers hence success of the business.
Editor’s Final Word
There you have it. Cosmetic business is one of the most viable business venture. The most important factors to consider include identification of suitable location, when necessary renovate the shop, apply for license, settle for products to stock, engage in price comparison among different suppliers, thereafter set your prices and open shelf.
It’s important to incorporate a wide variety of products including ladies accessories such as handbags to increase your sources of income. If you keenly consider these factors you will be smiling all the way to the bank.
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