The Business Of Beauty: Launching A Personal Care Startup On A 12-15 Lakh Budget

startup talk

Earlier this week, I was chatting with an entrepreneur who is building an interesting startup in the beauty/personal care space.

Let’s call him SOL so that I won’t need to use the word ‘entrepreneur’ again and again. This is called operational efficiency 🙂

Sol has an unusual background. Not so much for a startup founder but still unusual. He was a medical student but lost interest and then started studying business. And, eventually he ended up becoming an entrepreneur.

He had burnt his hands (and money) working with a partner for his earlier startup and wanted to do it right this time. More so because the apparent scale of his new venture is big.

He asked if I’d consider advising him. I said yes because I want him to win big and also because I am excited by this space.

We started talking and discussed strategy, branding, pricing, marketing budgets, who to trust when getting help, choice of customers, competition, website, people’s perception of a brand and more.

I thought of writing this post with what we discussed as base and expanded it so that he or anyone thinking of starting up and grow a startup can use it.

This is not the first time I am writing about building or growing startups here. For example, I earlier wrote about how startups should approach digital marketing based on my Digital India talk. That post is good for a solid understanding about startup marketing.

The one you are reading now is more about launching a brand successfully. But even those who are looking to reboot or relaunch their business can find value here.

Minimizing Risk: By Avoiding What Causes Failure

I want Sol to succeed so I thought about minimizing risk inherent in starting a business. To do that, I thought about what causes failure for a startup. Following came to mind,

  1. Poor product
  2. Poor communication (this includes brand + marketing)
  3. No strategy or wrong strategy (like selling to the wrong customers, selling at a low price that does not allow enough profits or on the other end a price so high that does not allow traction)
  4. Not being in it for the long haul
  5. Not doing it fast enough
  6. Lack of skills/experience (in the founder and those on the team)
  7. No money (need to raise funds or generate profits to reinvest)
  8. Spending too much or being penny wise pound foolish. First one is a bigger killer.

#1 above refers to product quality. It seems Sol has the product figured out. He does not have everything ready but has the know how.

#2 and #3, I’ll discuss in the rest of the post.

#4 and #5, are behavioral and I hope that Sol is in it for the long haul and he will understand the value of going fast. He can make sure that he commits to it by keeping a clause at incorporation which says that founder equity will vest only if founder stays in the business for a minimum of 3 or 4 years.

From the looks of it, he is doing a lot already. He is working on the product, raising funds, working with product formulator and guess doing other mundane stuff that an entrepreneur does.

#6 As shared above he has the know how. Now he needs to assemble the team to compliment him in the areas where he is not proficient. He needs a tight group of people who know what they are doing and have their heart and mind in the right place. Because culture is important. If you don’t like the people you work with you’ll not go far.

#7 is about money. He is raising seed funds for this.

#8 is also about money. But it is about investing money. I wish once Sol has the money, he will be mindful of any wasteful expenditure.

By taking care of these points Sol will reduce possibility of failure and increase chances of success.

As promised above I’ll now discuss strategy and marketing [#2 and #3 above]

Startup Launch Strategy & Marketing

startup marketing

To make his startup work Sol has to get his overall strategy, launch plan and marketing right.

He also needs to sell to the right audience and speak in their language. He needs to offer the product at a price where his prospects will buy what is planning to offer. Then offer the product in a way so that it is aligned with the buyer behaviour.

Background About Sol’s Startup And His Product

As I shared earlier, Sol’s product is in the personal care space. He has an interesting angle which only a few startups are working on. He will probably be the earliest in the space in India to launch with this angle or value add. The unit sales price for a product without value add is in INR 200-400 range.

This brings us to pricing.

Pricing

Price is one of the most important considerations in a country like ours if you are selling direct to consumers. Sol wants his product to be perceived as premium so he wants to go with a price around INR 2000.

My suggestion was to keep the price sub-1000. Because this is out of pocket expense for a normal working Indian girl who will be a good initial target group for this product.

Let’s dig into this audience group a bit more.

Buyers/Audience

Globally the beauty business is fueled by millennials and social media. This is what made Kylie Jenner the youngest self- made billionaire at 21. She started by selling $29 lip kits, and sold an estimated $360 million worth of Kylie Cosmetics in 2018.

So, millennials are the group to target because they have unsatiated appetite to try out new stuff. Gen Z is also becoming increasingly important but they can be tapped later.

Channels To Engage with Millennials

Instagram is one to start with because that is where 7 crore Indians hang out every month and 70% of them are under 30 years of age.

Focus on creating top quality pre-launch content. Do a mix of influencer outreach, paid social, contests and retarget those who engage with your brand.

Go deep on one platform. Start with Instagram followed by YouTube. YouTube makes sense but the audience building is more expensive there so get there later. For launch, create only one video with a solid story.

Leverage Facebook also but first Instagram and YouTube.

Once the core is taken care focus on email, blog and continued education related to your product. But first go big on one platform.

Focus on launching right and keeping the buzz alive.

That is why it is important to have a marketing strategy beyond the launch because It is great to get good traction on day 1. But it is also important that you keep selling past the launch day hopefully to an ever increasing audience.

Time To Think About The Brand and Getting It Right

This is so important for a direct to consumer brand without any or almost no human interaction at the point of purchase.

It starts with the name (which Sol has already figured out), logo, product and website copy, design, and colors. Everything matters.

Get the brand story right. It should incorporate the USP of the brand and why it exists. It will create a connection even when you are not there. For millennials a brand’s story is really important. So, make sure that you tell your story well.

This will also extend to product colors and packaging. Packaging especially has to be bright and more in tune with the kind of beauty minimalism Instagram eats up.

With brand figured, time to think about the launch.

Launch Strategy

Do you know what is the worst launch strategy ever?

It is launching to crickets. Launching while no one’s paying attention.

You fix this through pre-launch.

Pre-Launch

Plan a short pre-launch window of 1-2 weeks before the launch.

The pre-launch should prime people to refer your brand and bring other people onboard. The idea is to get more people excited about the launch. You can get 1,000 or 10,000 people. It is up to you, your understanding of how it works and your resources. But don’t launch without building attention and getting people curious about your launch.

A good pre-launch effort gives your launch wings.

The Launch

A good launch can be a game changer for your business. Like it was for DollarShaveClub. Thanks to its super successful launch, Unilever acquired it for a reported $1 billion in cash within 7 years of its launch.

You cannot control everything during the launch but there is a ton that can be planned. Like making sure that your website is well oiled, tested and ready to welcome users on the launch day. The product should be ready to go. And, someone should be there to listen to and address early customer queries.

Do Not Get Stuck With Attention Capturing, Make Monetization Your Focus Early [SUPER IMPORTANT]

Make money as soon as you can.

So you won’t have to reduce investments on product innovation and marketing. You do it by measuring the impact of what you are doing and not go wild with any one strategy in the beginning.

Monetization also depends on knowing your customers well.

Because Sol and I discussed selling to millennials it is important to know their buying behavior.

Howe Millennials Buy?

I have shared earlier the brand story is important to millennials. Reviews are also big so is testing.

Millennials live by testing. That’s why brands like Sephora are winning. During a survey done by TABS analytics last year, millennial respondents said that they bought fewer beauty products online last year than the year before. But they are visiting Sephora and Ulta.

This is due to what is known as “sephoraization’ of beauty space i.e. people wanting to try before they buy.

Sol can use this understanding to win the mindspace and wallets. He should offer a trial pack. Charge for shipping so that customer has skin in the game. Jessica Alba’s Honest does it well.

This brings us to the next important point which may be the last point but it is super important.

It Is The Importance Of Focus On Customer Experience

Make sure that the experience of buying from you, using your product and post-sale support are all world-class.

They are many ways to take care of this but it starts with a prompt response to customer queries and that too with empathy. If website is the interface to buy then make buying as friction free as possible. Use a customer support software to ensure that no customer query falls through the cracks.

Where To Invest How Much?

Now all this talk about what to do and how to do it is good and so very important. But a launch and marketing plan won’t be complete without a budget deployment plan.

Here is my recommendation based on what is most important at this stage. [This plan is for 6 months, and a budget range of 12-15 lakhs.]

ItemInvestment (L)Includes / Comments
Brand and tech stack2 – 2.5Includes e-com website, pre-launch tech system, software, subscription etc
Marketing: Content2 – 2.5Product and site copy, story based video
Marketing: Pre Launch Audience Building1Gather audience to get the word out on launch day and also for pre-launch build up
Marketing – Partnerships3-4Influencers partnerships across diverse influences for low risk. Used both during pre-launch, and launch phase
Marketing: Paid Social3-4Running ads on social platforms, targeting those who interact with the brand during launch and pre-launch [done mostly post launch]
Marketing; Digital PR1 – 1.5Optional, after building initial traction
Total Estimate12-15

My hope is this plan that came out of my discussion with Sol will help you plan your own launch and figure out marketing for your own startup.

For Sol, I think when he’ll launch with a fleshed out plan based on this, he can reach $500,000 to $1 million (3 to 6 crore) in revenues during first 15-18 months of launch. This means INR 50 lakh to 1 crores of profits net of expenses that he can deploy for next stage of growth which can very well take his startup in $10 million per annum range (60-70 Crores) in 3-4 years.

There is a lot here that I can go even deeper about but I wanted to share an overview first. If you have questions feel to ask in comments or reach out to me.

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