As a result of our selling soaps for wet shaving, we meet and work with a great deal of artisan soap makers building businesses in a highly-fragmented and very competitive niche. In doing so, we have noticed a few areas that perhaps may be helpful to the artisan soap maker looking to build a business.
Most soap artisans understand that selling items that only cost the consumer $5 to $15 each requires an obvious quantity threshold to make a living. For the artisan soap maker, this may vary based on both personal consumption as well as personal preference. The most successful artisan soap makers understand this principle and requirement for scale and do all within their power to mitigate the problems that may arise when one attempts to reach critical mass with a viable artisan soap business.
In discussing this topic, we will not delve into spreadsheets or the advanced modeling required to come to the quantity threshold that is viable and right for you and your business. Instead, we will discuss general concepts that point the reader down paths of thought that help prepare for risks and growth. It is still highly advised that small, budding soap vendors do, however, spend the time required to understand the demand metrics required to make their business successful. Here we will provide at least some of the helpful concepts at least at a high level.
Soap Riches are in the Soap Niches, But Niches Need to Scale
While you may need to sell tens of thousands of bars of artisan soap each year to turn a side hustle into a thriving company, you need to think niche-y before you take the business to a broader audience. For instance, sticking to a smaller handful of solid, trusted soap recipes aimed at a specific demographic or geographic market is the best place to start.
Trying to be all things to all people at the outset is the death nail to many a small soap artisan. The most successful soap vendors start within a specific niche demographic and then move outward. The chosen niche could range from focusing on female body care to male facial hair or male shaving. Regardless of the avenue in which you begin, it is best to start with a highly targeted niche. Doing so will mean you have less recipes and less education for the differing aspects of customer service that will impact various groups very differently, depending on the product and their individual needs.
Start Local, But Think National
The most successful soap artisans almost always start local. They hock their wares to local spas and hotels, they work their magic at local tradeshows and events. They pay for small booths at farmer’s markets, getting the word out to potential soap buyers wherever and whenever they are able.
Acquiring regular, repeat visitors is critical to establishing a solid base of regular purchasers for your custom soap products. Once you have an established and profitable base, you can work outward from there to the next phase of growth, but it is well-advised not to wait until that point to start thinking about a presence to a much broader audience.
Local, repeat buyers are great. They do several things for maintaining the sustainability of your business. First, they can help establish a recurring purchasing base to the business. This helps to mitigate the cyclical swings that may come from national online selling outlets. Second, they help with the most important type of sale of all: word of mouth. Generally, quality, local artisans are built thanks to the word-of-mouth among friends. “Have you tried [fill in the blank] soap yet? It’s fantastic!”
Finally, getting a customer base under your feet is helpful in understanding the size thresholds that may be required to get your business to move to the next level of operations. For instance, in running operations for a smaller company, you may better understand what equipment and manpower is needed to scale from say 10,000 units a year to 100,000 or 1,000,000.
Apart from the wisdom gained from establishing your brand in a local market, the time taken in doing so should provide you with the street smarts that will help you scale. It will also give you the time that may be required to establish yourself in a broader way (perhaps online) to a much more national audience.
Establishing Soap Marketing & Distribution Channels
For the sake of brevity, we will avoid talking about the scaling of production and stick more to the demand side of the equation. Supply is a different monster and is typically much easier once you can generate the right demand for your artisan soap products. Marketing and distributing your soap wares both locally and nationally will require several very different disciplines.
As previously mentioned, the starting artisan soap vendor may spend much more time building up local relationships and getting a good clientele base going in that way. However, such a group should also be thinking about website design and promotion as they look to take their business to the next level. Unfortunately, the website design and building needs to be run in parallel, while the fruits may not be harvested for a long time to come.
Establishing and building a successful website for an artisan soap vendor is critical if one wants to 1) compete on a national level 2) establish the scale required to make a viable, working and sustainable business 3)
Soap can be shipped nationwide, allowing for a single soap operator to sell his/her shave soaps to a broad audience from a single (or perhaps two) points of location.
Mitigate for Downside, But Prepare for the Spikes
Whether you are in the power generation business or you host websites in a server farm, the capacity required to run a business is not based on average demand, but for the instances of peak demand. Preparing a soap business for peak demand will change as you move from one niche market into a broader audience.
Preparing for peak demand in supply, marketing and operations requires a great deal of forethought on what it may mean to scale. It means understanding equipment capacity, throughput speeds and bottlenecks. It means knowing constraints in manpower and understanding where the chokes might be for successful delivery that may occur from a large spike in demand.
One problem many smaller soap artisans experience is that when they do all the right things on demand generation (i.e. start local and move national), they often may not plan completely for the larger demand spikes as they inevitably will if things are done correctly.
Soap artisans may start the business on a shoestring, but they will find they may not have appropriately planned for the right equipment and extra hands-on-deck when things really start to heat up. In many cases, they may also not understand that scale means increased cost structures as well. That is, they now need to pay employees for what they were doing without pay for the last 18 months.
In short, be prepared to mitigate the downside risks, but perhaps more importantly, prepare for the upside spikes.
Working On Your Business, Not In Your Business
Mitigating against the downside is something most small businesses are good at. In fact, smaller artisans will tell tales of working their soap making business as a side hustle until they were able to achieve some level of applicable scale that made them comfortable enough to jump ship.
But such scale comes with a price. One of the most successful artisan soap vendors we know spent about five years building their family business out of their garage into a thriving $1M revenue company. But that work requires them to make investments in property, equipment and people as the company produces more product. It also means the owners will need to begin to think about stepping away from some aspects of operations and leaving the work in the hands of trusted hirelings.
There will come a time that step-wise investments in these things will be requisite so you can work and think about how to work on building the business instead of simply working in the business. There is a higher cost to working on the business, but the returns to lifestyle and long-term success and growth will be much greater if you spend your time working on the business and not in it.
Achieving the scale necessary to quit your job and go full time as an artisan soap maker may be your ultimate aim, but be careful what you wish for. There may be a large gap where making soap and fulfilling orders into the wee hours of the night until you reach the scale necessary to bring additional hands into your company to assist.
And remember, the scale that you may desire and require could look completely different than someone else. It is best to understand your gross profit and your operating costs so you can back into a net profit number that will make you comfortable given various levels of volume you believe you can achieve. For many artisan soap vendors, massive scale is not desired, but simply a good side hustle or lifestyle business that provides them more time and money flexibility.
Whatever your aim, business planning is a critical element to achieving the levels of growth you will need to make your soap business your own custom-tailored definition of success.