How To Start A CBD Business In The Beauty Sector

23rd September 2019

Thinking of starting a CBD beauty brand in 2020? Well, we want to help your business idea succeed. Today we’re going to have a look at some tips and ideas you can use to make the best go of creating your own CBD beauty brand.

Whilst it might seem daunting when you take first start to consider all the legal necessities, the market research needed and the product sourcing options, there are some shortcuts that could make this journey into the unknown easier for you, but more on that later.

Maybe We Can Help

Marketing is key to building your brand and your business and things are a little less straightforward in the CBD niche. Maybe we can help. We can help connect you with reliable industry partners to help you overcome some of the pitfalls and help you reach your potential.


Choosing The Right Name

A name might be one of the most important parts of developing your brand.
You want your name to be easily identifiable and if it can tie into your particular area (in this case CBD and beauty) then all the better.
Don’t use something that ties you to CBD forever. Instead, choose a name that can evolve with your company and that conveys the essence of what your CBD brand is all about.

The young entrepreneur Alexis Rosenbaum choose ‘Rosebud' as it dovetailed well with her surname and encapsulated the natural essence of her brand, whereas Kourtney Kardashian has gone a different direction with her Hyaluronic Halo + CBD Serum brand.

Names To Avoid

We recommend not using ‘CBD’ or ‘cannabis’ or ‘hemp’ in your brand name. These words can be a red flag for banks and could cause problems down the line with processing payments – as an emerging business, you want to avoid this.
Choose a name for your company that is easy to remember and easy to spell.

Try to imagine the conversations between family and friends where they recommend *your* company – don’t use something confusing or unintentionally funny. Which leads us nicely to the next consideration…

Buying Your CBD Domain Name

After you conduct your due diligence and check your brand isn't already being used, make sure to go and find out if that domain name is free. Brainstorm with family, friends, co-workers and once you narrow down a list, go to GoDaddy.com and make sure the .com domain is available for your name. If this type of thing is not your area of expertise, don't fret as there are specialists who can help with technical areas.

Even if it is already a website don't despair. Go to the WHOIS database at the bottom of the GoDaddy webpage to see if the current domain-name owner would be willing to give or sell to you. But if you are going to start bidding on domains then you really need to have completed the next few steps first.

Registering Your Business & The Legalities

After you’re assured that this is the name for your burgeoning CBD beauty empire it’s time to set yourself up as a business entity.

We highly recommend setting up your business as an LLC. If possible set up your entity under the same name as your business. Many companies choose their company name and then get a DBA (“doing business as”) which is probably unnecessary.

Check The Prerequisites In Your Jurisdiction

Depending on your location, or your business's location there may be different legal documents to obtain. Make sure that, along with your market research, you know what the prerequisites for a business of your type is.

What Type Of Products Will You Sell?

There are a range of different options in the types of products you can bring to market, each with its own strengths and weaknesses. 

  • CBD Facial Oils
  • CBD Moisturisers
  • CBD Lip Glosses
  • CBD Day and Night Creams
  • CBD Body Wash
  • CBD Hair Care

Whether you are interested personally in bringing the next hot CBD facial oil to market or see an opportunity in hair care, before deciding which products you want to focus on, consider the costs involved in sourcing high-quality raw materials, processing, manufacturing and packaging. You may want to consider white labeling your product from a reliable vendor to reduce the time it takes to start doing business.

RELATED ARTICLE:
What is CBD?

Opening Your Business Bank Account

Opening a business bank account may prove troublesome, depending on which jurisdiction you are in for the simple reason that not everybody has come around the benefits of  CBD. The stigma of association with cannabis still gets in the way of many people understanding the true potential of cannabidiol. We are relieved to say that this is changing should you encounter some difficulty, remember that you now have a large range of choices with the increasing internationalisation of banking.

Getting Ready For Taxes

It’s the inevitable hurdle we all have to cross at some point but as an emerging CBD business, you will need to pay your taxes.

Below are the taxes that as a small CBD business you will have to inevitably deal with. Be sure to check all the requirements for your area.

Income Tax

Sole trader tax is paid from your business’s profit. Assuming you don’t receive any other income you will pay income tax on your business’s profit once it goes over the personal allowance. (Check your rate.)

If your business is a limited liability company (LLC), you may pay income tax on salary or dividends from the company. If you pay income tax or how much you pay, depends entirely on how much you take out.

When paying income tax on your salary, your employer (i.e. your own company) deducts it from your salary under the PAYE (Pay As You Earn) scheme.

National Insurance

National Insurance (NI) is a tax in all but name as it’s money paid to the government and accounts for 20% of Treasury receipts.

As an LLC, you must pay both employers’ and employees’ National Insurance Contributions on any salaries above the current threshold.

Corporation Tax

A corporation tax must be paid on all profits from the company.

It works in a similar way to income tax, however, corporations/companies do not have a personal allowance. This means a company must start paying corporation tax as soon as it starts earning a profit.

VAT

Value Added Tax (VAT) is a government tax on the sale of goods and services. Any business with earnings over the current VAT threshold (£85,000) must register and complete a quarterly VAT form.

The current VAT rate is 20% on goods and services.

Selecting The Right Payment Processor For Your CBD Merchant Account

Selecting a credit card processor for your company can be tricky. There are a lot of factors to take into account.

  • Location of your business
  • Size of your business
  • Credit history
  • Credit card processing history
  • High chargeback ratios

Whether or not you’re running your business exclusively online

When working in a high-risk industry such as CBD, even as a CBD beauty brand, it can be tricky to find a quality credit card processing service.

There are a lot of important questions to ask yourself as an emerging business. How much should you be paying in fees? Should you lock yourself into a service agreement?

These issues are important to consider before signing up for merchant account services.

How To Deal With Chargebacks In The Beauty Industry

What is a chargeback? A chargeback is a return of payment to a payer – in this case, it could be a consumer.

Chargebacks differ from traditional refunds because rather than contact the business for a refund, a consumer goes over the merchant’s head and asks the bank to remove funds from the business’s bank account.

If the bank feels the request is valid, the funds will be removed from the merchant’s account and returned to the consumer.

Building Your Website & Your Brand

Below we’ve listed a few things that are important to pay attention to as you grow your CBD beauty brand.

  • UX & Webdesign
  • SEO & Content Marketing
  • Social Media Marketing
  • Pay Per Click Advertising
  • UX & Website Design

Designing a website that is intuitive and easy to follow is key for a booming business. It’s important to have a website that, for lack of a better term, funnels the user towards a goal by fulfilling their needs in a linear fashion. This increases the chances of your business being successful.

SEO & Content Marketing

Like it or not, SEO and strategic content marketing is key to increasing your business's visibility. There is a tonne of content on the internet with more being created every single hour. You need to stand out from the competition which is why a dedicated SEO and Content team are required.

Take the time to create an SEO strategy that works for you and gets you seen by more and more people. This can be tedious for many entrepreneurs looking to make a splash fast but will yield significant ROI.

Social Media Marketing

Harnessing the potential of your social media accounts is key in 2020. Building up a tone and a voice that is instantly recognizable on social media is a task that many businesses must overcome.

The keys to doing this well are;

  • Understand your target audience – who are they, what do they want
  • Providing content that meets those needs
  • Introducing products and services as naturally as possible without being an “overseller”

People are more likely to buy from someone they know and trust. Therefore it’s important to build your reputation and your trust ranking. It’s a slow grind but eventually pays massive dividends from loyal customers.

Pay Per Click Advertising

Pay-Per-Click (PPC) advertising is a quick and easy way to buy visits to your site. Advertisers – in this case, your company – pays a fee each time one of their ads is clicked. Search engine advertising is one of the most effective forms of PPC.

It may sound like a money-sink but when PPC works correctly the amount you pay for these clicks is trivial. A lot goes into creating a successful PPC campaign (which is where your SEO team can help) but the rewards are well worth it.

Why Start a CBD Business In The Beauty Sector?

There are many reasons to consider starting a CBD business in the beauty sector. Worldwide we are seeing a loosening of cannabis laws and regulations which look to set the market blazing with lucrative cannabis business opportunities.

Small companies have already begun integrating CBD into their beauty ranges and more are following suit. In a recent report from Prohibition Partners, they estimated the global CBD skincare market to be worth about $710 million in 2018. While that figure is staggering enough, the cannabis research company projects the industry to be worth $959 million by 2024.

Additionally, they believe that CBD skincare could account for up to 10% of the world’s skincare sales in five to ten years.

Indeed there is stunning growth in all areas of CBD, not just CBD skincare, projected over the next decade. Customers want a brand that they can rely on so the time is now to lay the groundwork. By the mid-twenties, when the CBD skincare and beauty industry is in full swing, you’ll be an established voice and brand with an organically grown audience.

Can We Help?

If you are interested in starting a CBD brand and aren't sure about all the options open to you, including wholesale CBD and white labeling, maybe we can help. We have connections throughout the industry and all over the world.

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