Cosmetic Herbal Sundries Business Plan
Gentle Touch Creations is a start-up business specializing in hand-made herbal products created by Joanne Lovejoy, the company founder. These products include herbal therapy packs, soaps, Saint-John’s-wort oil, balsam eye packs, salves, moisturizers, herbal bath bags, and bath powder. All Gentle Touch Creations are made from herbs that are either garden grown or gathered in local fields or wooded areas when they are at their peak of maturity and the concentration of active ingredients is highest.
Herbal products have grown in popularity with consumers over the past ten years. Herbal products industry exceeded $4.3 billion dollar in sales last year. Where once a customer would have to go to a speciality shop to purchase herbal products, now those same product are available at the local supermarket. The demand has created a cottage industry of supplying herbal products to companies who then market the product under their own brand name.
Gentle Touch Creations will sell its product line to herbal product companies that sell baskets with specific themes (such as balsam salve and eye packs).
Joanne Lovejoy has seven years of experience in the herbal product industry. She has worked as a Product Manager for both Jerry’s Herbal Products and Safe Soap. She has maintained her contacts in the industry and has already signed contracts with Forest Meadows Products and WindWalker Products to supply herbal therapy packs, salves, balsam eye pack, and Saint-John’s-wort oil.
The mission of Gentle Touch Creations is to create herbal products that heal, sooth and cleanse our customers.
The objectives for Gentle Touch Creations are as follows:
- Achieve sales goal of $120,000 during first year of operation.
- Achieve a regular customer base of 10 companies.
- Increase sales by 15% during the second year of operation.
Gentle Touch Creations is a provider of herbal products including herbal therapy packs, soaps, Saint-John’s-wort oil, balsam eye packs, salves, moisturizers, herbal bath bags, and bath powder. Gentle Touch Creations sells its product line to herbal product companies that sell baskets with specific herbal themes.
The company will be organized as a Sole Proprietorship.
2.1 Company Ownership
Gentle Touch Creations is owned by Joanne Lovejoy.
2.2 Start-up Summary
The start-up expense for the Gentle Touch Creations is focused primarily on production and extraction equipment. Joanne Lovejoy will invest $50,000. In addition, she will secure a $50,000 SBA loan.
2.3 Company Locations and Facilities
Gentle Touch Creations is located in a 2,000 square foot manufacturing space in the Sneed Industrial Park in northwest Tracy.
The product line of Gentle Touch Creations is as follows:
- Herbal Therapy Packs for back and neck pain and relief of muscle aches, filled with wheat berries and flax seed and 10 herbs. These are made of natural cotton or patterned flannel and can be heated in the microwave oven or cooled in the freezer for optimum benefit.
- Saint-John’s-wort oil for use as an anti-inflammatory or for burns, in a roll-on applicator.
- Balsam eye packs in eye-pleasing patterns that help relieve sinus discomfort and eyestrain.
- Salves with Comfrey for healing cuts, Goldenseal, Balsam and other herbs for use on split skin caused by the drying effects of heat, cold or water.
- Moisturizer for face and hands with various scented oils.
- Soaps created with such herbs as powdered balsam and rose petals marbleized throughout each cake, gently scented.
- Herbal bath bags of lavender, peppermint, oatmeal and herbs.
- Bath powder made from arrowroot, cornstarch, rose petals and other herbs.
Market Analysis Summary
Herbal products have grown in popularity with consumers over the past ten years. The herbal products industry exceeded $4.3 billion in sales last year. Where once a customer would have to go to a speciality shop to purchase herbal products, now those same products are available at the local supermarket. The demand has created a cottage industry of supplying herbal products to companies who then market these products under their own brand name.
Currently, the industry can be divided into two segments:
- Herbal Health Products
- Herbal Beauty Products.
4.1 Market Segmentation
Gentle Touch Creations will focus on two target companies:
- Herbal Heath Products: The Northeast is home to a number of small-to-medium size herbal heath product companies such as Comfort Zone and HealthSmart in Burlington, GHK Natural Products and Wise Herb in Madison, and Sliver Dream and Simple LIfe in Montgomery. All of these companies buy raw or finished product from third-party vendors. These companies generated sales in excess of $40 million last year. Their products are sold in health and natural food stores on the East Coast and Midwest.
- Herbal Beauty Products: The Northeast is also home to a number of small-to-medium size herbal beauty product companies such as Glow and Nature’s Way in Tracy, Garden Dream and Rising Sun Products in Madison, and Carpe Diem Natural Products and Simple LIfe in Montgomery. All of these companies buy raw or finished product from third-party vendors. These companies generated sales in excess of $60 million last year. Most of their product are sold in health and natural food stores only on the East Coast.
4.2 Target Market Segment Strategy
Herbal health products dominate sales but herbal beauty products have been growing in popularity each year.
There are 10,000 herbal health product companies that are competing for market share among consumers. Most of these companies are regionally focused but 15% of these companies distribute their products nationally. This is compared to only 2,000 herbal beauty product companies. Most of these companies also only compete regionally though there are a handful (4%) that dominate the national market. As sales grow in herbal beauty product, more new companies will enter the marketplace.
Gentle Touch Products will focus on the small companies serving the East Coast regional market. Many of these smaller companies aggressively seek out new products that they can add to their product line. The cost of manufacturing all these items themselves is prohibitive so they contract with third party vendors to supply product.
4.3 Service Business Analysis
As the herbal market has grown into a multi-billion dollar industry, so has the opportunity for small firms and farms to supply product to larger herbal companies that then repackage and market the product under their own brand. The size of these suppliers can range to a one-person operation to a small farm that can have 20 or more employees.
As the larger and second tier companies face off to win greater market share, they are constantly looking for additional product items that will improve their advantage in the marketplace. Routinely, a product like an herbal therapy pack, is an attractive cost efficient addition to a product line.
4.3.1 Competition and Buying Patterns
Quality and timeliness are the essential factors in being successful as a supplier to an herbal product company. This is especially true when the product is re-packaged as part of a gift basket. A delay in delivery will impact the company’s ability to meet delivery deadlines.
Quality is also an important factor because word of mouth is one of the strongest marketing tools with herbal products. The local success of an herbal product many times leads to a larger company procuring the product for their line.
Joanne Lovejoy has sold her herbal products at craft fairs in the region for the past five years. The popularity and customer satisfaction of these products was an important selling point when WindWalker Products first approached Joanne about her herbal therapy packs.