Two of my friends have been trying to talk me into opening a cottage business with the handmade soaps I make. Last week one of them really was persuasive.
I am a realist and immediately a bunch of questions and concerns came to my mind.
First, what would it cost to buy all the base product I needed. Where could I get it at a lower price so I could make a profit? How many different soaps should I have for sale at a farmer’s market, for example? (I can’t show up with one kind.) If I had to make a variety of soaps all at once I’d need to buy more molds, more equipment costs more money.
Then the packaging. How would I package it and have it look attractive? I had a few ideas using my handmade rubber stamps. What would I call my business? Would I need a logo? Could I design it or would I have to pay someone to make one? What has to be on the package—do laws require that I list the ingredients?
Does the business need a state license? How would I apply for that and what is the cost? Are there laws regarding selling items that will be used on another person’s body? What if a person has an allergic reaction or some other issue and wants to sue me? Do I need liability insurance?
How would I make contact with stores to sell my product? Would I have to spend every weekend at craft shows and farmer’s markets trying to sell the soap? Would an Internet site be better? I don’t know how to make a website or do business over the Internet, so that represents a big project.
Does anyone want to use natural soap or do they just want cheap soap? What would they be willing to pay for homemade natural soap?
How much prep work and research would I have to do and do I have time for all of this in between mothering and homeschooling?
Would I make any money in the end? Is it worth it?
To this end, all excited at what my friend was telling me, I did a little research on the Internet. Here is what I found.
First I found a bunch of websites that were selling expensive e-books to answer all the questions I was asking. That was not an option for me as I felt I should be able to access the questions about laws and insurance online for free. I wasn’t about to be ripped off by an e-book writer to give me information I could find for free online with a little more time and effort put in.
Even the smallest cottage business has to follow certain rules. I’d need to buy a business license, through the state and maybe also through my town. I’d need to check my town zoning ordinances to make sure they would allow for a home-based business to happen inside my house.
I also need a separate liability insurance policy—the homeowner’s insurance would not cover it (and I read that most people make an error and assume that their homeowner’s would cover it). The insurance is mostly in case someone was hurt from using the products I made or if I am sued for any reason.
Additionally to protect the business name I’d probably have to register it (trademark it) or something like that, get it on record with the state or something.
For the finances, I’d have to keep detailed financial records and maybe also file tax returns for the business (especially if I am using a tax id number to buy the materials exempt from taxes). I might even need a new checking account in the businesses name right away.
It makes sense that farmers who are also ‘businesses’ make soap and can sell it as all that stuff is already covered by their business. It appears for me, a non-farmer, to do the right/legal thing, it would mean some up front expenses.
I found a handmade soapmaker’s guild that if you buy a membership, they have a discount on insurance or you buy the insurance through them or something like that (I need to read more about that). It is called the Handcrafted Soap Makers Guild.
I’d not feel comfortable breaking the law and not doing those things listed above by ‘winging it’. I have since confirmed with my friend that her friend is indeed not following the laws nor does she carry liability insurance. My husband and I are just not comfortable doing things in an illegal manner.
So you see it sounds so cute and easy when someone says, “start a homemade soap making business” but in reality if you look at all the issues and all the work, combined with the risk (lawsuits) and if you comply with all the local and state laws, it is not so easy. The making of the soap part of the process is the easiest and most fun while the rest of it is more like ‘real work’ and/or a hassle.
For the time being I don’t think that my opening a cottage business to sell handmade soap is going to happen.
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