Expert: Terry Knorr - 1/13/2006

Question
I would like to know your opion of the profitability of making homemade soap as a business venture.  It seems in my area that there is no one doing this and my thought is there could be a market for a good natural product.  What would your take be on this.

Answer
There are 4 things to consider before entering into the handmade soap business.

1.  Can the local economy support the business?  
If you live in a economically depressed area, few people will have the money to buy your product.  You will not be able to sell your soap as cheaply as Ivory, for example.  The quality and benefits of your product will have little to do with the people's ability to pay for it.

2.  What is the mindset of the people in your area?
If a good percentage of the people in your area do not already have a health/natural awareness, then you will spend much of your time and resources in an attempt to educate them.  And, many people will not allow themselves to be educated by someone who does not have a degree or some other form of "impressive" credentials.

3.  How will you market your product?
A store front with your business name on it, in a location which gets a large amount of foot traffic, such as a mall, is the best location for a retail business.  However, can your finances support this?  Your sales will likely be small and sporatic for a number of months.  
Another option would be to sell out of your home.  Will the local codes allow for this?  In fact, will the local codes allow you to produce the soap out of your home, or will you have to secure another location even to make the soap?

4.  Do you have the finances to support the loss?  
You will likely find yourself operating at a loss for the first 1-3 years.  

All of these comments might be a bit discouraging, but don't allow them to be.  Check with your local chamber of commerce.  These people have considerable experiance and can help you make the best choices concerning this business venture.  Take a trip to your local library.  Check out books dealing with this topic.  I've read that most successful businesses begin with lots of research.

If you decide to proceed with the business, I'd also suggest that you try several different soap formulas.  Make some samples and give them to your friends and relatives.  Write down a series of questions concerning what they like in a soap, what they like about your soap, and what they do not like about your soap.  Use their comments to produce a soap that most of them like - most likely, this is the soap that most other people will like, also.

I wish you great success in this endeavor!

Terry