A lotion business plan sets out what you'll make, the testing it needs before the first sale, who will buy it at what price, how you'll make and record each batch, and the first year month by month. Lotion is different from butters and balms in one way that runs through the whole plan: it contains water, so it needs a preservative, and the formula needs preservative and stability testing before you sell it, which costs money and weeks up front. In the example below, a lotion maker spends about $1,200 on testing before launch, reaches 200 retail and 300 wholesale bottles a month by month 11, makes a monthly profit from month 3, and ends the year about $18,000 ahead on top of paying for the making. Below is a description example, each part of the plan, the projection, and a free template.
The short version
- Describe the business in a paragraph: the lotions, the customers, the workspace, the goals.
- Budget preservative and stability testing, and the weeks it takes, before launch.
- Cost a bottle: ingredients, pump bottle and label, your time.
- Price for retail and wholesale, and count the shops you need.
- Put the rules in the plan: labels, claims, safety records, reaction reports.
- Give every batch a lot code and a date, and sell oldest first.
- TaroStack keeps every batch's lots, record and cost, and traces any bottle. More below.
Part 1: the business description
Hoʻola Botanicals, a made-up skincare maker I use in these examples, adds a body lotion to its skincare line. Its description reads:
Hoʻola Botanicals makes lightweight body lotions with island botanicals in small batches in a dedicated workspace on Oʻahu, in 8 oz pump bottles. Each formula is preserved and tested before sale. We sell at two Saturday markets and online, and wholesale to gift shops, spas and boutiques. Every bottle carries a lot code and a best-by date. In the first year we plan to sell 500 bottles a month by month 11.
Part 2: testing before the first sale
A water-based product can grow bacteria and mold, so the formula needs a preservative system that works, and testing to show it does and that the lotion stays stable over its shelf life. In the example budget, preservative efficacy and stability testing cost about $1,200 per formula, and take weeks. A change to the formula usually means testing again. The federal cosmetics law also asks every maker, small ones included, to keep records that support each product's safety; what still applies to a small business is in MoCRA for small businesses. This is general information, not legal advice.
Part 3: what a bottle costs
| Per 8 oz bottle | Cost |
|---|---|
| Water, oils, emulsifier, preservative, fragrance | $1.10 |
| Pump bottle and label | $1.25 |
| Labor, about 2 hours a batch of 40 at $20 | $0.90 |
| Variable cost | $3.25 |
A retail bottle also pays a 3% card fee, so its variable cost is $3.73. How the costs of a whole skincare range compare is in cosmetic business profit margin.
Part 4: customers and prices
| Channel | Price | Variable cost | Contribution | Bottles a month at full speed |
|---|---|---|---|---|
| Retail, markets and online | $16.00 | $3.73 | $12.27 | 200 |
| Wholesale to shops and spas | $9.00 | $3.25 | $5.75 | 300 |
Three hundred wholesale bottles a month is about 25 shops and spas taking a dozen each. A shop selling at about $16 sits beside your own retail price.
Part 5: operations
| Area | In the plan |
|---|---|
| Workspace | Clean, dedicated, with a homogenizer or stick blender, scale and thermometers |
| Formula | The tested formula, written down, and a rule that changes go back to testing |
| Label | Identity, net contents, ingredients in order, your name and place, a contact for reactions |
| Claims | How it feels and smells, not what it treats |
| Shelf life | A best-by date from testing; oldest stock out first |
| Records | A batch record and lot code for every batch: ingredient lots, temperatures, pH if you check it |
What goes on the label is in cosmetic labeling requirements.
Part 6: the first year, month by month
Sales start at 15% of full speed and reach 100% by month 11, against $870 of fixed costs a month: workspace rent, insurance, market booths, marketing and samples, the website, software and card fees.
| Month | Retail bottles | Wholesale bottles | Sales | Profit | Cash, year to date |
|---|---|---|---|---|---|
| 1 | 30 | 45 | $885 | −$243 | −$243 |
| 2 | 40 | 60 | $1,180 | −$34 | −$277 |
| 3 | 50 | 75 | $1,475 | $175 | −$103 |
| 4 | 60 | 90 | $1,770 | $384 | $281 |
| 5 | 80 | 120 | $2,360 | $802 | $1,083 |
| 6 | 100 | 150 | $2,950 | $1,220 | $2,302 |
| 7 | 120 | 180 | $3,540 | $1,637 | $3,940 |
| 8 | 140 | 210 | $4,130 | $2,055 | $5,995 |
| 9 | 160 | 240 | $4,720 | $2,473 | $8,468 |
| 10 | 180 | 270 | $5,310 | $2,891 | $11,359 |
| 11 | 200 | 300 | $5,900 | $3,309 | $14,668 |
| 12 | 200 | 300 | $5,900 | $3,309 | $17,977 |
Once the testing is paid for, the monthly numbers are kind. The plan's real costs are up front: the $1,200 of testing and the weeks before the first sale, which is why the startup budget is larger than for a water-free butter. Adding a second lotion formula means another round of testing, so plan new products a season ahead. How to plan batches and dates is in how to prepare a production plan.
Part 7: the startup budget
| Item | Example |
|---|---|
| Formulation and small test batches | $400 |
| Stability and preservative efficacy testing | $1,200 |
| Safety review by a cosmetic chemist | $500 |
| Ingredients for the first run | $600 |
| Bottles, pumps and labels, first 1,000 | $1,250 |
| Label design, with ingredient names | $500 |
| Homogenizer, scale, thermometers, pots | $800 |
| Business license and any state registration | $200 |
| Website and product photos | $600 |
| Market tent, table and display | $300 |
| Working cash | $2,000 |
| Total to start | $8,350 |
Get the template
Download the lotion business plan template. Type your products with their price, variable cost and monthly volume at full speed, your fixed costs and startup budget, and how fast shops will come on; it works out each month's sales, profit and cash, the first month with a profit and the lowest cash point. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
A tested formula only protects you if every batch follows it. Then a new supplier's emulsifier behaves differently, a batch is made with the old preservative by mistake, and a spa calls about a bottle that separated. The notebook says the batch was made on a Tuesday, but not which emulsifier lot went in, which formula version, or which other shops got that batch.
How TaroStack does it
TaroStack keeps every batch tied to its formula, its ingredient lots and its customers.
The formula, versioned. Each lotion is a recipe with versions, so the tested formula is the version every batch is made to, and a change is a new version: the cue to test again. Units convert: buy oils by the jug, use them by the gram.
Every batch, recorded and costed. Recording a batch takes each ingredient from the lot used, notes it on the batch, and puts the bottles into a lot with a best-by date, costed from what you paid, divided by what came out good. Batch record forms carry your own fields, like temperatures and pH, with limits that flag a reading outside them, and a batch can sit on hold until it's checked. Stock is picked first-expired-first-out.
And any bottle, traced. One report walks any lot to the shops and customers who got it and back to the ingredient lots inside, with what's still on your shelves, so a spa's call leads to its batch in minutes. Margins are reported by product and by customer.
| The job | Notebook | In TaroStack |
|---|---|---|
| Which formula was this batch? | Maybe noted | The recipe version, on the batch |
| Which emulsifier lot went in | "Emulsifier" | The supplier's lot, on the batch |
| A batch waiting on a check | On the same shelf | On hold until released |
| Who has this batch | Search the orders | One report, lot to customer |
Lots, holds, recalls, recipes with versions, batches and batch records are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.