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Common Mistakes Business Owners Make

Building a business to sell your handmade soaps can be extremely rewarding. It’s a great way to turn your passion into a source of income while providing and outlet for your creativity. However, a business requires a lot of preparation and planning to make sure that everything runs smoothly (and profitably), and a lot of beginner soap makers jump into this arena not fully aware of the challenges ahead. This leads to some of the common mistakes that business owners make (in any industry, not just soap making). If you’re aware of them ahead of time, though, you can overcome these challenges and build a great business on your amazing products. So, before you get started, be sure you recognize these potential mistakes:

Selling Products That are “Just Fine”

There are a lot of people making and selling their own handmade soaps. If soapers settle for selling products that are “just fine” and don’t stand out in any way, it will be really hard to make a splash in the marketplace.

We’re not even talking about bad or poor quality soaps. We’re talking about products that are perfectly serviceable. But who wants “perfectly serviceable” when they could have “unique and amazing” instead?

Not Giving Your Soaps a Chance to Mature

People don’t always use their newly purchased soaps right way. They may put it away for a couple weeks, maybe for months. On top of that, if you’re selling to a store or through a distributor, there’s no telling how long your soap will sit on a shelf before making it to the store.

If your soaps have lost their scent or structural integrity in that time, it’s not going to reflect well on your brand.

You need to know how well your soaps perform over an extended period of time. If you don’t test them out before going to market, it could lead to some bad reviews that are hard to shake.

Missing Out on Marketing

Different online platforms have made it easier for almost anyone to start selling their products. Just being online, though, isn’t enough. While it’s possible that some customers browsing the internet might find your products, you’ll have a lot more success when you take the time to get the word out about your soaps.

There’s a lot of great ways to do this. Social media is one of the simplest and most affordable ways to get started. From there you can quickly move on to a combination of online and offline channels to interact with potential customers.

Keeping Personal and Business Accounts Together

You need to be able to support the financial requirements of a business. You need to know what money goes to you and what money goes to maintaining the day-to-day activities of your business.

When soapers use their own bank account for their business, things can get muddled, making it hard to budget correctly for your business’s needs.

Skipping the Insurance

Insurance is a critical part of any business, and it’s even more so when you’re working in this industry. There are several types of insurance that can help protect you and your soap making business, and while you don’t need them all, there are a couple you should consider.

  • General Liability Insurance – This is often required by craft fairs and farmers’ markets if you’re going to sell there. It is there to protect your company’s assets and pay for things like medical costs if someone gets hurt on your property or is injured by you or your employees. It can also cover claims of false or misleading advertising.
  • Product Liability Insurance – This type of insurance is available specifically to deal with the possibility of your products casing damage or injuring someone. It’s impossible to predict every possible scenario of someone using your products, and this type of insurance is meant to protect you from potential litigation.

Forgetting that Sales Tax is a Real Thing

When people start paying you for your products you will be responsible for the tax on those sales. Many soapers treat their new revenue just like they did when friends and family reimbursed them for their materials and time. It’s different, now that you’re selling products as a business.

There are different ways to charge your customers. Some people include the sales tax in the final price, so customers are simply paying the amount listed and never notice the tax. Others may specify the tax on the website shopping carts.

You’ll have to check your states requirements, because it’s different everywhere.

Treating the Business Like a Hobby

Soap making is a lot of fun, and a great hobby. Taking it to the next level, though, and turning it into a business means you can’t treat it that way anymore. You can still enjoy it, just like you always have, of course, but some things have to change.

You may not be able to take the time to experiment with a new recipe because you’re answering emails. You may not be able to spend as much time making soap as you do promoting your soap.

It may take some time to get used to this change, and you may miss some of the hobby aspects, but you will be one of those lucky people who gets to have a job they love.

We’ve included a great infographic to help remember these tips!

Common Mistakes Business Owners  Make

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  1. Thank you for sharing this information. It is so valuable and all of the mistakes you listed are exactly right, but often overlooked. In regard to the sale tax, is it for just my state where I am shipping or the client state.

    Thank you AJ

    1. Glad the information helped. Regarding sales tax, it can be both scenarios you mentioned, one, or none; so, it would be best to check with your state’s tax department, as you’d want to be compliant from the start. Wishing you the very best!

  2. Thank you for sharing. This is great and surely an eye opener.
    Does this pertain to a business with a tax ID or a home business with no tax ID or both? I just started selling soaps on eBay and Etsy, but I do not have a tax ID and I never charge tax on eBay. Second, should I still get insurance for selling soaps on eBay and Etsy?
    Thsnk you for your help and tips.

    1. This pertains to both tax cases; it would be best to get some tax advice as it pertains to your state, so that you are full informed of your tax obligations for engaging in business. It always a great idea to get insurance to protect you and your business. Wishing you prosperity in your endeavors!

  3. What if I purchasing the “ready to label” products such as soap bar, bath bombs and lip balms? Do I still need insurance and what companies? I am having a hard time searching.

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