How Off Are Indie Beauty Brands’ Sales Forecasts?
In this edition of Beauty Independent’s ongoing series posing questions to beauty entrepreneurs, we ask brand 15 founders and executives: How accurate was your first-year forecast?
- Marie Vanderstichel Founder, The Sign Tribe
Unfortunately, I have to say not that accurate. We clearly underestimated the complexity and the timing of the listing process. Even if our product was ready to market, with some retailers, it took more than seven months from the moment we got the listing confirmation until the product launch.
Contract discussions and logistics setup can really take a lot of time. On top of them, it’s important to keep in mind that most of the retailers have fixed launch periods and, if you present your products between those special periods, you have to wait for the next one.
- Ash DePass Co-Founder, Stunn Collective
We were way off. We forecasted our numbers to be similar to some big brands with millions in investment. The big thing we learned was to cut back on expensive advertising and focus on growing our community, delivering white glove service, and doing things that don't scale in order to scale.
- Sirkku Hahn Founder and CEO, Inari Arctic Beauty
We were very happy to get a good amount of retailers selling our skincare line in the first year. Still, in the first 12 months after launch, we didn’t meet our sales targets. Although we had very good and established contacts, we underestimated the time it takes to establish a brand in retail. Decision-making and ordering processes often take a longer time than what we expect.
We learned that the process from first touch point to first order can take six to 12 months. While we were ready to ship and offer marketing toolkits and training for the staff, retail had its own timing, plans, policies and priorities. Marketing campaign planning at bigger global online stores had mostly been done for the whole calendar year. So, our strategic campaign planning needed to be adjusted to those plans, which in the first year was not always feasible. We see that those were the main reasons in the beginning why we were a bit off our forecast.
- Alicia Scott Founder and CEO, Range Beauty
To be completely honest, there was no first-year forecast! When I first began, I was just eager to know if people were going to purchase. I started my line with $150 and officially launched in August 2018. I knew my profit margin, and I was excited to see profit in my first year.
After year one, I saw that I was very heavily focused on product development and customer service without putting attention on marketing. This was a big lesson for me because you can have the best product, but without marketing you cannot successfully scale. Last year, I started reaching out to more influencers, being consistent with social media, newsletters, pitch competitions, brand activations and ads, and saw a 186.9% growth in sales than 2018.
- Elana Drell Szyfer CEO, RéVive Skincare
2018 was the first year that we owned and ran RéVive after the acquisition from the Shiseido Group. Our initial financial targets were conservative. We felt that we had to stabilize the business and rebuild, and that it would take some time to do that, allowing only to see real growth in Q4 2018. The reality of what happened is that the business responded quickly, and we beat our initial targets by over 15% growing the business by almost 20% in year one.
- CHERIE HOEGER Co-Founder, Saalt
The biggest thing we've learned about forecasting is that there is only one thing you can count on, that you'll be wrong. Sometimes, you're too low and, sometimes, you're too high, but you can be certain you're never going to get it exactly right in advance, and there are different consequences depending on how far off your forecasts are and in which direction.
Our first-year sales were actually double what our pre-launch projection was. That sounds wonderful, but, at the time, it was fairly problematic. When our sales began to grow, we quickly realized that we were going to run out of units, so we had to borrow more money and ramp up production as fast as we could. We still ran out of stock! In hindsight, had we predicted accurately, we think we could have doubled what we sold in the first 12 months, which would have been 4X our initial projection, but we couldn't keep our products in stock.
On the flip side, when you over-order, then you're paying extra interest on inventory that is just sitting on the shelf, and you're most likely paying for storage somewhere, too. Depending on your product's shelf life, you could also have products expire or go stale. We have been working on improved communication with our supply chain to reduce lead times and increase efficiency in production so that we can shorten our production cycle. This is helping us run things a little more lean and a little more on demand so that, if we have a lift in sales, we can order more and, if things slow down, we don't end up with too much. It's a work in process, but is reducing waste in our production and saving us money.
- MARCELLA CACCI CEO and Founder, One Ocean Beauty
When starting a new business, projections are challenging as there is no direct history to draw on. We decided to launch a global exclusive with Net-a-Porter for six months, which affected our ability to open additional destinations. It reduced our projections, but helped create brand awareness on a global level.
- Christy Hall Skin Therapist, Mikel Kristi
We underestimated our sales for our first year. We were surprised to have big wholesale accounts that regularly order from us. This was thanks to attending Indie Beauty Expo and getting in front of the right audiences. Also through launching our e-commerce storefront, we have achieved a great amount of sales from returning customers and new customers due to our advertising on social media and exposure from other media platforms.
- Tonia Walker Founder, Ime Natural Perfume
Ummm, what forecast? I had a great idea that I fell in love with, did my research, it resonated with many people, so I made it happen. Then, I knuckled down to the sell hustle. I did start with a business plan, which included budgets and forecasts, but they were very general. This may not have been the smart way to start a business, but I am one of those creative types who was great at bringing an idea to life and, now, running the business is a constant learning curve.
I also didn't realize how small the Australian market is, so getting the business off the ground has taken a lot longer than I anticipated. Our perfumes are alcohol-based, so shipping is a little tricky and expensive, which makes increasing my international market a little more difficult when it comes to the direct customer. I have learned to strategize and forecast much better since the beginning. It keeps me accountable and the business in check. There definitely was one area that I completely underestimated and that was marketing. You definitely need marketing in order to bring in the sales.
- Ido Magal Founder, Lavido
Seventeen years ago, I had no sales targets, we were just trying to keep our head above the water. Lavido began as a hobby. So, when it started, I didn’t have a business plan. When we eventually expanded into international markets, we did have specific sales targets. As we grew, we realized our initial targets were way off, and that it takes time to test and really understand each market’s nuances. You have to be willing to invest and adapt as you go.
- Camille Obadia President, Camille Obadia
When I look at the forecast I did for my first year sales, I was pretty accurate. Don't expect to make a profit on your first year in business. Sometimes good things come to those who are patient and understand that a profitable business doesn't build over a day. You might not even breakeven in your first year, but don't let that discourage you from progressing since everything in life takes time and effort.
- Brigitte Rozenberg Founder, Mineralgia
I was not accurate, and I was extremely off because of the kind of marketing I chose to do. Moving forward, I will do my research, consult with many experts from the industry and test my marketing strategies. It's definitely not one size fits all.
- SELMIN KARATAS Co-Founder and CEO, Kazani
I was pretty accurate when I looked at the forecast I did for my first-year sales. I learned that, since it is a new brand, it was important to educate consumers about my brand and products. My products were sitting in the front cashier, and they sold continuously as they were visible to consumers. However, when they're in the back of the store on the shelf that limits exposure, which is difficult in terms of building brand awareness.
I learned that I needed to do the branding and work on the packaging to write the benefits and features. That's why we decided to work on re-branding the brand. It took us many months, but it is getting there, surely but slowly.
- Peter Boyles Co-Founder and Co-CEO, Eden
We officially launched in September, so we only have a few months of sales to work off. However, we passed our subscriber goals, and retention has been very high. I should reiterate that this is based on a few month's data, so we will have a clearer idea of retention and churn in the next six months.
We are currently bootstrapping and, with that in mind, have put a heavy emphasis on organic content through our social channels, blog, and also getting my wonderful co-Founder Katie, who is our resident hormone health expert, out speaking at as many events as possible.
A key lesson we learned was the importance of marrying organic and paid. We were spending a lot of time producing organic content, but, with only a small platform, the reach could be disappointing. We were so resistant at first in putting spend behind FB/IG ads because, as many will know, it can feel like a bottomless pit that eats your budget.
However, the increase in reach our organic content received by supporting it through paid promotions really began to pay off through an increase in more loyal customers who have stayed on subscription for longer. You could be producing truly thoughtful and time-worthy content, but, without the microphone, aka paid support, few will hear it.
- JULISSA PRADO Founder and CEO, Rizos Curls
Yeah, we didn’t do a forecast for our first year. We had no idea what to expect, and I think even if we had done one we would have been far off. Our first year we just started growing and growing faster than we knew what to do.
I was working full time at Nestle at the time and created Rizos Curls as my passion project. Little did I know two months into launching I would have to quit to go full time with Rizos Curls. I think the first year is tough because there are so many moving factors, and you haven’t built that history yet of sales or the relationship with your customers. To me, forecasts start with your customers and it’s really hard to know how you will grow with your customers without building that relationship first.
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