6. Candle Business Setup

Part of learning how to start a candle company involves putting together a business plan, researching your target audience, taking care of legal requirements and building a presence to sell on and offline.

Our candle business setup guide covers every step of the process, giving you an outline of the things you need to take care of to help your business flourish.

Planning and Strategy

1. Writing a Business Plan

Executive Summary

This is an important part of any business plan, as it gives an overview of your business, including your mission and vision. It’s a short introduction that summarises your plan to give the reader an initial understanding of what you are offering.

Business Description

Sometimes referred to as a company description, this is another part of starting a candle business that should be incorporated into your plan. Describe the purpose of your business and what makes it unique, along with the type of products you will supply and your business model.

Market Analysis

Your candle making business plan will need to include detailed market analysis that investigates the currently competitive landscape. The goal is to provide evidence that there is a niche in the market that your business can target and exploit by analysing current trends and analysing the work of competitors.

Organisation and Management

This section of the business plan allows you to summarise information about the structure of the business, along with key team members and their roles. However, if you’re the only person involved in the business, then you can skip this section.

Product Line

If you’re new to candle making as a business, then another important section to include is the product line. Go into detail about the products you are offering, including candle types, sizes, colours, sizes and any special features they may have.

Marketing and Sales Strategy

A big part of learning how to start a candle business is developing a strong marketing and sales strategy. This describes how you plan to reach, engage and convert target prospects, turning them into profitable customers. You should also cover the methods and channels you will use to deliver your products from production to final delivery.

Financial Projections

The goal of this section is to provide realistic forecasts, or estimates, of the financial performance of your business. You can include things like cash flow statements, income statements and balance sheets to create forecasts for at least the next three years. As a new business, you can also review pricing strategies of competitors and analyse their research reports.

Funding Requirement

If you are seeking funding for your business, here you can add in how much you need, when you need it and how it will be used. This should link in with the rest of your plan, in particular, the sales and marketing and financial projection sections.

2. Market Research and Target Audience

Identify Target Market

To find your target audience, put together a profile of the average customer, considering their gender, age, occupation, income level and general lifestyle. This will give you an overall idea of what your customers need and how much they could spend.

Analyse Competitors

Take a closer look at your competition to see how they position themselves in the market. For example, what products do they sell, what level of pricing are they working at (including offers)? Also, scrutinise any marketing strategies they use.

Survey Potential Customers

Customer feedback is always the best way to get direct insight into what consumers are thinking. Conduct surveys or focus groups to get insight into preferences and buying behaviours.

Industry Trends

As you get underway with understanding how to start a candle business, it’s a good idea to keep up with the latest industry trends. This keeps you current with new ideas to entice customers, such as popular scents or sustainable products you could include in your range.

Legal and Financial Setup

1. Registering Your Business

Choose a Business Name

Once you’ve settled on a name for your business there is one more important check to make – ensuring that it has not already been registered and is actively in use.

You can search the government trademark database to see if your chosen name is available to register.

Select a Business Structure

You’ll have a few options to choose from here:

• Sole trader: This means you will run your business as an individual and are self-employed. You keep any profit you make but are also responsible for any losses you incur.
• Partnership: You and your partner(s) will be responsible for the business, including any losses. You share the cost and profits, with each partner paying their share of tax.
• Limited company: Abbreviated to an LLC, this separates your personal and business finances. So, whether you make or lose money, it will not affect your personal wealth or assets.
• Corporation: If you set up as a corporation, this keeps the business independent of the owner(s). Its profits are taxed and can be held liable – although the owners cannot.

Obtain Necessary Licences and Permits

The general rule is that you will not need a business licence to set up a small business in the UK. However, this may differ in some locations, so it is worth checking with your local authority just to make sure.

Register for Taxes

After forming your business, you will need to register for tax. HMRC can issue an EIN (Employer Identification Number). If you do not set up as a sole trader, you will also need to register for VAT and corporation tax.

Setting Up Accounting and Bookkeeping

It’s important to keep track of your expenses to cover the cost of materials used to sell candles online. You can use software like QuickBooks, Xero, or Wave to also track sales so you have a good insight into how your business is performing.

Set Up a Business Bank Account

Even if you set up as a sole trader, it is a good idea to keep your personal and business finances separate. The type of bank account you choose will depend on the structure of your business, as there are different features and benefits available, so carry thorough research online to find one that suits your circumstances.

Hire an Accountant (Optional)

If you aren’t confident with numbers and self-bookkeeping, then another option is to hire an accountant who can take care of all the figures for you. This will come at an extra expense, so factor this into your outgoings to see if it’s an affordable option.

2. Pricing Your Products

Calculate Costs

Another important part of learning how to start a candle company is finding a pricing strategy. The best place to start is to calculate how much it costs to make your candles, including raw materials, labour, additional overheads and shipping costs.

Determine Profit Margin

Aim for a profit margin somewhere between 25% to 50%. You need to ensure you can make a stable profit, whilst setting a fair price for the customer. Also think about what you would be comfortable paying as a consumer.

Research Competitor Pricing

Look at how competitors’ price their candles, comparing like-for-like products (if possible) to see what they are charging across the board.

Test Pricing Strategies

It may take a little while to find the perfect price spot, so don’t be concerned about changing things a little at the start. You can also use introductory offers and/or discounts to gauge customer response and to generate interest.

Marketing and Sales

1. Building an Online Presence

Create a Website

You can use the likes of Shopify, Wix, or WordPress to build an e-commerce site relatively easily, without having to be an experienced web designer. This will be the first point of contact for many of your customers, so look at competitors to see what kind of content you need to include.

Optimise for SEO

In today’s competitive digital world, SEO is a crucial element for any business to succeed. There are lots of helpful guides you can find online about making your website SEO-friendly to attract organic traffic, ensuring you can be found in popular search engines.

Utilise Social Media

Social media can be a great equaliser for brands that do not have large marketing budgets. Establish profiles on Instagram, Facebook, TikTok, Pinterest, and other relevant platforms and create engaging content (videos always work well) to build brand awareness.

Content Marketing

You can also add blog posts, videos and other content to your website to further engage and inform your audience. This also ties into your SEO, as the additional content can be optimised to capture popular queries, which can drive more people towards your products.

2. Selling Online

E-commerce Platforms

In the early stages of getting to grips with how to start a business making candles, most sellers list their products on popular e-commerce marketplaces like Amazon, eBay, Etsy and others. It instantly puts your products in front of thousands of people and helps to quickly build brand reputation.

Own Website

If you set up your own website, it’s also a good idea to add shopping features so customers can buy directly from you. This gives you more control over branding, removes the need to pay sellers’ fees on e-commerce platforms and also improves the customer experience.

Email Marketing

In addition to marketing on social media, you can also start to build customer email lists (with their permission, of course) so you can send out regular updates, promotions and newsletters to keep them engaged.

3. Offline Sales

Markets and Fairs

Selling candles can also be done in-person at local craft fairs, farmers markets and pop-up events. This is another great way to build brand reputation and enhance customer service, so consumers can physically interact with your products before making a purchase.

Wholesale

To expand your sales channels, consider partnering with local boutiques, gift shops and other retailers. It can help to boost sales, develop brand reputation and it will also provide valuable information about the type of customers using your product.

Corporate Sales

By offering bulk sales to businesses for corporate gifts or office use, this expands your reach and brand recognition. You can personalise the products for each client, and it will help keep your brand front and centre of people’s minds.

Final thoughts

By following these steps, you'll be well on your way to establishing a successful candle business.

Focus on creating high-quality products, understanding your market, and leveraging both online and offline sales channels to reach your target audience.

While it may seem there is a lot of work involved by choosing candle making as a business, following a well-constructed plan gives your business a much better chance of succeeding.