Is it economically possible to enter this industry? Hear me out.

Hello, wonderful community I must say.

I have finally achieved the privilege of discussing my business idea with a cosmetic consultant and a regulatory expert. It was very dreadful, but very useful.

The basic summary was "just because your neighbor is breaking the law, doesn't make it any more right."

The basic idea was to create a cosmetic serum for the beard (for "nourishment, vitalizing, volumizing, enhancing" and not marketed directly as "growth")

The cosmetic consultant told me I would file bankruptcy in 2 years max.

The regulatory expert informed me that every "Start your own cosmetic line!" is fantasy. He told me the harsh following:
  • To market/implicate/suggest this cosmetic as hair growth would mean that it were a drug. 
  • Existing studies and scientific literature about ingredient "y" is not proof that your cosmetic will assert claim "x". 
  • To formulate this product, with hope that the ingredients will assert the desired claims based on research, I would have to hire a cosmetic chemist ($1k-$5k) to mix 3-5 different sample formulations.
  • To market it with claim "x", I would have to conduct a clinical study to prove claim "x" (costs $10,000+). Not doing so would mean deceptive advertising, which would potentially get me sued.
  • To market the product with more claims, like "it moisturizes the hair!", I would legally be required to substantiate each and every claim with more series of conducted experiments. (Example, Camel claimed that "3 out of 4 doctors smoke Camel cigarettes. They were sued for millions because this claim was not substantiated). Not doing a study for each claim would mean deceptive advertising, and potentially get me sued for each claim.
  • Writing the product description for my eCommerce site with 6 descriptive sentences/claims would have to be substantiated by ~6 conducted studies. 
  • After these long clinical trials, I will then have to conduct tests on the formulation for safety, irritation ...(i forgot what else he said). This would cost another $10k, according to his PhD credentials.
  • I would then have to market extremely cautiously, or else my company will be tagged by the pesky FDA auditors. 
  • Once I become tagged, I will receive the grace period of correcting any false advertising. However, the lawyers that are subscribed to these FDA warning letters will sue me for millions despite me correcting claims.

This sounds ridiculous to me, but the regulatory expert has ultimately crushed my hope for entering this industry. He has informed me that Congress and big businesses are pushing small businesses from entering this industry by implementing more lawsuits and heavier policies. 

Ultimately, this industry and its future sounds near impossible to enter and execute professionally and legally. 

One possible business plan is to acquire $30k+ in funding to formulate and market this formulation with solely 1 extract ingredient, and just market it as an extract (with cosmetic claims), but I could not even be to market it as "rich in antioxidants" because I wouldn't have proof without conducting $10k+ studies. This seems like the only possible route.

I'm wondering how you guys do it? I'm also wondering why do it? Are the cosmetic regulator's words not correct? It sounds like any cosmetic business could get shut down in any minute, due to some mistake with marketing/claim substantiation. When I was talking with him, I gave him an example of a million dollar company promoting "beard growth" claims, and right then and there he tagged them, because of me! I've spent 6 months+ planning for my cosmetic product and spent hundreds, yet I couldn't be more discouraged by the harsh reality of this industry. Sorry to end on a bad note, but startups aren't cut out for this industry, it seems.

Comments

  • Just to start with, consider this: If you start a limited liability company, which is the business, your own liabilities are removed from the equation.
    Design of anti-aging creams, gels, and serums; shampoos; and therapeutic cosmetics. In-house label and box design capability.
  • edited March 2017
    I believe we spoke briefly. The issue at heart was your strong desire to either claim beard GROWTH outright or to infer through crafted marketing copy that the product could deliver beard growth. As I have heard said on numerous occasions, "If you expect your customers to make the jump to the tacitly endorsed claim, it is naive to expect the FDA to miss this inference."

    In this case, the sole issue is the encroachment onto the FDA OTC Monograph for Hair Growth products;   https://www.fda.gov/Drugs/DevelopmentApprovalProcess/DevelopmentResources/Over-the-CounterOTCDrugs/StatusofOTCRulemakings/ucm071330.htm

    For a more encompassing article on OTC monographs, I would suggest reading this.

    When trying to decide if your product is a drug or a Cosmetic, I always refer people back to the FDA Definition;

    The Federal Food, Drug & Cosmetic Act (FD&C Act) defines cosmetics as "articles intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body...for cleansing, beautifying, promoting attractiveness, or altering the appearance."Jun 7, 2016

    As many will tell you, the risk of being cited by the FDA is small at first but is still quite real. If you look at the recent FDA Warning letters, you will see that there are many small to medium size companies cited as demonstrated here. Also, just because you can find a noncompliant company, this can not be taken as "permission" per se to make the same claims. This is a facetious assumption.

    After we spoke briefly, I believe that I referred you to a well known Cosmetic Regulatory Expert.

    It is indeed possible to start your own Cosmetic Line and in fact, it is done quite often. It is quite possible to make a product that stays well within the limits of the definition of a Cosmetic and to build a product that delivers realistic Cosmetic benefits to your clients. There are far too many examples to cite where companies have adhered to the limits and still built successful lines, without exposing them to possible censure.

    I would suggest taking one of the many courses available such as Perry's course;  http://chemistscorner.com/start-your-own-line-of-cosmetic-products/. This will give you information on how to start a compliant line.

    http://chemistscorner.com/what-are-the-startup-costs-for-a-cosmetic-business/
    markfuller@microformulation.com Microformulation.com Microformulation Cosmetic Consulting provides Custom Formulations for both large Commercial accounts as well as smaller entrepreneurs. We can provide Naturally compliant Formulations under the NSF, NPA, Whole Foods and USDA Organic Certifications.
  • edited March 2017
    I'll chime in considering that I offer a course in how to start your own line. http://startacosmeticline.com

    Let's talk about the regulatory expert first.

    You have to realize that most regulatory experts are professional nay sayers. This was true at the company at which I worked and from your description, it is also true of some regulatory consultants.  They have a certain outlook of the world which, while not wrong, can certainly be unhelpful.  When I was in the Innovation group at the company I used to work at our regulatory people wanted us to consult them on every chemical we were testing. They invariably told us we couldn't use some certain technology. I think they were mistaken. They just have no benefit to saying "yes" to anything.  There is always a reason you can say "no" to doing anything.  If entrepreneurs listened to everything regulatory people said, no one would ever launch anything.

    It is true that "just because your neighbor is breaking the law, doesn't make it any more right" or that you should do it.  Don't break the law!

    Of course, don't make hair growth claims. It doesn't sound like that was the purpose of your product so as long as you aren't making those claims that shouldn't be an issue. Don't imply that you're growing hair either.

    But let's be real. The chances anyone would sue you is remote. If you are a start-up and set your business up as a corporation (talk to an accountant about this) this limits your liability for any lawsuits. Also, get business insurance if you are worried about it.

    Lawyers are not looking around to sue start-up businesses. They go where the money is and unless you have a huge pile of investment money, you'll be ignored.  If you get sued and have no money your business goes bankrupt and no one collects anything. It's a waste of everyone's time. This isn't something I would personally worry about, although other people would.

    I'm not going to go through a point-by-point refutation of what your regulatory expert told you. I can tell you that our big corporation made cosmetic claims all the time in which our claims support was simply a written explanation for why a claim was valid.  We didn't conduct a test every time we claimed a hair product was conditioning or moisturizing. Perhaps it was a risk by if you use known conditioning technologies, a lawsuit against you would be a waste of time.

    It's probably true that any cosmetic company could get shut down at any time. Or at least they could be hampered with legal challenges. The reality is that this almost never happens.

    If you're looking for a reason not to start a cosmetic line, there are lots of reasons.  It's a bit of a gamble. But cosmetic companies that fail almost always fail because they don't have a good marketing strategy. If you're big enough that someone wants to sue you, you'll have enough money to hire lawyers to defend you.

    Don't break the law. Follow the rules to the best of your ability and deal with challenges as they present themselves. I personally wouldn't let what these two consultant experts told you discourage you from moving forward with launching your brand.

    Incidentally, the FDA has published a set of guidelines for small / home based cosmetic businesses which might be helpful for you. 
  • @Microformulation Yes I do remember having that discussion with you. Hair growth would be an impossible feat to pursue unless I go through the process of a NDA, which would be completely out of the question for a startup. 

    The regulatory expert advised me that I couldn't even make a beard oil, which is a multimillion dollar market, without going through a series of studies/tests to determine if the formulation "conditions/softens/moisturizes the beard. He declared that every single claim for any product would have to be substantiated which I find quite ridiculous. Then it would have to be tested for safety and other things. 

    Is this accurate? Could I not even replicate a simple formulation of argon oil, jojoba oil, and peppermint essential and market that as a beard oil that is healthy for the beard without having to conduct $10k+ studies? Because while some ingredients/monographs might have been conducted on scalp hair, I doubt there is any information regarding beard hair.

    Any implication on hair growth is completely outside of my intentions now as I don't even want to deal with potential lawsuits. I would just like to start some beard oils without having the headache of claiming "illegal" copy for the product.
  • Hey @Perry, thanks for your tips! I do think their advice is situated on a "worst case scenario". 

    At the moment I have completely given up hope on any beard growth product, despite me believing several ingredients may have a significant impact on hair growth. It's just quite risky and I'd be shooting myself in the foot in the long run.

    However, I do want to formulate something for the beard, such as a beard oil or beard balm. There are many of these products on the market. It's quite known that a mixture of carrier oils and essential oils can be used on the beard and most agree that they benefit from it. 

    Could I purchase a few amber glass bottles, buy a bulk inventory of each castor oil and essential oil, and mix/dilute them appropriately at my kitchen and sell it? 
    According to the regulatory expert, even this is not a good idea, because there is no "proof" that my mixture would have any desired effects, and would therefore be deceptive advertising. 

    While I may not be "important" enough in the eyes of lawyers/FDA auditors, the cracking down on small businesses/mom and dad shops are growing exponentially. This favors Congress and big businesses and is likely that they are conspiring to rule this industry. 
  • @Belassi
    Thanks for the advice! I'll keep that in mind. 
  • I actually think by pivoting away from the Growth claims, you are far better positioned.

    Making quasi-drug claims in the US is risky, but as Perry pointed out rightfully COSMETIC claims (keep circling back to the FDA definition) are much easier. to make and I see them made all the time, often circling back to the Distributor's literature or other such references.

    I think if ou read the FDA Warnings I posted above you will see that it is when the lines "fly too close to the sun" and encroach upon a drug claim, this is where the FDA steps in. Not with claims that are truly Cosmetic, again as listed in that FDA definition.
    markfuller@microformulation.com Microformulation.com Microformulation Cosmetic Consulting provides Custom Formulations for both large Commercial accounts as well as smaller entrepreneurs. We can provide Naturally compliant Formulations under the NSF, NPA, Whole Foods and USDA Organic Certifications.
  • @Microformulation
    Is there a guideline for words/descriptions that may be used for cosmetic purposes? I know the definitions but it's quite ambiguous what claims "fly too close to the sun".

    Are these claims "safe"?
    -Moisturizes
    -Nurtures
    -Helps cultivate
    -Rich in antioxidants
    -Healthy
    -Gives you a better beard
    -improves/enhances
    -Freshens/revitalize
  • You're making a big mountain out of all this, unnecessarily. 
    Yes of course you can start in a small way as described. I suggest that Argan might be better than argon, which is a bit tricky to include. 
    Basically, stage 1: Learn how different oils behave. Try them out.
    2: Get other people to try them out. Improve. Begin developing a reputation.
    3. Create and register a brand name. Meanwhile continue improving.
    4. When you get the brand, make the social media pages and web site. Have professional labels printed. Begin intensive marketing to spread the word.
    5. Incorporate in some convenient tax-free location.
    6. Get celebs to wear your beard oil.
    7. One of the celebs buys you out.
    8. You retire.
    Design of anti-aging creams, gels, and serums; shampoos; and therapeutic cosmetics. In-house label and box design capability.
  • @Belassi
    I know, I probably am. It's just that the regulator's words gave me such a different perspective on the technicality of advertising and the such. I guess I'm just making excuses. 
  • If your product range is (or is potentially) devoted entirely to beards it would be wise to bear in mind that beard wearing is one of the current fashion statements which is well into its lifespan. I can well imagine that in a fairly short time the current vogue for a beard will be replaced by a clean shaven look - and where will your products be then?

    I am somewhat surprised that the "big shaving" companies have not reacted more actively but perhaps they are saving up for a big onslaught into the market again when the time is deemed a bit more suitable. I don't think it will be very long.
  • edited March 2017
    @HuskyBeard - What evidence convinces you that the FDA is cracking down on small cosmetic businesses?  I'm not seeing it. In my opinion, the FDA has an extremely limited budget and they aren't going to spend much of it on chasing down underfunded startups who don't represent much of a risk to consumers.

    I also think you misunderstand the cosmetic industry. It is a myth that Big Business or Congress cares much about start-ups. The tiny portion of the market that start-ups occupy is ignored by the big companies. When I worked at a medium sized corporation, if an idea couldn't generate at least $10 million in sales in the first year we didn't even bother pursuing it.  If a cost savings project didn't save at least $200,000 in a year we didn't bother. 

    These numbers are just too small for big cosmetic companies to even care about.  Start-ups however, can exists rather nicely on $200,000 in yearly revenue.

    The only time a big company cares about a start-up is when the start-up gets big enough to represent significant sales. And at that point the big guys just buy the company.

    "Could I purchase a few amber glass bottles, buy a bulk inventory of each castor oil and essential oil, and mix/dilute them appropriately at my kitchen and sell it? "
    I wouldn't recommend making things in your kitchen to sell, but if you set up an area away from where you make food and follow all the proper GMP rules as outlined by the FDA there is no reason you couldn't do this. This book is helpful. http://www.mariegale.com/gmp-basics

    But it seems to me that you are looking for reasons not to launch your venture which means you probably shouldn't. The product should really be the least of your worries. The thing that will determine success is your ability to market to your target consumer. That's what you should be worried about.

    @johnb - it doesn't surprise me that big companies have ignored the beard market. It's such a small market & the consumer is so different from their core consumer, they wouldn't bother. 
  • When I was working with several smaller cosmetic companies, and even with some claim substantiation labs, it was generally accepted that cosmetic-level aesthetic claims (moisturizes, softens, improves feel, etc.) could legally be substantiated by a consumer trial and subsequent survey. The minimum survey size was 20, if I recall correctly. The questions could be ultra-simple, i.e. "my beard feels moisturized after I use 'x', yes or no." There's nothing wrong with conducting the trial yourself, either.

    If you can't find 20 people to try out your product and fill out a simple questionnaire, you might need to rethink this project.

    "Rich in anti-oxidants" can be legally substantiated by relying on supplier claims/literature.

    I think what may have scared your consultant, however, was your desire to say "Nurtures, Helps cultivate, Healthy, Freshens/revitalize". These either come too close to making drug claims, or are just wrong. Hair is dead. It can't be nourished, revitalized or made more healthy. "Cultivate" sounds dangerously close to "grows".
    Robert Zonis, Sr. Formulation Chemist, Beaumont Products "All opinions and comments expressed are my own, have no relation to Beaumont Products, are fully copyrighted, and may not be used without written permission."
  • Would stating that your product can "help hair appear more voluminous" be an acceptable claim?
  • @Perry Well I've heard from several members in this group that the number of reports against smaller businesses and their claims are being tagged more and more often. This is what the consultant and regulator told me as well.

    Thanks for your advice! It does seem that it is indeed possible to enter this market.
  • @Bobzchemist Very interesting. Would a consumer survey like this have to be setup in a certain manner? Would I have to hire a legal person to write up this survey? Or could it be sufficient enough to just write up a google survey document and have my email subscribers fill it out?
  • It would be more credible, but not required, for an outside person/company to run the survey. It would be more credible, but also not required, for an expert in claim substantiation/consumer testing to write the survey. Lawyers shouldn't be allowed anywhere near this. 

    The problem with email surveys, in my opinion, is that, if you don't have an outside tester, it's expected that you have some way of verifying that the people filling out the survey have actually used the product. Remember, there's a very slim, but still real, chance that you'll be asked to defend your claims to someone outside your company at some point. So, you have to think of how it will sound to describe your claim substantiation process to someone who's somewhat skeptical.
    Robert Zonis, Sr. Formulation Chemist, Beaumont Products "All opinions and comments expressed are my own, have no relation to Beaumont Products, are fully copyrighted, and may not be used without written permission."
  • @Perry I wasn't intimating that the big shave companies would join the beard bandwagon but that they may well begin a big promotion of the beard free chin or face before very long.
  • @Perry Back to what you were saying, by the logic of big companies and congress and lawyers not caring about the smaller company, my cosmetic business could ultimately succeed small scale (a comfortable living).

    The cosmetic would imply beard growth but not directly state this. The intention would still be to create a formulation that grows hairs. 

    If the bigger people only care about big money, why would they bother suing? If they did "tag' me, why couldn't I just abide and decide to switch up my marketing? 


    I have contacted several hair growth companies who have been tagged by the FDA and asked them what had happened. They report that they just simply had to change their marketing and remove some of their claims. 

    No harm no foul.
  • @HuskyBeard - Just because you can do something doesn't mean you should do it.

    It's true that there is a low (but real) probability that you could proceed as you suggest and make a comfortable living for some time. You may never get sued or contacted by the FDA. They'll probably catch up with you eventually.

    But it's very much like cheating on your taxes. You can do it and you might not get caught.  That doesn't mean you should do it.

    It's a dubious business strategy to build a brand based on a lie or an unprovable claim. You'll always be looking over your shoulder. And you won't be able to feel good about your advertising and marketing because a regulator might catch up with you. Why would you want to do that when you can build a legitimate beauty brand?

    Your product will not increase beard hair growth. You shouldn't imply that it will. In my opinion, basing a beauty brand on that idea is just a terrible, unethical strategy.
  • I have to weigh-in 100% plus behind what @Perry has said.

    First, many people believe that they can use clever verbiage to imply to their clientele that a benefit can be achieved. It is a mistake to believe that the FDA will not make that inference as well.

    Secondly, I have seen lines try and let the clients make the inference and then post "testimonials" touting these benefits. They will blithefully disavow themselves from the claim with a justification of "I can't control what others say." The FDA has confronted this loophole. If it is on your social media or any other mode by which you control, publishing these statements falls squarely upon you.

    Thirdly, many of the products are based upon botanicals and google citations of anecdotal data. This does not satisfy the research standard and in fact, it is naive. Many of the studies that are cited are informal and nonvalidated. In many cases, the raw materials are difficult to obtain. For example, I had a client who wanted to use Silkworm excrement (yes, look it up). The material had a 12 week lead time which in reality proved to be closer to 16 weeks.

    Finally, there is no need to take such reckless and foolhardy risks such as promoting a noncompliant product with an end game of being "regulated" out of Business at some point. There are plenty of opportunities to make bonafide, useful and ethical products in this industry. As you will learn, the product is just one facet of a successful line. To a large extent, your marketing and market presence are the real values that you build. In your Business model, you have an end game that invalidates one of your most valuable assets; market presence and reputation.

    There is plenty of room in this Market to do things right and still be successful.
    markfuller@microformulation.com Microformulation.com Microformulation Cosmetic Consulting provides Custom Formulations for both large Commercial accounts as well as smaller entrepreneurs. We can provide Naturally compliant Formulations under the NSF, NPA, Whole Foods and USDA Organic Certifications.
  • @Microformulation @Perry
    Thanks for the input.

    Of course I too find it unethical for a brand to lie and deceive its customers and that is not what I want.

    Through claims, I would like to promote the idea that this product could grow beard hairs, based on the available information on the ingredients mechanisms of actions.

    About 3-4 extract ingredients have been suggested to have mechanisms of action similar to that of minoxidil (vasodilation, anagen induction, etc.) And some of these extracts have even been compared favorably to that of minoxidil. 

    Although this limited information isn't "proof" that this formulation would work, it suggests the possibility. This doesn't substantiate the claims legally, of course. But to the consumer, this information is logical and promising enough. If these extract ingredients have been suggested to promote hair growth through various studies, then the topical application of a carefully designed formulation with said ingredients would likely produce more hairs on the face than the body's natural hair growth rate. Some may experience extreme benefits and no benefits. And some may experience side effects, which is another topic.

    To the users who report no benefits, a full refund is given. 
  • If I am "tagged", then during the 15 day grace period, I could simply remove the non-compliant claims. This is what SkinBiology did. 

    I spoke to them on the phone and they informed me that they had to edit their whole website and remove much of their claims. Their business is still up and running and has been for years. 
  • Sorry, but that reckless attitude makes it harder for the rest of us to maintain any credibility in this Industry.
    markfuller@microformulation.com Microformulation.com Microformulation Cosmetic Consulting provides Custom Formulations for both large Commercial accounts as well as smaller entrepreneurs. We can provide Naturally compliant Formulations under the NSF, NPA, Whole Foods and USDA Organic Certifications.
  • edited March 2017
    It's not that long ago that I made a formal complaint to the ASA in the UK concerning a product that was being advertised with misleading statements. That resulted in their advert being pulled and their Web site redesigned. So don't assume it will just be the FDA. Competitors may well attack you. (And we don't even sell in the UK. I just hate consumers being cheated.)
    -
    Secondly I would like to point out that using studies to justify claims is not a great idea. Most studies do not relate to real life conditions or are on other species. For instance, my discovery of a study on Wistar rats. The conclusion of the study was that glycyrrhizic acid acted as a hair remover. I set about designing a hair remover based on it. To this end, I tested it on one of my legs for three months. If anything it made hair grow - the exact opposite effect. We're getting early reports that we may have a three-ingredient combination that does cause hair to grow, but sorry, I am not saying what the combination is! Currently doing consumer tests. I remain sceptical.
    Design of anti-aging creams, gels, and serums; shampoos; and therapeutic cosmetics. In-house label and box design capability.
  • @Belassi Sounds interesting. Are you going to fund this through the NDA process? I'd be astounded if you actually persisted enough with whatever formulation you've come up with, to pay 1 million dollars and wait 10 years. 
  • further to @Belassi's remarks about studies, I might add that an increasing number of raw material manufacturers conduct relevant in-vivo studies these days, and share the relevant data for the explicit purpose of claim substantiation
    UK based formulation chemist. Strongest subjects: hair styling, hair bleaches, hair dyes (oxidative and non-oxidative) I know some stuff about: EU regulations, emulsions (O/W and W/O), toothpaste, mouthwash, shampoos, other toiletries
  • It's always the same problem, you can conduct study, but rarely, all data are positives, so "ALL" the companies just do not present the bad results that go against the claims they look for. If pharmaceutical company are doing the same with clinical trial how do you think that cosmetic one are not using only the good results.

  • Be aware that not just the FDA, but also the FTC, state-level consumer protection agencies, and even private organizations like the BBB are all involved with regulating/policing advertising and claims. Not to mention the lawyers looking for a cash cow.

    We don't want to discourage you from getting into the cosmetic industry - but you clearly want to sell a drug and call it a cosmetic. This is a bad idea.
    Robert Zonis, Sr. Formulation Chemist, Beaumont Products "All opinions and comments expressed are my own, have no relation to Beaumont Products, are fully copyrighted, and may not be used without written permission."
  • Are you going to fund this through the NDA process?
    Since I don't sell in the USA, I don't give a fig for the FDA, so no, I don't care.
    Design of anti-aging creams, gels, and serums; shampoos; and therapeutic cosmetics. In-house label and box design capability.
  • If you have a world beating, unique, wonder product (as you seem to be intimating) another approach, rather than going through the hassle of trying to break into a market you know nothing about, would be to take out IP protection and then to license/sell the rights to a known manufacturer.

    I have done this three times now and the royalties provide me with a very comfortable way of life in my retirement (if only my state of health matched, but that's not for these pages). I have little or no input to the businesses apart from signing renewal documents each year and checking my bank account each quarter.

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