Industry News

Small Businesses Vs. Large Businesses

February 22th, 2023

There is much discussion around the benefits of small versus large business formulation. Yet both are critical aspects of the industry that keep cosmetics and makeup companies updated, afloat and modern.

Support small businesses! This is a headline that has taken over the media in recent years. Small businesses and formulation are vital for our community yet the conversation around them highlights a variety of different aspects. You can consider the specialized care they put into hygiene, product testing and quality. Without the resources of a large corporation, small organizations have to be extra careful with checking their products and ensuring they provide the best to their customers– as they often rely on these people for their only source of income.

Small businesses also have a tact for specializing in precision and using natural, cruelty-free methods of creation. It is especially hard for a small cosmetics business to find success in our current economy with the influx of celebrity and designer-based brands. Instead, the founders will have to do heavy amounts of research and find a way to stand out professionally.

When asking Suzanne Gokel, the founder of Skin Sutra, a Cal Aurum Cosmetics’ sponsor, she would describe the process of creating a small business as competitive and educational. When asked about the market she claimed, “Owning a small business means wearing many different hats. From CEO to packaging to administrative. This impacts how you make decisions. You have to be willing to do any and all of it in order to find success.” She then went on to talk about the\ industry specifically stating, “Small businesses in cosmetics give you a lot of flexibility to try new things and pivot quickly when the industry is evolving. You can make smaller batches and try new products while ensuring high quality for your customers. There is more opportunity to be creative!” She greatly advocates for supporting small businesses as they fuel the cosmetics and industry and can be the best/purest types of formulation.

On the other hand, large businesses are held accountable for their quality due to the constant competition of big corporations and well established cosmetic companies. In other words, when it comes to trusting skincare, customers tend to purchase products from trusted, well known brands which fuel their responsibility.

There is, however, one factor that has created such a boost in large businesses’ sales – their marketing and media teams that are responsible for maintaining profits and selling to an audience. A larger profit margin and rate of return allows for larger staff sizes and equipment. While this is a great aspect of the economy, in certain cases it may also lead to market greed which indicates a decrease in quality of products and ingredients as they try to increase these margins.

In addition to marketing teams, larger businesses may also have more research potential and a higher ability to test products– allowing them to cater to a wider audience. Funds that may come in through profit and investment can be used in the laboratory to ensure safety and sustainability of products. The fine technology and machinery applied in making these products, guarantees the linearity of all final product formulations – something that returning customers depend on as they form a relation with the brand and the product.

Nevertheless, living in the 21st century brands are constantly progressing towards social and economic realization. With increased marketing through media and influencer reviews, “cancel culture” has encouraged all brands to choose quicker, cheaper methods of formulation and cruelty free testing to create easier, greener and more sustainable methods. Modern companies that function on a large operational scale, are hence persuaded to showcase and maintain a certain level of transparency of what goes on behind the scenes. Small companies are even more at risk as they must adhere to specific trends in order to make any kind of profit. This is one reason we see the cosmetic industry heading towards a vegan, inclusive and diverse direction.

Therefore it comes as no surprise that the cosmetic industry is a place where both large and small businesses have their own niches and can thrive simultaneously. However, it is also true that both types of businesses may be motivated by their personal goals and provide an array in variability to customers. At the end of the day, both large and small cosmetics companies are vital factors that provide motivation for creativity and innovation within the industry.



Sarina & Ahana

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