1. Business Ideas
  2. Business Plans
  3. Startup Basics
  4. Startup Funding
  5. Franchising
  6. Success Stories
  7. Entrepreneurs
  1. Sales & Marketing
  2. Finances
  3. Your Team
  4. Technology
  5. Social Media
  6. Security
  1. Get the Job
  2. Get Ahead
  3. Office Life
  4. Work-Life Balance
  5. Home Office
  1. Leadership
  2. Women in Business
  3. Managing
  4. Strategy
  5. Personal Growth
  1. HR Solutions
  2. Financial Solutions
  3. Marketing Solutions
  4. Security Solutions
  5. Retail Solutions
  6. SMB Solutions
Product and service reviews are conducted independently by our editorial team, but we sometimes make money when you click on links. Learn more.

Small Beauty Firms Face Regulatory Beast

Small Beauty Firms Face Regulatory Beast


Go to any local gift shop, farmer’s market, or even your local grocery store and it’s clear that a growing cottage industry is churning out millions of dollars in hand-made soaps, lotions, lip balms and shampoos.

But this young industry is about to face its first major hurdle and is rallying hard against the passage of the recently introduced Safe Cosmetics Act 2010 (H.R. 5786). The proposed law would impose stricter regulations on what's going into those personal care products and how their ingredients are reported to the consumers.

Environmental groups say it's about time the U.S. Food and Drug Administration (FDA) monitors the potential carcinogens and reproductive and developmental toxins in cosmetics. Small beauty companies, however, claim the legislation will prove onerous, with extensive labeling and testing requirements and little distinction made between companies that produce 100 bottles of lotions a year and those that manufacture 100 bottles a minute.

Of particular concern are carcinogens including formaldehyde and 1,4-dioxane, mercury, other heavy metals and phthalates, chemicals that have been linked to cancer, reproductive problems and a variety of other conditions.

Consumer-rights groups and environmentalists claim the legislation will actually benefit small businesses.

The law will “level the playing field for businesses that are making the safest products,” according to the web site of the nonprofit Campaign for Safe Cosmetics.

“New advancements in science have exposed the health risks of repeated exposures to low-dose hazardous chemicals – while also enabling green chemists to develop safer, non-toxic formulas,” the organization claims.

But, small cosmetic manufacturers say the reason many of their colleagues went into business was to produce products using more natural ingredients than what they found on the shelves of their local discount retailer.

“While well-intended, the legislation goes far beyond what’s necessary,” said Donna Maria Coles Johnson, the founder and president of the Indie Beauty Network (IBN), a trade organization that represents more than 850 small cosmetics manufacturers.

The legislation, introduced by Rep. Jan Schakowsky (D-Ill.), along with Reps. Ed Markey (D-Mass.) and Tammy Baldwin (D-Wis.). in July , would alter the regulatory structure of the cosmetics industry and bring it more in line with other FDA-regulated products such as drugs, biologics and medical devices.

There are three potential threats to small cosmetics producers if the law passes as written, according to Johnson.


Under the Safe Cosmetics Act, manufacturers of personal care products would be required to individually test all ingredients in their products as well as in various combinations to assess potentially harmful reactions.

“We’re pretty much as green as you can get [by recycling] a by-product people are trying to get rid of,” said Kristin Fraser Cotte, founder and CEO of The Grapeseed Co. based in Santa Barbara, Calif. The company, which just opened its first retail location and generates under $1 million annually, produces bath and skin care products using grape seed oil, a natural by-product of the wine-making process culled from surrounding vineyards.

“It also happens to be fabulous for your skin,” she said.

Cotte, who started her business in her kitchen six years ago and now has three part-time employees and distributes products in 30 states, said that small traces of toxins can be found in the nanoparticles of numerous ingredients.

“Trying to eliminate them all is just scientifically impossible to do,” she said.


All cosmetics manufacturers will be required to register with the FDA by providing contact information, a description of the company’s activities, gross receipts, the number of employees and the name and address of any company that supplies ingredients for products.

For Emily Caswell, whose GCDSpa.com produces a customizable line of beauty products for any occasion, the new reporting requirement would keep her from giving her customers the personalized attention they’ve come to expect over the last five years.

“It’s a lot of busy work and paperwork ,” said Caswell, whose one-woman Maine-based operation generated about $30,000 last year.

“I’m small potatoes,” she said.

Caswell, whose top flavors of the year for her lip balms and skin care products include cosmopolitan and strawberry margarita, pointed out the recent outbreak of salmonella in the egg supply and the difficulty the FDA has had controlling the situation.

“What we put on our skin is regulated more strictly that what you put in your mouth,” she said, “and that’s just silly.”


Not only will all ingredients used in personal care products require greater testing but elements that are detected, even in trace quantities, will need to be listed on product labels as well as on all consumer websites where products are sold.

Anne-Marie Faiola, the owner of Bramble Berry, a supplier of raw soap-making materials to more than 62,000 hobbyists and micro-businesses, said the label for a lotion bar made of just cocoa butter, olive oil and lavender oil would produce an ingredient label over 60 lines long.

“Just by telling consumers there are toxins in their products doesn’t make them any safer,” said Faiola, who started her business in 1998 and is based in Bellingham, Wash. “Look at Doritos,” she said.

Business owners agreed that ultimately the consumer would bear the costs associated with compliance.

“I think if it’s passed as it is we’ll see prices skyrocket,” said Cotte, whose vinotherapy products are now available in the United Kingdom, “and a lot of small players vanish from the scene.”

Johnson, a former attorney, has traveled to Washington, D.C. , to meet with lawmakers to discuss the impact of the Safe Cosmetics Act on her IBN members.

“How can we make you understand how we do business differently?” she said she asked them. “(Small businesses) have different needs and do things in a different way and that needs to be embraced.”

The Safe Cosmetics Act is currently being reviewed by the House Energy and Commerce Committee and Education and Labor Committees. Faiola expects a similar bill to be introduced to the Senate later this month by Sen. Dianne Feinstein (D-Calif.). Faiola has been in touch with Feinstein's office and thinks that legislation will address more of the concerns of  small businesses and would be "something the industry could work with."