Starting an Aromatherapy Business

Starting, owning, and managing any business is a large task. Starting an aromatherapy business can be even more daunting because of all the different paths you can choose. Teaching, working as a practitioner, selling a product, and so many more options are open to aromatherapists. On top of that, deciding what kind of entity to operate must be considered too.

I get asked alot by individuals where to start with it all. So hopefully this will help you. I know there's a lot of excitement and nervousness and it can be overwhelming. So starting out,I highly recommend you sit down with a business lawyer.

They’ll be able to help you choose what the best initial plan of action is and give you guidance about business entity type (sole proprietorship, LLC, etc.). They’ll also be able to help you navigate your state laws to know what you’re able to do within the business you choose – service or product or both. They may even have a recommendation for insurance in your state.

Ah, insurance.

I'm not a business lawyer, so it's important to say this. Any information I share below isnot and should not be considered legal advice. Only a business lawyer can give that. I'm only sharing based on my own experiences starting out.

As far as insurance, you'll need to be clear on what you want to do. It's incredibly important to be clear and here's why:

If you have studied the FDA guidelines for selling, you’ll note that services arenot ever mentioned by the FDA. Only products. They give information on labeling requirements, testing, all of it. But, this guidance is only for products and this is a major piece of the insurance puzzle.

With that being said, any service based business should always be kept separate from a product based business. This means that if you plan on working as a practitioner (which is classified as a service), you’ll need to have a separate business entity created just for that. That business entity requires its own EIN, bank account and insurance.

If you plan on making a product to give as part of your service, the cost of your products should always be included in your service. If you are not going to teach, you might be able to find a product liability insurance that is affordable.

However, if you plan on teaching at all under this business entity, you’ll need to find insurance appropriate for service-based practitioners. Just keep in mind, insurance companies that offer plans for service based businesseswill need to know what is included in your service – that is the tricky part. Some insurance plans may not allow you to give (or sell?) a product, so you'll have to ask.

Also, not all states will have insurance available due to how their laws are written for complementary therapies. You may find that you are not able to work as a practitioner, but only as a teacher.

Selling aromatherapy products without teaching or working as a practitioner is pretty cut and dry. It requires an EIN, separate business entity, bank, etc. and most importantly, full product liability insurance. There are a few affordable ones if you’re just starting out, but it’s important you understand the limitations and what’s covered or not covered for each.

For example when I first started out, I used an insurance company called RLI. However, the momentI earned more than $2,500, my business was no longer covered. Another company I looked into did not cover selling essential oil singles because they are considered a “resell of original product,” even though they are direct from distillers.  Some insurance plans are designed specifically for resellers; so, if you plan on creating your own blends and body butters or salves they may not cover manufacturing. So, it’s important to ask a few questions when looking into insurance companies.

• What is the sales limit for the product liability?
• Are the coverages and sales limits applicable for the insurance company’s fiscal year or for a year from the start date of your contract with them?
• Do they allow you to sell essential oil singles that you do not distill yourself?
• Do they allow you to resell unscented bases (they typically don’t if they don’t allow EO singles)?
• Do they cover manufacturing of product liability (this is important if you are creating blends, salves, etc. as thatis considered manufacturing)?
• Do they cover in-person selling in a retail setting or special event or both?
• Do they cover online selling?
• Do they cover you working and creating products in your home if you don't have a warehouse to manufacture out of?

One more thing to consider: As you grow, deepen your knowledge of aromatherapy and potentially herbalism. I’ve seen a lot of people sidestep insurance companies by not listing on their website things like fire cider and elderberry syrup; but, it’s still unethical. If you get caught doing this without proper coverage, your insurance company can drop you and make your life miserable. If you ever plan on introducing herbal products to sell like these or even tinctures, you really need to ask if this is allowed.

• Do they allow for herbal preparations that can be ingested?

I’m sure there are more questions, but it’s been so long since I first started out. My best advice is to be very clear on exactly what you want to do or offer. You have to know exactly what you want to do and where you want to end up with your business in order to really get all the pieces of your business built with a solid foundation. 

If you plan on "doing it all," make sure you discuss this with your business lawyer before you go purchasing multiple insurance policies to cover what you want to do. You may need to have a separate business entity, bank account, etc. for each facet of business within aromatherapy that you intend on doing. Starting out, this can bevery expensive.

One more thing regarding insurance: The most important thing to keep in mind forgood product liability insurance is that it isnot cheap. And depending on your growth each year, the cost can increase as you grow. So be prepared for that! 

As far as resources, check the Alliance of International Aromatherapists (AIA) to see if they have recommendations for Insurance companies – again some may not be available in your state depending on your laws.

My mentor, Marge, has always said it best so I'll share her words: "If it (running an aromatherapy business) was easy, everyone would do it."

And I'll add to that - if running your own aromatherapy business theright way with the passion and love you feel for such a healing industry was easy, everyone who started out would still be in business because everyone could do it.

I know this information can be daunting, which is why a good business lawyer is imperative. I hope this gives you a great starting place and I wish you much love and good fortune wherever you decide to start after completing your training!

Special Recognitions:

Thank you to Crystal Brothers for offering edits for this! She's an amazing editor and currently is the editor for AIA's journal.