For entrepreneurs looking for low investment business, starting soap and detergent manufacturing business is the ideal one. There are many reasons for choosing it due to its perennial use in our day to day life.
We use soaps and detergents for bathing and washing clothes. Before going ahead with the business, it will be better if you could learn a bit about soap and detergent manufacturing. As you might be aware, there is a right process of making soaps and detergents.
Broadly speaking, making soap or detergent is not difficult at all. Obviously, the primary requirement here is buying raw materials. India is blessed with abundance of resources so starting the business will be like walk in the park.
It is the marketing and creating a durable market which needs elbow grease. Working door to door pitching your product is hard. This is where you fight the hard battle. Moreover, the business has got ample scope for growth and expansion.
Initial investment in the business is small. Roughly, it is advisable to have financial resources amounting to INR 6, 00,000/-. Around INR 3, 00,000/- would be available for buying soap and detergent making machinery. The remaining amount will be available for paying salaries and meeting miscellaneous expenses.
In the beginning one can cut cost by starting the manufacturing unit at home if sufficient space is available. Otherwise, you have the option for leasing or renting the required space to start the business. You will install the soap manufacturing plant inside the rented or leased premises.
We will discuss step-by-step details for starting a soap and detergent manufacturing business:
Discover your niche
Just like any other business, you will have to know the business first before starting it. We use soap for bathing and laundry so you must decide your niche. Similarly, there are many types of detergents for light & heavy cleaning.
There are chiefly two types of detergents-commercial and residential. There is further sub-division into light duty, heavy duty and phosphate-free detergents. And, you also have an option for making fabric softeners. Ideal way is to know the feasibility, trends and then starting the business.
Develop formula for making soap & detergents
There is abundant literature available on various ingredients to formulate a unique formula for making a detergent or soap. Moreover, you also have many Youtube Videos to learn to get the desired combination ingredients for your detergent or soap formulation.
Then, you have formulation consultants who can advise on various formulations you can work with. They can provide you with a feasibility plan, product details, raw material sourcing, and manufacturing process. You can easily find such professionals in online directories.
To illustrate, I consulted a manufacturing plant specialist for enabling me to purchase a couple of liquid oxygen plants, industrial gas plant, and nitrogen gas plants for a leading steel manufacturing company from prominent air separation manufacturers. My purpose in narrating this story is to underline the advantages of hiring professionals.
Plan your budget & arrange finances
Making forward-looking budget is crucial for smooth running of any business. However, preparing budget would involve taking into consideration several factors. Needless to say, it would make allowance for rent, machinery & equipment, branding, employee salaries, license, registration, insurance and marketing expenses.
With the initial capital, you will be able to rent space for setting up the soap manufacturing unit. No denying purchasing machinery and renting space would require significant upfront capital investment. However, salaries and rent will be a recurring expense along with other operational costs. One can take commercial loans for starting soap and detergent venture.
Prepare a business plan
Success of your business would depend on how effectively you have prepared the business plan. Every business needs a solid strategy for better execution and expansion. For achieving solid growth, you will have to focus on multitude dimensions.
First and foremost would be the target market. It is imperative that you define your audience with precision. This way you will know whom to pitch your product. The plan must also have detailed information on the source and cost of raw materials.
Next, deciding the plant capacity is equally important. Depending on projections, you will set a sale target for a particular period. The plan will also include detailed info on equipment cost and source. For efficient working you will include management structure and its functionalities.
Moreover, you will also include your recruitment methodology and salary structure. This is helpful in budgeting expenses. Under marketing strategy, you will include details of your marketing targets and the process for achieving them.
Needless to say, business plan is the blueprint for running the business. It will contain every minute detail of every process, transactions, and sources. Arrangement of capital will be adequately explained with sources. Similarly, it will also have a detailed explanation of financial arrangements.
Find vendors for raw materials
Having a list of trusted vendors is of paramount importance to every product manufacturing company. After successfully making a formula, you will need raw material for making soap and detergents. Manufacturing will require various essential ingredients which you will purchase from a list of trusted vendors.
The plan will include detailed information on the vendors with full contact details with their products & prices. No doubt, more than of the working capital will go into purchasing the raw materials. Therefore, you must find the suppliers that offer you the best prices. To keep the costs low, the vendors must be near your manufacturing unit to reduce transportation costs.
Pricing and Branding
For deciding the pricing of soap and detergent you must calculate the annual manufacturing cost including operating expenses such as salaries, etc. And, you can also check out the prices of your competitors and set your prices accordingly.
On other hand, inflation is an important factor in pricing mechanism. So, it is important that prices include inflationary cost. Apart from prices, it is also important to study the sale techniques of competitors.
Branding soap and detergents is the next step of the business. The brand must project a certain value and idea which will appeal to your target customers. Your log and package design must reflect that.