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Do you want to start a soap manufacturing business on a small scale? If so, find here a detailed project business plan guide covering manufacturing process, licenses, machinery, etc.
A simple production method with high return in toilet soaps is invariably used in every household. The non-edible oil soap has huge market potential. The market is spread from remote village to the metro cities alike. In modern society due to awareness towards hygiene, soap has now become the necessity of life and one of the top-selling products in the FMCG industry.
Increasing awareness of health and hygiene have led to an increase in health soaps across the country. New technologies have also contributed their bit in the development process. As a result, the market is flooded with a variety of soaps varying in both physical and functional attributes.
Market Potential of Soaps – Is Soap Manufacturing Profitable?
Various types of soaps available can broadly be categorized into three categories namely perfumed soap, carbolic soaps, and medicated soaps. There is a tremendous scope for production in both small and large scale due to the exponential growth of soap demands.
The Indian Soap Industry includes about 700 companies with combined annual revenue of about $17 billion. Indian Soap Industry volume is Rs 4,800-crore. For the purpose of gaining a competitive edge, Indian companies are now relaunching their brands with value-additions to woo consumers across India.
Total annual soaps sales by companies marketing their brands at national or state levels are estimated at 14,000 tonnes of a total soaps market considered to be about 126,000 tonnes.
Here are the 10 Steps to Start a Soap Manufacturing Business
1. Learn the Soap Manufacturing Process
Both continuous and batch processes produce soap in liquid form, called neat soap, and a valuable by-product, glycerine.
The next processing step after saponification or neutralization is drying. Vacuum spray drying is used to convert the neat soap into dry soap pellets. The moisture content of the pellets will vary depending on the desired properties of the soap bar.
In the final processing step, the dry soap pellets pass through a bar soap finishing line. The first unit in the line is a mixer, called an amalgamator, in which the soap pellets are blended together with fragrance, colorants and all other ingredients.
The mixture is then homogenized and refined through rolling mills and refining plodders to achieve thorough blending and a uniform texture. Finally, the mixture is continuously extruded from the plodder, cut into bar-size units and stamped into its final shape in a soap press.
2. Machinery for Manufacturing Soaps
While buying a machine for manufacturing soaps, the first thing to consider is about the output. There are manual, semi-automatic, and fully automatic machines. According to your budget and scale of production, choose the one which fits you best. The machine cost starts at a minimum of Rs. 75000.
3. Choose a Location for Manufacturing Soaps
You don’t need much space to manufacture soaps if starting on a small scale. Other than the plant area, you must make separate spaces for administrative work and storage. The location of the soap making plant must be in an area which must not be far from the local immediate market. This increases transportation cost and thereby reducing profitability.
4. Register Your Company
If you are starting on a small scale with a low budget, a sole proprietorship is a popular option. The minimal cost is least in this kind of company formation. However, there are other options too like OPC, partnership, LLP, etc. If you are planning to start on a larger scale and looking for funding, register your business as a private limited company.
5. Licenses and Permits
Check with the local concerned authority and obtain the required licenses and permits needed to start soap manufacturing. Within 30 days of starting the business, it is advised to get the GST registration. Enlist your company with Udyog Aaadhar scheme for securing certain benefits from the government. You can also apply for trademark registration if you intend to protect your brand.
6. Arrange Finance
If you are looking for finance, the most important tool will be your business project plan. Talk with investors and financial institutions including banks and pitch your business proposal effectively. Check this guide to know more about how to raise capital for a small business.
7. Pricing Your Product
Pricing your soap products is one of the most critical decision you have to take before launching the product. If you are launching a regular soap, you have to come with a competitive price with other best selling soaps. However, if your product is added with rich features and catering to buyers who are looking for value-based products, you can go for premium pricing.
8. Setup a Proper Accounting Process
You have to be very careful about accounting processes from day 1 of your business. Having a proper accounting system will not only help you in understanding the financial health status of your company but also in filing annual returns with the income tax authority. Check the list of best accounting software available at present.
9. Soap Manufacturing Plant Cost Sample
Mentioned below an estimated project cost of a small soap making plant.
If the production capacity is set at 100 kg/day, plant machinery cost at Rupees 8 Lakh, working capital at Rs. 38 Lakh. The total capital investment will be around rs. 76 Lakh in India Rupees. The expected return will be around 49.41% and the break-even stands at 40.34%.
10. Sell your Products
Develop a network of wholesalers, distributors, and retailers for effective distribution of your soap items. Check this guide to know more about low-cost ways of promoting a product. Packaging, creating promotional tools like brochures, visiting cards are a must.
Nowadays having a website is a must. If you want to sell online, list your product with marketplaces like Amazon, Flipkart, etc. If you can afford, create an online store and thereby attract a much wider audience.