It is estimated that the global market for liquid detergent will have a CAGR of over 8% in 2021. Additionally, the industry has grown steadily in the past, thus showing that detergent manufacturing businesses have great potential. For anyone who is thinking of setting up a business of their own, the scope of this sector is excellent.
Here are some tips to help you understand how to start a detergent manufacturing business if you are looking for a new venture of your own.
1. Find Your Niche
Like any other business, a washing powder manufacturing business also requires thorough research. You need to understand the type of detergent that is most lucrative based on your budget, location and other parameters. The most common options include commercial and residential washing powders or detergents. These are further divided into heavy-duty detergents, light-duty detergents, phosphate-free detergents and fabric softeners. Market demographics and research is the first step to understanding how to start a detergent manufacturing business.
2. Get The Formula For Your Detergent
Several videos and research papers are available online that tell you the perfect combination of ingredients to get a unique formula for your detergent manufacturing business. You can also get in touch with detergent formulation consultants who can give you a detailed plan, including raw material procurement, the type of manufacturing process and other steps involved in the large-scale production of the formula. These professionals can easily be contacted through online directories or through popular search engines. Finding your niche will also make it easier for you to get the right formula for your detergent powder manufacturing business.
3. Prepare Your Budget
When planning the budget for your detergent manufacturing business, there are several factors to consider, including the rent of the factory, raw material, branding, employee salaries, equipment, insurance, license, registration, and advertising. An estimated cost for a factory with an area of 1000 sq ft is Rs. 25 lakhs as the initial capital. While this is a sizable investment, the returns justify the investment, making this one of the most profitable manufacturing businesses to start in this sector.
Most of your investment costs are towards your staff which includes a plant manager, purchase officer, supervisors, factory workers, quality control managers, sales staff, engineers and accountants.
4. Create a Detailed Business Plan
The success of manufacturing business ideas lies in the business plan that you prepare. You will need a strategy that will help you get started and operate the business smoothly. The most important elements that should be incorporated into your washing powder manufacturing business are:
- The target market
- Source and cost of raw material
- Plant capacity
- Equipment cost and source
- Management structure
- Hiring options
- Marketing strategy
- The manufacturing process for your product niche
- Capital investment source
- Detailed financial plan
5. Find a Good Location For The Factory
Once you have the required resources for starting your medium or small manufacturing business, the location of the factory is the next challenge. The location that you choose must be close to the raw material sources, preferably. Additionally, it should have adequate electric power and water supply and easy access for transportation.
It is also important to ensure that the factory for your detergent powder manufacturing business is compliant with government zoning regulations. The property should be large enough to support your infrastructure and should be in an industrial zone for the best access to raw material and transportation.
6. Register Your Business
Your detergent manufacturing business becomes a legal entity only after it has been registered. First, find a suitable name for your brand. Then decide if you want to register your business as a Limited Liability Partnership, Private Limited, Partnership or sole proprietorship, must be decided. Registering the business as an SSI or MSME is helpful as it allows you to get government subsidies. After this, you will need to set up a bank account for all transactions related to your business.
Additionally, you will need to obtain the necessary certificates and permissions from the Pollution Control Board. To enter your product into a distribution network, you must also obtain a Distribution Agreement Paper. For any product that you manufacture for home use, getting a license is the final step to making it a viable product for the market.
7. Equip the Factory
Be it small-scale manufacturing business ideas or large-scale ones; you will need to invest in some basic equipment. Here is a list of the equipment that you will need to get your detergent manufacturing business started:
- Mixing vessels
- Weighing scales
- Storage tanks
- Conveyors sieve
- Spray dryer
- Waste disposal material
- Packaging machine
- Electric stove or gas stove
- Anti-pollution unit
- Hand gloves and basins.
8. Find Vendors for Raw Materials
To manufacture your detergent, you will need several active ingredients depending on the formula that you choose. Almost 60% of the working capital for your manufacturing business goes towards purchasing raw materialsPulverisers. Therefore, you will need to find raw material suppliers who are cost-effective and closely located to save on transportation costs.
9. Pricing and Branding
Take your annual production cost into account to finalise the price of your detergent. Inflation is another crucial factor to account for as the prices of raw materials may fluctuate. The best way to set the price on the product developed through your washing powder manufacturing business is to check the price of your competitors and study their sales tactics.
Branding is the next step, which includes your logo and packaging design. Once this is done, you are ready to advertise and sell your product.
10. Advertisement and Sales Channels
Today, there are various advertising options for your small-scale manufacturing business ideas, with social media providing cost-effective solutions. You can also place ads on search engines and other virtual options for more visibility of your brand. Most manufacturing businesses choose traditional marketing options like print ads, hoardings and TV commercials as they are most effective in reaching out to an active customer base.
Establishing a distributor-dealer network that is very strong is a crucial step. You can use e-commerce portals to get access to popular distributors for your detergent manufacturing businesses. The best sales channel, to begin with, are retail counters near your target audience, such as supermarkets and independent retail stores located in your region of operation. To establish these B2B connections, it is highly recommended that you hire commission-based sales representatives. You can also choose online channels like a company website or e-commerce portals to generate sales for your product.
Ensure that your manufacturing business ideas are backed by solid strategy and planning to ensure success in any industry you choose to invest in.
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Q. What is the monthly cost of raw materials for a detergent manufacturing business?
Ans. Although the costs vary significantly depending on your product’s formula, it is estimated that the average cost towards raw materials for a small-scale detergent business is Rs. 4 lakhs per month.
Q. What is the best manufacturing process for detergents?
Ans. The scale of production determines the manufacturing process that you choose. There are two options for a detergent manufacturing business:
- Raw material mixing process: Ideal for small-scale businesses.
- Spray-dried process: Best suited for large-scale businesses.
Q. What license do I need to manufacture detergents?
Ans. The license for manufacturing any product depends on the country that you are operating from. For a washing powder manufacturing business in India, you need to get a BIS registration and IS: 4955-1968.
Q. How to manage waste with a detergent manufacturing business?
Ans. Make sure that you dispose of both liquid and solid waste correctly. Any bio-medical waste should be disposed of as per the Bio-Medical Waste Rule of 1999. You also need to make provisions for the safe storage of any waste material. You can get in touch with the Pollution Control Board in your region to get a detailed understanding of the best waste disposal practices.
Q. How much does it cost to register a detergent powder manufacturing business?
Ans. The minimum cost of registering a detergent powder manufacturing business is Rs.50000. This does not include other registrations like trademark registration. This cost varies according to the type of business and the state that your business is registered in.