If you are an entrepreneur planning to start your own soap manufacturing business, then according to current market research, it is one of the most profitable manufacturing businesses to start in 2021. With the outbreak of Covid-19, people all over the world have become more hygiene conscious than ever. As per medical experts, washing hands often using soaps helps to keep the virus infection at bay. In a recent study conducted by WaterAid India among the six states in India, a whopping 77% of the people have changed their handwashing habits after the pandemic. One more interesting finding is that 87% of the survey respondents rated soap as the most effective hand washing agent during these pandemic times. Moreover, handmade organic soaps have found increasing acceptance since they are made of natural ingredients and are devoid of chemicals.
7 steps to setting up a soap manufacturing business
Currently, a soap manufacturing business can be one of the most profitable small-scale manufacturing business ideas. As per the report by Fortune Business Insights, in 2019, the size of the global soap industry worldwide was USD 34.09 billion and is expected to reach USD 55.29 billion by 2027 with a CAGR of 5.0% during the forecast period. This business is easy to start and requires minimal investment. One more attractive factor is that you can operate this business in a small space. Now let’s delve into the various steps involved in soap manufacturing.
1. Create a soap manufacturing business plan
The first step is to have a business plan or the roadmap of the business you are planning to launch. This should contain the details of your soap manufacturing business plans, the various goals, and how you plan to achieve these goals. The business plan acts as a guide to reviewing your original goals, analysing and tracking your progress, and allowing for amendments wherever required. This should include the executive summary of your small manufacturing business, a detailed business description, competitive market analysis of other players operating in the same industry, information about the management and operations, financial requirements, procurement, and marketing and sales strategies.
A well-written business plan makes it easier to get loans from banks and other financial institutions. It can also attract investors and venture capitalists to invest in your business.
2. Learn the different techniques of soap manufacturing
As a business owner, it's imperative for you to know about the various steps involved in the soap manufacturing process. The two primary techniques used are the cold-press and the hot-press. In the cold press method, an alkali is mixed with fats or oils. After it is mixed and it takes shape, you have to wait for weeks for the soap to cure. In the second technique, i.e., the hot process, you need to cook the soap as part of manufacturing the soap. The cure time is zero in this process, and it is relatively easy to add fragrance and colours. However, it is quite a cumbersome task to produce soap using this technique. If you are new to soap manufacturing, it is helpful to attend classes and learn from resources on the internet to gain more knowledge.
3. Procure the equipment
The equipment required for soap manufacturing also varies based on the technique you are applying. However, irrespective of the technique used, the basic equipment will be the same. This includes an accurate digital or normal scale, gloves made of rubber, goggles used for protection, a pitcher made of plastic or stainless steel which is heat resistant (with a lid and ideally having a capacity between 2 to 3 litres), large plastic or stainless steel spoon, a large Pyrex pitcher or stainless steel pot, measuring spoons made of stainless steel, and some glasses made of stainless steel with approximately 2-litre capacity. The other requirements are some beakers of small size, ramekins or cups used for measuring, some spoons and whisks, ladle made of stainless steel, spatula made of rubber, a thermometer with good accuracy, stick blend, soap moulds and some napkins and towels.
4. Make the necessary arrangements
Though soap production is one of the most profitable manufacturing businesses to start, you have to first procure the various raw materials and ingredients. The various materials required include lye, oils that can be castor or olive oil, fragrances and water. The remaining ingredients vary depending on the fragrances and the variety of soap you want to manufacture. It's up to you whether the soap needs to be based on milk, water, cream or glycerine. The most popular fragrances are sandal, rose, or lavender, for which the ingredients are different.
The other formalities include the legal permits and licenses required to run your business. A business license needs registration for GST, registration as a business entity and other licenses specified by the respective municipal corporation in your city or state.
5. Identify a niche
As per the report by PR Newswire, the Indian soap industry was valued at $2.9 billion for the financial year 2020. Going by the projections, it will surpass $4.4 billion by FY 2026. The soap manufacturing industry in India faces stiff competition from big players. Hence to survive the competition, you need to identify a niche segment. Come up with a unique size or smell for your soap. Highlight the USP (Unique Selling Proposition) of your product so that customers will be able to easily distinguish your product from that of your competitors.
6. Find suppliers
For manufacturing soaps consistently, you need to have a sufficient supply of oils, fats, scents, colours, wrappers, etc. Though you can buy these materials on your own, entering into a contract with suppliers can save you a lot of time and effort. Look for suppliers who can regularly ship to you materials such as oils, moulds, scents and colours, and equipment.
7. Pricing and marketing your products
Before pricing your soap, research the prices charged by the competitors. Based on the value you are offering, fix your price above or below their price. Marketing also plays a significant role in selling your product. Approach supermarkets and grocery retail stores and get your soap brand displayed on their shelves. One more effective strategy is to sell your products online. By selling your products on e-commerce websites such as Flipkart and Amazon, you can access a larger customer base. Also, it's imperative to have a website and official social media pages for your brand. Effective digital marketing can spread the word about your brand and ultimately lead to more sales.
The packaging of your product also deserves as much attention as the marketing of the product. The product should be visually appealing for the buyers; you can club the soap with other related products and sell them as a complete gift hamper.
In the post-pandemic world where customers have become increasingly hygiene-conscious, you have made a wise decision to start a soap manufacturing unit. However, since there is cutthroat competition in the industry, coming up with an out-of-the-box idea will help your business stand out.
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Q. Why should I add fats while manufacturing the soap?
Ans. For the soap to possess the required solidity and long-lasting properties, it is necessary to add fats or oils such as lard, coconut oil, palm oil etc. When you manufacture a soap without adding fats, it will dissolve easily. Moreover, when the soap is exposed to water for a long time, it tends to turn soft and mushy.
Q. Why don’t commercial soap companies make cold-pressed soaps?
Ans. The shelf life of cold-pressed soaps is shorter. Due to the glycerine content, essential oils, and expensive natural organic ingredients, the price is also higher for these soaps. Hence commercial soap manufacturing companies generally don’t follow this method.
Q. What are the clear soaps found in stores made of?
Ans. In most cases, clear soaps are made by adding alcohol to the soap mixture. This alcohol is mostly obtained from corn grain alcohol or premium rubbing alcohol. Most customers think that clear soaps are natural glycerine soaps since they are made of different foaming agents, wetting formulas and alcohol, and a standard mixture of water, oils, and alkali. However, in reality, the squeaky clean feeling that consumers get while using clear soaps is due to the presence of synthetic ingredients, detergents and foaming agents.