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Soap Making Business Plan Investment Profit

Soap Making Business Plan Investment Profit

Everyone needs soap – unless you live in the jungle and adore your body odor – you will need soap. It is one of the common goods and is a daily essential. Hence the market for soaps is wide. Due to the variety in skin types there are a lot of types of soaps which are required. To cater to every need the soaps are produced in a number of different ways.

The soap making business is one of the most promising FMCGs. Perhaps this is the reason why so many people are attracted to this business every year. In a country like India, there is a huge demand for soaps every day. But there are only a few handful of players in the market. If you want to start your own soap business in India, we have a few tips for you. Let’s get started.

How to make soap?

We will give you the basics of how soap is usually made. Remember this is only a basic step. After this, to customize your product you might need additional supplies and a specific formula to separate your product from the rest.

Ingredients:

  • Get 2/3 cup coconut oil (which will produce lather) and then get olive oil of the same amount. Also get some almond oil, grape seed or safflower oil in about 2/3 cup.
  • After that you will need 1/4th cup lye which is about 100% sodium hydroxide. Finally you will need 3/4th cup of pure or distilled cold water.
  • Other items you would need are oatmeal, clay, cornmeal, salt, Aloe Vera gel, or any other item which you might want to use.

Now that you have them, this is how you shall proceed –

  • Put your gloves on and pour the lye in a canning jar along with the water. Stir them slowly and when the water starts to clear, allow them to sit.
  • Now add the oil you have in a pint jar. Stir it well and then place the jar inside a bubbling hot pan of water (or you can simply microwave it, if you do, put the temperature to 120 degrees).
  • Once that is done, take out the lye. Let the lye cool down. Take out the pint jar and let your oil cool down too. Both should reach a temperature that ranges between 95 and 105 degrees. Make sure it doesn’t get down below 95 degrees or your soap will start to crumble.
  • When they reach the right temperature, pour them into a mixing bowl and stir them until they are all mixed. After 5 minutes of stirring, use an immersion blender to blend it.
  • After this, add the essential oils, herbs and any other item that goes with it to make your soap unique. Stir them well so that they become coarse. Now put them into the molds and cover this with a towel.
  • Check the soap after 24 hours and if it’s still warm or soft, let it sit for another 12 – 24 hours. Cut the bars and let the soaps cure for a week.
  • Once this is fully cured, make sure to wrap this in paper wax and keep it in an airtight container. We need an airtight container because this soap has its own oil. Therefore contact with air can make it attach with dust and debris.

Soap making machine and price

The price of a fiber coated mixing machine is approximately Rs. 1 lakh 40 thousand. In this price you will get a fiber coated mixing machine which can churn up about 200 kilo of detergent powder.

Where to get soap making machine?

You can get soap making machine online. There are many online stores that are providing you with soap making machines. You can get the equipment required such as the blender, microwave, mold, wrapper, labeler etc. as well as the main machine from these websites.

For example, this soap making machine https://www.indiamart.com/proddetail/soap-making-machine-3939134791.html is available at a price of Rs. 9.75 lakh per piece. You can make use of this item to make detergent cake and toilet soaps.

If you are looking for something cheaper, that is, within Rs. 2 lakh per piece then you can take a look at this item – https://www.indiamart.com/proddetail/automatic-bath-soap-making-machine-11708850630.html – it is the best option for making bath soaps.

Similarly, there are other items in different price ranges. But perhaps the budget starts from Rs. 1 lakh per piece. In this price you will get a decent detergent maker.

Soap making raw material and price

Soap making materials are available in very cost effective prices. If you are buying them wholesale, it is even cheaper. If you can get the cost right, the rest will become very easy later on in your venture. Hence the wholesale raw materials are what we suggest.

The two major raw materials required for making soap are – alkali and fat. Sodium hydroxide is the most common raw material used in making soap. However, we can do with potassium hydroxide too. The latter creates a more water soluble soap. Therefore with potassium hydroxide you will get a “soft soap”.

Raw materials are sold locally at cheaper prices. With a quick Google search you can find the raw materials for making soap online or nearby you. Usually people buy it locally because it reduces the cost down further.

Rest assured, the prices will vary based on your requirements. It all depends on how much you are producing and how much raw material you need. The price of caustic soda in the market is around Rs. 25632.92 -32041.15 per metric ton. For laundry soap, the prices for 1000 Kilograms range between Rs. 169.18 and 188.40.

Soap making formulae

The official chemical formula for soap is C₁₇H₃₅COONa which means sodium stearate. But note that this is for common soaps for personal use. For detergents there is usually a long chain of carboxylic acid along with ammonium salt or sulfonate salts.

Soap packaging process

  • Colorful wrappings: Find a colorful and eye-catching wrapping that will make sure that your product doesn’t go unnoticed. Style it and use proper design to segregate it from the rest in the market.
  • Branding: Make sure that you use this packaging opportunity to establish your brand. Again, choose the right design that you feel represents your brand.
  • Go simple: Simple is what entrepreneurs are going for today. Also check out how your POP displays are performing. If they don’t go as per your expectations, it is time to change something.

Soap marketing strategy

  • Email marketing: Email marketing is the best way to market since those who sign up for your product are the ones who are genuinely interested in soaps. It is also becoming more and more customizable these days and it is also cost effective.
  • Blogging: Blogging is the next logical step. You must find some influential bloggers who can spread the word about your business. You can also ask them to review a sample of your product on their blog.
  • Social media: Brand establishment is easier now due to the availability of social media. Also, guess what? It is the easiest and cheapest. The key is to get something to become viral. It could be your advertisement, your product or your online presence.

Soap making supplies

You will need a few modernized tools and equipments and a lot of space to make it work properly. For this you may need to seek out a rental space for making the soap. Mixing vessels, cyclone, blowers, furnaces, reactors, perfumer, weighing scale, blender is some of the common items that you will need to get started. 

Marketing area for soap

The marketing area will depend upon the demographic that you are targeting. In social media marketing you will have the option to segregate based on the age and the demographic.

The area for marketing will depend upon your type of soap. For example, if you are selling detergent cakes, those are relevant mostly for homemakers who happen to be women of various ages. So you can select the options of age and gender to show the advertisement.

Marketing works on many levels. It just depends on whether you have an online business or an offline one. Either way, it is best to let an expert handle this.

How to get license for the business

If you want to get sell handmade soaps then you ought to have a license for the same. This is how you can get one –

  • Apply for a manufacturing license and fill the application form number 31. With it you have to deposit Rs. 3500 as an application fee. Rs. 2500 you have to deposit separately as inspection fee.
  • If you want to apply for this scheme you have to at least have had Chemistry in your intermediate exam and passed in that subject.
  • Also, the person must also have a diploma in Pharmacy which must have a Pharmacy Council’s certificate and approval. You also need to mention details like minimum area under manufacturing and other technical details.
  • Licensing authorities also need to check whether it is a spurious cosmetic or the cosmetic is misbranded. The location, building premises and the waste disposal, along with the sanitation and health of the workers will be checked.

Total investment

  • Investment is not independent of raw materials. As already mentioned, the raw materials for detergents and personal soaps are different. Hence investment for them will differ.
  • Also the place and size of business have to be taken into account for starting the business. You need minimum capital of Rs. 25 lakh to buy the machinery and the initial raw materials – even if you start low.
  • Raw materials will cost Rs. 4 lakh per month, manufacturing unit rental will cost not less than Rs. 1 lakh per month. On top of that the plant manager’s salary is Rs. 50,000. Equipments will cost around Rs. 10-15 lakh onwards.

Apart from the above costs you need Rs. 50,000 for license and registration and Rs. 1 lakh cover accidental coverage. Marketing may cost around Rs. 50,000 per month.  

Selling price

  • Factors that affect the pricing of soaps are availability, ingredients, brand, packaging, etc. If your brand is just getting started, keep the pricing at par with your competitors.
  • A lot of factors govern the prices. A cheaper soap is usually seen as one with inferior quality. Hence we will not keep the prices too low compared to the market price.
  • On the other hand too high price could again the overall demand. Hence we will come to the golden middle and keep it only slightly, if at all lower than the market prices.

Profit margin

  • Estimate your profit margins by keeping the annual cost of production in mind. You also have to keep in mind the cost of labor, utilities, raw materials and maintenance.
  • The profit margin is high in this business but there is also high competition from already established brands. So the profit margins will depend upon your product pricing.
  • Learn more about the pricing of your competitors’ and therefore decide which will give you the optimal profit – find that golden price point for sales.

Precaution

  • Taking insurance is of prime importance. This is why a part of the investment must always be devoted to insurance along with other necessities.
  • Another important step is to take the legal pattern of your company into account. Make sure you get the ‘consent to establish’ and ‘consent to operate’.

Risk

  • The risk in the soap business is not making the brand big enough to be at par with your competitors’. There are a lot of players in the industry and making your mark is tough.
  • Another risk is your business failing because you haven’t got the market quite right. Choosing the right market is essential to creating a successful soap business.

Conclusion

As fun as it is, soap making takes a lot of research and calculated risk taking to come into existence. Starting the business is simple, and so is finding your niche. But planning and proper action is required to make it a success. Don’t undersell yourself and make sure you stand out.  

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