How to Start Soap Making Business – Costs, Profits, ROI

How to Start Soap Making Business?

Soaps come under the category of ‘Organic and natural products’, that is only if you manufacture a soap without any added chemicals and in a natural way. Over the years, people have realized the importance of using natural and homemade products that are beneficial for their health and skin. Hence, Organic or natural, homemade soaps already has a huge market to be explored, especially in India. Let us have a look at the entire concept of Soap Making Business in India.

Overview

Natural and Organic soaps are in a great demand in the market. People nowadays prefer natural and Organic soaps over the ones that are produced in factories and through Synthetic means. This proves a positive point for businesses that plan to manufacture Soap from their home or through some natural means.

Another significant point to be noted is the increasing number of types of soaps that are out there in the market. This would mean that you have a big list of soaps that you can make a choice from. An entrepreneur can start from one type of soap, or select to manufacture multiple types, thus streamlining their income streams and market, through the various number of types.

Soaps also provide health benefits to the consumers. If we go by an example, Aloe Vera soaps have the magical ingredient of Aloe Vera properties, this would help a consumer with their skin and also with some healing effects. This is the reason why many consumers nowadays look out for soaps that are made up of natural ingredients and the ones that are beneficial for their skins.

With so much of uniqueness and distinct features, the soap making business has huge demand in the market, thus being profitable for the business owner, let us have a look at the entire roadmap for Soap Making Business.

License Required for Soap Making Business

SSI Registration
FDA Approval
Government Clearances
Weight and Measurement Board
Current Bank Account
Trade Mark
GST Registration
Trade License
Drug Control Board
NOC from Pollution Control Board

Investment required

The total investment that would be required for starting your Soap Making Business in India is as follows. The major difference in the investment majorly depends on the type of industry you choose or the type of soaps that you prefer to deal with.

CONTENT	AMOUNT
Small Scale	1 to 3 lakhs
Medium Scale	5 to 10 lakhs

Expected Profits that can be Made.

An average amount of Profit that can be earned by individuals doing Soap making business on a monthly basis would go around INR 20000 to 80000 per month. This would depend on the total number of markets that you could capture, as the demand for Soaps is already out there in the market. Health- conscious people and increasing awareness of using natural and organic products make things easier for businesses dealing with homemade soaps, and hence it can get you a huge number of profits if done correctly.

In a well settled and established medium-sized Soap Making business, you can even earn more than 1-2 lakhs per month, however, these numbers are only an estimate.

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Target Consumers

Local shops: You would always start with your neighbours, people from your locality and of course your local shops. They would help you to get the initial experience for dealing with stores.

Retailers: Retailers deal with most of the FMCG products. Their stores have most of the products that belong to the category of FMCG. Soaps being one of them can become beneficial for you to approach them.

Supermarkets: With such a huge variety of products that are displayed in supermarket, they have stocks of many soaps from different brands and different types, getting in business with them can grant you good orders.

Online Retail Stores: When we talk about Online stores, the best way to profit through them is to display your product at a very competitive rate that would be lower than your competition.

Hotels: Hotels are in frequent need of soaps for their guests that stay there. Once you make a tie-up with a hotel, you are sure to get orders in bulk for a lifetime, however, the quality of your product will also matter.

Hospitality Chains: Yes, you read that right. You can also retail your soaps at such places, although you may not get orders in bulk, but is worth it.

Beauty salons and Spas: Last but not the least, they can also make up your target list, and can get you orders in good numbers for your business.

Raw Materials required

Just like any other business, you’d require some raw materials, that would act as a base for your product quality. The following are the various types of raw materials that are required for the Soap Making business.

Olive Oil
Castor Oil
Fragrances
Lye
Packaging Materials
Some amount of water
cream for cream-based soaps
Glycerine for glycerine-based soaps
Rose petals for Rose petal- based soaps

Equipment Required

Along with raw materials, you would also require various equipment that would help you to process the Soaps further at each stage. The Equipment ranges from various start to end processes.

Double Boiler or,
A microwave
Soap moulds
Container for pouring soaps
Weighing scale
Gloves
Miscellaneous equipment
Eye protection equipment
Wrapping sheets
Plastic wraps
Printer

Manpower Required

The manufacturing process of soap is simple once you understand the formula and get used to it. In this case it is not necessary to have a skilled worker, however, it is better to have them instead of the ones who are not skilled, for that may disturb the quality of your soap.

The skilled workers that you would require to set up a small scale-based or a home-based Soap making business would be around; 2 to 4.
In the same manner, the total number of manpower required for a medium-scale Soap making business would be; 5 to 7 workers at the most.

Profit Margin

Although the profit margin on soaps is considered to be low, however, being a part of FMCG and having frequent sales, the profit percentage that you can make through this business would be between 10% to 25%.