The Russian market of hygiene products is steadily showing annual growth of an average of 7-9%. According to experts, this trend will continue in the future. In financial terms, the market is growing faster (20-30%) than in kind, because single-layer toilet paper is selling worse. Today, many consumers prefer to buy two or three layer toilet paper for hygiene needs.
Brief Market Analysis
In the domestic market of hygiene products, a steady change in consumer demand has recently been observed. Consumers prefer quality, but budget products. Demand is stable and not subject to seasonal fluctuations, and the low cost of finished products ensures quick implementation. But when planning a sales strategy, you need to consider competition and market saturation with products.
The level of competition is rated as medium to high. At the moment, have to compete with at least a dozen large companies. The number of small firms and medium-sized enterprises that are engaged in the business of producing toilet paper is almost impossible to calculate. It can be expected that larger market players will absorb small ones, and those that produce low-quality products will disappear.
The largest manufacturers are: Syassky Pulp and Paper Mill, which is located in the Leningrad Region, the Syktyvkar Tissue Group holding (Komi), Naberezhnye Chelny Paper Mill (located in the Republic of Tatarstan), and SS-Haijin Products Russia (plant in Leningradskaya areas). Significant initial investment in a toilet paper business will definitely be required. At home, organizing a workshop is completely unprofitable.
Business Registration
How to open toilet paper production? The step-by-step instructions are simplified as follows: registering a business, renting production shops and purchasing equipment, searching for suppliers of raw materials and working out sales channels. All these issues need to be addressed sequentially and comprehensively. One of the longest stages is the official registration of a legal entity, the choice of a tax system and other bureaucratic procedures.
Entrepreneurs need to register with the Federal Tax Service at the legal address. Legal address can be obtained at non-residential premises. It is impossible to register as a legal entity without an office. Before applying to the tax, you need to choose the form of the enterprise (for the normal operation of the plant you will need to get a legal entity, but if you plan a small company, you can also focus on individual entrepreneurship) and an acceptable option for taxation. If there are several owners, the choice usually lies with the creation of an LLC or production cooperative.
During registration, you will need to indicate the number of OKVED. For such an activity, code 21.22 is suitable - the production of paper products for sanitary-hygienic and household purposes. To carry out production and wholesale, it is necessary to draw up taxation according to a general or simplified scheme. When simplified, an entrepreneur is exempted from property tax, profit, VAT, but is limited by income limits (up to one hundred and fifty million rubles a year).
Prior to carrying out activities, it is also necessary to obtain permission from the SES and the fire inspectorate. Production facilities must comply with sanitary and fire safety standards.
Production technology
A business plan for the production of toilet paper must necessarily include a description of the production process. Depending on the raw materials, the production cycle may be complete or incomplete. In the first case, waste paper is used, in the second - the finished paper base is the raw material for the production of toilet paper. Waste paper as a raw material is more profitable, because in this case there is no need to purchase special expensive equipment and hire trained employees who can cope with complex and time-consuming work.
The full cycle production technology of hygiene products is as follows:
- Sorting of waste paper, grinding of raw materials in a crusher, adding water and filtering through a sieve.
- Washing the mixture (the whiteness of the raw material will depend on the number of washing cycles with water in a special tank).
- Shredding raw materials for the production of toilet paper.
- Checking the proportions of the paper base and water.
- Extraction of excess liquid by a kapron mesh, placement of raw materials in a dryer. At 110 degrees Celsius, the paper base dries, the tapes are wound on bobbins.
- Place the reel on an unwinder, embossing and rewinding.
- Cutting technological rolls into consumer ones of the right size.
- Packaging of goods and shipment to a warehouse or to points of sale.
Using the finished framework
The technology for the production of toilet paper and paper napkins from the finished base is simpler, so it does not require highly qualified personnel. The costs of acquiring special equipment will not be significant either. The production process is divided into the following stages:
- Installing the base roll on a special drum.
- Perforation in special perforation blocks.
- Cutting technological rolls into consumer blanks in accordance with specified sizes.
- Packaging of finished products and warehousing for subsequent sale to the final consumer.
Production shop rental
Almost the entire technology of production of toilet paper (according to reviews, this business requires considerable investments at the initial stage for the purchase of equipment) is based on the use of mainly semi-automatic machines, so the room needs to be selected in a sufficiently large size. The workshop should be located on the ground floor or in the basement, be well heated, have good ventilation, running water and electricity. Free access to shipment of finished products and supply of raw materials should be provided to the premises. Profitability of a business depends, among other things, on a reduction in the cost of delivering raw materials and delivering finished products, so it is better to look for a premises for a plant near paper recycling workshops or secondary raw materials bases.
After choosing the premises, it is necessary to establish contacts with the owner and conclude a preliminary contract. At this stage, the entrepreneur does not yet have the right to conduct activities, because he does not have state registration. It is advisable to issue final agreements only after completion of all bureaucratic procedures, however, for registration it is necessary to provide a lease agreement for the production workshop. Some entrepreneurs decide to register a company at their home address, but in the future this can cause serious conflicts with the tax.
Equipment purchase
The business plan for the production of toilet paper needs to reflect the cost of acquiring equipment. Used machines vary in complexity and cost. To organize a mini-production, you will need:
- unwinding and winding machine (rewinds the feedstock into technological rolls with sizing layer;
- a machine for cutting technological rolls (technological rolls on such a machine are cut into ready-for-sale ones).
The most affordable unwinding and winding machine costs almost seven thousand dollars, a band saw for cutting technical rolls costs about two thousand. For the equipment of the production workshop, it is advisable to purchase a separate sleeve, rewind, detachable, packaging machine, and gluing table. A semi-automatic line will have to pay about 800 thousand rubles or more. A full automatic machine costs from 1.2 million rubles and above.
Paper processing machine
The Japanese company has proposed an effective solution in the field of recycling paper waste - White Goast's machine recycles office cardboard and paper waste into toilet paper. The productivity of the machine is relatively low: out of 900 sheets of standard A4 format, 30 minutes after the start of the cycle, one roll of paper is obtained. The cost of the processing apparatus is about 100 thousand dollars.
The cost of one roll of toilet paper made on such a machine is approximately $ 0.17, and the retail price is $ 0.58. Payback periods are very long. If the machine will function continuously, then in a year it will pay off only for eight thousand dollars. At the same time, after ten years, the same machine can cost twice as much. It turns out that it is much more profitable to take paper waste to a regular recycling center. Most likely, this is only a prototype that will be further developed.
Hiring staff for production
The success of the toilet paper business depends on the skills of the employees. If an entrepreneur does not have experience in this field of activity, then a good technologist is required. You also need to hire a storekeeper, an accountant (at first you can outsource accounting, rather than invite an employee to the staff), a driver, several workers to ensure the smooth operation of the production line. A business plan for the production of toilet paper should include staff qualification requirements and an indication of the level of pay.
Provision of production with raw materials
Where to find raw materials and where to put on waste paper production? Most often, suppliers are recycling plants, which are in many regions and are open to cooperation. To establish business contacts, it is usually enough to send a proposal to the management of the relevant department or simply call.
About 100 kg of production waste per shift. Raw material collection points usually do not accept such waste because they cannot sell it. You can try to pass the scraps through the machines again (this is possible only with full-cycle machines), make egg trays or seedling pots from the wet mass, and sell to the public to add to the compost for fertilizer.
Channel development
The business idea of producing toilet paper is an opportunity to make good money, but any manufacturer depends on the stability of demand and the availability of sales channels for finished products. You can offer your goods to wholesale bases simply by phone. Advertising blocks in catalogs or traditional print advertising in wholesale markets work well. Large buyers do not need to be lured by creative advertisements, as is the case with the retail consumer, which greatly facilitates the process of finding sales channels.
Payback calculation
The final (but not the least significant) part of the business plan for the production of toilet paper is the calculation of the project payback. About 110 thousand rolls of toilet paper are obtained from one ton of base, the optimal lot size is 330 thousand rolls (30 tons of raw materials). The cost of the roll will be 7.6 rubles. At a margin of 22%, the implementation of the entire batch will allow the entrepreneur to earn 732.6 thousand rubles a month. Investing in a business will pay off in three to four months of operation of the production workshop.
In different regions, the cost of renting industrial premises and the margin for finished products differ, therefore, the estimates are approximate. It may be possible to purchase cheaper (high-quality used) equipment, which will reduce costs. The salary of employees also depends not only on the region where the production is based, but also on the type of settlement (city, village or urban settlement). In any case, the production of toilet paper, if properly organized, is a profitable business with prospects for expansion and development.