Hi, you might have heard about the Paper Cup manufacturing business for a long time… but still, you have a doubt whether is the paper cup business is profitable or not? Therefore, here in this article, we shall look into all the details of the paper cup business… which will make you decide whether it is profitable or not.
There are mainly 5 factors which decide the profit of the paper business. Before starting this business you should check these in order to ensure your profit.
- Competition for the paper cup manufacturing business.
- Demand for the paper cups in that area.
- Marketing tactics and strategy you use for the paper cup manufacturing business.
- Management of your working and sales team.
- Increase or Decrease of indirect cost.
Five Factors that Affect The Profit of the Paper Cup Business
Competition for the paper cup manufacturing business
This is one of the main factors which will directly make your business into a tough situation. Therefore, if there is more competition for this Paper Cup Manufacturing business then your business profit will be reduced naturally…
Due to more competition, you have to cut off your profit margin in order to enter into the market… And therefore it will be much difficult to run your business.
Another point of view is that if there is more competition then that also means that there is more demand in that area… So the probability of you selling your paper cup is high. At least you will be able to sell a little bit and still run your business.
In this case, you should be prepared for low profit and high investment. Then you may have the chance to run your business successfully in this competitive area too.
You can check the competition of your state by seeing the Indiamart. Yes, most of the paper cup manufacturers will have at least a free account in India mart and TradeIndia… therefore you can search for your state and literally count the number of companies in your state and their size.
For example, you can check your competitors like this…
In the above image it shows, according to the Indiamart registration, there are about 1750 companies in India. You can find how many companies are in your city…
How much demand for paper cups in that area?
It is another important factor for a business to be in profit. If there is not enough demand in the market for damn sure your business will hit huge loss.
But fortunately, the demand for the paper cup is still increasing than before… In 2019 the demand for the paper cup has increased to 8%. And the 80% of the paper cups are consumed by the restaurants.
Paper cup industries skyrocketed due to the fact that it can be used and thrown, cheap, and easy to use. It also replaces the plastic cups and glass tumblers.
It is used for tea, coffee, cooldrinks in railways canteens, households, hotels, restaurants, many other parties, and functions.
It is still high in demand in India because of the recent plastic ban.
Marketing Strategy that you use for selling your paper cups
Marketing strategy and the money you spend in marketing are key to success in this paper cup manufacturing business…
Yes, you need to use a strategy to approach the clients… You have to innovatively think where can you get the order.
You should have a marketing team, that should always plan to increase your orders.
For example, if the function is regarding the marriage function you can print according to the marriage related images in the paper cup.
Management of your Team
Management is vital for any business to get profit. It directly affects the quality of a company and therefore it leads to an increase or decrease in the profit.
Management is something many small start-ups don’t take much care… But it is very important to run a business without loss.
You should eventually meet your employees often and have touch with them. You should make your team aware of your company’s growth and its expansion. You should provide some benefits for your employees and keep them happy working.
You should create a responsibility for your employees for the growth of the company.
Because, if you don’t keep the team happy the work output will be low and therefore you will lose the market.
Indirect Cost of Paper Cup Business affects the profit margin
If you produce the paper cups with extreme expenses like rent, raw materials, increase in labor then your profit margin will reduce.
This increase in expenses may also result in the loss of your business. And therefore, you should be keen on spending the money unnecessarily.
Here are the average expense details for your paper cup manufacturing business. You can calculate the expense according to your present situation.
According to the http://www.dcmsme.gov.in/
| Sl.No. | Description | Nos. | Salary (Rs.) |
| 1 | Manager | 1 | 5,000 |
| 2 | Production Supervisor | 1 | 3,000 |
| 3 | Accountant-cum-storekeeper | 1 | 2,500 |
| 4 | Watchman-cum-peon | 1 | 1,500 |
| 5 | Skilled Workers | 2 | 5,000 |
| 6 | Unskilled Workers | 6 | 10,800 |
| Total | 27,800 | ||
| Perquisites 15% | 4,170 | ||
| Total | 31,970 | ||
| Say | 32,000 |
RAW MATERIALS (Per Month)
| 1 | A special type of paper (Poly-coated paper) 2 Tones @ Rs.6, 000/- | 1,20,000 | |
| 2 | Printing chemicals and Dyes | L.S. | 5,000 |
| 3 | Packing Material | L.S. | 5,000 |
| Total | 1,30,000 |
UTILITIES (Per Month)
| 1 | Power 3000 units @ Rs.3.80/- | 11,400 |
| 2 | Water | 300 |
| Total | 11,700 |
OTHER EXPENSES (Per Month)
| 1 | Postage and Stationery | 500 |
| 2 | Telephone | 500 |
| 3 | Consumable Stores | 1,500 |
| 4 | Repair and Maintenance | 500 |
| 5 | Transport Charges | 1,000 |
| 6 | Insurance | 500 |
| 7 | Misc. Expense | 500 |
| Total | 5,000 |
WORKING CAPITAL FOR THREE MONTHS
| 1 | Salary & Wages | 32,100 x 3 | 96,000 |
| 2 | Raw Materials | 1,30,000 x 3 | 3,90,000 |
| 3 | Utilities | 11,700 x 3 | 35,100 |
| 4 | Other expenses | 5,000 x 3 | 15,000 |
| Total | 1,78,700 | 5,36,100 |
Paper Cup Training Institutes:
You can get training for manufacturing the paper cup from the government or from the machine dealers.
The best option is… getting training from the government sector.
You can train from the government sectors like,
- District industry center
- MSME
It is best because they also provide free training and arrange loans for your business. It is safe to lean on the government based training institutes for this paper cup manufacturing business.
You can also get details from this website:
http://www.dcmsme.gov.in/howtosetup/guidenewssi.htm
Free training while buying the machine:
You will also have the opportunity for free training from the Paper cup selling company directly.
Paper cup machine loan:
Agencies Provide Financial Loan:
Financial assistance is available from institutions such as Nationalised Banks, Small Industries Development Bank of India, Regional Rural Banks, National Small Industries Corporation, State Financial Corporations etc. depending upon the project requirement and promoters background.Financial assistance has two components. Loan for fixed capital is used to acquire Plant and Machinery, land and building. Working capital loan is used to meet day to day operational cost of the production.
State Financial Corporation and National Small Industries Corporation generally provide working capital. However under a package assistance, State Financial Corporations also provide a composite loan covering plant and machinery and working capital
– MSME govt of India
You can also get details from this website:
http://www.dcmsme.gov.in/howtosetup/guidenewssi.htm
Conclusion:
According to my judgment, the paper cup manufacturing business is highly risky to start but still profitable because it has good raising demand. So, you need to discover the competition in your area and find the risk.
You should also be considering spending some amount on the marketing team. This will productively increase your orders and manage the difficulties.
Therefore, if you are about to start this business consider the above factors and do some deep analysis before investing in it. You may require 20 to 30 lakhs to start and run this business…
And the profit margin is 15% on average…
You can comment below and ask me for any details about this business
All the best and good luck!
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