An agarbatti (incense stick) making business involves producing scented sticks for religious and aromatic purposes. It requires market research, diverse product lines, efficient production capacity, and strategic budgeting. Success hinges on effective marketing to attract customers and accurate financial projections to ensure profitability and sustainability in the competitive market.
What is an agarbatti making business plan?
An agarbatti making business plan is a comprehensive document that outlines all aspects of starting and running an incense stick manufacturing business. It details the business model, market analysis, production process, cost analysis, and financial projections. A well-structured plan helps in navigating the business through its initial stages and managing ongoing operations effectively.
Basic parameters for agarbatti making business plan
Creating a comprehensive business plan for an agarbatti (incense stick) making business involves several essential parameters that ensure a clear and strategic approach to entering and succeeding in the market. Here’s a detailed breakdown:
- Market research: Conduct thorough market research to understand the demand for agarbatti, identify key competitors, and analyze customer preferences. This involves studying market trends, cultural influences, and seasonal demand fluctuations. Gather insights into popular scents, packaging preferences, and price points. Understanding the target market’s needs and buying behaviors is crucial for positioning your product effectively.
- Product line: Clearly detail the types of agarbatti your business will produce. This can include traditional scents like sandalwood and jasmine, as well as unique blends to cater to diverse consumer tastes. Consider offering a variety of sizes, packaging options, and premium versus budget-friendly lines. Highlight any unique selling points, such as organic ingredients or handcrafted methods.
- Production capacity: Establish the production capacity by determining how much product will be produced daily, weekly, and monthly. Consider the machinery and technology required, the availability of raw materials, and the labour needed. Plan for scalability to meet future increases in demand.
- Budgeting: Outline both initial and operational costs. Initial costs include machinery, raw materials, workspace setup, and licensing fees. Operational costs cover ongoing expenses such as raw materials replenishment, labour wages, utilities, and maintenance. A detailed budget helps in securing financing and managing cash flow effectively.
- Marketing strategy: Develop a robust marketing strategy to reach potential customers. This includes identifying the most effective channels for promotion, such as online marketing, social media, local advertising, and participation in trade fairs. Create a compelling brand story, design attractive packaging, and consider offering samples or introductory discounts to attract new customers.
- Financial projections: Estimate the revenue, profits, and return on investment (ROI). Prepare detailed financial projections that include sales forecasts, profit margins, break-even analysis, and cash flow statements. These projections help in assessing the business’s financial viability and attracting investors or lenders.
By addressing these key parameters, you can create a solid foundation for your agarbatti making business, ensuring it is well-positioned to meet market demands and achieve sustainable growth.
Steps to start agarbatti manufacturing business
1. Creating a business plan
Before starting any business, one of the first tasks is to write a business plan. This plan is essential because it outlines the nature of the business and is a key document when seeking financial support. A well-written business plan helps in obtaining funding from financial institutions, including government subsidies, business loans, term loans, and working capital loans from both public and private sector banks, as well as Non-Banking Financial Companies (NBFCs).
A business plan should include several important components:
- Background and nature of the business: This section describes the type of business you are starting, the products or services offered, and the goals of the business
- Total budget: Here, you mention how much capital you need to start and run the business, as well as a breakdown of how the funds will be used
- Working capital investment: This refers to the amount of money you will need for the day-to-day operations of the business, including wages, raw materials, and other operational expenses
- Details of equipment and machinery: Information about the machinery and equipment needed to run the business, including costs and where you plan to source them
- Raw materials or products: Details about the raw materials or finished products required for manufacturing your product, along with suppliers
- Staffing details: Information on existing employees, as well as the number of new employees you plan to hire, their roles, and responsibilities
- Marketing and advertising strategies: This section outlines how you will promote your business and reach potential customers
- Loan details: If you are taking out any loans, you should include the terms and conditions
- Credit report: A report detailing your business’s creditworthiness
- Property/Premises information: You should include details about the property or premises where the business will operate, including its location and size
2. Registering the business with the registrar of companies
To make your agarbatti business legal, it is essential to register it with the Registrar of Companies (ROC). This ensures your business is recognised by the government and complies with legal requirements.
As the business owner, you need to decide on the structure under which your business will operate. There are several options for this, including:
- Private limited company
- Public limited company
- Sole proprietorship
- Partnership firm
- Limited liability partnership (LLP)
The registration process ensures that your business is officially recognised, and it protects your personal assets by separating them from your business. Registering with the ROC is a requirement under the Companies Act, 2013.
3. Applying for licenses
Starting an agarbatti business requires several licenses and registrations, which vary depending on the state in which you are operating. It is important to research the rules and regulations specific to your state.
Here is a list of some of the licenses and registrations you may need:
- Company registration: The first step is to get your business registered with the ROC
- EPF registration: If your business employs more than 20 workers, you must register with the Employees' Provident Fund (EPF) organisation
- ESI registration: If you have more than 10 employees, you need to register with the Employees’ State Insurance (ESI) Corporation to provide health and social security benefits to your employees
- Factory license: If you are setting up a large-scale manufacturing unit, you will need to apply for a Factory License from the state government
- GST registration: It is mandatory for all businesses to have a Goods and Services Tax (GST) registration to collect and pay taxes on behalf of the government
- Pollution certificate: You will need to obtain a pollution certificate from the State Pollution Control Board. This involves a site inspection to ensure that the business complies with environmental regulations
- SSI registration: Small Scale Industries (SSI) registration is required even if your business is not classified under small-scale industries
- Trade license: A trade license is issued by local authorities to allow you to carry out business activities in a specific area. The validity and requirements for this license can vary depending on the state
4. Arranging capital investment
Starting an agarbatti business requires a moderate to high level of investment, depending on the scale of operations. On average, the initial investment required for an agarbatti business can range from Rs. 10 lakh to Rs. 40 lakh. This investment will cover costs such as raw materials, machinery, property, and initial working capital.
Additionally, you will need to hire staff for your business. A typical agarbatti manufacturing unit may require 8-10 workers, including roles such as production managers, semi-skilled labourers, accountants, delivery personnel, and clerks. The number of workers may vary depending on the size and complexity of your business.
5. Purchasing machinery and equipment
The machinery required for manufacturing agarbattis is usually large and expensive. The cost for initial machinery can range from Rs. 1 lakh to Rs. 5 lakh, depending on the size and quality of the machines. These machines require a spacious area or factory shed to be set up. It is important to keep the machinery away from residential areas to avoid any complaints due to noise or pollution.
The machines used in agarbatti manufacturing are designed to automate processes like rolling, drying, and packaging the sticks. Investing in the right machinery will help improve efficiency and product quality.
6. Buying raw materials
The raw materials used in agarbatti manufacturing are mostly available through suppliers or wholesale markets. While bamboo sticks are often imported, they can also be made using stick-making machines. Other essential raw materials include aromatic chemicals, essential oils (such as sandalwood), perfumes, sawdust, gelatin papers, and various powders used for colouring and fragrance.
Some of the key raw materials you will need include:
- Bamboo sticks
- Aromatic chemicals
- Essential oils (e.g., sandalwood)
- Gelatin papers
- Perfumes
- Sawdust
- White chips
- Packing materials
- Colour powders (e.g., charcoal, jikit powder)
7. Finding places to sell the product
Once your agarbatti products are ready, you need to find suitable places to sell them. The best locations include religious places such as temples and churches, as agarbattis are commonly used in religious rituals. Local markets, bazaars, grocery stores, and retail shops are also good places to sell your products. Additionally, wholesalers can help distribute the products to a larger audience.
In today’s digital age, you can also sell agarbattis through online platforms. Many e-commerce websites provide a marketplace where you can list your products for sale, reaching customers across India and even internationally.
Additional read: How to start your business
Get business loan to start agarbatti manufacturing business
Securing a business loan from Bajaj Finance can provide the necessary capital to start your agarbatti manufacturing business. A business loan helps cover costs related to machinery, raw materials, and other initial expenses. It ensures that you have sufficient funds to manage operations smoothly and grow your business effectively.
Some of the key features of our business loan are:
- No collateral required: You do not have to pledge any collateral to get our business loan, which is beneficial for small businesses without substantial assets.
- Competitive interest rates: The interest rates for our business loans range from 14% to 30% per annum.
- Flexible repayment schedules: Repayment terms can be tailored to align with the business's cash flow, helping manage finances without strain. You can choose a tenure ranging from 12 months to 96 months.
These features and benefits of business loans make them a highly accessible and practical financial tool for starting your business.
