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Flour processing business is the procedures whereby grains and agriculture produced and sold as finished products for consumption. The flour processing business can at no time be out of business because as the huge customer base food is an essential.
Virtually all snacks (cake, meat pie, Pizza, Doughnut, bread) are made from processed flour. Processed flour are determined by the raw materials for example wheat flour, corn flour, rice flour, yam flour, plantain flour, coco-yam flour, beans flour and many more.
In other to make profit from a flour processing business, it’s important you know the end users for example bakeries use if bread production, cake baking etc, pharmaceutical companies use if for drug manufacturing and private individuals use it for home baking
Before setting up a flour processing business you need to research the market on competition, most sort out type of flour processing business, machine cost, license and marketing strategy and cost. In addition, write out a business plan that will include the business description, executive summary, financial details and business legal entity (sole proprietorship, LLC or partnership).
Profit in Flour Mill Business
Your profit margin in a flour mill business is dependent on a number of factors that I will walk you through.
- Finding the right location taking into consideration a good road network that would be favorable to gain easy access to the raw material market and also delivery of the finished product.
- Mill high demand product this will reel in the profit you so desire.
- Get licensed by the government, this will boost the confidence your customers will have in your product and they will be assured that what they are consuming is high in quality and well packaged.
- Get adequate financial backing to set up and also keep track of the local market where you intend to supply as this will in turn help you gain a huge margin of profit and customers.
- The structure and layout of the factory which will include the processing unit, storage unit for raw and finished product, the bigger your storage the more produce and product you will have and invariable meet the demands of your old and potential customers.
- High quality machine investment is the way to go as this will help you avoid unexpected problems/cost that may arise during the installation and production process.
Flour mill business is an easy business to start and its cost effective you can nit totally ascertain the profit margin a flour mill business but it can be guesstimated based on the production cost.
If it’s a small scale flour mill business it won’t fetch as much as what a large scale flour mill business will bring in, however once the cost of production is decreased the profit margin goes high.
Cost of Setting up a flour Mill Business
The cost of setting up a flour mill business/factory differs and this is due to the different production volume. The bigger the scale of the flour mill factory/business the more expensive it will cost, the smaller the factory the cheaper the cost.
If you don’t have enough startup capital you can opt for a bank loan or you can get into partnership entity where the cost will shared among two or more persons.
The cost of flour mill machines are based on their production capacity for example F6FC mini flour mill machine will cost between $2,500 to $3,000, while the M6FX mini flour mill factory will cost $3,000 to $5,000.
On the other hand, the large scale flour mill plant with automatic wheat mill machinery cost about $19,000 to $1,448,000. Bear in mind that this isn’t the exact cost of the flour mill equipment/factory; the costing will be calculated on the ground of the factory set up and the conditions /selections of the machines.
How to Start a Flour Mill Business
A flour mill business can be sighted anywhere urban or rural what is important is availability of essential raw materials and market. There are two models of flour mill business,
- The small scale or the basic, this is where the customer get their grains and it is milled for them at a minimal rate. This usually doesn’t require permit but in any case it is advisable to get one. The investment capital is very cheap, it needs a little space, the machines can be rented if in any case it can’t be bought, it should be located in residential area and it’s easy to set up. The profit margin is small in the small scale flour mill business.
- The large scale: The raw materials are processed and packaged and sold to wholesalers who in turn retail it to consumers. The large scale takes on huge capital and advanced machinery’s are used in the production process, this type of factory should be located in a non-residential area. The magnitude of the factory translates to a profit margin is noteworthy.
So if you are interested in starting up a flour mill business there are basic factors to be consider and steps to be taken.
- Location sorting: This plays a key role to the success of the flour mill business knowing that without a location there won’t be production. Key things to consider when looking for the right location.
- Good road; if the road to the factory is bad there would be difficulty in accessing your finished goods plus it will place a high cost on vehicle maintenance and it will discourage potential customer from patronage.
- It should have easy access to raw materials and delivery/shipping of finish product.
- The location should have enough capacity to store raw materials, finished products, milling machines and office layout.
- Business Name: If you intend to run a large scale flour mill business you need to register your business name, as this will give your brand a face in the eyes of competition and to consumers. Business name registration can be done through the internet or you visit the local government office in your base.
- Government approved license: Food production industry and any other business entity have requirements, laws and policies that governs them. These requirements differ based on state and are set up by government.
It is important that you obtain research the necessary information’s and permit you need to operate, as a food industry you need to be updated and keep to the laid down rules for health officers will from time to time pay the factory unannounced visit to determine if you have violated any of the rules, if found guilty it will attract a fine or can lead to seizure of license.
- Finances: Every business needs funds to setup and survive, the required funds you need will be determined by the size of factory you intend to build, the machines you will acquire, the cost of raw materials and the initial running cost before profit kicks in, also know that the estimated price will be determine by the current price which you will need to research and understand before you start.
When setting up a flour mill business you can choose to take a loan or you can have one or multiple partners that will share the capital cost.
- Milling Machine: Machines comes in capacity, producers, quality and specification. The investment cost will determine the size of the milling machines and lost more. Therefore take time to buy a reliable flour milling machines to avoid extra cost for constant repairs during operation.
- Safety Education: Every operational staff should be taken through safety education and most especially the machine operators. This training should be done before the commencement of production and periodical trainings should be carried out to increase the knowledge of every employee in the flour mill factory.
Most suppliers carry out free trainings for companies who purchase their equipment’s or products and they also carry out maintenance occasionally at a discounted fee.
Lastly, the factory should be clean to avoid invasion of rodents and other harmful termite that can be disruptive to human health.
- Market Strategy: The goal is to get the finish product to the final consumer, be rest assured that if the local market competition is low and there is a high consumer demand for flour mill products your goods will be in hot demand.
In your market strategy research on countries and states that are in high demand for your product that way you will not be in lack of where to ship your product too for quick consumption.
In conclusion, food is constantly in demand so therefore flour mill business is a good investment and the demand for flour mills are high as compared to other agricultural produce.