Do you want to start a castor oil production company? If YES, here is a sample castor oil production business plan template & FREE feasibility report.
Over the years, the use of castor oil has continued to gain popularity. This popularity can be said to be associated with the health benefits of the oil. It is for this reason that the market for castor oil has continued to be on the increase.
Castor oil can be used as an irritant/simulative laxative. Castor oil is a natural emollient and a few drops may also be used to remedy dry skin, as a massage oil, and may benefit hair as a treatment. Castor oil contains ricinoleic acid, a fatty acid that comprises about 90% of the oil.
The fact that this line of business is not very popular means that you must be willing to undertake thorough feasibility studies and market research. It is indeed money – spinning business if it is well located and if you are able to create a robust distribution network.
A Sample Castor Oil Production Business Plan Template
Castor oil is a pale yellow vegetable oil that is extracted from castor seeds. Castor oil is mainly used in preservative, medicine, lubrication etc. Currently, india is the largest producer of castor seeds and accounts for over 80 percent of the global production, followed by China and Brazil. Asia Pacific is the largest consumer of castor oil and is expected to retain higher growth rate during the next few years due to strong growth in pharmaceuticals and cosmetics industry. China and India have witnessed a major chunk of the production and consumption of castor oil in the Asia Pacific region.
The castor oil market in Europe is growing on the back of rising demand of bio based cosmetic production, whereas the demand for castor oil in North America is driven by the strong consumption of biodiesel.
According to a recent study conducted, over the next five years the Castor Oil market will register a 4.1 percent CAGR in terms of revenue, the global market size will reach US$ 1500 million by 2024, from US$ 1180 million in 2019.
Essential oils are usually extracted by distillation, often by using steam. Other processes include expression, solvent extraction, absolute oil extraction, resin tapping, wax embedding, and cold pressing. They are used in perfumes, cosmetics, soaps and other products, for flavoring food and drink, and for adding scents to incense and household cleaning products.
Essential oils are often used for aromatherapy, a form of substitute medicine in which healing effects are credited to aromatic compounds. Aromatherapy may be useful to induce relaxation, but there is not adequate indication that essential oils can effectively treat any condition.
Research shows that the united states essential oil market size was treasured at USD 3.36 billion in 2015 and it is anticipated to witness a predictable growth rate of 9.0 percent from 2016 to 2024. This industry is a thriving industry and as a matter of fact, there are about 200 different types of essential oils are used up all over the world annually, and the United States of America plays a main role in total demand.
Going forward, the additional health profits of castor oil is anticipated to trigger their demand in pharmaceutical and medical applications as well. These oils do not exhibit in any way any recognized main side effects unlike other conventional medicines and drugs; this will probably be a significant boosting factor for the market.
The increased usage of fragrances and flavors due to the development of end-use industries in emerging markets is projected to drive the U.S. market. Major players have established supply partnerships to reduce total production costs. Local manufacturers concentrate on providing advanced varieties of castor oil at reasonably priced level and most of the striking castor oil are formed from rare crops and plants which are either difficult to harvest.
Please note that the barriers to entry for the castor oil extraction line of business are moderate, with the most significant barrier being the ability to raise capital. Capital investments are needed to purchase machinery and equipment and purchase or rent facilities. While the amount of capital needed to enter the industry depends on the scale of operations an entrant is pursuing, even small – scale facilities require significant capital. Other barriers include securing supply contracts with upstream suppliers of essential oil plants (bark, leaves and resin) such as bitter orange, cinnamon, ginger, lavender, guava, myrrh, pine, bay leaf, frankincense, grapefruit, cedar, jasmine, hyssop, lemon grass and other ingredients used to extract essential oil and other industry goods. The well-entrenched position of the leading processors in the industry can also represent a barrier to entry for prospective entrants.
The castor oil extraction business is a profitable industry and it is open for any aspiring entrepreneur that has the capacity to compete with other players for the available market shares to come in and establish his or her business.
Shavonne Smith® Castor Oil Production Company, Inc. is a licensed and standard castor oil extraction and packaging company that will be located in between an industrial area and a farming community in Montgomery – Alabama. We have been able to secure a long – term lease for a facility in a strategic location with an option of a long – term renewal on an agreed terms and conditions. The facility has government approval for the kind of business we want to run and it is easily accessible.
We are in the castor oil extraction business to produce castor oil in commercial quantities for retail outlets, cosmetics and fragrance businesses and message and body therapy businesses et al. We are also in business to make profits at the same time to give our customers value for their money; we want to give people and businesses who patronize our castor oil the opportunity to be part of the success story of Shavonne Smith® Castor Oil Production Company, Inc.
We are aware that there are several castor oil production companies scattered all around the United States, which is why we spent time and resources to conduct our feasibility studies and market survey so as to enable us locate the business in an area that will support the growth of the business and also for us to be able offer much more than our competitors will be offering. We ensured that our facility is easy to locate and we have mapped out plans to develop a wide distribution network for wholesalers all around Montgomery – Alabama and the United States of America.
Much more that the extraction of quality castor oil in commercial quantities, our customer care is going to be second to none. We know that our customers are the reason why we are in business which is why we will go the extra mile to get them satisfied when they purchase our product.
Shavonne Smith® Castor Oil Production Company, Inc. will ensure that all our customers (wholesale distributors) are given first class treatment whenever they visit our Depot / Plant. We have a CRM software that will enable us manage a one on one relationship with our wholesale distributors.
Shavonne Smith® Castor Oil Production Company, Inc. is family business that is owned and financed by Shavonne Smith and her immediate family members. This Montgomery, Alabama native graduated from high school in just three years. Formerly, Shavonne was Brand Manager at Proctor & Gamble, and also worked at Bain & Company prior to starting Shavonne Smith® Castor Oil Production Company, Inc. She has robust experience that stretch over 13 years and she hold a Bachelor of Science Degree in Biochemistry from the University of California, Davis and MBA from Chicago Booth School of Business.
Our Product Offering
Shavonne Smith® Castor Oil Production Company, Inc. is going to operate a standard and licensed castor oil extraction and packaging company whose product will not only be sold in Montgomery – Alabama but also throughout the United States of America. We are in the castor oil extraction business to make profits and also to give our customers value for their money and we are going to do all that is permitted by the law of the United States of America to achieve our corporate goals.
Our Vision Statement
We want to launch a standard castor oil extraction and packaging company whose product will be not only be sold in Montgomery – Alabama, but also throughout the United States of America.
Our Mission Statement
Our mission is to build a standard castor oil extraction and packaging company that will favorably compete with leaders in the industry. We want to build an castor oil extraction and packaging business whose brands will someday become a household name in the United States of America.
Shavonne Smith® Castor Oil Production Company, Inc. is established with the aim of competing favorably with other leading brands in the industry.
We will make sure that we only employ people that are qualified, honest, hardworking, customer centric and are ready to work to help us build a prosperous business that will benefit all the stake holders. As a matter of fact, profit-sharing arrangement will be made available to all our senior management staff and it will be based on their performance for a period of five years or more depending how fast we meet our set target.
In view of that, we have decided to hire qualified and competent hands to occupy the following positions;
- Chief Executive Officer (Owner)
- Plant Manager
- Human Resources and Admin Manager
- Castor Oil Extraction Machine Operators
- Sales and Marketing Manager
Roles and Responsibilities
Chief Executive Officer – CEO (Owner):
- Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results;
- Responsible for fixing prices and signing business deals
- Responsible for providing direction for the business
- Creates, communicates, and implements the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
- Responsible for signing checks and documents on behalf of the company
- Evaluates the success of the organization
- Responsible for overseeing the smooth running of the essential oil extraction plant
- Part of the team that determines the quantity of essential oil that are to be produced
- Maps out strategy that will lead to efficiency amongst workers in the plant
- Responsible for training, evaluation and assessment of essential oil extraction plant workers
- Ensures that the steady flow of both raw materials and easy flow of finished products through wholesale distributors to the market
- Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
- Ensures that the plant meets the expected safety and health standard at all times.
Human Resources and Admin Manager
- Responsible for overseeing the smooth running of HR and administrative tasks for the organization
- Defines job positions for recruitment and managing interviewing process
- Carries out staff induction for new team members
- Responsible for training, evaluation and assessment of employees
- Oversees the smooth running of the daily office and factory activities.
Castor Oil Extraction Machine Operators
- In charge of operating machines that are used in extraction of castor oil
- Handle other processes include expression, solvent extraction, absolute oil extraction, resin tapping, wax embedding, and cold pressing.
- Responsible for taking care of the machines and equipment in the production plant
- Handles any other duty as assigned by the production manager.
Sales and Marketing Manager
- Manages external research and coordinate all the internal sources of information to retain the organizations’ best customers and attract new ones
- Models demographic information and analyze the volumes of transactional data generated by customer purchases
- Identifies, prioritizes, and reaches out to new partners, and business opportunities et al
- Responsible for supervising implementation, advocate for the customer’s needs, and communicate with clients
- Documents all customer contact and information
- Represents the company in strategic meetings
- Helps increase sales and growth for the company
- Responsible for preparing financial reports, budgets, and financial statements for the organization
- Provides managements with financial analyses, development budgets, and accounting reports
- Responsible for financial forecasting and risks analysis.
- Performs cash management, general ledger accounting, and financial reporting
- Responsible for developing and managing financial systems and policies
- Responsible for administering payrolls
- Ensures compliance with taxation legislation
- Handles all financial transactions for the organization
- Serves as internal auditor for the organization
Client Service Executive
- Ensures that all contacts with customer (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
- Through interaction with customers on the phone, uses every opportunity to build client’s interest in the company’s products and services
- Manages administrative duties assigned by the store manager in an effective and timely manner
- Consistently stays abreast of any new information on Shavonne Smith® Castor Oil Production Company, Inc. products, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients when they make enquiries
Distribution Truck Drivers
- Assists in loading and unloading castor oil products meant for distribution.
- Maintains a logbook of their driving activities to ensure compliance with federal regulations governing the rest and work periods for operators.
- Keeps a record of vehicle inspections and make sure the truck is equipped with safety equipment
- Assists the transport and logistics manager in planning their route according to a delivery schedule.
- Transports finished goods and raw materials over land to and from manufacturing plants or retail and distribution centers
- Inspects vehicles for mechanical items and safety issues and perform preventative maintenance
- Complies with truck driving rules and regulations (size, weight, route designations, parking, break periods etc.) as well as with company policies and procedures
- Collects and verifies delivery instructions
- Reports defects, accidents or violations
If you live in the United States of America, you will agree that products from castor oil production companies in South America, the Caribbean and India can be seen in stores in the United States of America. We know that if a proper SWOT analysis is conducted for our business, we will be able to position our business to maximize our strength, leverage on the opportunities that will be available to us, mitigate our risks and be equipped to confront our threats.
Shavonne Smith® Castor Oil Production Company, Inc. employed the services of an expert HR and Business Analyst with bias in startup business to help us conduct a thorough SWOT analysis and to help us create a Business model that will help us achieve our business goals and objectives.
This is the summary of the SWOT analysis that was conducted for Shavonne Smith® Castor Oil Production Company, Inc.;
Part of what is going to count as our strength is the vast experience of our management team, we have people on board who are highly experienced and understands how to grow business from the scratch to becoming a national phenomenon. So also, our large national distribution network and of course our excellent customer service culture will definitely position our company to compete with other castor oil production companies within and outside the United States of America.
The inability to initially leverage on economies of scale may count against us since we are a new castor oil extraction company. In addition, we don’t have the financial capacity to engage in the kind of publicity that we intend giving the business.
The opportunities for castor oil production companies is enormous because there are loads of manufacturing companies across who rely on the supply of castor oil. As a result of that, we were able to conduct a thorough market survey and feasibility studies so as to position our business to take advantage of the existing market. We know that it is going to require hard work, and we are determined to achieve it.
Some of the major threats that we are likely going to face is economic downturn and unfavorable government policies. It is a fact that economic downturn affects purchasing power. Another threat that may likely confront us is the arrival of a new castor oil extraction and packaging company in same location where ours is located.
Investors and entrepreneurs are beginning to establish businesses in the value chain of the essential oil production business due to the fact that health profits of essential oils are anticipated to trigger their demand. Good enough, studies show that these oils do not exhibit any recognized side effects unlike other conventional medicines and drugs; this will probably be a significant boosting factor for the market.
Another notable trend in this line of business is that more players in the food, fragrance and cosmetics, pesticide and other related production industry are beginning to increase their demand for essential oil as part of their raw materials because of the aromatic nature it adds to their product.
Lastly, the price of castor oil plant is typically the most reliable driver of industry performance. It is important to state the part of what affect productivity output in this industry is the fact that castor oil seed farming is vulnerable to unpredictable weather conditions, and the demand for high-quality essential oil in key foreign markets will boost exports.
Castor oil is one of many products that is used all around the globe for different purposes, there is indeed a wide range of available customers. In essence, our target market can’t be restricted to just a group of people or organization, but all those who resides in our target market locations.
We are in business to engage in the extraction of castor oil and wholesale distribution of castor oil products to the following groups of organizations;
- Pharmaceutical companies
- Alternative medicine practitioners that use essential oil for Aromatherapy
- Perfumes production companies
- Cosmetics, soaps and other products production companies
- Food and drinks production companies
- Incense and household cleaning products production companies
- Small scale businesses that make use of castor oil as part of their raw material.
There is hardly any business that does not come with its own fair share of competitions hence we are well prepared to compete favorably with other castor oil production companies in Montgomery – Alabama and throughout the United States.
Top on the list of the competitive advantages that we are bringing to the industry are our business location, robust relationship with essential oil seed farmers, ability to alter goods and services produced in favor of market conditions.
Part of what is going to count as competitive advantage for Shavonne Smith® Castor Oil Production Company, Inc. is the vast experience of our management team, we have people on board who are highly experienced and understands how to grow business from the scratch to becoming a national phenomenon. So also, our large national distribution network and of course our excellent customer service culture will definitely count as a strong strength for the business.
Last of all, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry, meaning that they will be more than willing to build the business with us and help deliver our set goals and objectives. We will also give good working conditions and commissions to freelance sales agents that we will recruit from time to time.
SALES AND MARKETING STRATEGY
Sources of Income
Shavonne Smith® Castor Oil Production Company, Inc. is established with the aim of maximizing profits in the castor oil extraction business in the United States of America and we are going to ensure that we do all it takes to sell our essential oils to a wide range of customers.
Shavonne Smith® Castor Oil Production Company, Inc. will generate income by simply selling;
- Castor oil
When it comes to castor oil extraction and packaging business, if your essential oil is well – packaged and branded and if your production plant is centrally positioned and easily accessible, you will always attract customers cum sales and that will sure translate to increase in revenue generation for the business.
We are well positioned to take on the available market in Montgomery – Alabama and every city where our castor oil products will be sold and we are quite optimistic that we will meet our set target of generating enough income/profits from the first six months of operations and grow the business and our clientele base.
Below are the sales projection for Shavonne Smith® Castor Oil Production Company, Inc., it is based on the location of our business and other factors as it relates to small scale and medium scale castor oil extraction and packaging company start – ups in the United States;
First Fiscal Year (FY1):
Second Fiscal Year (FY2)
Third Fiscal Year (FY3)
N.B: This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor offering same product and customer care services as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.
Marketing Strategy and Sales Strategy
Prior to choosing a location for Shavonne Smith® Castor Oil Production Company, Inc. we conducted a thorough market survey and feasibility studies in order for us to penetrate the available market in our target market locations. We have detailed information and data that we were able to utilize to structure our business to attract the number of customers we want to attract per time.
We hired experts who have good understanding of the castor oil extraction line of business to help us develop marketing strategies that will help us achieve our business goal of winning a larger percentage of the available market in Montgomery – Alabama.
In summary, Shavonne Smith® Castor Oil Production Company, Inc. will adopt the following sales and marketing approach to sell our essential oil;
- Introduce our castor oil brand by sending introductory letters to manufacturing companies that make use of castor oil, households, alternative medicine practitioners, castor oil merchants and other stakeholders in Montgomery – Alabama
- Engage in roadshow in targeted communities from time to time to sell our products
- Advertise our products in community – based newspapers, local TV and radio stations
- List our business and products on yellow pages ads (local directories)
- Leverage on the internet to promote our castor oil brands
- Engage in direct marketing and sales
- Encourage the use of Word of mouth marketing (referrals)
Publicity and Advertising Strategy
Notwithstanding the fact that our castor oil extraction plant is a standard one with a wide range of products that can favorably compete with other leading brands, we will still go ahead to intensify publicity for all our products and brand. We are going to explore all available means to promote Shavonne Smith® Castor Oil Production Company, Inc.
Shavonne Smith® Castor Oil Production Company, Inc. has a long – term plan of distributing our castor oil products in various locations all around the United States of America which is why we will deliberately build our brand to be well accepted in Montgomery – Alabama before venturing out.
Here are the platforms we intend leveraging on to promote and advertise Shavonne Smith® Castor Oil Production Company, Inc.;
- Place adverts on both print (community – based newspapers and magazines) and electronic media platforms
- Sponsor relevant community programs
- Leverage on the internet and social media platforms like; Instagram, Facebook, twitter, et al to promote our castor oil brand
- Install our Bill Boards on strategic locations all around major cities in the United States of America
- Engage in roadshow from time to time in targeted communities
- Distribute our fliers and handbills in target areas
- Position our Flexi Banners at strategic positions in the location where we intend getting customers to start patronizing our products.
- Ensure that our castor oil product is well branded and that all our staff members wear our customized clothes, and all our official cars and distribution vans are customized and well branded.
We are aware of the pricing trend in the castor oil extraction business which is why we have decided to produce various bottle sizes of essential oil.
In view of that, our prices will conform to what is obtainable in the business but we will ensure that within the first 6 to 12 months our products are sold a little bit below the average price of various castor oil brands in the United States of America. We have put in place business strategies that will help us run on low profits for a period of 6 months; it is a way of encouraging people to buy into our brand.
The payment policy adopted by Shavonne Smith® Castor Oil Production Company, Inc. is all inclusive because we are quite aware that different customers prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.
Here are the payment options that Shavonne Smith® Castor Oil Production Company, Inc. will make available to her clients;
- Payment via bank transfer
- Payment with cash
- Payment via online bank transfer
- Payment via check
- Payment via bank draft
In view of the above, we have chosen banking platforms that will enable our clients make payment for product purchase without any stress on their part. Our bank account numbers will be made available on our website and promotional materials.
Startup Expenditure (Budget)
Starting a standard castor oil extraction and packaging company is indeed a capital-intensive business because the amount required to setup a castor oil extraction plant is relatively on the high side when compared to similar businesses. The bulk of the startup capital will be spent on leasing or acquiring a facility and also in purchasing castor oil extracting and processing machines.
These are the key areas where we will spend our startup capital;
- The Total Fee for Registering the Business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits as well as the accounting services (software, P.O.S machines and other software) – $1,300.
- Marketing promotion expenses for the grand opening of Shavonne Smith® Castor Oil Production Company, Inc. in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of – $3,580.
- The total cost for hiring Business Consultant – $2,500.
- Insurance (general liability, workers’ compensation and property casualty) coverage at a total premium – $2,400.
- The total cost for payment of rent for 12 months at $1.76 per square feet in the total amount of $115,300.
- The total cost for construction of a standard essential oil extraction plant – $100,000.
- Other start-up expenses including stationery ($500) and phone and utility deposits ($2,500).
- Operational cost for the first 3 months (salaries of employees, payments of bills et al) – $100,000
- The cost for Start-up inventory (raw materials, drums, bottles and packaging materials et al) – $80,000
- The total cost for the purchase of castor oil extracting and packaging equipment – $100,000
- The total cost for store equipment (cash register, security, ventilation, signage) – $13,750
- The total cost of purchase of distribution vans – $100,000
- The cost for the purchase of furniture and gadgets (Computers, Printers, Telephone, Fax Machines, tables and chairs et al) – $4,000.
- The cost of launching a website – $600
- Miscellaneous – $10,000
We would need an estimate of five hundred thousand dollars ($500,000) to successfully set up a standard and world class castor oil extraction plant in Montgomery – Alabama. Please note that this amount includes the salaries of all the staff for the first 3 month of operation.
Generating Funds/Startup Capital for Shavonne Smith® Castor Oil Production Company, Inc.
Shavonne Smith® Castor Oil Production Company, Inc. is a family business that is owned and financed by Shavonne Smith and her immediate family members. They do not intend to welcome any external business partners which is why he has decided to restrict the sourcing of the startup capital to 3 major sources.
- Generate part of the startup capital from personal savings and sell of stocks
- Source for soft loans from family members and friends
- Apply for loan from the bank
N.B: We have been able to generate about $200,000 (Personal savings $150,000 and soft loan from family members $50,000) and we are at the final stages of obtaining a loan facility of $300,000 from our bank. All the papers and documents have been signed and submitted, the loan has been approved and any moment from now our account will be credited with the amount.
Sustainability and Expansion Strategy
Part of the plans we have in place to sustain Shavonne Smith® Castor Oil Production Company, Inc. is to ensure that we continue to make available different sizes of high quality castor oil, deliver quality services, improvise on how to do things faster and cheaper. We are not going to relent in providing conducive environment for our workers and also the required trainings that will help them deliver excellent services at all times.
From our findings, another factor that kills new business such as ours is financial leakages. In order to plug financial leakages, the management of Shavonne Smith® Castor Oil Production Company, Inc. adopted the use of payment machine and accounting software to run the business.
We are quite aware that our customers are key components to the growth and survival of our business hence we are going to continuously engage them to give us ideas on how to serve them better and the products they want to see in our store. We will not waste time in adopting new technology, best practices and diversifying our services.
Shavonne Smith® Castor Oil Production Company, Inc. will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner.
We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.
- Business Name Availability Check: Completed
- Business Registration: Completed
- Opening of Corporate Bank Accounts: Completed
- Securing Point of Sales (POS) Machines: Completed
- Opening Mobile Money Accounts: Completed
- Opening Online Payment Platforms: Completed
- Application and Obtaining Tax Payer’s ID: In Progress
- Application for business license and permit: Completed
- Purchase of Insurance for the Business: Completed
- Leasing of facility and construction of standard castor oil extraction and processing plant: In Progress
- Conducting Feasibility Studies: Completed
- Generating capital from family members and friends: Completed
- Applications for Loan from the bank: In Progress
- Writing of Business Plan: Completed
- Drafting of Employee’s Handbook: Completed
- Drafting of Contract Documents and other relevant Legal Documents: In Progress
- Design of The Company’s Logo: Completed
- Printing of Packaging and Promotional Materials: In Progress
- Recruitment of employees: In Progress
- Purchase of the needed furniture, racks, shelves, computers, electronic appliances, office appliances and CCTV: In progress
- Creating Official Website for the Company: In Progress
- Creating Awareness for the business both online and around the community: In Progress
- Health and Safety and Fire Safety Arrangement (License): Secured
- Establishing business relationship with vendors, castor oil wholesale suppliers / merchants: In Progress.