Do you want to start a caustic soda production business? If YES, here is a complete guide to starting a caustic soda production business with NO money and no experience.
Okay, so we have provided you an in-depth sample caustic soda production business plan template. We also took it further by analyzing and drafting a sample caustic soda production marketing plan backed up by actionable guerrilla marketing ideas for caustic soda production companies. In this article, we will be considering all the requirements for starting a caustic soda production business. So put on your entrepreneurial hat and let’s proceed.
Table of Content
- 1 Why Start a Caustic Soda Production Business?
- 2 Starting a Caustic Soda Production Business – Market Research and Feasibility Studies
- 3 Starting a Caustic Soda Production Business – Legal Matters
- 4 Is Professional Certification Needed to Run a Caustic Soda Production Business?
- 5 Starting a Caustic Soda Production Business – Technical and Manpower Details
- 6 Starting a Caustic Soda Production Business – The Marketing Plan
Why Start a Caustic Soda Production Business?
Starting a production business can sometimes be a frustrating task. This is especially if you do not know jack about what you are delving into. On the other hand, there are folks who may have started the production of a particular product by not knowing a thing and today that have been able to build their businesses into big conglomerates.
It is okay to decide to delve into production; however, you have to first sit and figure out what really you want to produce and how good you are at the trade. One of the businesses you may want to venture into is caustic soda production. If caustic soda does not ring a bell, then you can think of some soaps that are made of soda.
Caustic soda is also used in the aluminum, pulp and paper production industries. It is used for water treatment and purification, as a cleaning agent, for starch production, for dyeing clothes and what have you.
Caustic soda is a solution of Sodium hydroxide (NaOH) in water. It is a powerful base with a myriad of applications in different industries. Caustic soda is produced together with chlorine and hydrogen from the electrolysis of salt brine.
Even though starting a standard caustic production company may be capital intensive for an entrepreneur that is just starting out, but if you are able to conduct a thorough market research and feasibility studies before launching the business, you are sure going to break even before most businesses that are started on a same day, within same location and under similar economic conditions. The bottom line is that economic recession hardly affects the rate of purchase of caustic soda since it is an essential thing people need to have in their homes.
If you want to go into caustic soda production, part of what you need to do is read this article to get some information on how to go about launching the business. This is because it is a business that requires that you get permits as it relates to handling chemicals. The truth is that you can start your caustic soda production business in a small town in the United States and if you put the proper structure in place, it won’t be too long before your brand becomes an international brand.
Starting a Caustic Soda Production Business – A Complete Guide
- Industry Overview
Caustic soda production business falls under the inorganic chemical manufacturing industry and businesses in this industry produce inorganic chemicals including caustic soda, chlorine, potassium, sodium and other alkali compounds, chemical catalysts, inorganic acids, carbon black and other inorganic chemicals. Please note that inorganic chemicals are mineral based chemicals.
Over the years, the industry has experienced a slight decline. Inorganic chemical production depends on demand from downstream users, ranging from paper producers to oil refineries. Products produced by players in the Inorganic Chemical Manufacturing industry are used for many applications. At the same time, many industries are linked to one another and a decline in one may reduce production in others.
Going forward, the industry is expected to slowly expand as downstream industries grow. It might interest you to know that the demand from the construction, paint and glass manufacturing sectors are expected to drive industry sales especially as the housing sector advances.
The Inorganic Chemical Manufacturing industry is a thriving sector of the economy of the United States of America and they generate well over $35 billion annually from more than 645 registered and licensed inorganic chemical manufacturing companies (caustic soda production companies inclusive) scattered all around the United States of America.
The industry is responsible for the employment of over 39,169 people. Experts project the paper stationery manufacturing industry to grow at -0.5 percent annual rate within 2012 and 2017. Chemours happens to be the market leaders in the Inorganic Chemical Manufacturing industry in the United States, they have the lion market share in the United States of America and in most countries of the world.
A recent report published by IBISWorld shows that in 2016, the top four players in the Inorganic Chemical Manufacturing industry are expected to generate only 16.6 percent of industry revenue, indicating a low level of market share concentration. The report also shows that industry operators specialize in a few specific products, limiting the overall market share each operator can control.
According to US Census data, 35.6 percent of industry enterprises are small operators with fewer than 99 employees. However, in the five years to 2016, some operators consolidated to increase production capacity and improve operating efficiency. Operators have also merged to jointly pursue new technology and products, such as more energy-efficient machinery and chemicals.
Some of the factors that encourage aspiring entrepreneurs to venture into starting a caustic soda production company is that the market for caustic soda is pretty huge and not seasonal. That makes it easier for entrepreneurs who are interested in the business to come into the industry at any time they desire.
Over and above, the caustic soda line of business is a profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business as long as you are able to obtain the required chemical handling license. You can chose to start on a small scale producing limited quantities of caustic soda used mainly for domestic purposes or you can chose to start on a large scale with distribution networks in key cities all around the United States of America.
Starting a Caustic Soda Production Business – Market Research and Feasibility Studies
- Demographics and Psychographics
The people who make use of caustic soda cut across all players in various industries and households hence the demographic composition for a caustic soda production company is all encompassing especially when they are also into the production of other inorganic chemical products.
You may also consider targeting cleaning companies, households, soap and paper manufacturers, plastic wrap manufacturers, poultry farmers, fumigation companies and paint manufacturing companies amongst others.
List of Niche ideas Within the Caustic Soda Production Business That You Can Specialize in
It is important to state that caustic soda production business is a niche idea in the inorganic chemical manufacturer industry. It is common to find a standard caustic production company also engage in the manufacturing of all or some of the under listed;
- Manufacturing alkalis and chlorine
- Manufacturing carbon black
- Manufacturing ammonia
- Manufacturing titanium dioxide
- Manufacturing all other basic inorganic chemicals
The Level of Competition in the Inorganic Chemical Manufacturing Industry
There is hardly any industry or line of business anywhere in the world where there is no competition, as a matter of fact, it is competition that brings creativity and innovation to the business world.
The fact that there is stiff competition in the Inorganic Chemical Manufacturing industry does not hamper the performance of new entrants; most of them know how to recreate and re-strategize to reach out or attract more customers even if it is just households and small scale businesses in their immediate community.
List of Well – Known Brands in the Industry
In every industry, there are always brands that perform better or are better regarded by customers and the general public than others. Some of these brands are those that have been in the industry for a long time, while others are best known for how they conduct their businesses and the results they have achieved over the years.
These are some of the leading inorganic chemicals cum caustic soda production companies in the United States of America and in the globe;
- Millennium Inorganic Chemicals
- Dow Chemical Co
- Arclin USA Inc
- Infineum USA
- Sasol Phenolics North America
- Akcros Chemicals
- Sasol Chemical Plant
- Chemtura Corporation
- Buzzi Unicem USA Inc
- M&G Chemicals
- Lamberti USA Inc
- Addivant USA LLC
- Methanex USA, LLC
- Everlight USA, INC
- Weylchem US Inc
- Otsuka Chemical America, Inc.
- Eastman Chemical Co
- Harcros Chemicals Inc.
A caustic soda production company is not a difficult business venture but at the same time, it is a business that requires thorough economic and cost analysis, feasibility studies and market survey et al if you are looking towards making profits in the industry.
Some of the things you need to focus on in this line of business is how to build a standard caustic soda production plant, a robust distribution networks, branding and of course how to maintain your machinery and equipment and to take care of your overhead before your business breaks even. Other costs that should be considered during planning and budgeting are supply of chemicals, packaging materials and maintenance costs.
Lastly, in other to play safe with your investment, it is important that you hire the services of experts to help you carry out thorough economic and cost analysis before committing your resourcing to the business.
Starting Your Caustic Soda Production Business from Scratch vs Buying a Franchise
There are loads of factors that should be considered before choosing the option to follow if you are considering starting a caustic soda production business. Some of the factors to consider are the cost of starting from the scratch or buying a franchise, your financial capacity, your vision, and your business skills and experience.
If your intention of starting a caustic soda production business is to grow beyond one city, if you want to have presence in key cities in the United States and Canada, then starting your caustic soda production company from the scratch is your best option.
But if you want to start a business with the aim of just making profits and you don’t have the required finance and experience to build a business from the scratch, then it will pay you to buy the franchise of a successful brand in the Inorganic Chemical Manufacturing industry if you are lucky to come by one.
Possible Threats and Challenges You Will Face When Starting a Caustic Soda Production Company
If you decide to go into the caustic soda production business today, one of the major challenges you are likely going to face is the presence of well-established brands in the Inorganic Chemical Manufacturing industry both in the United States of America and from other parts of the world. The only way to avoid this challenge is to create your own market (distribution network).
Some other challenges and threats that you are likely going to face is economic downturn; if the economy is in a bad shape, businesses such as caustic soda production companies usually struggle to maintain their old customers or even welcome new customers.
Unfavorable government policies can also hamper the growth of your caustic soda production company. There is nothing you can do as regard these threats and challenges other than to stay positive that things will work well for you.
Starting a Caustic Soda Production Business – Legal Matters
- Best legal entity to use for this type of business
If you have plans to launch a caustic soda production business, the legal entity you choose will go a long way to regulate how big the business can grow. Some caustic soda production companies design their business for neighborhood market, some for city wide market, while others for national and international market by exporting opening chains of distribution network globally.
You have the options of choosing a general partnership, limited liability company, or even a sole proprietorship for your caustic soda production business. Ordinarily, sole proprietorship should have been the ideal business structure for a small scale caustic soda production business especially if you are just starting out with a moderate startup capital in a small neighborhood and just into production of caustic soda for domestic use.
But if your intention is to grow the business and have distribution networks spread across the United States of America and other countries of the world via franchising, then choosing sole proprietor is not an option for you. Limited Liability Company or even general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholders meetings and other managerial formalities.
Catchy Business Name ideas Suitable for a Caustic Soda Production Company
When it comes to choosing a name for your business, you should be imaginative because whatever name you choose for your business will go a long way to create a perception of what the business represents. If you are considering starting your own caustic soda production business, here are some catchy names that you can choose from;
- Super Chemo® Caustic Soda Production Company, LLC
- Home Use® Caustic Soda Production Company, LLC
- Brighter Side® Inorganic Chemical Production Plant, Inc.
- Top Grade® Caustic Soda Production Company, Inc.
- EPC Zone® Caustic Soda Production Company, Inc.
- Encore™ Caustic Soda Production Company, Inc.
- Denzel Freeman© Caustic Soda Production Company, Inc.
- Pent House™ Caustic Soda Production Company, LLC
- Century Chemicals© Caustic Soda Production Company, Inc.
- Fritz O’Shea and Family© Caustic Soda Production Company, Inc.
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your caustic soda production company.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own caustic soda production company in the United States of America;
- General insurance
- Health/Medical insurance
- Liability insurance
- Building Insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
Intellectual Property Protection/Trademark
If you want to begin your own caustic soda production company, you may not have any need to file for intellectual property protection/trademark. This is because the nature of the business makes it possible for you to successful run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.
Is Professional Certification Needed to Run a Caustic Soda Production Business?
If you want to make impact in the inorganic chemical manufacturing industry, you should work towards acquiring all the needed certifications in your area of specialization. You are strongly encouraged to pursue professional certifications; it will go a long way to show your commitment towards the business. Certification validates your competency and shows that you are highly skilled, committed to your career and up-to-date in the competitive market.
These are some of the certifications you can work towards achieving if you want to run your own caustic soda production company;
- Chemical Handler’s Certificate
- Professional Certificate of Competency in Chemical Engineering and Plant Design
- Degree or Diploma in Chemical Engineering and related courses
Please note that you can successfully run a caustic soda production company in the United States and in most countries of the world without necessarily acquiring professional certifications as long as you have acquired the required chemical handling certificate.
List of Legal Documents You Need to Run a Caustic Soda Production Company
The essence of having the necessary documentations in place before launching any business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations. If you do, it won’t be too long before the long hand of the law catches up with you.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your own caustic soda production business in the United States of America;
- Business and liability insurance
- Tax Payer’s ID
- Fire certificate
- Chemical Handler Certificate
- Certificate of Incorporation
- Business License
- Business Plan
- Non-disclosure Agreement
- Employment Agreement (offer letters)
- Employee’s Handbook
- Operating Agreement for LLCs
- Insurance Policy
- Company Bylaws
- Memorandum of Understanding (MoU)
- Building License
- Franchise or Trademark License (optional)
Financing Your Caustic Soda Production Company
It is often said that money is the blood of any business. Raising startup capital is perhaps one of the major concerns of entrepreneurs; it can be challenging raising capital to launch a business idea. Your idea must be workable and promising for you to secure finance from financial institutions or from angel investors.
The first thing to have in place before sourcing for startup capital for your caustic soda production business is a detailed business plan. With a good business plan, you can easily convince investors to invest in your business. The truth is that no bank can give you a loan if you don’t have a good and workable business plan. Besides, investors will not take you seriously if you don’t have a business plan on ground before launching out to source for capital.
Here are some of the options you can explore when sourcing for startup capital for your caustic soda production company;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell of shares to interested investors
- Applying for loan from your bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends
Choosing a Suitable Location for a Caustic Soda Production Business
When it comes to choosing a location for a caustic soda production company, there are key questions you should answer and key factors that must be considered. You are expected to choose a location that is accessible especially as it relates to your distribution network and supply of raw materials et al. Affordability, availability of labor and safety are also some of the factors that you should consider.
Despite the fact that caustic soda and other inorganic chemical products are used by households, facility managers and farmers, it is important to choose a location that will give you economy of scales; a location that will allow you to favorably compete in the industry as a new entrant and also to make reasonable profits.
It cannot be overemphasized that the location you chose to launch your caustic soda production company is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people and businesses that make use of caustic soda and with the require purchasing power
Most importantly, before choosing a location for your caustic soda production company, ensure that you first conduct a thorough feasibility studies and market survey. The possibility of you coming across similar business that just closed shop in the location you want to open yours can’t be ruled out.
Starting a Caustic Soda Production Business – Technical and Manpower Details
If you are considering starting a caustic soda production company, then you should make plans to build a standard caustic soda production plant. A standard caustic soda production plant includes chemical mixer, vessels, tanks, and protective gear et al. So, you are expected to put all this equipment and machine in place and also purchase standard distribution trucks.
Although you can get the above listed equipment and machines as fairly used, but it is advisable to go for new and latest machines and equipment that can serve you for a long time, especially if you have the required money to make the purchase. Even if you don’t have the required amount, you can enter an agreement with the suppliers of such machines and equipment and spread the payment over a period of time.
As regards acquiring a facility, if you have the required finance, it is to your advantage to acquire a property or lease a facility to be used for your caustic soda production plant; it usually gives you the freedom to design the facility the way you want to it to be and install safety gadgets as you so desire. But if you are low on cash, then you don’t have any option other than to rent a facility.
When it comes to creating a workforce structure for a standard caustic soda production company, then you should look towards getting qualified and competent people to fill the following roles; Chief Executive Officer (Owner), Plant Manager, Chemical Engineer, Quality Control Officer, Human Resources and Admin Manager, Merchandise Manager, Sales and Marketing Manager, Accountant, Production Workers/Machine Operators, Distribution Truck drivers and Cleaners.
Over and above, you will need a minimum of 15 – 20 staff members to successfully run a small scale but standard caustic soda production company.
The Business Services Process Involved in Caustic Soda Production
There are different processes as it relates to producing caustic soda, but it is important to state that caustic soda is derived from the electrolysis of salt. A concentrated solution of purified salt (NaCl) in demineralized water (brine) is decomposed in an electrolytic cell by the passage of an electrical current (DC). In the electrolytic cell, the sodium chloride solution is decomposed to chlorine at the anode, and to a sodium hydroxide solution and hydrogen at the cathode.
Once the caustic soda is produced, then it is packaged and branded before they are sold to end users via the distribution network. Your products must be approved by the regulating authority in the United States before it can be sold.
It is important to state that a caustic soda production company may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated caustic soda production company process is not cast on stone.
Starting a Caustic Soda Production Business – The Marketing Plan
- Marketing ideas and strategies
In practical, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a caustic soda production company, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well-known brands that determine the market direction for the inorganic chemical manufacturing industry.
People and organizations will purchase and make use of your caustic soda and other inorganic chemical products if they know that they are going to get the best and value for their money.
Your marketing strategy should center on quality, efficiency and pricing and above all excellent customer service. If you are able to put the above stated in place, you won’t struggle to retain your old customers and at the same time win new customers.
Businesses these days are aware of the power of the internet and which is why they will do all they can to maximize the internet to market their services or products. In other words, a larger percentage of your marketing effort should be directed to internet users.
These are some of the marketing ideas and strategies that you can adopt for your caustic soda production company;
- Introduce your caustic soda production company by sending introductory letters alongside your brochure to cleaning companies, households, soap and paper manufacturers, plastic wrap manufacturers, poultry farmers, fumigation companies and paint manufacturing companies and other stakeholders throughout the city where your caustic soda production company is located and distributed.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your business so as to give your business an online presence
- Directly market your products
- Engage in roadshows in targeted communities from time to time to promote your caustic soda
- Join local caustic soda production company associations for industry trends and tips
- Provide discount days for your customers
- Advertise your business in community based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word of mouth marketing (referrals)
Factors That Will Help You Get the Right Product Pricing
One key factor that will help you sell your caustic soda and other inorganic chemical products at rock bottom prices is to purchase your raw materials directly from wholesalers in pretty large quantities. The truth is the higher the quantity of items you purchase directly from wholesalers, the cheaper you tend to get them.
Another strategy that will help you retail your caustic soda at the right price is to ensure that you cut operational cost to the barest minimum, and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products.
You can also try as much as possible to work with independent contractors and marketers; it will help you save cost of paying sales and marketing executives.
Strategies to Boost Your Caustic Soda Production Business Brand Awareness and Create Your Corporate Identity
If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be.
If your intention of starting a caustic soda production company is to grow the business beyond the city where you are going to be operating from to become a national and international brand by opening chains of distribution networks and exporting your products, then you must be ready to spend money on promotion and advertisement of your brand.
No matter the industry you belong to, the truth is that the market is dynamic and it requires consistent brand awareness and boosting cum promotion to continue to appeal to your target market. Here are the platforms you can leverage on to boost your brand awareness and create a corporate identity for your caustic soda production company;
- Place adverts on both print (newspapers and magazines) and electronic media platforms
- Sponsor relevant community based events
- Leverage on the internet and social media platforms like Instagram, Facebook, Twitter, YouTube, Google + et al to promote your caustic soda production company
- Install your billboards in strategic locations all around your city or state
- Engage in roadshows from time to time in targeted neighborhoods to create awareness of your caustic soda production company
- Distribute your fliers and handbills in target areas
Contact cleaning companies, households, soap and paper manufacturers, plastic wrap manufacturers, poultry farmers, fumigation companies and paint manufacturing companies and other key stakeholders throughout the city where your caustic soda production company is located informing them about your caustic soda production company and the products you sell
- List your caustic soda production company in local directories/yellow pages
- Advertise your caustic soda production company in your official website and employ strategies that will help you pull traffic to the site
- Position your Flexi Banners at strategic positions in the location where caustic soda production company is located
- Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are branded with your company logo
In order to successfully run a caustic soda production company, you must establish good business relationship with wholesalers of the required raw materials within the city where your caustic soda production company is located. You would need a steady supply of these raw materials at affordable prices in order to remain in business.
Also, you are expected to create business networks with distributors of inorganic chemical products. They are your major clients and can help you distribute your products throughout the nooks and crannies of the United States of America.
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