Do you want to start a groundnut oil processing business? If YES, here is a complete guide to starting a groundnut oil processing business with NO money and no experience.
Okay, so we have provided you an in-depth sample groundnut oil processing business plan template. We also took it further by analyzing and drafting a sample groundnut oil processing marketing plan backed up by actionable guerrilla marketing ideas for groundnut oil processing businesses. In this article, we will be considering all the requirements for starting a groundnut oil processing business. So put on your entrepreneurial hat and let’s proceed.
Table of Content
- Why Start a Groundnut Oil Processing Business?
- 1. Understand the Industry
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 6. Know the Possible Threats and Challenges You Will Face
- 7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- 8. Choose a Catchy Business Name
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Work Out a Reasonable Pricing for your Services & Products
- 18. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Why Start a Groundnut Oil Processing Business?
No entrepreneur would want to go into a business if they know the chances of making profit from the business is slim, as such, the need to start a business whose products or services is generally accepted by all and sundry, and one of such businesses is the production of groundnut oil. It is fact that all homes or restaurants cum hotel related businesses make use of groundnut oil on a daily basis.
A groundnut oil production company is not one of those businesses that can be started without suitable study of the industry. It is important that you conduct detailed research in order to find out what it will take for you to setup a groundnut oil production company and how to leverage on the existing market to sell your products and also how to create new market channels.
A Groundnut oil Production Company can be considered to be capital intensive, but it is indeed a money spinning business if it is well located and if you are able to create a robust distribution network.
If you are tinkering with going into groundnut oil production business, part of what you need to do is read this article to get some information on how to go about launching the business. You can start your groundnut oil production business in a small town in the United States and if you put the proper structures in place, it won’t be too long before your brand becomes a nationally recognized brand and your products get sold all across major cities in the United States of America and other countries of the world.
Starting a Groundnut Oil Processing Business – A Complete Guide
1. Understand the Industry
Groundnut oil production business falls under the Cooking Oil Production industry and players in this industry basically manufacture cooking oil from a wide variety of edible oil plants. Industry products include soybean oil, rapeseed oil, palm oil, peanut (groundnut) oil, cottonseed oil and other edible oils.
The Cooking Oil Production industry has shown impressive growth over the years. Groundnut oil is a consumer staple and does not experience wild fluctuations in demand, even during recessions. The main reason the industry’s revenue has increased over the five years is due to a major spike in the price of peanuts (groundnuts).
Going forward, manufacturers readjusted prices to reflect lower peanut prices, resulting in revenue declines. Please note that the demand for groundnut oil is expected to remain robust in the next five years as it maintains its position as an important household staple. However, because of fluctuating peanut prices, industry revenue will likely remain volatile.
The Cooking Oil industry of which groundnut oil production line of business is a subset of is a thriving sector of the economy of the united states of America and it generates well over billion annually from more than 456 registered and licensed manufacturing companies scattered all around the United States of America.
The industry is responsible for the employment of over 16,278 people. Experts project the industry to grow at a 2.8 percent annual rate. No cooking oil brand can boast of having a lion share of the available market in the United States of America.
The Cooking Oil Production industry in the United States expanded rapidly in recent years due to increased industry capacity and high levels of domestic demand. With the country’s change in economic focus from export to domestic demand and increased living standards, cooking oil consumption in the United States is expected to maintain a rigid growth trend, with the industry revenue rising to $27.8 billion in 2017, up 3.8 percent for the year.
Over the past five years, revenue has been growing at an annualized rate of 2.8 percent. The small-package cooking oil segment accounted for 15.0 percent of total industry revenue in 2008, and its share has been increasing rapidly in recent years.
Some of the factors that encourage aspiring entrepreneurs to venture into starting a groundnut oil production company is the fact that the market for groundnut oil is growing rapidly in the United States and it is not seasonal. That makes it easier for loads of entrepreneur who are interested in the business to come into the industry at any time they desire; the entry barriers are quite affordable and any serious minded entrepreneur can comfortably raise the startup capital even if it means collecting loans from the bank.
The Cooking Oil Production industry 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 license and permits; you can choose to start on a small scale producing limited quantities of groundnut oil or you can choose to start on a large scale with distribution network and several outlets in key cities all around the United States of America.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who make use of groundnut oil cut across households and all players in the food preparation line of business such as hotels, restaurants, bakers, caterers, and snack manufacturers et al. So, it will be safe to say that the demographic composition for a groundnut oil production company is all encompassing.
3. Decide Which Niche to Concentrate On
Groundnut oil production is a niche area in the Cooking Oil Production industry, but we are not ruling out the fact that it is the practice for groundnut oil production companies to engage in the production of other cooking oil for the purpose of maximizing profits.
This is why you find groundnut oil production companies also engage in producing some or all of the under listed;
- Soybean oil production
- Rapeseed oil production
- Cottonseed oil production
- Olive oil production
- Castor oil production
- Sesame oil production
- Sunflower seed oil production
- Corn oil production
- Other edible oil production
The Level of Competition in the 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 creativities and innovations in the business world. This goes to show that if you are looking towards starting a groundnut oil production company, then you should brace up for competitions in the industry.
The truth is that you are expected to compete with other players in the Cooking Oil Production industry even if they are not producing groundnut oil. This is why most groundnut oil production companies are leveraging on creativity in terms of producing oil with low cholesterol, packaging and marketing to continue to stay afloat in the industry.
The increasing competition in the Cooking Oil Production industry is not hampering the performance of new entrants as most of them know how to recreate and re – strategize to attract more customers even if it is just households in their immediate community.
4. Know Your Major Competitors in the Industry
It in every industry, there are always brands that perform better or are better regarded by customers and the general public than the 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 groundnut oil production companies in the United States of America and in the globe;
- Fuji Vegetable Oil, Inc.
- American Vegetable Oil
- Adams Grain Co
- C P Vegetable Oil
- Columbus Vegetable Oils
- Smude Sunflower Oil
Starting a groundnut oil production company is not difficult but at the same time, it is a business that requires thorough economic and cost analysis if you are looking towards making profits in the industry.
Part of what you need to focus on in this line of business is how to build a standard groundnut oil production plant, 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 peanuts, 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.
5. Decide Whether to Buy a Franchise or Start from Scratch
There are loads of factors that should be considered before choosing the option to follow. 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 groundnut oil 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 company from the scratch is your best option. But if you just want to start a business with the aim of making profits but 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 Cooking Oil Production industry if you are lucky to come by one.
Please note that most of the big and successful groundnut oil production companies around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success and of course you can build your own groundnut oil production company to become a successful brand with your distribution networks spread throughout the length and breadth of the United States of America and other countries of the world.
6. Know the Possible Threats and Challenges You Will Face
If you decide to go into groundnut oil production business today, one of the major challenges you are likely going to face is the presence of well – established brands in the Cooking Oil Production industry both in the United States of America and other parts of the world.
The only way to avoid this challenge is to create your own market by concentrating on grocery stores and households in your immediate community. So also, unfavorable government policies can also hamper the growth of your groundnut oil production company. There is nothing you can do as regards these threats and challenges other than to stay positive that things will work well for you.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- Best legal entity to use for this type of business
If you have plans to launch a groundnut oil production business, the legal entity you choose will go a long way to determine how big the business can grow; some groundnut oil production companies design their business for national and others for international market by exporting and opening chains of distribution networks globally.
Generally, you can choose a general partnership, limited liability Company, or even a sole proprietorship for your groundnut oil production business. Ordinarily, sole proprietorship should have been the ideal business structure for a small – scale groundnut oil production business especially if you are just starting out with a moderate startup capital in a small neighborhood and just into production limited groundnut oil for local consumption in your immediate community.
But if your intention is to grow the business and have distribution network spread across the United States of America and other countries of the world via franchising, and then choosing sole proprietorship is not an option for you. Limited Liability Company, LLC 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.
These are some of the factors you should consider before choosing a legal entity for your groundnut oil production business; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.
If you take your time to critically study the various legal entities to use for your groundnut oil production business with the ability to export and open chains of distribution networks all across the United States of America and other countries of the world, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
8. Choose a Catchy Business Name
When it comes to Choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. Usually it is the norm for people to follow the trend in the industry they intend operating from when naming their business.
If you are considering starting your own groundnut oil production business, here are some catchy names that you can choose from;
- Pure Gold® Groundnut Oil Production Co
- Perry Peanut® Cooking Oil Production Company, LLC
- Green Life® Vegetable Oil Production Company, Inc.
- Healthy Heart® Groundnut Oil Production Company, Inc.
- Little Droplets® Groundnut Oil Production Company, Inc.
- Lara Brown™ Groundnut Oil Production Company, Inc.
- Cooking Delight© Groundnut Oil Production Company, Inc.
- Pinker Lane ™ Vegetable Oil Production Company, LLC
- Jane Hollow© Groundnut Oil Production Company, Inc.
- Queens Oil© Groundnut Oil Production Company, Inc.
9. Discuss with an Agent to Know the Best Insurance Policies for You
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 groundnut oil production company.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your groundnut oil 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
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own groundnut oil production company, usually you may not have any need to file for intellectual property protection/trademark. This is so because the nature of the business makes it possible for you to successfully 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.
11. Get the Necessary Professional Certification
When it comes to the groundnut oil production business, you do not need to have any formal training or special certification before you can be allowed to start the business. All you need is informal training that will give you the needed skills coupled with your own inbuilt artistic talents.
On the other hand, if you come across any form of certification that can aid you to conduct your groundnut oil production business properly, then by all mean try and pursue such certification.
12. Get the Necessary Legal Documents You Need to Operate
The essence of having the necessary documentation 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 groundnut oil production business in the United States of America;
- Business and liability insurance
- Tax Payer’s ID
- Fire certificate
- Certificate of Incorporation
- Business License
- Business Plan
- 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)
13. Raise the Needed Startup Capital
Raising startup capital is perhaps one of the major concerns of entrepreneurs as it can be challenging to raise 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 put in place before sourcing for startup capital for your groundnut oil production business is to draft 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 startup capital.
Here are some of the options you can explore when sourcing for startup capital for your groundnut oil 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
14. Choose a Suitable Location for your Business
When it comes to choosing a location for a business such as groundnut oil 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 easily accessible especially as it relates to your distribution network and supply of peanuts. Affordability, availability of labor and safety are also some of the factors that you should consider.
Because groundnut oil is used by households and commercial users, it is important to choose a location that will give you leverage to compete in the industry as a new entrant and also to make reasonable profits.
The location you chose to launch your groundnut oil production company is key to the success of the business, so you should rent or lease a facility in a visible location; a location where the demography consists of people and businesses with the required purchasing power
Most importantly, before choosing a location for your groundnut oil 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.
15. Hire Employees for your Technical and Manpower Needs
If you are considering starting a groundnut oil production company, then you should make plans to build a standard groundnut oil production plant. A standard groundnut oil production plant includes oil extractors, vessels, tanks, and conveyor belt system 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 fairly used of the above listed equipment and machines, 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 groundnut oil 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 groundnut oil production company, then you should look towards getting qualified and competent people to fill the following roles; Chief Executive Officer (Owner), Plant Manager, Quality Control Officer, Human Resources and Admin Manage, Merchandize Manager, Sales and Marketing Manager, Accountant, Production Workers, 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 groundnut oil production company.
The Service Delivery Process of the Business
The groundnut oil production process includes: groundnut seeds preparation, groundnut pressing and groundnut oil refining. The starting point involves taking the groundnut seeds through a thorough cleaning process to remove sand, stalk, plant debris and any other unwanted particles.
Thereafter, the groundnut seeds have to be prepared for pressing, which usually involves size reduction of the groundnut seeds by breaking them and then conditioning by adjusting their moisture content and temperature, while keeping the seeds hot for a period of certain minutes.
In the next stage, the well – prepared seeds are conveyed via conveyor belt system to the screw pressing machine, which is the most popular method of groundnut oil production. The machine’s screw warm press the groundnut seeds as it moves to advance where the space is smaller and smaller.
Due to strong friction and high pressure, groundnut oil is pressed out. In addition, as the temperature in the machine’s pressing chamber rises, the output rate of groundnut oil also increases. Finally, the fresh groundnut oil comes out through the small openings in the bottom of the pressing chamber.
Lastly, the fresh crude groundnut oil obtained from the pressing machine is elucidated in a setting tank and then pumped through the filter press. The filtered crude groundnut oil is then channeled to the refinery for three stages of refining: neutralization, bleaching and deodorization and then filling into the required container, packaged and ready for distribution.
Please note that quality control is enforced at every stage of the process in order to ensure that only healthy groundnut oils are produced and sold to the public.
16. Write a Marketing Plan Packed with ideas & Strategies
- Marketing Ideas and Strategies
Running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a groundnut oil 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 cooking oil production industry.
As a matter of fact, your marketing strategy will center on quality, heart friendliness, low cholesterol, good packaging and pricing, and above all excellent customer service. The truth is that 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 over 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 will be directed to internet users; your website will become your number one marketing tool.
These are some of the marketing ideas and strategies that you can adopt for your groundnut oil production company;
- Introduce your groundnut oil production company by sending introductory letters alongside your brochure to households and all players in the food preparation line of business such as hotels, restaurants, bakers, caterers, and snacks manufacturers et al. throughout the city where your groundnut oil 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, so that those on the social media or those who read blogs will know what groundnut oil to purchase within your location
- 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 groundnut oil brand
- Join local groundnut oil production company associations for industry trends and tips
- Provide discount days for your customers
- Advertise our 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)
17. Work Out a Reasonable Pricing for your Services & Products
One key factor that will help you sell your groundnut oil at rock bottom prices is to purchase your raw materials directly from peanut farmers and wholesalers in pretty large quantities. The truth is the higher the quantity of items that you purchase directly from wholesalers, the cheaper you tend to get them.
Another strategy that will help you retail your groundnut oil 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 for paying sales and marketing executives.
18. Develop Strategies to Boost Brand Awareness and Create a 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 portray your business to be.
If your intention of starting a groundnut oil 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 network 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 brand 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 corporate identity for your groundnut oil production company;
- Place adverts on both print (newspapers and food 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 groundnut oil production company – brand
- 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 groundnut oil production company
- Distribute your fliers and handbills in target areas
- List your groundnut oil production company in local directories
- Advertise your groundnut oil 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 groundnut oil production company is located
- Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are well branded with your company logo
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