Business plan for the production of paper bags with calculations

Organic products are a popular business line. The plan for the production of paper bags from recycled materials is a promising activity. Profitability in well-established sales markets reaches 50%. At the same time, an entrepreneur can independently organize the purchase of raw materials from the population and reduce dependence on suppliers.

Scope of application

Paper packaging is used in various industries. These include:

• network retail;
• storage of household goods;
• gift industry;
• dry mixes.

When drawing up a business plan for the production of paper bags, it is necessary to take into account certain nuances. Only an integrated approach will allow us to grow steadily and cover all costs.

Choice of legal form

Before starting your own business, you need to register with the tax authorities. For small businesses, two forms of existence are suitable:

1. Individual entrepreneurship.
2. Limited liability company.

Each way of doing business has its own advantages and disadvantages. For example, it is easier for individuals to keep tax records; less documents are required for registration. There are also disadvantages. In the event of lawsuits, a limited liability company loses only its authorized capital. An individual entrepreneur risks movable and immovable property. This aspect should be taken into account when drawing up a business plan for the production of paper bags.

A legal entity is also organized in the event that several businessmen begin to work together. In such a situation, the income of each founder depends solely on the degree of his participation in the formation of the authorized capital. This includes not only bank accounts, but also the cost of the equipment used. At the same time, businessmen turn to a third-party assessment to determine the real value of such units.

Start of activity

One of the main criteria for consumption in the business plan for the production of paper bags is the purchase of equipment. Production lines are divided into two classes:

1. Automated.
2. With the involvement of manual labor.

The first variations of the equipment are more expensive. Their use helps the businessman save a certain amount in the future. Such designs are characterized by increased performance characteristics, they do not require the involvement of a large staff. Therefore, it will be possible to reduce the monthly costs of doing business, which will positively affect profitability.

Selection of premises

The second item of expenditure is the rental of the workshop. It is better to place the factory on the outskirts of the city, since the rates there are minimal. Before concluding the contract and starting the installation of the paper bag production line, it is necessary to clarify all issues related to the allocation of electric capacities, and the summing up of other necessary communications. An inspection in the regulatory authorities (fire inspection) lies with the owner of the premises. Sometimes exceptions to this rule also occur. This moment is agreed in advance and taken into account when concluding the contract.

With an increase in income, it is advisable to acquire your own premises. When searching for the right site, attention is focused on the socio-environmental component of the business. This will help to agree with the municipality on preferential conditions for the provision of building land.

Staff recruitment

Cadres decide everything. The phrase is battered, but relevant to this day. Maintenance of equipment for the production of paper bags does not require special preparation. Personnel training takes a minimum of time, therefore there is no expense for the payment of qualified employees. Marketing is more difficult. You need to find a professional sales manager. The motivation in this case is the percentage of transactions concluded. Saving on such an employee is impossible. The manager is the entrepreneur himself. Often this type of activity is organized as a family contract.

Raw Material Search

Purchase constitutes a substantial part of the costs only at the initial stage. In the future, this money is included in the working capital of the enterprise. To purchase used paper, you can go in several ways:

1. Purchase from the public.
2. Acquisition from third parties.
3. Search for a major supplier.

The first method is the cheapest and least effective. The population is constantly disposing of waste paper, but no one will go specifically to the processing workshop. Therefore, this method of forming the resource base is considered unstable. Buying paper from resellers is more expensive. This negatively affects the cost of the paper bag. As a result, you can lose the lion's share of income. The ideal option is to find a major supplier. They can be large shops, shopping centers, supermarkets. It is difficult to conclude a cooperation agreement with them because of great competition, but if it succeeds, you can count on constant supplies of waste paper at a minimal cost. A simple technique will help increase the likelihood of a positive outcome. An entrepreneur needs to focus on the social responsibility of his business, the struggle for the environment.

To reduce the risk of downtime of the production line, the businessman is recommended to establish all three channels for finding raw materials. In some cases, this approach will increase the workload to 100%. Surplus paper can simply be resold to other companies or put additional lines, for example, for the manufacture of packaging for eggs. Diversification will lead to an increase in the entrepreneur’s income and the stability of the entire business model.

Sales options

The problem of marketing finished products worries many. It generally determines the success or failure of entrepreneurial activity. This also applies to the paper bag business. Search for wholesale buyers constantly! It is impossible to dwell on any major counterparty and work only with it. The risk of monopsony is created, that is, a situation where only one buyer is present on the market. At first, such cooperation can promise high profits, but soon the situation will become much worse. There is a risk of lower purchase prices and lower profitability.

Chain stores are the main buyers of paper bags. Here, an entrepreneur faces another problem - competition. Buyers in supermarkets purchase ordinary plastic bags and do not pay any attention to paper. The reason for this behavior is the high price difference. Paper bags are 10 times more expensive than plastic bags! Therefore, you need to choose the right product positioning. It is advisable to sell bags not in the form of regular packaging, but as an environmentally friendly product that is used for its intended purpose for a long time in a row. This approach will give motivation to purchase a large category of citizens.

Contacts should also be established with other companies. To increase the profitability of the enterprise will help the production of paper bags with a logo. The move is non-standard, but effective. Here, a businessman solves several problems at once:

1. Implements the product itself.
2. Increases added value through the use of advertising on the package.
3. Expands sales areas.

Moreover, such an idea will be popular among various business representatives. For promotion purposes, you can also use your own data. Often paper bags with a logo are ordered by creative workshops, gift shops. This service is in demand in both large and small cities.

The production of paper bags for products is not the only direction in development. Entrepreneurs additionally manufacture packaging for dry building mixes. It is especially advantageous to debug work in cities where manufacturers of gypsum or cement compounds are located.

Accents

Business success depends on a number of important factors. Paper recycling is no exception. In this case, the capacity of the equipment used for the production of paper bags is taken into account primarily. Modern automatic lines have high efficiency. The recommendation for an entrepreneur is simple: it’s better to immediately spend money on a quality line than to sustain further losses due to downtime due to breakdowns.

A careful analysis is also made of the raw material procurement policy. Two options are possible here:

1. Establishing a regional average price.
2. Increased purchase value relative to competitors.

Both methods have advantages and disadvantages. In the first case, costs are reduced and profitability is growing, but it is more difficult to compete in a busy niche. In the second, you will have to inflate the budget and find more funds at the start of the business. But such a model will immediately engage in competition. As a result, the entrepreneur will benefit from this.

Fundraising

This type of business is expensive. A significant item of expenditure is determined by the equipment for the production of paper bags. A reasonable question arises as to where to get the money. There will be two options for action:

• own funds;
• attracting loans and investors.

To start cooperation with banks and third-party investors, it is recommended to draw up a detailed business plan. It takes into account the different stages of work, the likely scenarios of enterprise development.

A bit about calculations

Where to start the production of paper bags? With calculations and a business plan. The simplest calculations are presented as follows:

It is also necessary to consider that at the start during the first two months the company will not bring any dividends in principle. Therefore, be patient.