How to Start an Agarbatti Business in India? A Guide to Arrange Funding, Machinery and License:
Starting a new business may feel a bit daunting in the beginning. However, we are here to help you make your journey smooth and hassle-free. The Indian Agarbatti (incense sticks) industry has recently experienced immense growth. The industry is worth approximately $1 billion, with exports worth over Rs 100 crore.
During the Coronavirus pandemic, the demand for Agarbatti went up by 30%. Since then, the industry has been experiencing consistent growth. This has led to the industry contributing approximately Rs10,000 crore a year.
You can also be a part of this growth story by forming an Agarbatti manufacturing unit. As it comes under the small and medium enterprises category, it is not mandatory to form a limited or private limited company to manufacture incense sticks. With the right business loan at an attractive business loan interest rate, you can get your business started soon.
Licenses Required for Agarbatti-making business
Different states have different requirements for licenses for an Agarbatti-making business. Ensure compliance with your state's respective rules and regulations.
However, the two main types of licenses that you may have to get for starting an Agarbatti-making business are:
To engage in the trading of goods and services, you need a trade license. You can apply to your local municipal body for a trade license.
To start manufacturing goods, you must have a manufacturing license. This is further divided into two types:
- Small-Scale Industries Registration: If your small-scale company's plant and machinery investment does not exceed a value of Rs 25 lakh, then you need this registration.
- Factory license: A factory license and a no objection certificate (NOC) must be obtained if your company is a large-scale manufacturer.
How can you finance your Agarbatti-Making Business?
You can start an Agarbatti-making business with a small or medium-sized investment. This can be procured through an MSME loan or any other type of business loan as well. You can also avail of collateral-free business loans or quick business loans. While looking for loans, try to find those with a low-interest rate for a business loan and do not require excess documentation. It would be feasible to choose lenders that are easily accessible and have online applications as well.
Another way of getting finance for your business is to approach investors. Pitch your business plan and make them aware of the past and expected growth of the Agarbatti industry along with its potential. They should get a clear idea about how you plan to proceed with your business and what would their return on investment be while being able to retain the profits. Show them the bigger picture and let them know what is in it for them as investors. If they like your business plan and see bright prospects for your growth, they will invest in your project.
Make A Agarbatti Making Business Plan
To proceed towards funding your business through a business loan or investors, you need to make a concrete business plan. Your plan should elaborate on the nature of your business and the strategies you will be implementing for your business. A business plan is the first step that an entrepreneur has to take. Without it, your idea may not seem as credible as it is. Your business plan should give a reflection of financial viability to the investors.
An estimate of Rs 12 lakh to Rs 42 lakh could work to start your Agarbatti business. You can purchase machinery for under Rs 5 lakh. Along with finance, you would require around ten workers, including any delivery personnel if required.
Components Of A Sound Agarbatti Making Business Plan
You should ideally divide your business plan into these categories:
Background and nature
Start with a brief background about why you want to take up the Agarbatti-making business.
Then, explain what your business will be doing in detail. Include the details of your targeted customer base, if you wish to export to foreign countries and other information.
The budget of any business is one of the most integral parts. You must include a detailed budget description to use your business plan to get funding.
Incorporate details like the initial investment, raw material and machinery cost, the infrastructure cost, the labour cost and the expected return on your entire investment along with the expected turnover.
Apart from that, you must include the working capital investment so that your investors or lenders know your day-to-day cash expenses.
Return on investment (RoI)
You should project the estimated RoI that the investors will earn by investing in your business. Show them a viable plan regarding profitability and growth so that they express interest in your business.
Required or existing machinery and raw materials
To start the production of incense sticks, you would require certain raw materials and machinery.
Make sure to include those requirements in your business plan. If you have a business that has raw materials and machinery that can be put to use, include them in your business plan.
Existing or newly hired employees
Your business plan should have details about your personnel, new or existing. This may also help the investors know if the labour cost in your estimated budget is reliable.
Details of any existing loans
If your business has any loans taken before this one, it should be disclosed.
Details of an existing property
If your business has any property or asset, it should be included in your business plan.
Starting an Agarbatti business requires you to follow the steps given above. After you are done with financing your business, your next step would be to attain a license. To get the best financing options in the easiest and hassle-free manner, visit Flexiloans.
They come up with many loans, including business loans, business loans for women, MSME loans, small business loans, term loans and unsecured business loans. They will help you overcome your overwhelming opinion about starting a new business with their easily accessible loan options. You can also apply for their business loans online.