More and more people have realized that the paper roll business is small but profitable, and they can’t wait to buy the slitter machines to start their own paper roll manufacturing business! Unfortunately, most of these people eventually fail. My over 13 years of paper roll industry experience taught me that while starting a paper roll factory is a great idea, it isn’t as easy as some think. In this article, I will describe 8 components that must be in place when starting your own factory. If you are missing even one of them, your chances of succeeding are virtually zero.
1. Market Research
The success of your paper roll factory depends primarily on two factors: market volume and competition. In the ideal market, there is a great demand for paper roll products and zero competition. In this case, you can just run your manufacturing machines and wait for the money to flow into your pocket. But this is just the “ideal.”
Firstly, you must evaluate the demand for paper roll products in the geographic area you want to serve. For example, determine how many supermarkets, cinemas, shopping malls, and banks there are in your city or even your country. These businesses will be your primary customers. Another approach is determining how many cash registers (or POS vendors) are in your market area. The more sellers, the larger market you will have.
Secondly, check out your competition. The simplest but most effective way is to do the research online. You can Google “thermal paper roll” or similar keywords to find how many paper roll suppliers there are in your area. If there are many competitors in your market, don’t worry, because just as the saying goes: “the sky is too wide for two birds to collide”.
Do the needful by asking Google as many questions as you can possibly come up with regarding starting a paper roll production business. You might be absorbed as an intern to go into the factories and see how things are run for yourself. Be sure to take very detailed notes on the processes involved.
2. Profit Research
The profit directly decides if a business opportunity is worth investing in. You can analyze the market or industrial situation by asking yourself the following questions:
- What is the size of the market? Or what’s the estimated turnover you can have?
- What is the growth rate of the industry?
- How long can the business opportunity or investment remain accessible?
- What’s the cost of the infrastructure? (electric fee, water fee, factory renting fee, depletion fee, even the bandwidth & phone fee, etc)
- What’s the expected ROI?
These questions will help you gain further insight into the nature of the business opportunities you intend to pursue. In my experience, you can get at least 10% net margin in the paper rolls and it has a very short payback period of between 1-2 years, and the return on investment is very huge (about 50%).
After finishing the market research and profit research, if you are sure it is a very good choice to start your own paper roll manufacturing factory, then you are ready to go.
3. Get a Location
Now that things are beginning to take shape, your next assignment would be to locate a good environment where your paper roll factory would be located. You might want to get a realtor involved since they are experts and have adequate information per time on the properties available for sale or lease. Be sure that you locate your plant in a non-residential area. This is so because you do not want to disturb the neighborhood’s peace with noisy machines and what have you. In fact, there are specific laws in different countries prohibiting manufacturing companies from locating their businesses in residential areas.
There are many other factors you must consider when locating your factory, such as demographics, accessibility, and parking, basic infrastructure (water supply, power supply, good road network, and security), economic policy (free trade zones, bonded area), local workers labor cost, etc.
4. Equip Your Factory
The next thing you would want to do now is acquire the necessary equipment with the resources you have gathered. Some of the machines needed to get you started include the following:
- Five slitting machines: for a medium-sized factory, you will need at least five machines. Prices range from US $10,000 to $30,000 each.
- Two packaging machines: the price is around $10,000 to $20,000 each.
- One printing machine: from $50,000 to $500,000.
- Of course, you will need the various raw materials and accessories (jumbo rolls, packing material, etc.).
If you carefully shop around, you should be able to get the machines above at very affordable prices, but if you’re short on startup capital, you can get them second-hand. Then, once you get started, you can gradually move towards importing new machines. Regardless, always make sure that your equipment is of high quality, as substandard equipment will not only affect the quality of your products, but the cost of repairing and maintaining inferior machines will eat into your operating capital and may eventually cripple your business.
5. Find Suppliers for Raw Materials
The primary raw materials required for paper roll production are:
- Thermal jumbo rolls (which are used to cut into small rolls)
- The cores (plastic or cardboard)
- Packing materials (silver film, POF shrink film, glue, tapes, labels, cartons, pallets, etc.)
Before starting your business, you will need to find dependable suppliers for these materials. Only then will you be able to ensure steady and high-quality production as well as profitability.
It is strongly advised that you find two or three reliable suppliers for each raw material you will need. If you have only one supplier and that supplier runs out of materials or stops production for some reason (e.g., fire, weather, mechanical breakdowns), your manufacturing will come to a screeching halt, which means you will fail to deliver to your customers and lose huge amounts of business. If you cannot source your supplies locally, try importing them overseas.
6. Hire Experienced Workers
Many of the most successful people in history have agreed on one thing that is critical for their success: surround yourself with good people. There is much truth in this statement; the effectiveness of your business is only as good as its people. Remember, a business is just a building, furniture, and equipment. It’s the people inside that make it work, or not work.
Always bear in mind that “humans are always priceless resources, and they are more expensive than the machines”. You can have the best business, the best product, the best market in the world, but if your people are substandard, you will fail miserably. Do absolutely everything you can to hire experienced operators, as well as managers that can create and maintain a happy, productive workplace. Remember: with most of your customers, you will only have one chance to earn their patronage. If they try your products and are disappointed, they won’t call back; they’ll go somewhere else.
Hiring inexperienced people can start a cascade of problems. They can create an inferior product and your costs can skyrocket. You lose income from that customer who will not return. You may have to re-manufacture the product to replace it. Your reputation will be damaged, as the customer will talk to others. Valuable production time is wasted trying to track down and fix quality control problems. You can hire workers from similar industries by paying them a higher salary. If they lack experience, give them careful training and evaluation before allowing them to do critical work.
7. Draw Up Your Marketing Plan
Knowing how to sell is always more important than knowing how to manufacture. You can make the best product in the world, but if you can’t market it, nobody will buy it. Conversely, look at all the inferior products out there that sell by the millions. How do they do it? Marketing. There are numerous marketing methods for paper roll products. In our experience, some proven, effective marketing approaches are:
- Cold calling. Visit restaurants, shopping malls, and other places in your marketing area where paper rolls are used in significant quantities, and inform them about your business and product. Leave them a neat, concise brochure, business cards, and contact information, and always follow up later.
- Make a visit to the marketplace. There is always a big marketplace in every city. assign your sales personnel to visit the marketplaces and give them business cards to hand out.
- Visit the POS/cash register vendors. They always need to sell the paper rolls to customers along with the machines.
- Online marketing. You can build your company website to display your products and advertise on Google and other social media. Or even you can build an e-commerce website that supports online order and payment. Study other websites and identify the appealing ones. There are many, many poorly designed websites out there. Having a strong internet presence is virtually a requirement in today’s business world; if you don’t, your competition will!
- There are many other marketing strategies out there. For example, you can print advertising on paper rolls and market them as an advertising medium. You might even give free paper rolls to a customer (such as a shopping mall), and charge only for the advertising.
At first, however, because your brand is new, you will need a vigorous marketing drive to get your brand known and get your name out. For example, you might offer special prices to first-time customers. It’s a good idea to hire a professional advertising consultant to help you develop strategies to drive sales.
8. Manage Your Business and Expand
Starting a paper roll factory is hard, but running a business for 10 years is harder. There are three major factors involved in assessing the risk-to-reward ratio of a business or investment opportunity: capital, manpower, and technological requirements. These factors combine to form the basis of business and investment risk analysis. If the cost of pursuing a business opportunity is too high with respect to the profit potential, then it’s not worth pursuing. I don’t mean to sound discouraging; there is huge profit potential in the paper roll manufacturing business, but do your homework before you dive in.
Another concept to be aware of is “focus”. Do you know why there are so many stagnant businesses today? It’s because a lot of entrepreneurs like to diversify too much! They experience a little success, and then instead of focusing and building on that success, they get excited and start over-expanding and starting another business before they’re ready. Eventually, it all balloons out of control and they crash. Take your time to grow a business before going into another. Build a solid marketing and financial foundation with your business before you expand or move to another. Of course, it’s very important to expand your business as you grow your market, but take your time and stay focused. Diversifying too much or too early can weaken your foundation.
In conclusion, I want to assure you that there is a big potential market for the paper roll production business. It’s very possible for you to build a multi-million dollar industry by producing paper rolls for the world market. So why wait?
Start with your basic ideas, then develop them and make them more solid. Write a business plan and get started! Of course, before jumping in, you should conduct your feasibility research to determine if your market has potential. “Be bold but also cautious” is the advice we give you. If you need any assistance with the paper roll manufacturing business, feel free to contact us at [email protected], and we will be glad to share our insights with you.