How to Start a Rice Mill Business
Are you planning to start a rice mill business? Following the border closure in Nigeria, there is growing interest among farmers to go into rice farming. One thing is certain, as long as the border remain closed to the importation of rice into Nigeria, there is a ready market for rice. Rice is a staple food here in Nigeria. Even if you are not in Nigeria, I don’t think that there is any country where they don’t consume rice.
But everybody cannot turn a farmer. The good news is that you don’t need to be a farmer before you can profit from the border closure which has led to sharp increase in the number of farmers going into rice planting. Even those people already in the rice business are expanding the scope. One area that people are not focusing on is the rice mill business. You will agree with me that become the rice can be available in the market for consumers to buy, it will go through some processes. One of such major processes is milling. If you are looking for a good business idea, you don’t need to search further. As long as you have farmers in your area producing rice, they will be the ones knocking at your door for business. You will be amazed at how much money you can make from rice mill business within a year.
Is rice mill a profitable business?
If you are looking for profitable business to do, rice mill business can be a good option, all things being equal. How much profit in rice mill business? The profit you will make from rice mill business is relative. It depends on many factors such as the location of your rice mill, the available infrastructure, the size or operating capacity of the rice mill etc. What is the average cost of rice mill plant? The modern rice mill project cost is quite high. However, if you don’t have enough capital to start a modern rice mill, you may not start the business with automatic processing. This means that you may need to dry the rice manually before packing it into the mill. Therefore, if you are interested in setting up a rice mill business, you don’t necessarily need to start with a modern rice mill plant. You can start small and then grow into a full fledge standard rice mill plant. While this is not rice mill sample business plan, it will provide a guide on how to set up a rice mill. So, without wasting time, let’s see how you can make your dream of starting a rice mill business a reality.
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Acquire relevant skills
Whatever business you may want to do, you need to have a good knowledge of the business. Apart from the general entrepreneurial skills that you will need to operate the business, you need to acquire other skills that may be specifically related to rice mill business. You may not get this kind of skills from schools. The best way to acquire the skills is to work directly with somebody who is successful in rice mill business. This can take any form. You can work as an apprentice or you can work as an employee. If you choose to work as an employee, you should know the reason you are there. Your employer may not teach you what you need to know about the business. It is your responsibility to learn by observation. You should be ready to ask questions about what you don’t know. Also, you should be willing to work outside the scope of your own assignment. You can even choose to lend helping hands to your colleagues. With this, they will be willing to share their knowledge with you. Peradventure you are not in a position to enrol for apprenticeship or work as an employee possibly because of your status or other work schedules; you may not have other option than to hire somebody who is very skilled in the business. Alternatively, you can get a trusted person and have him properly trained. This person will be in a good position to run the business even when you are not there. Notwithstanding, it is risky to totally put your business in the hands of another person without you having the basic information on how to run the business. Your employee may exploit you by taking undue advantage of your ignorance.
Conduct a Feasibility Study
Every business is profitable but you need to get things right. Certain factors make business to be profitable or not profitable. A profitable business in a particular location may be unprofitable in another location. Therefore, you should not be carried away with the profitability of the business. You should seek to know what factors are responsible for the profitability of the business. If you want to conduct a thorough feasibility study, you may need to spend money. Some do hire professionals. The result of the feasibility study will help you to decide whether the business is good or not. At times, people see feasibility study as a waste of time and resources especially if the business is not practicable. You should not look at it that way. It is better to lose the money you spent on feasibility study than to lose your whole investment if you wrongly put all your money into the business. If you truly conduct a thorough feasibility study, you will realise that some of the information you gathered can still be useful to you for other purposes.
Write a Business Plan
You should not confuse business plan with a feasibility study. Feasibility study is more generic while business plan is more specific. If a business idea is practicable or feasible, you can then write your business plan. On the other hand, if the business idea tends towards failure, there will not be any reason to proceed further in writing the business plan. In business, you may need to make certain assumptions but the assumptions should be based on facts. There is nothing disastrous in business like basing business decisions on wrong assumptions. Your business plan will help you define the capital requirements for the business, the phases and their timescales, the needed equipment, personnel requirements, marketing and sales plans. A very important aspect of your business plan is the financials. You need to come up with realistic projected profit and loss, balance sheet and cash flow for your rice mill business. When it comes to the preparation of projected financial statements, there is tendency to overstate the income and understate the expenses. For this reason, you may need to seek an accountant’s advice. Have an independent person looking at your projections for you will ensure that you don’t base things on emotion. If you decide to start a particular business, you may only focus on good aspects of the business and ignore the negative sides. Some people will say that things will fall in place as times go on. Of course, all lights may not need to turn green before you start a business. However, you need to have concrete plans on how you can weather the storms as they arise. For example, if your cash flow projection indicates a cash deficit in a particular period, you don’t need to back out from the business. It is an indication that you need to prepare ahead on how you can source for short term funds in order to cushion the effects of the liquidity challenge.
Register your business
Some people stop at giving their business a name. You should not stop there. You need to register the company with the regulatory authority. Your business can take any form of legal structure. The three popular form of business legal structure are sole proprietorship, partnership and a limited liability company. The way you want to raise funds and the extent you are willing to share control with others may impact on the legal structure you will choose for your rice mill business. There are other factors you may need to consider which are not included here. Each legal structure has its own tax implications. If you don’t know which legal structure is best for you, you should contact an accountant or an attorney.
Read Also: Factors Affecting Choice of Legal Structure of Your Business
Register With Tax Authority
It is important that you register your business with relevant tax authorities both at state and federal levels. As an entity, there are certain taxes your business should pay. Also, if you hire staff working for you, you need to deduct tax from their salary which you are expected to remit to the state tax authority. Doing otherwise will be seen as tax evasion. Of course, this has its own legal implications.
Open a Bank Account
It is important that you have a bank account for your business. Even though you have a personal bank account, you still need to open a separate account for your business where you can lodge all the supermarket revenues. Also, you should make all the expenses relating to the business from the company. This makes you more accountable. At the same time, it will be easier for you to source loans from the bank when needed. Furthermore, having a bank account makes it easy for your accountant to prepare the financial statements of the supermarket.
Raise Funds
I mentioned earlier that rice mill business is capital intensive. It is not a business you can do with just a few hundred dollars. If you cannot raise the amount needed alone, you may contact others such as friends, colleagues and relations to assist. This can be kin form of gifts or loans. They may also want to be part of your business by investing into it. However, involving relations in business has to be done with utmost care so that relationship will not be adversely affected. When dealing with relations, it is better to document the terms and agreements about whatever money they are giving to you. Other ways of sourcing funds include bringing in of additional partner, funds from venture capitalist, government grants and loans from banks etc. One mistake you should not make is using short term funds for long term projects. What you want to do with the money you will raise will influence the type of capital you should source. For example, taking a bank overdraft to buy equipment is totally a mismatch of funds. This will definitely put much pressure on you and this may lead to the collapse of the business.
Choose location
Choice of location has a big role to plan in the success of a rice mill business. Essentially, a rice mill business should be located very close to where rice is grown. You need a place that is easily accessible to farmers. They should be able to transport the rice produce to your place without much trouble. You need a large space where the farmers can drop their harvests. Also, you need storage place where the milled rice can be kept. The layout of the rice mill should allow free movement of people and should be very ventilated.
Read Also: How to Choose Business Location for Your Business
Buy Needed Equipment
Your major investment will be land and equipment. If you have the money, it is better to go for modern rice milling machine. New machine is also better than used machine. If you buy used machine, you may soon discover that you are spending chunk of your income on repairs. Some vendors have maintenance agreement with their customers. You can take advantage of this. Regardless of the availability of power supply, it is safer to make provision for generator which you can use to power your equipment in case of power failure.
Offer Good Customer Service
Your marketing efforts may bring customers the first time. It is your customer service that will keep them coming back. Therefore, it is very important that you satisfy your customers.