How to Start a Palm Kernel Oil Extraction Company

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Are you interested in starting a palm kernel oil extraction business?
Do you need a sample palm kernel oil extraction business plan template or feasibility study report? Then I advice you read on.

Palm kernel oil is used domestically for cooking, and it is used in almost every African home for this purpose. It is also used industrially as a major ingredient in the manufacture of soap, cosmetics, processed foods, and so on. Its industrial demand is derived from its varied and broad use in the food and chemical industries.

How to Start a Palm Kernel Oil Extraction Company Palm Kernel Oil
Palm Kernel

If you live in a country like Nigeria, Malaysia, etc where palm kernel oil is in huge demand both domestically and industrially, then you can consider venturing into the palm kernel oil production business. All this business requires is basic education and training in the process technology, which you can easily obtain by consulting a veteran in the business or searching online for helpful resources that can guide you.

This article is a brief guide that explains all you need to know about starting a palm kernel oil extraction business. If you seem to be interested in the business, then read on to find out more about what it entails.

How to Start a Palm Kernel Oil Extraction Company – Sample Business Plan Template

1. Start by writing your business plan

Writing a good business plan is an important part of starting a business. It helps you know upfront, if you are capable of starting the business or you don’t have the requirements yet; since it highlights all the startup requirements in terms of cash.

It also includes the market analysis, financial summary, and other details that help you plan your business perfectly from the start. Even after starting the business, your business plan will help you stay focused to achieve your goals. Although having and following a business plan will not guarantee that your business will succeed, not having one usually results in a fiasco.

2. Source for funds

Well, truth be told; this business is capital intensive. A palm kernel production business will require between N5,000,000 and N10,000,000 (between $30,000 and $60,000) depending on the size of your business, your chosen location, and many other factors.

You will need about N750,000 (about $5,000) to cover startup expenses, which include the rent for at least 3 years, business registration and agency fees, insurance, and others.

Startup assets usually make up the rest of the needed capital. These include the cash needed for recurrent expenses (one year forecast), startup inventory and stock (for six months), and the cost of other assets required at startup, such as office furniture, processing equipment and machinery, office fittings, and so on.

If you can afford all the required funds, then you can run the business as a sole proprietorship. However, if you would need more funds from third parties, then you should consider involving one or more other individuals and going into a partnership. Better yet, you can source for either equity funding (by approaching angel investors), debt funding (by taking bank loans) or by taking small business grants, if available.

3. Find a good location

Before choosing a location for your palm kernel oil production business, you will need to consider the availability of raw materials as well as the target market. An ideal location will be very close to the market, as well as the source of raw materials.

4. Acquire the needed equipment

Palm kernel production involves cleaning, breaking, flaking, steam condition, screw pressing, and filter pressing stages. And most of these processes require the use of machines for faster production. So, you will need to acquire the machines needed for each process.

However, you must bear in mind that high quality machines will be more productive and will save you huge repair and maintenance costs in the long term. So, it’s very important that you choose your machines carefully.

5. Hire the required staff

For the effective day-to-day running of your palm kernel oil production business, you will need to hire competent individuals to man certain positions. Aside the manager (which may be you, the owner), you will need to hire a technical assistant, a storekeeper, about 5 production staff members, a quality control staff, security officers, as sales and administrative staff. In all, you will need between 10 to 15 staff members to run your palm kernel oil production business effectively.

6. Start production and market your business

How to Start a Palm Kernel Oil Extraction Company palm fruit
Palm Kernel

Once you have everything in place, you can start production. Since your business is still very new, you will need to adopt marketing strategies in order to spread word about it and attract customers.

Your customers include households, restaurants, food industries, soap and cosmetics industries, and so on. If you have a good number of them around you, then you can easily approach them and convince them to buy from you.

In conclusion, the time of developing your business plan to the time you will start operation typically spans between 3-4 months. It could take shorter or longer, depending on your enthusiasm, availability of capital, and other factors.

Challenges of Starting a Palm Kernel Oil Extraction Business

 • It is a capital intensive project, as you will need to erect a production structure (factory) and the machines doesn’t come cheap either.

  • It is management intensive, as you will need several people to man the various production stages.


 
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