How to Start a Vegetable Oil Production Company

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Are you interested in starting a vegetable oil production company? Do you need a sample vegetable oil production business plan template? Then below is an in-depth guide on how to start a vegetable oil production company.

Vegetable oil is the clear oil extract derived from plants (such as coconut, groundnut, palm kernel) through a pressing process. All over the world, several billions of pounds of vegetable oil are produced by farmers every year. In the United States alone, farmers produce as much as 16 billion pounds of vegetable oil every year.

People use vegetable oil for a wide range of purposes, which include cooking, and production of plastics and soaps. In fact, the waste products of vegetable oil production are now used to fuel diesel engines.

Vegetable oil production presents huge opportunities for small business entrepreneurs, as there is a wide consumer base and various sectors to serve. There is also the option of working in collaboration with large vegetable oil extraction companies, such as the American Vegetable oil.

So if you are looking to start a small business, then vegetable oil production might be the best option to consider. The following are the steps involved in setting up a vegetable oil extraction business.

How to Start a Vegetable Oil Production Company – Sample Business Plan Template

  1. Learn more about the business

You will need to conduct extensive research on what a vegetable oil production business requires in terms of capital, competition, market size and trends, and other insights on the business.

For example, you can visit business statistics websites such as IBISWorld to find out the economical statistics on vegetable oil production business. You can also visit forums and online communities to learn more about the opportunities in the business.

Another option is to search the web for information about established vegetable oil extraction companies within your state or country, and personally visit the premises (if possible) to gain some insight on the establishment and operation of the business. Examples of vegetable oil production companies in the United States include American Vegetable Oil (California) and CP Vegetable Oil (Fort Lauderdale).

  1. Craft your business plan

Having a business plan before plunging into a new business is like having a compass before setting out on a voyage; it gives you insight on everything you will need to set up and run the business successfully.

In your business plan, you will include the required capital and projected cost of running the business, target market, competition analysis, and so on.

Before writing the business plan, you will need to conduct research on the cost of equipment, such as a vegetable oil processing machine, packaging instruments, and so on. You will also need to estimate the cost of transporting raw materials from suppliers to your location as well as extraction costs.

  1. Decide on your source of raw materials

You have two options for obtaining the raw materials needed for vegetable oil extraction. You can either buy the plants from a supplier or have your own farm for cultivating the plants (olive oil, groundnuts, coconuts, etc).

How to Start a Vegetable Oil Production Company vegetable oil1 1If you are planning to start small or quickly, you will want to buy the raw material from a supplier. However, the second option (that is, having your own farm) is better and more economical, but it is more expensive; and setting up the farm takes time.

  1. Find a good location

The location of your business is another very important factor that can make or break it. It is best to locate it close to your source of raw materials. For example, if you will be going into olive oil production, you should locate your extraction plant close to an olive oil plantation. This will reduce transportation costs, which could be crippling at times.

  1. Get the funds

If you have all the required capital to yourself, that’s fine. But if you would need funds from other sources, start approaching those sources with your business plan. If your business plan presents your business as a very promising and lucrative one, you would easily attract investors or get loans from banks or other lending institutions.

  1. Get the equipment

The most important of all the equipment you will need is the extracting machine. The cost of this machine depends on the model and the tasks it can perform. For example, the D-1688 costs between $3,000 to $5,000. Other equipment you will need include large storage containers and instruments for cleaning and packaging.

  1. Hire employees

Using various media, you will need to advertise vacancies for employees in the oil extraction process, and select the best employees to work with you.

  1. Market and launch your business

It is important that you market your business through a wide range of effective media. You can start by visit businesses that fall within your target group, such as restaurants and manufacturing industries. Also, you can approach retailers and entice them with attractive discounts.

You will need to have a ready list of reasons why your oil should be preferred over that of the competition. These are your unique selling points, and you will need them to help you win customers.


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