How to make money from a Manufacturing business

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Posted by on Thursday April 10, 2014 at 8:59:57:

For most people who make money in Nigeria, their business mostly involves buying and selling but that still makes them dependent on other people since they don't control the means of producing those things that they sell.

A better way to make money in Nigeria is by actually producing something. In Nigeria, it seems that it is only a few smart people that are into the business of manufacturing.

Manufacturing has to do with producing something that people are willing to buy because they need it.

There are a lot of products that would sell well in Nigeria and it is the job of an investor who wants to invest in manufacturing to find out which product to focus on that will keep his business profitable.

To start a manufacturing business, one of first things you need to do is to have a business plan from people who are already into it so that you'd know what you are getting into. You can hire a supervisor or Manager who has had an experience in other manufacturing companies just to help you get started.

Things you should consider doing are:
- Deciding on which product to produce
- Deciding on your selling price per product
- Deciding on whether to do deliveries yourself of allow customers do a pickup
- Registering your business as a manufacturing company
- Opening a corporate bank account
- Injecting some running capital
- Siting your factory
- Installing machineries and equipment
- Installing a power generator
- Employing staff
- Getting any necessary rights to produce
- Keeping a Manufacturing, trading profit and loss account
- Keeping a record of your expenses on raw materials, labour, rent, bills, fuel and so on
- Keeping a record of all your assets and working tools
- Marketing your product to the market
- Keeping a record of your sales
- Depositing and withdrawing all money related to your business into or from your corporate bank account
- Avoid taking money out of your company account for personal use
- Doing a monthly review of profit and loss to see your company performance
- Paying your profit tax to govt as at when due
- Recording sales and paying VAT to govt account
- Withholding employee income tax and remitting to govt account as PAYE on a monthly basis

One of the main issues investors normally have with running a manufacturing company is profitability. You can easily track to see if your company is profitable in the first 6 months or eevn on a monthly basis. You can do this by deducting the Cost of sales from your total sales.

Profit = Sales - Cost of Sales

Cost of Sales = Raw material used + Labour paid + Bills + Rent + Other expenses

Cost of sales would not include Fixed assets like machinery,Vehicles and so on since those would last for many years but you can include yearly depreciation on it depending on the expected life span of the asset.

You can calculate this on a monthly or quarterly basis just to check out results

Some manufacturing businesses are not profitable in the first month or even the first year while others are and so it depends on the kind of product that is being produced.

Some Small scale Manufacturing businesses that are profitable in Nigeria
- Pure/Satchet water production
- Packaging bags production
- Biscuit production
- Garri production
- Ice block production
- Exercise book production
- Ice cream production
- Plantain chips production
- Yam chips production
- Soap production

Some manufacturing businesses require more capital while others can be started with little capital. Apart from the capital, the other important thing needed to get started is having knowledge of the processes involved. You can choose to run a mechanized or labour intensive business.


Re: How to make money from a Manufacturing business Reply by Emeka on Thursday March 5, 2015 at 19:24:52:

It is really good starting a manufacturing business and ruining it. One of the most important thing I suggest in Manufacturing business is marketing the products where you have to explore the 4ps and 4cs then the SWOT Analysis.

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