How to Start a Ceramic Tiles Business – Details of Investment, Business Plan and Profit Margin

Tiles Business has become one of the popular business ideas in the construction sector. Today, ceramic tiles are the go to choice for covering different surfaces such as roofs, floors, bathroom finishings, and walls. It is no surprise to see tiles have become a mandatory material for constructing any structure

In fact, they have dominated the construction business in such a way, that the demand for Marble and  Granites which were the major materials used for flooring in India has significantly gone down

So, what makes Tiles so popular? if you are someone who is interested in starting a tiles business you should take a look at this article

But before let’s quickly learn what tiles are and what type of materials are used in making them

What are Tiles?

Tiles are square shaped blocks that are used for covering floors just like marble or granite. These are generally thin structures and are known to have a glossy finish.  They are mainly made up of clay and inorganic raw material.

There are two kinds of tiles available in the market, ceramic tiles and vitrified tiles. Both of them have a contrasting differences in terms of appearance, features and usage.

Although both of them undergo the same manufacturing process where they were mixed with a combination of clay and water and then later heated at high temperatures in a klin. The vetrified tiles may also use other materials in addition to silica and clay such as quartz, silica and feldspar which generally gives them a glossy finish.

Why Consider Starting a Tiles Showroom?

Starting a tiles showroom offer a wide range of business opportunities in growing nations like India, Tanzania, Nigeria, Vietnam, and Nepal. Due to the increase in purchasing capacity and urbanization. There has been a high demand for residential buildings, shopping complexes and offices which directly increased the demand for tiles

Moreover, the design of houses has changed a lot in recent years, the use of Blackstone, Marbles and Granite has significantly decreased and was replaced with tiles which are economical, easy to install, and maintenance free

Unlike marbles or Granite; Tiles come at various prices you have very low priced tiles as well as expensive tiles. This diversity makes tiles a popular choice for various economic backgrounds people creating a vast business opportunity

How Much Does it Cost to Start a Tile Shop?

A normal small scale tile shop requires a budget of 10 -20 lakhs of initial investment to start. But a medium to large scale tile store at a prime location may need an initial investment of 50 Lakhs to 1 crore

50% of the investment goes to buying tiles from dealers or suppliers. 10% goes to transportation 20% goes to rent and maintenance, 10% for workers and 10% for electricity and miscellaneous charges.  In addition, one must be aware that the tiles business involves additional GST and Taxes which is around 28%

Drawbacks in Tiles Business

Although, tiles business is a popular one and has good demand in the market. It still has some drawbacks such as

• Getting a loan to start a tile store is a very difficult task. Several banks and financial institutions don’t offer loans to start this business
• Tile showrooms need very large spaces to display and attract more customers; however, one can only find such a large space in the city outskirts which is far from public and high-demand areas. If you want to establish a large tiles store within city; the rent can eat up major chunk of your investment
• The chances of damage is very high in the tiles business. So, the owner should train and deal with their workers to handle the material very carefully. Once there is slight damage the piece will not be sold
• This is one of the highly competitive businesses in the construction industry. If you want to sustain and make profits; you must do this business on a bigger scale
• The majority of the tiles are supplied from the Gujarat market. Most tile showroom owners purchase bulk from this state so they have to arrange transportation from Gujarat to their city or state; if your city or state is far from Gujarat, a significant amount is invested just for getting the tiles transported to your showroom
• A Significant portion of your investment needs to be spent on tiles just for display purposes which may or may not be used again

Business Plan for starting a Tiles shop

In order start a tiles shop one must prepare a business plan that should have the details of market scenario, resources, investment sources, budget, marketing and profit margin estimation. Each of these details are very crucial for creating a successful tiles business plan that can give high clarity before starting the business.

1. Analyze the Tiles Market Condition In your state and locality

The first step you need to do before starting a tile business is to conduct a through market research. Which means, you need to know the basic details of opportunities available in the business that you want to start

As you are considering to start a tiles showroom, you need to analyze following market conditions

• How is the growth of real estate in your locality or state?
• Are there already available tiles showroom in your locality?
• What type of tile material has high demand ceramic or vitrified
• Information of expected profit margin information from already existing business owners
• What sizes of tiles are in demand in your locality?
• Which designs are trending?
• What are the pricing structure and market reputation for top tile manufacturers such as Kajaria, Johnson, Parry ware, CERA, Hindware etc.,
• Estimated budget required for setting up a tile store at your locality – Rental prices, wages to workers, transportation charges, etc.,

2. Create a Business Plan

Any business requires a solid business plan to function properly and earn profits. A well written business plan for your tiles showroom is necessary to achieve success in your business

Here are some key components that you should include in your tiles business plan

1. Provide an executive summary of your business. A short description of your business, how you are going to run it, what type of products or services you are going to offer for the customers
2. Operations Plan – the second part of the business plan should cover how you are going to operate the business daily. This can include, the number of workers you will hire, their wages, what type of tools and equipment going to be used, location details of your tiles showroom, What method of sales system you will use, details of tiles traders and suppliers you will be dealing with and their pricing structure and a glimpse of day to day operations
3. Marketing Strategy – In the third part of your business plan, you need to mention a detailed marketing strategy that you are going to use to ensure profit margin in the tiles business. This is a very critical part of the business plan, without a proper sales and marketing strategy it is hard to get success in the business. So, here you need to mention practices you will use for marketing (Digital marketing, Ads, Offers or mouth publicity etc.,)
4. Sales – Though sales and marketing come under the same segment, it is always advisable to have clear and separate details of ‘Sales Strategy for your tiles business’. In this section, you should provide the expected sales you are trying to achieve for a period, for that, you need to know what type of tiles have demand in the market, the Supply rate and prices from different tiles dealers or traders across the country, Which method of Sales system you are using (POS – Point of Sale), Your USP – Unique selling proposition of your tiles showroom such as free transportation, no questions asked for damages, unique customer experience etc.,
5. Hiring Staff and Workers – You should also have details of the number of workers you are expecting to hire for your tiles showroom and their salary structures, plus, any additional training details on how to handle and maintain the tiles shop
6. Competition Details –  Details of existing competitors in your locality, their strengths and weakness,es and how you can do better business than them
7. Financial Details –  You should capture full details of the sources of your investment, and business expenses such as salaries, transportation, rent, maintenance, marketing, inventory, and insurance. This should also include details of loans if you have obtained any and their interest rates
8. Details of Tile Manufacturers – Your tiles business plan should provide details of various tile brands and their pricing structure or dealership rates, reputation in the customers and what kind of services or offers they provide to tile shop owners

3. Tile showroom Investment

A significant portion of capital is required in setting up a tile showroom. To attract customers as well as create significant sales a tile showroom must be equipped with a wide variety of tiles, it should have a large floor space to accommodate big flooring tiles also

The investment in a tile showroom depends on the following factors

• Location of the tile showroom
• Floor space
• Number of designs

On a rough note, a large-scale tile showroom with 10,000 sq. ft floor space at a prime location pays 2 – 5 Lakhs per month just for the rent. In addition, a portion of the rent also needs to pay for warehouses which is generally located in city out skirts

Next, you need a mid-size truck to carry the loads you can either rent it on a demand basis or get a secondhand one

You also need 2 – 3 helpers just for cleaning and taking care of chores in the showroom daily

In addition, one must be known that any tile showroom needs to spend around 50,000 to 2,00,000 Lakhs rupees just for display pieces. Some of them will be sold in second-hand markets that recycle the tiles or you can sell them off at a cheaper price

Your tiles showroom must be attractive from the outside which means a lot of investment goes initially for lighting up the entire showroom, plus, you may need furniture such as Tables, and sofa sets to receive customers and sometimes require central A.C

So, considering the above factors the initial investment for setting up a large scale tile showroom at a prime location may require an investment of around 50 Lakhs.

From the above showroom design, office furniture, and display sets are mostly one-time investment. The rest need to be paid every year

4. Registration and Paperwork for Tile Showroom

Tile showroom business requires following paper work in order to start the business

• Business registration
• GST Certificate
• Rental agreement of the leased space
• Shop and establishment certificate
• Fire safety certificate
• NOC as applicable per the state government

5. Resources Required for Tiles Showroom

In order to start a tiles business you need following resources

Manpower

A Medium to large-scale tile showroom requires at least 3 – 4 workers. They should be able to handle the tiles carefully; and load and unload them from warehouse-showroom-customer location. If possible ensure proper handling and safety equipment are provided for them to make the job easier and safer

Rental space

Tile showrooms require a very large floor space to accommodate all types of designs as well as freely move the material. One must have at least 1500 sq. ft to setup a tile showroom. However, if you wan to start a large-scale tile showroom you require floor space of 5000 – 10,000 sq.ft

Several small to medium-scale tile showroom owners buy a low to medium size floor space tile showroom in the city and keep the display samples. Once they get a deal they will ship the tiles from a warehouse which is mostly located at city outskirts

Transportation

You definitely need a mini truck to transport the tiles from the warehouse to the showroom. Most of the tile showroom owners have contacts with several truck drivers so that whenever they have orders they will call them and arrange transport to the customer location

If your tiles showroom is very busy then getting a second hand truck is a also a feasible opinion

Internet Presence

To stay inline with the current market scenario; it is recommended that your tile showroom have a dedicated website that should provide a list of items available, store location details, and owner details

Make sure your showroom is also listed in search engines through which customers can see the reviews, timings of your store, and location details

6. Details of Various Tiles and Their Demand in the Market

In India as well as several developing nations tiles market is very diversified. There are various types of tiles each serving a different purpose. However, when you are starting a tiles showroom you cannot purchase all types of models expecting customers will buy everything.

If you are new to the tiles business. You need to have a thorough understanding of the market demands and know which type and brand tiles have good demand and service and purchase them

Tiles market is usually divided into three categories – Usage, Size and Pattern

Usage

• Wall tiles
• Parking tiles
• Floor tiles

Size

Small to Medium size flooring

• 16X16 inch
• 12X12 inch
• 6×6 Inch
• 12×24

Large floor spacing

• 24×48 inch
• 36×36 inch
• 48×48 inch

Pattern Or Design

• Natural stone finishing
• Matte
• Glossy
• Metallic
• Polished

Based upon this information you need to list which kind of tiles are have demand in your area or locality.

For more information reach out to nearby real estate dealers, builders, and civil engineers who are handling projects so that you will have a better idea of what to sell in your showroom

7. Profit Margin in Tiles Business

The profit margin rate in the tiles business depends upon several factors. Usually, the margin rate for tiles business varies between 7 – 10%.

However, the margin rates mostly depend on the brand and variety of tiles. For example, for Large Floor tiles from top brands, you may only get a 3 – 5 % profit margin, but the amount is high when compared to selling normal brand tiles.

In addition, Profit margin rates for a ceramic tiles shop also depend on the selling mode. For example, if you have directly bought the tiles from the manufacturer by yourself with your transportation and sell them to the customer, then you can make a high profit margin of around 10 -12%. The reason is, you are not dealing with any middlemen rather you are directly supplying to the customer.

At the same time, the profit margin rate will be different for bulk orders such as orders received for building apartments or large housing projects.

8. Sales and Marketing Details

As most the customers are now searching on the internet for keywords like ‘tile showroom near me’, ‘best tile shop near me or city’ it is highly recommended that you consult a digital marketing agency and have a website set for your such that these keywords gets added to your website

Make sure your tiles shop is listed in apps like google maps and safari etc., these are the apps that are extensively used by people to find out there nearby stores

During festive seasons, advertise your services through local newspapers. This is a highly economical way of marketing

Maintain social profiles for your business and notify whenever there are new items in your store

Build connections with contractors, civil engineers, and real estate dealers. This is the most popular way of maximizing your sales

Although not mandatory, it is good to reach out and take feedback on your services and offers from the customers once they have made a purchase

Conclusion

The ceramic tiles business has lots of pros and cons. We do not say you will see high profits from day one. it is a business that is influenced by market demands and customer preferences. However, it is a business that is worth trying out.

Especially in countries like India, China, Nepal, Vietnam and several Middle Eastern and African countries real estate is rapidly growing and items like Tiles are mandatory for construction purposes having an outlet at the correct locality and a variety of designs can help in growing your business