How To Start Flour Mill Business – Investment, Profit Margin, and Business Plan Explained

Flour Mills are utilized to process staple grains such as Wheat, rice, maize, corn, chickpea, millet, etc., into flour. In the olden day’s flour is processed using manual methods that are tedious and time-consuming work and this is mostly done at home by women.

Today, the processing of flour in homes has drastically decreased. Thanks to advanced technology, the automation of flour processing not only increased the production capacity, but has also saved a lot of time that can be utilized for other uses

Today in countries like India, Pakistan, Nepal, Nigeria, and several Asiatic nations it is easy to find at least one small flour mill business within your vicinity. Not only that, the Flour mill business has created a wealth of opportunity for small-scale business owners and also became a potential source for Women empowerment

There are also schemes such as MUDRA, PMEGP that provide financial support upto 10 Lakhs in setting up of flour mill business

Today, we will understand what is flour mill business, how to start a flour mill business in your vicinity, and discuss the Business plan and profitability aspects

What is Flour Mill Business and Its Advantages for Business Owners

The use of flour production machinery to produce finely graded flour and sell it to customers is the main motto of the flour mill business. There are two types of running this business

a) The raw material (grains) are purchased by the customer and were given to the mill to process them. The Flour mill owner charges an amount to the customer to run the machinery

b) Quite opposite, the flour mill owner already has a stock of grains and processes them into flour depending upon customer needs and sells them for a price

In general, most of the flour mills that you see in cities or in your villages adopt both methods. The only difference is the difference in profit margin

In the first method, as the customer had already purchased the raw materials the only thing the flour mill owner must do is simply run the machine. Hence the profit margin is less

Whereas, in the second method the flour mill owner earns a slightly high-profit margin as they charge for raw materials as well as running the machine

Advantages of Flour Mill Business

• Flour mill is a cost effective and maintenance free business idea that provides a decent return on investment. For example, one can start a mini flour mill with just 2 Lakh rupees
• Flour such as wheat, rice, corn, and maize are always in demand providing year-long business opportunities for mill owners
• Availability of Government schemes
• No technical or high-level education is required to run a small flour mill, You just need some basic skills on operating the machinery which is easy to understand
• A Small scale flour mill can be started within just 100-150 sq. ft of space
• You can even run this as a part-time business
• One person can easily manage the flour mill without the requirement of a worker

How To Start Flour Mill Business – Details along With Business Plan

Let’s us now look into the steps involved in setting up a flour mill business and things that we need to check while creating a business plan

Step 1: Registering Your Business

The first step of setting up of business starts with registering your company as per government rules and regulations. You can register your company as Sole Proprietor Ship or LLP or Private Limited Company. In the process of registering your company, you need to have some basic documents such as Aadhar Card, PAN Card, Voter card, and supporting residential proof documents such as Bank statement, Electricity bill, Telephone bill, Mobile bill, etc.,

Step 2: Setting up of Flour Mill Unit

When compared to several small-scale businesses the resources required to start a flour mill business is quite economical. Here are some basic resources you need to have to establish a small flour mill.

Let us find out what we need to consider when obtaining the above-mentioned resources to set-up flour mill

Land or Building for Flour Mill

As mentioned earlier A mini flour mill can be easily started within 200 sq. ft. It can easily accommodate 2 automatic flour mill machines and enough space for storing and packing

When you are looking for land or building watch out for the following things

• Make sure the flour mill has road connectivity
• The location should be ideally located near to residential areas as well as market
• Try to avoid setting up of a flour mill next to another flour mill in the same area as this can hamper both businesses – Of course, if there is high demand then you can go ahead
• Ensure there is a good supply of electricity connection

Requirement of Workers

Usually, a mini flour mill can be easily operated by a single person. However, if there are a high number of customers coming to your flour mill then, it is advisable to hire at least 1 worker.

The operating process of the flour mill machine is simple to understand, and you can easily train the worker within no time. There are also MSME units that provide short training programs on how to run flour mills and provide helpful tips on how to fix if there is trouble in the machinery

Step 3: Buying Flour Mill Machine and Other Equipment

The flour mill machine is the most important part of this business and it takes up the major part of the investment. Hence, you need to pay special attention while purchasing one

The price range of flour mills for small-scale businesses or simply mini flour mills ranges from 30,000 to 75,000 rupees.  However, Here are some tips that you need to check while purchasing a flour mill for small businesses.

• Look for the Amount of space required to set up the machine and see if you can operate the machine within the available space.
• Pricing – flour mill machine price depends upon several factors such as, automation grade, production capacity, material, and build quality  
• Operating method – Check whether it is automatic or semi-automatic and learn about its functions.
• Compatibility – Decide whether you like to purchase a machine that can process only certain grains such as (atta chakki machine) or a machine that can process different types of grains
• Production capacity – How much can it process per hour and check if the production capacity is ideal for your business or not. In general, the production capacity of flour mills used for the commercial purposes can produce up to 50 -100 kg/hour, whereas domestic purpose machines can produce up to 10-15 Kg/hr
• Material of Construction – flour machines for business purposes are made up of different materials such as Stainless steel, Mild steel, and Cast Iron. The pricing and durability of the machines slightly differ depending upon the material it is made up of
• Power consumption  – Normally, flour mill machines that are used in small businesses run on 2 phase power. This is more than sufficient to run the machine seamlessly without any issues. However, if your flour mill runs continuously. It is always better to purchase another unit so, that the load on the machine gets divided. Overrunning the machine may sometimes damage the electricals and might damage the entire machine itself

Where to Buy a Flour Mill Machine?

Most of the well-known Flour mill machine manufacturers and dealers are located in states like Gujarat, Punjab, Rajasthan and Maharashtra. Famous cities like Rajkot, Ahmedabad, Pune, Coimbatore and Surat are known to have some of the best flour mill manufacturing companies.

You can contact them via email, phone, or going through the websites like India Mart, Trade India, or Just Dial. Or you can simply search with phrases like “Flour Mill manufacturer in Ahmedabad”

Step 4: Arranging Capital for Your Flour Mill

The amount required to start a flour mill business is very reasonable and makes it one of the most affordable businesses that can even run from home. Basically, if you are thinking of starting a mini flour mill business you require a capital of 2 –  5 Lakhs – This covers registration charges, machinery and equipment, raw materials, the advance amount for rent

Preparing a Project Report for Flour Mill Business

If in case you do not have sufficient funds to start the business, you can get a loan from a bank. For this you need to prepare a project report.

A project report for a flour mill business helps you to understand the feasibility of running the business with allocated resources. This should include the technical, financial, and marketing aspects. Overall the report should be able to explain why and how your business is feasible to operate.

Here are a few things to be mentioned in Flour Mill Project Report

• Owner details
• Resources details
• Unit location details
• Working capital estimation details
• Monthly expenditure
• Means of finance
• Annual revenue
• Depreciation
• Net profit

Step 5: Operating a Flour Mill Unit

Having a proper operating plan is necessary to run your flour mill in profit. In general, most of the small flour mills that you see in villages or towns, or cities run on-demand bases. This means the customer provides the grains and the flour mill owner processes them for a price

Alternatively, certain flour mills already process the flour and pack them in packets, and sells them to the markets, street vendors, or to customers

These two are widely popular methods. Both have their own Advantages

If you were running a mini flour mill where there is limited demand then it’s best that you run it on-demand bases. This will ensure that you are not overspending on buying grains and not operating the plant without business, this can save some electricity bill

However, if you see there is a scope of a high number of customers’ requirements then analyze which type of flour is having high demand in that area and then set up a dedicated flour mill

For example, when you take the northern part of India, the demand for wheat is high as it is used as a staple food source. In such regions setting up an atta chakki mill is reasonable

On other hand, in southern parts of India, you have demand for both Rice flour as well as wheat flour. In such conditions, you cannot run the mill with just one machine. You might need at least two of them for separate processing

In addition to these, there is also a growing demand for millet flours such as ragi, jowar, and bajra so, think about whether your area has demand for this type of flour or not and plan accordingly

Step 6: Maintaining Quality and Consistency

Whether you run a small or large flour mill, the reputation of your business depends upon the quality of the flour that you produce

The quality of the flour production depends on the type of machinery used and the raw materials

Type of Machine

Flour mill machinery comes with different processing specifications. Most of the time a customer expects the flour to be pulverized into a fine powder without any traces of grain. So, when you are purchasing a machine ask the vendor how well the flour mill can pulverize

Raw Material (Grains)

If your flour mill processes the flour from the raw material that you have purchased instead of the customers then, you need to ensure the flour is of the best quality

Here are some tips to follow when you are processing the flour

• Make sure you purchase quality grains
• Ensure the flour/grain is free from bugs especially “Flour Beetles” – these can easily damage the flour as well as produce a pungent odor
• Make sure the processed flour is free from moisture – This is the worst enemy to any flour mill business, the presence of water or excess moisture can develop fungus that can contaminate the entire product
• If you were to purchase a bulk amount of grain bags, then ensure they are stored safely. Free from rats, birds, and insects

Step 7: Marketing Your Flour Mill Business

Before you implement marketing steps you need to think about three major marketing factors that can indirectly influence your flour mill business a) Quality of the flour b) Pricing c) Customer Service

Whether you run a small-scale flour mill or a large flour mill these three are very important. Because, without these in the first place, a customer can never trust your service even if you spend so much money on marketing

Quality

You should not only make sure the quality of the flour is maintained but also ensure the production process is carried out with quality. Which means, ensuring cleanliness procedures are in place while operating the flour mill such as…

• Ensuring the use of gloves, head caps and nose masks by the workers handling the unit
• Make sure there is no mix-up of flour.
• The vessels used for storing or processing flour are cleaned periodically

Pricing

Customers always prefer a flour mill where the price is reasonable. Because flour is a common commodity for daily living hence people like to go with the one having an economical price range. It doesn’t mean you have to completely lower your price, but try to look for a price range that is feasible for customers as well as better than your competitors.

Customer Service

You need to have good relations with the customers coming to your flour mill. In order for that, please ensure your communication with customers is professional, try to listen to the customer preferences first. Don’t simply ignore them

Be prompt in delivering the order without delay and do not try to think about charging extra fees unnecessarily. If there is a fault in processing the flour on your side, it’s okay to re-pay the customer or provide free of charge for their order

So, these three factors are essential before you start marketing your business. Now when it comes to external ways to market your flour mill Business. Here are some tips to follow

• Distribute pamphlets to your locality.
• Use social media to post offers, services, etc.,
•  Make sure your shop banner is visible to the public and contains all the information about your services
• Use word of mouth and reach out to your friends or relatives
• Hand over business cards to customers coming first time to your mill
• Approach street vendors and local shops and explain your service and provide them a free sample
• Make sure the packing and labeling of your product can be easily remembered by the customer – you can use eco-friendly packing material and attractive logos and information about your business or product

Flour Mill Business Profit Margin

Now, you have got an idea what are the steps involved in setting up a flour mill business, its time that we also see how much profit we can expect from flour mill business

let’s assume you have started a mini flour mill – atta chakki mill (wheat flour mill). Let us assume you have spent 2 Lakhs of investment to set up this small flour mill and there are no workers, it’s just managed by you. Assume you charge 50 rupees/Kg of wheat flour. If you get 15 orders per day, you will make around 22,500/- monthly.

Of this, 40% goes for buying raw materials, rent, and power consumption, Interest which is around 9,000 per month. Finally, You will end up with 13,500/- per month, If You save carefully, by the end of the second year you can almost close your loan amount. However, if the entire capital is yours you won’t even have to bother about interest or loan amount

Moreover, In order to increase the number of customers as well as improve your flour mill business, you can diversify it by starting a mini oil mill business at the same location. Because today most of the flour mills also run a small oil mill unit at the same location. By this, you are serving two important commodities in the same place, which can help you increase profitability in the business

Profit Margin Analysis of Running a Mini Flour Mill

Here’s a rough Breakdown of a report on running a mini flour mill that is operated using 3 Mini flour mill machines which are used to grind different flours.

In this scenario, the flour mill runs on-demand basis as well as sells flour directly to customers. If we assume we get 20 orders per day, and charge 50/- per order, per day the flour mill makes 1000 rupees per day.

If the mill operates 26 Days, it makes up to 26,000/-. If we take away the monthly expenses, one can earn from 8000 – 9000/- rupees. Although this amount might seem less, it is sufficient for small towns and villages to provide decent income to the owner. Moreover, during festival seasons as well as marriage seasons, the demand for Flour goes up and you might get extra orders

So, on average one can earn anywhere between 10,000 to 12,000/- rupees per month by running a small-scale flour mill business