Sausage production business plan

Production of sausages is a highly profitable business. Nevertheless, like any other food production it has a lot of nuances and complexities. The main difficulties are associated with the search of suitable facilities for the production site, which would correspond to all sanitary. For example, former kindergartens, dwelling houses and places of mass use are not suitable for sausage production. The minimal area of the facilities should be 50m2. However, even a small production of sausages with a daily output of 1000kg, an area from 100 to 250 square meters is needed.

Business description

The production site should be equipped with a low-temperature chamber for the storage of raw materials, a separate cold store for stuffing and another one for the finished products. The total area of the site is divided into several areas, for instance, a department for the preparation and processing of raw materials, preparation of stuffing area, thermal separation plot, warehouse for dry products, etc. In addition, it’s necessary to arrange a room for changing clothes, showers, warehouse for clothes and sanitary equipment. The main requirement is that during the production process the finished goods should not come into contact with raw materials, that haven’t been processed yet.

Market

A sausage market, according to research, is actively developing during the last decade. The annual growth rate is about 7.5-8.0%. First of all, it’s possible due to a stable and growing demand for meat products. This segment enjoys one of the highest rates of turnover in the food industry and is evaluated by entrepreneurs and investors as a very promising one. This fact explains a constantly increasing level of competition in the industry. Domestic products prevail in the domestic market while the import share is not considerable. Despite the tense competition in the sausage market, it does not lose its attractiveness for new manufacturing companies operating at a local level.

Team

To organize the production of sausages it’s necessary to attract employees First of all, a technologist who controls the product quality and makes the sausages recipes is needed. Two butchers are needed to process meat and prepare it for the next stages of production. At the launch stage you can act as a purchasing manager of raw materials and a salesman of finished products. Modern automated equipment allows save on personnel costs greatly. No more than three workers are needed to cope with one production line. You’ll also need an accountant and a driver to deliver the goods to the selling points. But qualified and experienced employees should be hired to have no problems with the quality of products.

Success

In order to create a truly successful sausage production, some basic rules must be observed. First, it’s necessary to choose a segment, in which you will work. At the moment, smoked sausage is considered the most promising market segment to start business activity. This segment accounts for almost 30% of the total market volume. Secondly, it’s critically important to develop own recipes of sausages to obtain a commercial success. As the business expands, own production recipes may be an excellent platform for marketing campaign, namely a positioning strategy. Another crucial point is the quality. A strict control of the ultimate product quality should be maintained. Apart from this, it’s necessary to invest in quality assurance on every stage of production too. Constant search of sales channels and networking with grocery stores and retail supermarkets is evidently another factor of success.
The advantage of a small sausage production over the large meat-processing companies is its flexibility. Small producers respond faster to the market needs, removing unpopular product from the market and replacing it with something new.


SWOT Analysis

Strengths
Environmentally friendly products
Constant updating of the product range
High quality of the products
Modern equipment
Opportunities
Rapidly growing market
Increase of consumers’ incomes
Possibility of entering new market segments
Weaknesses
Weak development strategy
Inefficient promotion
Low qualification of staff during the initial period of activity
Threats
Increasing level of competition
A limited number of raw materials suppliers
Changes in consumers’ preferences

Clients

Experience shows that sausage business is rarely unprofitable, if a sound approach to its organization is preserved. Ensuring the quality of sausages and giving them an exceptional taste you can be sure your products will not remain unnoticed on the marketplace. Commonly, you may orient on two big groups of consumers. The first one is corporate clients like large supermarkets, small shops or local meat stores. They are able to make quite big orders and purchase large batches of sausages. So you’ll enjoy a stable flow of orders and be able to plan your production ahead. The second large group of customers is separate buyers or individuals. In the previous case you deal with them through intermediaries, i.e. supermarkets and stores. But oftentimes it makes sense to reach them directly. An excellent solution is the opening of your own stores, where target customers will always find fresh and quality product. Generally, the development of your own selling network is a risky affair requiring substantial investments. But once you decided to develop it, you would benefit from closer relations with your consumers. It will also result in your better understanding of the clients; tastes and preferences and you’ll be ready to respond faster in case they change. Moreover, it’s possible to conduct marketing surveys to determine the needs of the target segment, thus changing or complementing the assortment.

Location

Locating a plant for the production of sausages in a small village or a residential district, you can minimize the cost of advertising. First choose an appropriate territory for the production and establish a signboard that will draw the attention of people passing by. The place should be crowded enough with plenty of people going or returning from work or just going shopping. At this stage it is vitally important to control the products quality because each buyer is your free marketing assistant in promoting a trademark. Success and prosperity of your business depend directly on the satisfied client.

Price

During the first three months of activity, it is recommended to establish a minimal margin. Since the competition is high, the primary task is to gain a foothold on the market. A special attention during the first year of the sausage production should be paid to the prices of other manufacturers. It also makes sense to charge lower prices when selling large batches to supermarkets and shops. After half a year of business activity it is possible to bring the prices in line with the average on the market. Competition at the expense of price is ineffective in the long run, since prices for raw materials tend to grow and it may appear impossible to support low product prices constantly. The aforementioned type of strategy is applicable only during the launch stage. Instead, it’s preferable to gain a competitive advantage at the expense of product quality and rich assortment.

Product

Product occupies the most important place in every business. Sausage production is extremely diverse with hundreds of various types of sausages that can be produced. That’s why it is recommended to choose a limited number of sausages and concentrate on their production during the first three months. As the positions on the market strengthen, the product range should be expanded. Market surveys will help determine sausage types are in a constant demand. Apart from that, it’s necessary to develop own recipes to attract customers and create a differentiating point compared to the competitors.

Implementation

The company has to pass the following steps to launch the sausage production:
1. Find the appropriate facilities and prepare them for use
2. Pass the registration procedures and receive the permits from the local authorities
3. Purchase the equipment necessary for manufacturing
4. Arrange the supply of raw materials
5. Hire employees.
It takes from three to six months to finish all the above mentioned preparations.

PR

In order to form a stable demand, it’s necessary to inform customers about the company and its products. The following marketing steps may be useful promoting the company on the market.
First of all, it’s necessary to concentrate on developing the own brand. All manufacturers that want to expand their business work hard establish their own brand and also dedicate much effort to increase the consumers’ awareness about their brand. Brand development requires lots of investments as well as much time and the first results may be seen even after several years of commercial activity.
As the trade rapidly moves to the Internet, it’s worth follow the trend and create a corporate website. Nevertheless, considering the business specifics, it is preferable to develop an information website instead of the selling one at the initial stage. Informing people about the company and its products should be a main purpose of such website.
When it comes to advertising, conventional methods are not very effective. TV and radio advertising may be avoided, since they are quite expensive. Instead, the promotion campaign should be based on creative approaches. For example, degustation may be a powerful instrument for promoting the product. Degustation and demonstrations may be arranged in large supermarkets and are aimed at attracting new consumers and introduce the company’s products to them.
Another wonderful ways of promoting is sponsorship. The company may donate certain funds and become an official sponsor of some local event. Such step will contribute to the increasing of consumers’ awareness about the brand greatly.
Another element of a successful promotion is a corporative logotype and motto. Both these elements should be accurate and highly recognizable to facilitate the perception of the brand by the customers.
Sometimes billboard advertising is possible. However, its expediency should be considered in each particular case considering such factors as price, location, period of placement, coverage rate, etc.

Sausage Production Business Plan Resume

Sausage production business plan is a highly profitable and promising business despite the increasing competition on the market. A main key to the market success is the competent organization of production. The number of consumers wishing to buy tasty and fresh sausages is constantly growing. Consequently, the flow of buyers is expected to be permanent. Sausage production needs considerable investments but after its launch it brings high returns and repays all costs within several years. Therefore, the financial investments in its creation are justified.

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