India is one of the biggest markets for soft toys business worldwide owing to large size populations this presents a great opportunity for entrepreneurs to explore the niche segment in toy industry particularly Soft toys BusinessRead more below
1.1 An overview of Soft toys Business worldwide
The global market size for plush toys or soft toys business is around USD$51.43 Billion . With compounded annual growth of 7.5% y-o-y (source: Statista) and its estimated to be a USD $9.5Billion by the end of 2030.
1.2 Why to start a Plush toy or Soft toy business in India?
India is one of the biggest markets for Soft toys business worldwide owing to large size population and among it a huge chunk of our populations are children’s below the age of 12 who are the direct consumers base for plush toys or soft toys.
Traditionally Toys manufacturing is both labor intensive and capital intensive. But starting a soft toy business is relatively easy and is a good choice for stating a low cost toy business in India.
Plush toys business usually has very low manufacturing cost with higher outputs in less time and very high profits margins. Factors such as Raw materials, Skilled labour’s, trusted suppliers, dealers’ distributors, wholesalers etc., are all readily available greatly reducing the overall cost of manufacturing and thus making the Soft toy business a highly profitable toy business.
1.3 What is the rough estimated market size of the toy industry in India?
The Indian toy industry in currently marked at USD $1.5 Billion with more than $100 million in exports. Soft toys and Plush toys market is about 25% of the overall toy industry.
Most of north India particularly Delhi an Uttar Pradesh (UP) are the biggest hub of soft toy manufacturing in India. Maharashtra, Karnataka, Tamil Nadu are some other states with prominent clusters of Toy manufacturer.
1.4 Who are the major Indian toy’s manufacturing companies?
Although There are a number of Global Toys businesses manufacturing in India like Hamley’s, Fisher Price, Mattel Toys etc. there are also a number Indian toys manufacturers also. Here are some of the Toys or Soft toys Business in India.
- Aditi Toys,
- Peacocks Toys
- Fun Corp,
- Win Magic Toys,
- Skoolde etc.
2. CAPITAL INVESTMENTS
2.1 What is the tentative cost for starting a soft toys business in India?
Starting a soft toy manufacturing unit is really good business idea. The cost of setting up a micro scale soft toy manufacturing unit with 2-5 employee and basic machinery and simple designs like teddy bear, animals, kids cushion etc. will require a capital investment of ₹5.5 lakhs to ₹10 lakhs. Although it may vary greatly depending on your location and scale of operation.
To start a medium size Soft Toy manufacturing unit with 8-10 employees, advance machinery and more complicated designs like cartoons, anime, superheroes, cute animals etc. will require a capital investment of about ₹30lakh to ₹55Lakhs.
Starting a retail 250sqft outlet or a Soft toys theme store will require a capital investment of ₹5 lakh to ₹12 lakhs depending on your store location and scale of business.
2.2 How much capital is needed for starting a soft toys manufacturing business in India.
For micro unit or home based low cost soft toy business capital needed is around ₹ 50,000 to ₹1.5Lakhs.
For starting a medium scale soft toy business, the capital investment required is around ₹10 lakhs to ₹15 Lakhs. And large-scale business with potential for overseas exports could be started with capital investment of ₹50lakh to ₹75Lakhs onwards.
2.3 What are the Soft Toys manufacturing machines and its Price?
Usually, large scale Soft toys manufacturing business usually rely on machines for making stuffed toys as opposed to manual filling as you can get higher output per hour and the plush toys or stuffed toys are evenly filled does increasing productivity and efficiency.
The soft toy making machine used for filling Plush toys are POLYESTER TOY FILLING MACHINE which may cost you anywhere between ₹2.5 Lakhs to ₹4Lakhs depending on its capacity.
3. PROFITABILITY AND MARGINS
3.1 How much profitable is the soft toys business?
Soft toy or plush toy manufacturing is a profitable business with gross margins as high as 40-50%. Most Toys business es with successful Brandings can have even really higher markups as much as 100-180% on certain highly demanded popular products.
With increase in the disposable income parents are now looking for more attractive and high-quality toys for their kids. With abundance of choices among soft toys kids now usually get bored quickly and parents are out looking for new one soon. Thus, increasing the potential for more repeatable business.
3.2 How much can you earn in soft toys business as a retailer?
What is the earning potential in Soft toys business?
The median revenue for a small soft toy specialty store with operating profit margins of 30-40% can put revenues of around 6lakh to 8lakhs per annum in tier1 and tier2 city.
A medium to small scale soft toy manufacturing business can have revenue of around ₹21 lakhs to ₹36lakhs per annum. Micro small-scale units or home based toy manufacturing business can have revenues of ₹5.5lakhs to ₹8 lakhs per annum.
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4. FUNDING YOUR BUSINESS
4.1 How to fund your stuffed toys or soft toys business in India?
Funding your business is definitely one the core issues most businesses face when starting a new business. Businesses should focus on securing funds for their business through various channels.
Securing funds can be a difficult and frustrating task for most entrepreneurs but not securing funds should never be a reason for not starting your business.
Here are some of the secured ways to fund your soft toys business in India.
- Crowdfunding: Crowdfunding is very good option to raise capital for business without losing an equity in business or acquiring debt.
- SIDBI: SIDBI stands for Small Industries Development Bank of India. This is government of India backed financial institution set up for financing micro and medium and small scale industries in India.
- Angel investors: If your have a novel product idea you could approach Angel investors who are basically wealthy individuals or group of wealthy individuals who are more inclined to invest in early-stage start-up businesses.
- Bank loans: Business loans from banks are one of the most common and preferred ways in India. There are a number of banks who specialise in providing short term and long-term business loans at nominal interest rates.
- Friends and relatives: One can seek help from friends and families to raise initial capital for business and later move towards institutional financing. However, looking at the risk associate with starting new business this mode of funding should be mostly avoided and chosen lastly.
- Other investments like Fixed deposits, Savings deposits, Mortgage loans and other unsecured loans could also be used to fund your business. However, these modes of funding are highly risky and lead to heavy indebt risking your financial stability and in mostly likelihood be avoided.
5.1 How to register your soft toys business in India?
Registration for new business in India is a compulsory process. You have to apply to the Registrar of Companies under the Registration of companies Act 2000 and submit the Articles of Association and Memorandum of Association of your proposed company.
To register your company in India there are some basic steps to be followed the entire process can take anywhere between 4-6 weeks for completion. One would also need the service of a registered charted accountant for completing all the documentations and formalities.
Here are the following steps involved in registering your business in India.
- Obtaining DSC (Digital Signature Certificate)
- Obtaining the DIN (Director Identification Number)
- Company Name Registration
- Incorporation of company
- GST Registration
You may optionally need to obtain licenses from local state authorities its highly recommended that you approach the state local government offices or commerce chamber to obtain the full list of licenses and compliances you may need to obtain ad follow respectively.
Here are some licenses you may need to obtain although it may vary from state to state.
- Gaumasta License (Trade License)
- Bureau of Indian Standards (BIS) certification
- Shop and establishment License.
- Pollution control Board certificate
- Fire department NOC
6.1 How to prepare a marketing plan for your soft toys business in India?
A marketing plan is a blueprint for your business which focuses on creating marketing strategies for business. Creating a good marketing plan is very important document for your business as its draws a roadmap to achieve your marketing goals and also highlights any potential threats or pitfalls along the way.
Due to the fickle nature of businesses trends a good marketing plan acts as an insurance cover for your business it should keep evolving with the dynamic changes in the markets.
A good marketing plan should include the following details in depth as per your business requirements.
Market Analysis: A brief summary describing the status of the markets like competitions, threats, demand, supply, product positioning etc.,
Aims & Objectives: A list of aims and objective that your business would like to achieve in both short term and long term.
Branding: Branding is the process of creating a positive image of your business. It is all about creating an emotional connection with your target customer’s base.
Marketing Strategy: A marketing strategy is a comprehensive approach towards growing the business, increase sales, acquire new customers, increase market share and create a positive cash flow for business.
Soft toys business is simple to operate business with good profits margins and has great potential for scaling the business. Due to less overhead cost and low start-up capital requirements, it is an ideal business for small entrepreneurs who wish to start the business with less money. The above article will definitely help you to start your own Soft toys business in India successfully.