Innovations to Generate More Income
When starting any business, or even something simple as a do-it yourself project in your home, it’s important to get the right tools for the job, and to make sure said tools will last. A novice may think they can get an inexpensive machine or tool and use it to turn a profit or get their project done faster, but that is the exception, not the rule. But how does this relate to processing machinery?
Simply put, in the extrusion business, I have seen startup businesses struggle to survive because they chose to purchase cheap equipment. They are often plagued by breakdowns due to metal fatigue, low quality motors, fast wearing parts or lack of spare parts and lack of service and support. On the flipside, you see the successful business that understands that to be successful, you need to have a fast, efficient, and high-quality piece of equipment that you can rely on. For example, a soybean (or corn) extruder & oil-press are money-making machines. You are taking the bean and transforming it into a high-quality ExPress® soybean meal and oil ingredient for use in animal or human diets.
The profit available in an extrusion business is a simple formula:
Profit = Sell price – (Cost of beans + Operating cost)
Sell price and cost of beans are variable, while operating cost is generally a fixed cost (labor, electricity, spare parts, etc.)
So why pay more up front for higher quality equipment? Because there are two very important factors not reflected in the formula above – downtime and product quality.
- Downtime – In the case of the extruder, if you have a breakdown, you not only have the cost to get a new part, but you have an indefinite downtime until you receive part, install it, and get everything up and running again. If you have 24 hours a day to produce 24 tons, you are missing out on all that profit if you are not running. Downtime mitigation is crucial to a profitable business.
- Product quality – You will set your ExPress® meal price based on your cost and local market conditions. You will need customers to buy your meal to keep your facility running. If you undercook or over cook your product or do not remove sufficient oil from the meal, your customers may not be happy with the price comparative to the quality, so they will either pay you less or take their business elsewhere.
In summary, yes, you can start with a lower quality machine, but the chances of success are much lower than with a proven, high quality, reliable profit-making extruder.