Business Model : “Litres to Grams”

Business model is the heart for any business . “Liters to Grams” is one of the great and interesting business models. Whats this “Liters to Grams”? .

itreToGram

Its very simple and profitable business model. Buying the raw material in litres and convert it into a product to sell in grams. Wow… What’s the raw material ? and what’s the end product and how is its a great business model.

Here it goes… The raw material here is milk and the end product is curd and butter. We have a small outlet near by my house where the solo owner buys the milk,in litres,  from the farmers residing in the city suburbs. He converts the milk into curd through natural process and sell the curd in grams.

How is this business so profitable and what makes this business a great one?

Let’s look at the numbers.

Cost of 1 litre of milk – INR 50

1 litre of milk produces 500 grams of curd.

Price of 100 grams of curd – INR 20

Profit on 1 litre of milk  – INR 50 i.e profitability is 100 %.

Wow… 100% profitability . its a great business by any standards. Another beauty of this business is velocity. We can realise the profit within a day on no credit. How many business models have such a wonderful characteristics?

Who are the competitors for the curd outlet owner? . The big milk brand houses such as Amul and other regional branded milk suppliers such as Heritage , Tirumala Milk Products etc. The curd outlet owner outperforms the competitors with the freshness of the curd with no chemicals added and his natural way making the curd.

So this Curd business is one of the great small scale businesses. -:)

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