Do you want to start a mushroom farming business?

Do you wish to start a mushroom farming business? Mushroom farming has been taking ground over the years due to an increase in demand for mushrooms. One of the best things about this business is you can farm various types of mushrooms to stand out from your competitors. Nowadays, people have become healthy conscious and eat mushrooms a lot. In the United States, people love taking their mushrooms dried, canned or fresh. The fact that mushrooms grow fast, they make great business to venture in because you can make money fast. Accoding to statistics, in 2013, mushrooms globally was valued at $29million and it projected to grow to $59million by 2019.

Executive Summary

2.1 The Business

The mushroom business will be registered as HealthyFarm and will be situated in Dallas, Texas. The business will be owned and managed by John Taylor who’s as experienced mushroom farmer by profession.

2.2 Management Team

John Taylor who is the owner and manager of HealthyFarm is an experienced farmer with a vast experience in the mushroom farming industry that spans over 15 years. During his career, John has worked for top mushroom farms across United States. During his career, he got to work in Japan for few years for a top mushroom growing company.

2.3 Customer Focus

In this mushroom farming plan, the main focus will be to target customers who love consuming mushrooms and want to change their healthy for the better.

2.4 Business Target

HealthyFarm plans to offer high quality, sweet and healthy mushrooms to a wide range of customers. After learning how to start a mushroom business, studying the market you intend to target is essential. After doing research on the local trends, HealthyFarm is looking to target regional and local customers.

Mushroom Farm Business Plan - 3 Years Profit Forecast

Company Summary

3.1 Company Owner

John Taylor is an experienced mushroom farmer who has had the opportunity to work in reputable and well known mushroom farms across the United States as well as abroad. Given his past experience, he knows how to start mushroom growing business. John has an understanding to various aspects involved in strategy, selection and business marketing.

3.2 Aim of Starting the Business

Mushrooms have become so popular thus driving the need to have more farmers who can farm organic mushrooms to meet people needs. Customers love eating organically grown mushrooms because they are not only healthy but they are nutritious too. Since many people have embraced eating of mushrooms, there is an evident increase for mushrooms, John came up with the best mushroom growing business plan model that caters for individual customer needs.

3.3 How the Business will be Started

With over a decade in mushroom farming sector, John Taylor is an expert in mushroom farming businesses and he has actively assisted many farms to prosper. Given his accounting experience, John understands what needs to be done and has come up with an in depth financial analysis for HealthyFarm.

Mushroom Farm Business Plan - Startup Cost

Start-up Expenses
Research and Development$14,000
Expensed Equipment$15,000
Start-up Assets$0
Cash Required$80,000
Start-up Inventory$43,000
Other Current Assets$23,000
Long-term Assets$8,000
Total Requirements$25,000
Start-up Expenses to Fund$30,000
Start-up Assets to Fund$20,000
Non-cash Assets from Start-up$8,000
Cash Requirements from Start-up$0
Additional Cash Raised$43,000
Cash Balance on Starting Date$20,000
Liabilities and Capital$0
Current Borrowing$0
Long-term Liabilities$0
Accounts Payable (Outstanding Bills)$0
Other Current Liabilities (interest-free)$0
Planned Investment$0
Investor 1$15,000
Investor 2$20,000
Additional Investment Requirement$0
Loss at Start-up (Start-up Expenses)$50,000
Total Funding$100,000

Services for Customers

HealthyFarm plans to offer its clients a wide range of awesome products. The best part about mushroom farming is it directly caters for the needs of customers. HealthyFarm hopes to find out the kind of mushrooms many people prefer to eat. With this information, the business will be in a position to offer the best kind of mushrooms to the market. In order to successfully create a mushroom farming business plan, it is important to identify the products you wish to sell and try to diversify where necessary. In this case, HealthyFarm is planning how to start a mushroom growing business that will offer customers the following products:

  •    Offer different types of dried mushrooms
  •    Offer different types of canned mushrooms
  •    Offer different types of fresh mushrooms
  •    Offer mushroom farming classes to people interested in the farming.

By offering the following products, HealthyFarm hopes to make good profits within a short period of time. Over time, the business will look into expanding products and services to offer so as to maximize on the profits. HealthyFarm plans to plant three types of mushrooms; Agaricus mushrooms, Shiitake mushrooms and Oyster mushrooms.

Marketing Analysis of Mushroom Farm Business

Ever since the introduction of mushroom farming, the market has been receptive as the number of people looking for
mushrooms has greatly increased. The retail market has changed and customers now want to eat various types of mushrooms that have been grown organically to maximize on health benefits. There are many reasons that have increased the popularity of mushroom farming businesses. This mushroom farm business plan identifies the high quality seedlings as one of the main drivers to the growth of the mushroom farm enterprise. According to statistics growers produced 109 million pounds of mushrooms that were certified organic during the 2016-2017 growing season.

5.1 Market Segment

For HealthyFarm to meet the needs of its customers, the business plans to offer different mushroom products whose demand is high. This way, there will be an overflow of customers enquiring after the mushrooms. HealthFarm has done a comprehensive market analysis to come up with a mushroom business plan that will make the business grow.

Mushroom Farm Business Plan - Market Segmentation

5.1.1 Big Suppliers

According to the mushroom growing business plan, HealthFarm plans to target mushroom big suppliers who supply mushrooms to big hotels and restaurants in Dallas. Nowadays, hotels and restaurant need mushrooms on a daily basis for cook recipes for their customers.

5.1.2. Local Suppliers

HealthyFarm plans to sell mushrooms to local suppliers who supply mushroom from door to door. Most local suppliers need to be supplied with mushrooms every day, to supply to household and grocery shops.

5.1.3 Agro based product producers

To make sure HealthyFarm benefits from mushroom farming profitability, it will sell its products to agro based product producers.

Market Analysis
Potential CustomersGrowthYEAR 1YEAR 2YEAR 3YEAR 4YEAR 5CAGR
Big suppliers40%25,00030,00035,00040,00045,00010.00%
Local Suppliers35%20,00025,00030,00035,00040,00012.00%
Agro Based Product Producers25%15,00020,00025,00030,00035,00014.00%
Total100%60,00013%000 90000105,000120,00010.00%

5.2 Business Target

With the demand for mushroom increasing, HealthyFarm has created a unique mushroom farm business plan template that will cater for both local and external customers. Dallas is a large city and business expects to make large sales by putting in place systems that allows for growing of quality and healthy mushrooms. The mushroom farm hopes to achieve annual sales of growth of between 30-50%.

5.3 Product Pricing

In order for HealthyFarm to achieve its targets, a detailed pricing survey was carried out to come up with a reasonable yet competitive pricing structure after taking into account the market average. HealthyFarm also hopes to sell its mushrooms at a discounted price for the first one month.


The mushroom farming business has witnessed positive growth and it’s expected to grow even bigger in a few years. What’s surprising is that the demand for mushrooms is so high and the already growing farms can’t meet the demand. This is why John’s decision of starting a mushroom growing business is a great one. When determining how to run a mushroom business, focus should be to attract long lasting mushroom lovers to keep a steady income. With excellent strategies in place, HealthyFarm hopes to reach out to a wide market segment.

6.1 Competitive Analysis

When you have figured out how to start a mushroom farm business, it is important to analyze the market and come up with the best strategies to grow the business. Despite the growing number of mushroom farms in Dallas, HealthyFarm has come up with incredible strategies to remain relevant and on top of competitors.

6.2 Sales Strategy

For HealthyFarm to advertise its mushroom products, the following sale strategies will be adopted for marketing the business.

  • Understand client preferences and what they want in order to minimize cancellations and find out ways of packing the mushrooms to make them more appealing.
  • Find a creative and customer-friendly approach of dealing with customers complains to avoid any cancellations and returns to keep a positive image of the business
  • Advertise the mushroom farm on local media channels such as television, radio and newspapers
  • Advertise the business using digital marketing strategies such as Social media platforms (Facebook, Twitter and Instagram).
  • Advertise the mushroom farm by word of mouth and refarrals.

6.3 Sales Forecast

To achieve its sales targets, HealthyFarm has formulated a detailed sales forecast to show how the subscription box business will perform when it begins operations.

Mushroom Farm Business Plan - Unit Sales

Sales Forecast
Unit SalesYear 1Year 2Year 3
Dried Mushroom290,000310,000330,000
Canned Mushrooms270,000290,000320,000
Fresh Mushrooms250,000270,000310,000
Mushroom Farming Classes230,000250,000270,000
TOTAL UNIT SALES1,040,0001,120,0001,230,000
Unit PricesYear 1Year 2Year 3
Dried Mushroom$200.00$220.00$240.00
Canned Mushrooms$170.00$190.00$210.00
Fresh Mushrooms$140.00$160.00$180.00
Mushroom Farming Classes$110.00$130.00$150.00
Dried Mushroom$200,000$220,000$240,000
Canned Mushrooms$170,000$190,000$210,000
Fresh Mushrooms$140,000$160,000$180,000
Mushroom Farming Classes$110,000$130,000$160,000
Direct Unit CostsYear 1Year 2Year 3
Dried Mushroom$2.00$3.00$4.00
Canned Mushrooms$1.60$2.60$3.60
Fresh Mushrooms$1.00$2.00$3.00
Mushroom Farming Classes$0.80$1.80$2.80
Direct Cost of Sales
Dried Mushroom$170,000$190,000$210,000
Canned Mushrooms$130,000$150,000$170,000
Fresh Mushrooms$100,000$120,000$140,000
Mushroom Farming Classes$70,000$90,000$110,000
Subtotal Direct Cost of Sales$410,000$430,000$460,000

Personnel Plan

Healthy Farm plans to employ an experienced small team of staff to run the mushroom farm business. After starting a mushroom business, you are required to identify your personnel team as well as allocate a role to every member. It is essential to come up with a staff budget to help the business know how much it will spend on salaries.

7.1 Personnel Plan

HealthyFarm is owned by John Taylor who will also become the manager of the mushroom farm business. As preparations take shape to open the business, the following staff members will be hired to help in running the farm. The team is expected to work closely as a team to facilitate a smooth flow of business activities.

2 Marketing Executive
1 Operations Manager
1 Accountant
4 Cleaners
5 Mushroom Farming Experts
Those who’re successful will be taken through extensive training in order to familiarize themselves with how mushroom farm businesses are managed on a day-to-day basis.

7.2 Average Salaries

HealthyFarm plans to remunerate staff members the following salaries in the first three years of operation.

Personnel Plan
Year 1Year 2Year 3
2 Sales and Marketing Executive$60,000$62,000$64,000
Operation Manager$25,000$30,000$35,000
4 Cleaners$80,000$82,000$84,000
5 Mushroom Farming Experts$150,000$152,000$154,000
Total Salaries$405,000$433,000$456,000

Financial Plan

HealthyFarm has come up with a comprehensive financial plan that will guide how the business will be run and managed to ensure the mushroom business profit margin are excellent. In this plan, key financial parameters have been identified. John Taylor will raise capital from his personal savings and will be working closely with two investors. Before planning a mushroom farm business plan, you need to know about the expenses and costs involved to launch operations. A bank loan will be secured to finance any budget deficiencies. For mushroom cultivation profit margin to be met, the business has invested enough time and worked with experts to come up with an in-depth financial plan.

8.1 Important Assumptions

The financial forecast for HealthyFarm will be based on the assumptions below.

General Assumptions
Year 1Year 2Year 3
Plan Month123
Current Interest Rate10.00%15.00%20.00%
Long-term Interest Rate5.00%5.00%5.00%
Tax Rate12.00%17.00%22.00%

8.2 Brake-even Analysis

The Brake-even Analysis for HealthyFarm is shown in the graph below.

Mushroom Farm Business Plan - Brake-even Analysis

Brake-Even Analysis
Monthly Units Break-even2500
Monthly Revenue Break-even$230,000
Average Per-Unit Revenue$130.00
Average Per-Unit Variable Cost$1.40
Estimated Monthly Fixed Cost$290,000

8.3 Projected Profit and Loss

Below is the Profit and Loss information for the mushroom farm business calculated on a monthly and annual basis.

Pro Forma Profit And Loss
Year 1Year 2Year 3
Direct Cost of Sales$50,000$55,000$60,000
TOTAL COST OF SALES$65,000 $85,000 $95,000
Gross Margin$350,000$400,000$450,000
Gross Margin %70.00%74.00%78.00%
Sales and Marketing and Other Expenses$5,000$6,000$70,000
Leased Equipment$0$0$0
Payroll Taxes$35,000$40,000$45,000
Total Operating Expenses$250,000$270,000$290,000
Profit Before Interest and Taxes$60,000$70,000$80,000
Interest Expense$0$0$0
Taxes Incurred$23,000$24,000$25,000
Net Profit$130,000$160,000$190,000
Net Profit/Sales40.00%45.00%52.00%

8.3.1 Monthly Profit

Mushroom Farm Business Plan - Profit Monthly

8.3.2 Yearly Profit

Mushroom Farm Business Plan - Profit Yearly

8.3.3 Monthly Gross Margin

Mushroom Farm Business Plan - Gross Margin Monthly

8.3.4 Yearly Gross Margin

Mushroom Farm Business Plan - Gross Margin Yearly

8.4 Projected Cash Flow

Below is a summary of pro forma cash flow, subtotal cash received, subtotal cash spent, subtotal cash from operations and subtotal cash spent on operations.

Mushroom Farm Business Plan - Projected Cash Flow

 Pro Forma Cash Flow   
Cash ReceivedYear 1Year 2Year 3
Cash from Operations
Cash Sales$70,000$80,000$90,000
Cash from Receivables$9,000$11,000$13,000
SUBTOTAL CASH FROM OPERATIONS$79,000 $91,000 $103,000
Additional Cash Received
Sales Tax, VAT, HST/GST Received$0$0$0
New Current Borrowing$0$0$0
New Other Liabilities (interest-free)$0$0$0
New Long-term Liabilities$0$0$0
Sales of Other Current Assets$0$0$0
Sales of Long-term Assets$0$0$0
New Investment Received$0$0$0
SUBTOTAL CASH RECEIVED$79,000 $91,000 $103,000
ExpendituresYear 1Year 2Year 3
Expenditures from Operations
Cash Spending$25,000$27,000$29,000
Bill Payments$20,000$23,000$26,000
SUBTOTAL SPENT ON OPERATIONS$45,000 $50,000 $55,000
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out$0$0$0
Principal Repayment of Current Borrowing$0$0$0
Other Liabilities Principal Repayment$0$0$0
Long-term Liabilities Principal Repayment$0$0$0
Purchase Other Current Assets$0$0$0
Purchase Long-term Assets$0$0$0
SUBTOTAL CASH SPENT$45,000 $50,000 $55,000
Net Cash Flow$16,000$19,000$22,000
Cash Balance$33,000$38,000$43,000

8.5 Projected Balance Sheet

Below is a Projected Balance Sheet for HealthyFarm that shows assets, capital, liabilities, long term assets and current liabilities.

 Pro Forma Balance Sheet   
AssetsYear 1Year 2Year 3
Current Assets
Accounts Receivable$20,000$23,000$26,000
Other Current Assets$5,000$5,000$5,000
TOTAL CURRENT ASSETS$179,000 $204,000 $229,000
Long-term Assets
Long-term Assets$15,000$17,000$19,000
Accumulated Depreciation$12,000$14,000$16,000
TOTAL LONG-TERM ASSETS$3,000 $1,500 $1,000
TOTAL ASSETS$209,000 $236,500 $265,000
Liabilities and CapitalYear 1Year 2Year 3
Current Liabilities
Accounts Payable$16,000$19,000$22,000
Current Borrowing$0$0$0
Other Current Liabilities$0$0$0
Long-term Liabilities$0$0$0
TOTAL LIABILITIES$16,000 $20,000 $24,000
Paid-in Capital$30,000$30,000$30,000
Retained Earnings$35,000$40,000$45,000
TOTAL CAPITAL$170,000 $200,000 $230,000
TOTAL LIABILITIES AND CAPITAL$200,000 $230,000 $260,000
Net Worth$270,000$300,000$330,000

8.6 Business Ratios

The following is the Ratio Analysis, Business Net Worth and Business Ratios for HealthyFarm.

Ratio Analysis
Sales Growth4.00%45.00%65.00%5.00%
Percent of Total Assets
Accounts Receivable6.00%5.00%4.00%12.00%
Other Current Assets3.00%4.50%5.00%42.00%
Total Current Assets100.00%120.00%150.00%65.00%
Long-term Assets-7.00%-15.00%-30.00%38.00%
TOTAL ASSETS100.00%100.00%100.00%100.00%
Current Liabilities6.00%4.00%3.00%28.00%
Long-term Liabilities0.00%0.00%0.00%24.00%
Total Liabilities6.00%2.00%1.30%48.00%
NET WORTH83.00%90.00%110.00%32.00%
Percent of Sales
Gross Margin13%.00%85.00%90.00%0.00%
Selling, General & Administrative Expenses66.00%74.00%80.00%55.00%
Advertising Expenses5.00%3.00%1.20%4.40%
Profit Before Interest and Taxes25.00%35.00%45.00%3.20%
Main Ratios
Total Debt to Total Assets4.4.%5.50%2.40%65.00%
Pre-tax Return on Net Worth90.00%95.00%97.00%4.50%
Pre-tax Return on Assets55.00%60.00%65.00%9.00%
Additional RatiosYear 1Year 2Year 3
Net Profit Margin20.00%25.00%28.00%N.A.
Return on Equity56.00%60.00%65.00%N.A.
Activity Ratios
Accounts Receivable Turnover7911N.A.
Collection Days9296103N.A.
Inventory Turnover182328N.A.
Accounts Payable Turnover13.315.618.2N.A.
Payment Days232323N.A.
Total Asset Turnover2.83.84.8N.A.
Debt Ratios
Debt to Net Worth0-0.06-0.04N.A.
Current Liab. to Liab.000N.A.
Liquidity Ratios
Net Working Capital$300,000$320,000$340,000N.A.
Interest Coverage000N.A.
Additional Ratios
Assets to Sales1.310.8N.A.
Current Debt/Total Assets8%5%3%N.A.
Acid Test303336N.A.
Sales/Net Worth3.22.81.6N.A.
Dividend Payout000N.A.