Worm Farm Business Plan Template

Worm Farm business plan for starting your own business

Growing and selling worms may seem like a useless idea to many people. But the truth is that the farming of earthworms is one of the most popular businesses – one that gives unimaginable profit to people. A big advantage of starting this business is the less investment needed to start it. The worms are small in size and take little space to grow, so the cost of the area is also reduced.

To start a successful worm farming business, you need a strong and well written business plan. In the following business plan, you will read everything about how to start a farm business. Read on as we have mentioned all the necessary steps in this worm farm business plan.

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Executive Summary

2.1 The Business

Dennis Begg Earthworm Farms, Inc. will be a licensed, registered and insured worm farm in Stow, in Summit County of Ohio.

After careful market research, we have planned to start our business on two hectares of land. Our business is going to be a standard business and we will be involved in growing and selling earthworms to fishermen and farmers in the state of Ohio.

Please not that through this worm farm business plan template, you can easily write a business plan for your worm farming business and red worm farming business.

2.2 Management of Worm Farm Business

To start a worm farm business, it is important to plan everything before starting the business.

The management body of our company will include the chief operating officer, earthworm farmworkers, front desk officer, customer representative and accounts. The team will be managed and looked after by the owner himself who will take care of all the company matters.

The complete staff will be hired 20 days before the launch of the business and will be trained by the owner and managers.

2.3 Customers of Worm Farm Business

An important step to know when working on how to start a worm farm for profit is the determination of its customers.

The business becomes successful when you identify and understand your customers. Similar to the business plan for a franchise, you need to mention all your customers in the business plan for worm farming. Our customers will include following:

• Fish Farmers
• Scientific Labs
• Research Institutions
• Crop farmers
• Aqua Culturists
• Organic Product Manufacturers
• University research programs
• Fishermen

2.4 Business Target

Our business target is to become one of the top leading earthworm farms within the next 4 years of our launch. We aim to become the most popular worm farms in not just Ohio but also in the entire country. Our goal is to produce world-class earthworms and send them to every corner of the US and other countries of the world.

Franchise Business Plan

Helps the franchisee get business case approval from the franchisor

Company Summary

3.1 Company Owner

Dennis Begg Worm Farms, Inc. will be owned and managed by Dennis.

Dennis always wanted to do something different. When he studied about the worm farm business and how to worm farm for profit, he found a keen interest in this business. He visited and worked in some worm farms and got an idea on how to start a worm casting business. After that, he made a worm farming business plan to start and run his business seamlessly.

In his worm firm, Dennis will be responsible for recruiting, orienting, selecting, training, counselling, and coaching the staff and the managers. He will also communicate, create and implement the organization’s mission, vision and overall direction.

3.2 Why the Worm Farm Business is being started?

When we talk about organic farming, the earthworm plays an important role. Earthworms play a key role in converting organic matter into humus, which is a rich nutrient for improving soil fertility.

Dennis knew the importance of growing earthworms and after getting an idea about the profit from this business, he decided to start his worm farm.

3.3 How the Worm Farm Business will be started?

When starting a worm composting business, you should list down all the necessary steps to start it.

The Dennis Begg Worm Farms, Inc. will follow the following steps to start their business:

Get a Worm

To start a worm business, the first thing that you need is the worm itself. You can get worms from a bait shop or pond. According to research, worms have a very high rate of reproduction and if you get a pound of them, that is equivalent to around 1000 worms.

Get buckets

To start a worm farm, you need to make an environment in which they grow and reproduce. The ideal environment for earthworms to grow is in the dark. Get a plastic bin and make a worm bed.

Drill the bin

Since the worms need air to survive, some drilling is required. In the dark bin, make some small holes. Make sure to drill very small holes so that the worms cannot escape through them.

Stack the bin

Use two bins and stack them over each other. Put the drilled bin above the undrilled bin to allow the liquid to drop in the undrilled bin from the drilled one

Prepare the bedding

Get the food for the worms

The next step is to get the food for the worms. You can use orange, orange peels, coffee grounds, table scraps and other acidic substances.

Cover the bin

The environment that we have made for the worms is also ideal for other flies and insects. To avoid infesting the worms, make sure to cover the bin with paper. To grow healthy worms, ensure that everything stays safe.

Start-up Expenses
Legal	$292,000
Consultants	$0
Insurance	$30,000
Rent	$31,000
Research and Development	$25,000
Expensed Equipment	$57,000
Signs	$4,100
TOTAL START-UP EXPENSES	$439,100
Start-up Assets	$353,000
Cash Required	$396,000
Start-up Inventory	$39,000
Other Current Assets	$232,000
Long-term Assets	$275,000
TOTAL ASSETS	$1,295,000
Total Requirements	$1,734,100
START-UP FUNDING
Start-up Expenses to Fund	$439,100
Start-up Assets to Fund	$1,295,000
TOTAL FUNDING REQUIRED	$1,734,100
Assets
Non-cash Assets from Start-up	$1,687,000
Cash Requirements from Start-up	$384,000
Additional Cash Raised	$52,000
Cash Balance on Starting Date	$31,000
TOTAL ASSETS	$2,154,000
Liabilities and Capital
Liabilities	$29,000
Current Borrowing	$0
Long-term Liabilities	$0
Accounts Payable (Outstanding Bills)	$48,000
Other Current Liabilities (interest-free)	$0
TOTAL LIABILITIES	$77,000
Capital
Planned Investment	$1,734,100
Investor 1	$0
Investor 2	$0
Other	$0
Additional Investment Requirement	$0
TOTAL PLANNED INVESTMENT	$1,734,100
Loss at Start-up (Start-up Expenses)	$342,900
TOTAL CAPITAL	$2,077,000
TOTAL CAPITAL AND LIABILITIES	$2,154,000
Total Funding	$1,734,100

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Services

In the process of knowing how to start a commercial worm farm, you should also mention the services that your business will provide. In earthworm production business, there are several services provided by the companies.

When starting a worm farm business, list down all the services that you will provide. The services provided by Dennis Begg Worm Farms, Inc. will be following:

Cultivation of worms

Our worm farm will cultivate different species of earthworms. We have made research on the most profitable and most beneficial earthworms for the organic industry. Our farm will grow all the types of earthworms that are needed in the organic industry.

Exporting the earthworms

We will not only provide our product to the local fishermen but we will also export these to other countries as well.

Consultancy and advisory services

We will provide advisory services, consultancy and training regarding worm growing business.

Labs and research programs

We will provide earthworms at a low cost to the science labs and university research programs and research institutions.

You can read about more services on free worm farm business plan available online.

Marketing Analysis of Worm Farm Business

In every worm farm sample business plan, marketing analysis is an important component. That’s why Dennis got the services of marketing experts to get through this important phase.

5.1 Market Trends

When you analyze how to build a commercial worm farm, you need to include the market trends in it. If you look closely, you will know that organic farmers and fishermen are unable to carry out their business successfully if they are not provided with the daily supply of earthworms.

Business Plan for Investors

In recent years, the revenue from worm farming has increased rapidly. This is because people are shifting to eating healthy and pure by consuming organic products. It has increased the demand for organic food and people are now interested in buying organic products.

People are making more money in this line because they are not only doing this worm farm business for sale in the neighborhood but they are also exporting it to different countries making worm farming profitable business.

5.2 Marketing Segmentation

In this worm farm business plan template, it is important to write down the marketing segmentation for our business. After conducting careful market research, we have got an idea about our target market. Our marketing segmentation will include the following businesses and groups of people.

Organic & Poultry Farms

We will supply different species of earthworms to the organic farmers. These farmers’ crops depend upon the regular supply of different earthworms. Other important groups include poultry farms located in the area.

Aquariums Owners

Another important customer will be the aquariums owners who need earthworms every day to feed their sea creatures and fish.

Fishermen

We will also provide our products to the fishermen, who need different species of earthworms as bait for their fishes

Labs & Research Centers

We will provide our earthworms at a low rate to laboratories and institutions to make. A number of medical organizations need worms for research purposes.

Market Analysis
Potential Customers	Growth	Year 1	Year 2	Year 3	Year 4	Year 5	CAGR
Private Customers	31%	32,000	34,000	36,000	38,000	40,000	10.00%
Retail Businesses	25%	25,000	27,000	29,000	31,000	33,000	10.00%
Hotels and Restaurants	23%	22,000	23,000	25,000	27,000	28,000	10.00%
Wholesalers	21%	19,000	20,000	21,000	23,000	25,000	11.00%
Total	100%	98,000	104,000	111,000	119,000	126,000	10%

 

5.3 Business Target

Our target of industrial worm farm is to cover all the investment within 2 years of our launch. The secondary goal is to become one of the leading worm farms in the US.

5.4 Product Pricing

The price of the products depends on their quality. We aim to produce world-class earthworms and will export them to other countries as well. A good location and good breed can guarantee the production of high-quality worms. After considering the market demands, we have set our pricing plans to be reasonable and comparable to other worm farms.

Marketing Strategy for Worm Farm Business

Some earthworm farming businesses do not make a good profit and the reason for that is their inability to sell their worms at the due date. Keeping in view, we have decided to cultivate feeds for our earthworms and we have also set up a standard packaging plant for our earthworms. These steps will help us in maximizing our profit.

This worm farming business plan includes the marketing strategy and sales strategy to run the business. To make a worm farm business run successfully, marketing worms and their significance in the right way is also important.

6.1 Competitive Analysis

Due to the high demand for organic products, the need for earthworms in the organic industry has grown rapidly. It is one of the most competitive industries in the world. With every passing day, the number of people and businesses working for the production of worms is increasing.

We have a team of hard-working and dedicated professionals who have come up with unique ideas to increase the breed of worms. Our biggest competitive advantage is the leadership of our owner, who has experience working in world-class worm farms, as well as the dedication of our team.

6.2 Sales Strategy

Dennis has carried out a detailed analysis and came up with excellent ideas to advertise his company.

We will:

• Advertise our business on websites and magazines related to the agriculture
• Reach out to the people working in organic farms
• Use social media platforms to reach out to millions of people
• Introduce our business to other businesses in the area by sending them letters and brochures
• Encourage referrals and word of mouth marketing
• Use direct marketing to communicate and increase our sales

6.3 Sales Monthly

6.4 Sales Yearly

6.5 Sales Forecast

Personnel plan

Before you start a worm business on a large scale, you should first try it at a small scale. It’s important for you to know how to start a worm farm at home and make a living out of it.

In every worm farming business plan, it is crucial to mention the personnel plan as well. The personnel plan is an effective component of any business plan – as the success of any business rely on its staff and management. If the management is not sincere with the company, the company cannot grow.

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7.1 Company Staff

Dennis will be the owner and CEO of Dennis Begg Worm Farms, Inc. business, and the following people will be hired 3 weeks before inauguration.

• 1 farm manager
• 2 worm researchers
• 10 farm workers
• 1 HR for operation
• 2 sales executives

7.2 Average Salary of Employees

Personnel Plan
	Year 1	Year 2	Year 3
Farm Manager	$38,000	$41,800	$45,980
Farm Workers	$300,000	$330,000	$363,000
Worm Researcher	$48,000	$52,800	$58,080
HR	$18,000	$19,800	$21,780
Sales Executives	$30,000	$33,000	$36,300
Total Salaries	$434,000	$477,400	$525,140

Financial Plan

In the worm farming business plan, another important step to go through is the financial plan.

While writing a business plan for worm farming, you should have an idea about the worms farming profit and also how much do worm farmers make. It will help you in writing a financial plan that covers all the aspects of the company. Your financial plan should include:

• The cost of leasing farmland
• The amount needed to prepare a farmland
• The money needed to buy earthworms
• The money needed to launch a website
• The salaries of the employees
• Bonds, securities, registration costs, and insurance

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8.1 Important Assumptions

General Assumptions
	Year 1	Year 2	Year 3
Plan Month	1	2	3
Current Interest Rate	8.12%	8.15%	8.24%
Long-term Interest Rate	8.37%	8.46%	8.49%
Tax Rate	24.01%	25.10%	26.30%
Other	0	0	0

8.2 Break-even Analysis

Break-Even Analysis
Monthly Units Break-even	5340
Monthly Revenue Break-even	$131,500
Assumptions:
Average Per-Unit Revenue	$232.00
Average Per-Unit Variable Cost	$0.65
Estimated Monthly Fixed Cost	$163,400

8.3 Projected Profit and Loss

Pro Forma Profit And Loss
	Year 1	Year 2	Year 3
Sales	$8,360,000	$10,279,456	$12,639,619
Direct Cost of Sales	$8,078,000	$9,637,520	$11,811,283
Other	$0	$0	$0
TOTAL COST OF SALES	$8,078,000	$9,637,520	$11,811,283
Gross Margin	$282,000	$641,936	$828,336
Gross Margin %	3.37%	6.24%	6.55%
Expenses
Payroll	$134,000	$147,400	$162,140
Sales and Marketing and Other Expenses	$137,000	$148,000	$156,000
Depreciation	$2,100	$2,200	$2,340
Leased Equipment	$0	$0	$0
Utilities	$3,000	$3,000	$3,100
Insurance	$2,100	$2,100	$2,100
Rent	$3,100	$3,200	$3,400
Payroll Taxes	$31,000	$32,000	$33,000
Other	$0	$0	$0
Total Operating Expenses	$312,300	$337,900	$362,080
Profit Before Interest and Taxes	($30,300)	$304,036	$466,256
EBITDA	($30,300)	$304,036	$466,256
Interest Expense	$0	$0	$0
Taxes Incurred	($6,060)	$60,807	$93,251
Net Profit	($24,240)	$243,229	$373,005
Net Profit/Sales	-0.29%	2.37%	2.95%

8.3.1 Profit Monthly

8.3.2 Profit Yearly

8.3.3 Gross Margin Monthly

8.3.4 Gross Margin Yearly

8.4 Projected Cash Flow

Pro Forma Cash Flow
Cash Received	Year 1	Year 2	Year 3
Cash from Operations
Cash Sales	$52,000	$56,160	$60,653
Cash from Receivables	$14,000	$15,120	$16,330
SUBTOTAL CASH FROM OPERATIONS	$66,000	$71,940	$77,695
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	$67,000	$72,000	$78,000
Expenditures	Year 1	Year 2	Year 3
Expenditures from Operations
Cash Spending	$37,000	$39,000	$41,000
Bill Payments	$26,000	$27,000	$28,000
SUBTOTAL SPENT ON OPERATIONS	$63,000	$66,000	$69,000
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
Dividends	$0	$0	$0
SUBTOTAL CASH SPENT	$63,000	$68,040	$73,483
Net Cash Flow	$19,000	$21,000	$22,000
Cash Balance	$29,000	$31,000	$33,000

8.5 Projected Balance Sheet

Pro Forma Balance Sheet
Assets	Year 1	Year 2	Year 3
Current Assets
Cash	$275,000	$308,000	$338,800
Accounts Receivable	$25,000	$28,000	$31,472
Inventory	$4,000	$4,480	$4,900
Other Current Assets	$1,000	$1,000	$1,000
TOTAL CURRENT ASSETS	$287,000	$321,440	$361,299
Long-term Assets
Long-term Assets	$10,000	$10,000	$10,000
Accumulated Depreciation	$20,100	$22,512	$25,326
TOTAL LONG-TERM ASSETS	$24,000	$26,880	$30,240
TOTAL ASSETS	$293,000	$328,160	$369,180
Liabilities and Capital	Year 4	Year 5	Year 6
Current Liabilities
Accounts Payable	$19,000	$21,280	$23,919
Current Borrowing	$0	$0	$0
Other Current Liabilities	$0	$0	$0
SUBTOTAL CURRENT LIABILITIES	$19,000	$21,280	$23,919
Long-term Liabilities	$0	$0	$0
TOTAL LIABILITIES	$16,700	$18,704	$21,023
Paid-in Capital	$30,000	$30,000	$31,000
Retained Earnings	$53,800	$58,642	$64,506
Earnings	$198,000	$215,820	$237,402
TOTAL CAPITAL	$287,000	$312,830	$344,113
TOTAL LIABILITIES AND CAPITAL	$303,700	$328,160	$369,180
Net Worth	$300,100	$327,109	$359,820

 

8.6 Business Ratios

Ratio Analysis
	Year 1	Year 2	Year 3	INDUSTRY PROFILE
Sales Growth	7.23%	8.01%	8.88%	3.00%
Percent of Total Assets
Accounts Receivable	9.20%	10.19%	11.29%	9.80%
Inventory	5.39%	5.97%	6.62%	9.90%
Other Current Assets	2.12%	2.35%	2.60%	2.40%
Total Current Assets	149.00%	152.00%	152.00%	158.00%
Long-term Assets	11.54%	11.60%	11.64%	12.00%
TOTAL ASSETS	100.00%	100.00%	100.00%	100.00%
Current Liabilities	4.87%	4.91%	4.95%	4.34%
Long-term Liabilities	0.00%	0.00%	0.00%	0.00%
Total Liabilities	7.56%	7.62%	7.69%	7.38%
NET WORTH	100.45%	101.25%	102.19%	110.00%
Percent of Sales
Sales	100.00%	100.00%	100.00%	100.00%
Gross Margin	94.90%	97.46%	100.19%	99.00%
Selling, General & Administrative Expenses	94.00%	96.54%	99.24%	97.80%
Advertising Expenses	1.52%	1.56%	1.60%	1.40%
Profit Before Interest and Taxes	41.00%	42.11%	43.29%	33.90%
Main Ratios
Current	34	35	36	32
Quick	32	32.6	33.415	33
Total Debt to Total Assets	0.18%	0.18%	0.17%	0.40%
Pre-tax Return on Net Worth	74.00%	74.50%	75.00%	75.00%
Pre-tax Return on Assets	94.60%	99.33%	104.30%	111.30%
Additional Ratios	Year 1	Year 2	Year 3
Net Profit Margin	33.01%	34.03%	35.09%	N.A.
Return on Equity	56.00%	57.74%	59.53%	N.A.
Activity Ratios
Accounts Receivable Turnover	7.7	7.8	7.8	N.A.
Collection Days	100	100	100	N.A.
Inventory Turnover	32.4	34.02	33	N.A.
Accounts Payable Turnover	15	16	16.3	N.A.
Payment Days	27	27	27	N.A.
Total Asset Turnover	2.4	2.5	2.6	N.A.
Debt Ratios
Debt to Net Worth	-0.04	-0.03	-0.04	N.A.
Current Liab. to Liab.	1	1	1	N.A.
Liquidity Ratios
Net Working Capital	$239,000	$252,384	$266,518	N.A.
Interest Coverage	0	0	0	N.A.
Additional Ratios
Assets to Sales	0.86	0.87	0.87	N.A.
Current Debt/Total Assets	1%	0%	0%	N.A.
Acid Test	29.1	29.12	29.16	N.A.
Sales/Net Worth	2.1	2.2	2.3	N.A.
Dividend Payout	0	0	0	N.A.

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FAQ

1. How profitable is a worm farm?

If you are interested in commercial worm farming for profit, you can expect a huge amount of revenue from your business. But make sure to get to know all the necessary steps for how to start a worm farm for profit before you start this business.

2. Is vermiculture a profitable business?

Yes, it is a profitable business as people strongly want to buy organic vegetables and fruits. Vermicomposting is a technique through which fruits and vegetables are produced without using any harmful chemicals. The worm farm profit margin is great in this business.

3. Is there money in raising worms?

If you want to make money raising worms, you can start your worm farm. A well-written worm farm business plan can help you make a handsome living out of this business.

4. Are worm farms worth it?

Earthworms are efficient in turning household waste into nutrients for the soil. They provide rich nutrients to the soil to make it grow healthy fruits and vegetables. With a well thought and well-written worm farming business plan, you can easily start your worm farm on a small scale.

Download Worm Farm Business Plan Template in pdf