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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.
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 cultivation business. John has an understanding to various aspects involved in strategy, selection and business marketing.
3.2 Aim of Starting the Mushroom Farming 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 Mushroom Farming 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.
| Start-up Expenses | |
| Legal | $3,000 |
| Consultants | $5,000 |
| Insurance | $24,000 |
| Rent | $15,000 |
| Research and Development | $14,000 |
| Expensed Equipment | $15,000 |
| Signs | $4,000 |
| TOTAL START-UP EXPENSES | $80,000 |
| Start-up Assets | $0 |
| Cash Required | $80,000 |
| Start-up Inventory | $43,000 |
| Other Current Assets | $23,000 |
| Long-term Assets | $8,000 |
| TOTAL ASSETS | $23,000 |
| Total Requirements | $25,000 |
| START-UP FUNDING | $0 |
| START-UP FUNDING | $90,000 |
| Start-up Expenses to Fund | $30,000 |
| Start-up Assets to Fund | $20,000 |
| TOTAL FUNDING REQUIRED | $0 |
| Assets | $16,000 |
| 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 |
| TOTAL ASSETS | $0 |
| Liabilities and Capital | $0 |
| Liabilities | $0 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $0 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $0 |
| Capital | $0 |
| Planned Investment | $0 |
| Investor 1 | $15,000 |
| Investor 2 | $20,000 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $120,000 |
| Loss at Start-up (Start-up Expenses) | $50,000 |
| TOTAL CAPITAL | $54,000 |
| TOTAL CAPITAL AND LIABILITIES | $30,000 |
| 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.
Note
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
Franchise Business Planning
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 mushroom growing 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.
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 Customers | Growth | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 | CAGR | |
| Big suppliers | 40% | 25,000 | 30,000 | 35,000 | 40,000 | 45,000 | 10.00% | |
| Local Suppliers | 35% | 20,000 | 25,000 | 30,000 | 35,000 | 40,000 | 12.00% | |
| Agro Based Product Producers | 25% | 15,000 | 20,000 | 25,000 | 30,000 | 35,000 | 14.00% | |
| Total | 100% | 60,000 | 13%000 90000 | 105,000 | 120,000 | 10.00% | ||
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.
I would recommend this company to anyone
I would recommend this company to anyone
Strategy
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 grow commercial mushrooms, focus should be to attract long lasting mushroom lovers to keep a steady income. With excellent strategic plans 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.
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Dried Mushroom | 290,000 | 310,000 | 330,000 |
| Canned Mushrooms | 270,000 | 290,000 | 320,000 |
| Fresh Mushrooms | 250,000 | 270,000 | 310,000 |
| Mushroom Farming Classes | 230,000 | 250,000 | 270,000 |
| TOTAL UNIT SALES | 1,040,000 | 1,120,000 | 1,230,000 |
| Unit Prices | Year 1 | Year 2 | Year 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 |
| Sales | |||
| 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 |
| TOTAL SALES | |||
| Direct Unit Costs | Year 1 | Year 2 | Year 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.
Manager/Owner
Administrator
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 1 | Year 2 | Year 3 | |
| Manager | $40,000 | $42,000 | $44,000 |
| Administrator | $25,000 | $35,000 | $40,000 |
| 2 Sales and Marketing Executive | $60,000 | $62,000 | $64,000 |
| Operation Manager | $25,000 | $30,000 | $35,000 |
| Accountant | $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 for business plan for mushroom farm 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 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 10.00% | 15.00% | 20.00% |
| Long-term Interest Rate | 5.00% | 5.00% | 5.00% |
| Tax Rate | 12.00% | 17.00% | 22.00% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
The Brake-even Analysis for HealthyFarm is shown in the graph below.
| Brake-Even Analysis | |
| Monthly Units Break-even | 2500 |
| Monthly Revenue Break-even | $230,000 |
| Assumptions: | |
| 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 in the mushroom farming business calculated on a monthly and annual basis.
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $540,000 | $560,000 | $580,000 |
| Direct Cost of Sales | $50,000 | $55,000 | $60,000 |
| Other | $0 | $0 | $0 |
| 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% |
| Expenses | |||
| Payroll | $300,000 | $380,000 | $400,000 |
| Sales and Marketing and Other Expenses | $5,000 | $6,000 | $70,000 |
| Depreciation | $4,000 | $6,000 | $7,000 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $6,000 | $7,000 | $8,000 |
| Insurance | $2,000 | $3,000 | $4,000 |
| Rent | $15,000 | $17,000 | $19,000 |
| Payroll Taxes | $35,000 | $40,000 | $45,000 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $250,000 | $270,000 | $290,000 |
| Profit Before Interest and Taxes | $60,000 | $70,000 | $80,000 |
| EBITDA | $24,000 | $30,000 | $36,000 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $23,000 | $24,000 | $25,000 |
| Net Profit | $130,000 | $160,000 | $190,000 |
| Net Profit/Sales | 40.00% | 45.00% | 52.00% |
8.3.1 Monthly Profit
8.3.2 Yearly Profit
8.3.3 Monthly Gross Margin
8.3.4 Yearly Gross Margin
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.
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 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 |
| Expenditures | Year 1 | Year 2 | Year 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 |
| Dividends | $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 | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $150,000 | $170,000 | $190,000 |
| Accounts Receivable | $20,000 | $23,000 | $26,000 |
| Inventory | $4,000 | $6,000 | $8,000 |
| 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 Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $16,000 | $19,000 | $22,000 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $16,000 | $20,000 | $24,000 |
| 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 |
| Earnings | $150,000 | $170,000 | $190,000 |
| 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 | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 4.00% | 45.00% | 65.00% | 5.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 6.00% | 5.00% | 4.00% | 12.00% |
| Inventory | 5.00% | 7.4 | 3.30% | 10.00% |
| Other Current Assets | 3.00% | 4.50% | 5.00% | 42.00% |
| Total Current Assets | 100.00% | 120.00% | 150.00% | 65.00% |
| Long-term Assets | -7.00% | -15.00% | -30.00% | 38.00% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 6.00% | 4.00% | 3.00% | 28.00% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 24.00% |
| Total Liabilities | 6.00% | 2.00% | 1.30% | 48.00% |
| NET WORTH | 83.00% | 90.00% | 110.00% | 32.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 13%.00% | 85.00% | 90.00% | 0.00% |
| Selling, General & Administrative Expenses | 66.00% | 74.00% | 80.00% | 55.00% |
| Advertising Expenses | 5.00% | 3.00% | 1.20% | 4.40% |
| Profit Before Interest and Taxes | 25.00% | 35.00% | 45.00% | 3.20% |
| Main Ratios | ||||
| Current | 13 | 16 | 19 | 2.5 |
| Quick | 30 | 35 | 40 | 5.5 |
| Total Debt to Total Assets | 4.4.% | 5.50% | 2.40% | 65.00% |
| Pre-tax Return on Net Worth | 90.00% | 95.00% | 97.00% | 4.50% |
| Pre-tax Return on Assets | 55.00% | 60.00% | 65.00% | 9.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 20.00% | 25.00% | 28.00% | N.A. |
| Return on Equity | 56.00% | 60.00% | 65.00% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 7 | 9 | 11 | N.A. |
| Collection Days | 92 | 96 | 103 | N.A. |
| Inventory Turnover | 18 | 23 | 28 | N.A. |
| Accounts Payable Turnover | 13.3 | 15.6 | 18.2 | N.A. |
| Payment Days | 23 | 23 | 23 | N.A. |
| Total Asset Turnover | 2.8 | 3.8 | 4.8 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | 0 | -0.06 | -0.04 | N.A. |
| Current Liab. to Liab. | 0 | 0 | 0 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $300,000 | $320,000 | $340,000 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 1.3 | 1 | 0.8 | N.A. |
| Current Debt/Total Assets | 8% | 5% | 3% | N.A. |
| Acid Test | 30 | 33 | 36 | N.A. |
| Sales/Net Worth | 3.2 | 2.8 | 1.6 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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This is very helpful. It has given me an insight of the mushroom business. Thank you, author.