Herbal tea is herbs, dried and blended: peppermint, chamomile, lemon balm and the rest cost little when they're grown, and a pouch keeps most of its price. What the plan has to cover is drying and blending time, the pouches, and the season: herbs are harvested in summer and sold all year. Herbal teas are food, so the label describes what's in the blend, and doesn't claim to treat anything. In the example, a Utah herb farm starts with $9,900, ends its first year about $38,900 ahead before the owner's pay, and makes about $4,800 a month at full speed. Below is each part of the plan, the first year month by month, the startup budget, and a free template.
The short version
- Describe the business in a paragraph: the herbs, the blends, who buys, the goals.
- Cost each pouch: the herbs, the pouch and label, blending time, the card fee.
- Plan sales by product: direct pouches, shop pouches, sachet boxes, café bulk.
- Harvest and dry in summer; sell all year from storage.
- Describe the blend; don't claim it treats anything.
- Keep dried herbs sealed and dark: aroma fades.
- TaroStack makes each blend a recipe and each batch a lot. More below.
Part 1: the business description
Jordan River Herb Farm, a made-up herb farm in near Salt Lake City, Utah, writes:
Jordan River Herb Farm grows culinary and tea herbs on two acres near Salt Lake City and adds a line of herbal tea blends, sold in pouches at its market stall and online, wholesale to co-ops and gift shops, in boxes of sachets, and by the pound to cafés. In its first year it aims to reach $7,450 of tea sales a month.
Part 2: what a pouch costs
| Product | Herbs | Pouch, box or bag | Blending and packing | Card fee | Cost | Price | Cost share |
|---|---|---|---|---|---|---|---|
| Loose herbal tea, 1.5 oz pouch | $0.80 | $0.55 | $0.67 | $0.36 | $2.38 | $12.00 | 19.8% |
| Same pouch, to shops | $0.80 | $0.55 | $0.67 | $2.02 | $6.50 | 31.1% | |
| Sachet box of 15 | $0.90 | $1.40 | $0.88 | $0.42 | $3.60 | $14.00 | 25.7% |
| Bulk, 1 lb, to cafés | $8.50 | $0.50 | $3.00 | $12.00 | $45.00 | 26.7% |
The herbs are valued at what it costs the farm to grow and dry them. Loose tea as its own business is in tea business plan.
Part 3: the harvest, drying and blending
Herbs are cut in the morning and dried on racks in a shaded shed, then stored whole in sealed bins. Blending happens through the year, by weight from each blend's recipe, in small batches so the pouches are fresh. The farm's fresh herbs are in herb farm business plan.
Part 4: what each product earns
| Product | Price | Variable cost | Contribution | Margin | Units a month at full speed |
|---|---|---|---|---|---|
| Loose herbal tea, 1.5 oz pouch | $12.00 | $2.38 | $9.62 | 80.2% | 250 |
| Loose herbal tea, to shops | $6.50 | $2.02 | $4.48 | 68.9% | 400 |
| Sachet box of 15 | $14.00 | $3.60 | $10.40 | 74.3% | 100 |
| Bulk, 1 lb, to cafés | $45.00 | $12.00 | $33.00 | 73.3% | 10 |
At full speed the business sells $7,450 a month and keeps $5,567, 74.7%; direct pouches bring $2,405 of it.
Part 5: the first year, month by month
Fixed costs are $760 every month: drying shed and storage upkeep ($300), market fees ($150), insurance ($100), website ($60), and other costs ($150). Sales start at 35% of full speed:
| Month | Sales | Profit | Cash, year to date |
|---|---|---|---|
| 1 | $2,636 | $1,210 | $1,210 |
| 2 | $3,120 | $1,572 | $2,781 |
| 3 | $3,661 | $1,976 | $4,757 |
| 4 | $4,190 | $2,371 | $7,128 |
| 5 | $4,686 | $2,742 | $9,870 |
| 6 | $5,215 | $3,137 | $13,007 |
| 7 | $5,756 | $3,541 | $16,548 |
| 8 | $6,240 | $3,903 | $20,451 |
| 9 | $6,705 | $4,250 | $24,702 |
| 10 | $7,106 | $4,550 | $29,252 |
| 11 | $7,450 | $4,807 | $34,059 |
| 12 | $7,450 | $4,807 | $38,866 |
The year's sales are $64,215, and the business ends it $38,866 ahead, before the owner's pay. It breaks even at about $1,020 of sales a month, in the first month. The lowest cash point, $1,210 in month 1, never goes below zero. Tea sells all year from a summer harvest, so the plan spreads it as monthly averages; November and December are bigger, with gift boxes.
Part 6: the startup budget
| Item | Example |
|---|---|
| Drying racks and fans | $2,500 |
| Sealed storage bins | $600 |
| Pouch sealer and scale | $900 |
| First pouches and labels | $1,200 |
| Sachet filling tools | $400 |
| Branding | $1,000 |
| Licenses | $300 |
| Working cash | $3,000 |
| Total to start | $9,900 |
The $6,900 before working cash is earned back in about 1 months at full speed. What a dried herb keeps is in herbs shelf life, and packaging tea in how to package tea for sale.
Get the template
Download the herbal tea business plan workbook. Four sheets: your products, each with its price, variable cost and units a month at full speed; the first year, month by month, with sales ramping up, profit, cash, the first profitable month, the lowest cash point and whether the working cash covers it; your fixed costs; and the startup budget. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
The plan uses one harvest. A wet summer that cuts the peppermint, a blend that sells out by March, and bins of chamomile drying at different dates change the year.
How TaroStack does it
TaroStack makes each blend a recipe and each batch a lot, so its true cost follows the price of dried herbs.
Recipes by weight. Each blend is a recipe by weight, with dried herbs bought by the case or sack and used by the gram.
Each batch a lot. Each batch records the ingredient lots it used, gets its own lot and date, and counts what came out good.
Orders and the oldest first. Shop and market orders are sales orders, and the oldest lots go out first by default.
| The job | Notebook | In TaroStack |
|---|---|---|
| What a blend costs this month | Worked out once | True cost from the batch |
| Which batch went to which shop | Not recorded | Lots on each order |
| Which stock goes out first | Whatever's in front | First-expired-first-out |
Recipes, batches, lots and orders are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.