Mushroom Farm Business Plan, With a 12-Month Projection

A mushroom farm business plan sets out what you'll grow and who buys it, what a block and a pound cost, the grow room it needs, and the first year month by month. Gourmet mushrooms are a fast crop in a small space: an oyster block can fruit six weeks after it's made, and a spare room can grow hundreds of pounds a month. The numbers that decide the business are less obvious. A block is mostly work, mixing, bagging, inoculating and harvesting, and some blocks will be lost to mold before they fruit, so the cost of a pound has to carry the ones that never made it. In the example below, a grower in North Carolina sells 300 market boxes, 400 pounds to restaurants, 120 boxes of lion's mane and 40 grow kits a month by month 11, makes a profit from month 3, and ends the year about $20,800 ahead on $67,100 of sales, after paying $20 an hour for the work. Below is a description example, each part of the plan, contamination, the projection, the startup budget, and a free template.

The short version

• Describe the business in a paragraph: what you grow, where you sell, the grow space, the goals.
• Cost a block with your time in it, then divide by the pounds it gives.
• Plan for losses: a contaminated block has already cost its materials and work.
• Sell to markets and restaurants: markets pay more, restaurants buy every week.
• A grow kit is a block sold before it fruits, at the best margin in the plan.
• The first month sells nothing; the first blocks are still growing.
• TaroStack keeps every block and harvest counted, with a lot for each. More below.

Part 1: the business description

Hilltop Greens, a made-up small farm in Asheville, North Carolina, I use in these examples, already grows microgreens and adds mushrooms:

Hilltop Greens grows oyster and lion's mane mushrooms indoors, year-round, on sterilized sawdust blocks, for two farmers markets a week, five restaurants and our online shop, with grow-at-home kits for gifts. Every harvest is dated. In our first year we plan to grow about 600 pounds a month.

Part 2: what a block and a pound cost

An oyster block gives about 1.5 pounds over two flushes, so a pound costs $5.95; lion's mane gives about a pound, so it costs $8.92. Then each product adds its own:

How a loss rate turns into a higher cost per good unit is in scrap rate formula; the same arithmetic as a batch that yields less than it should.

Part 3: customers and prices

A pound at the market brings $18 in two boxes; the same pound to a restaurant brings $11. The restaurant still earns its place: it orders every week, takes the big flushes in one delivery, and doesn't need a Saturday. And a grow kit sells the block itself, with no harvest, no cooler and no days ticking down. What a market day really costs, and how to tell whether it pays, is in cost to sell at a farmers market.

Part 4: the first year, month by month

Fixed costs are $1,000 a month: grow space rent ($500), power for the humidifier, fans and cooling ($150), market fees ($160), the vehicle ($100), insurance ($45), and the website and software ($45). Month 1 builds the room and makes the first blocks; sales start in month 2 and reach full speed by month 11:

The year's sales are $67,137 and the profit $20,822, on top of $20 an hour for the work. The table counts each block's cost when its mushrooms sell; in real life month 1's blocks, a few hundred dollars of substrate and spawn, are paid for before anything fruits, which the working cash covers.

Part 5: contamination

The plan assumes one block in ten is lost, mostly to green mold, before it fruits. That's 10% of the materials and work gone, and it's already in the $8.92. If losses run at 25%, the good block costs $10.71 and a restaurant pound $7.14 before the bag and delivery, and the restaurant pound leaves $3.26 instead of $4.45. So the losses are worth writing down every week: which batch of substrate, which day it was inoculated, which shelf; a waste log template does it on one page. A run of losses traced to one sterilizer load or one bag of spawn is fixed in a week; one that nobody counts quietly eats the margin.

Mushrooms sold fresh from the farm are produce, and cooking, drying or turning them into another product makes them a processed food with its own rules, so what each needs is worth checking with your state's agriculture department.

Part 6: the startup budget

Buying ready-made sterilized blocks instead of making them lowers the startup cost a lot and raises the cost per block; the template takes either.

Get the template

Download the mushroom farm business plan workbook. Four sheets: your products with price, variable cost and monthly volume at full speed; the year, month by month, with sales, profit and cash; your fixed costs; and your startup budget with working cash. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Where this stops working

At full speed the room holds a few hundred blocks at different ages: incubating, fruiting, on a second flush, or bagged up as kits. Spawn comes in by the case, harvests go out daily to five restaurants and two markets, and the cooler holds mushrooms with days, not weeks, to sell. Losses go unrecorded, so the cost per pound is a guess, and the spawn runs out the week a restaurant doubles its order.

How TaroStack does it

TaroStack keeps every block batch and every harvest.

Blocks as batches. A block is a recipe, substrate, spawn and bag, with a scrap % for what contamination takes, and units convert: spawn bought by the case, used by the pound. Recording a block batch takes the materials off stock from the lots used, at what you paid, and divides by the blocks that came out good.

Harvests as lots. Each harvest goes into stock as a lot with its date, picking takes the oldest first, and lots close to their date show in your alerts. Restaurant orders are sales orders that show whether the pounds to fill them are in the cooler while you're still typing.

And losses with reasons. Blocks thrown out go off as adjustments with their reason, reported by reason and item, the reorder list works in days of cover so spawn arrives in time, and margins are reported by product and by customer.

Recipes, batches, lots, sales orders and margins by product and customer 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.

Questions people also ask

Is mushroom farming profitable?

It can be. In the example, an indoor farm selling oyster and lion's mane mushrooms at markets, to restaurants and as grow kits ends its first year about $20,800 ahead on $67,100 of sales, with $20 an hour paid for the work.

How much does it cost to start a mushroom farm?

In the example, about $9,450: $6,450 for a sterilizer, a fruiting room, a flow hood, the first month's materials, packaging and a market setup, and $3,000 of working cash. Buying ready-made blocks costs less to start.

How much do mushrooms cost to grow per pound?

In the example, an oyster pound costs $5.95 and a lion's mane pound $8.92, counting materials, ten minutes of work per block and one block in ten lost to contamination.

How long before a mushroom farm makes money?

In the example, the first sales come in month 2, the first profitable month is month 3, and the first year's cash turns positive in month 5.