Olive Oil Business Plan, With a Projection

An olive oil business plan is a plan for selling one harvest for a year. The olives are picked and milled in a few weeks in the autumn, the whole year's oil is paid for then, and it sells a bottle at a time until the next harvest. So the plan needs to know how much oil the grove will give, what it costs to turn it into bottles, and how fast it will sell before it's no longer this year's oil. In the example below, a family with a mature six-acre grove in California starts bottling its own oil instead of selling the olives, and sells bottles direct, bottles to shops, a lemon oil and tins for restaurants, ending the year about $37,000 ahead on $79,900 of sales. Below is a description example, each part of the plan, the extra virgin grade, the year month by month, the startup budget, and a free template.

The short version

• Describe the business in a paragraph: the grove, the oil, who buys it, the goals.
• Work out the oil from the grove: tons of olives, liters of oil, bottles.
• Cost a bottle from the harvest up: harvest and milling, bottle and label, bottling, fees.
• The whole year's harvest and milling is paid in the autumn; the plan has to carry it.
• Have the oil tested and tasted before calling it extra virgin.
• Keep each harvest's oil as its own lot, with its date, and sell the oldest first.
• TaroStack keeps each harvest as a lot, bottles it with its date, and tracks every bottle and tin to the shops. More below.

Part 1: the business description

Tule Fog Olive Co., a made-up olive oil producer near Oroville, California, I use in these examples, writes:

Tule Fog Olive Co. grows olives on six acres near Oroville, has them milled within a day of picking, and sells its extra virgin olive oil and a lemon oil at the farm stand, online and at markets, to about 15 shops, and in tins to restaurants. In its first year of bottling it aims to sell the whole harvest before the next one.

Part 2: from grove to bottle

In this example, six acres give about 16 tons of olives, and the mill gets about 115 liters of oil from each ton, so about 1,900 liters for the year: 2,600 half-liter bottles, 620 small bottles of lemon oil and 140 tins. A contract harvest crew costs about $3, and the mill about $2.50, for each liter of oil the olives give.

The grove's own costs, pruning, irrigation and feeding, are in the fixed costs, because they're paid whatever the harvest brings. A bottle's cost is about equal parts oil and glass; the price is set by what the oil is, not by what it costs.

Part 3: the extra virgin grade

The USDA's grade standards define U.S. Extra Virgin Olive Oil as virgin olive oil with excellent flavor and odor, judged by a taste panel, and a free fatty acid content of no more than 0.8 grams per 100 grams, with further limits in the standard (USDA AMS). Oil with more defects or acidity grades lower, as virgin olive oil. A small producer that calls its oil extra virgin backs that up with a lab test and a taste panel each harvest, and keeps the results with the lot; some states have rules of their own, so check yours. This is general information, not legal advice.

Part 4: customers and prices

In December, the best month, the direct bottles bring $4,628 of the $8,022 of contribution, the shops $1,350, the lemon oil $1,138 and the tins $906. Shops buy at about half the farm stand price; their minimums are in minimum order quantity.

Part 5: the year, month by month

Fixed costs are $1,535 every month: grove upkeep averaged ($900), the lab test and taste panel averaged ($40), cool storage for the oil ($150), insurance ($90), the website ($50), market fees ($120), ads ($150), and software and card fees ($35). Month 1 is December, the first month of new oil:

The year's sales are $79,941 and the profit $37,005. Because each bottle's cost includes its share of the harvest and milling, the profit is what's left after paying for next November's harvest, not before it. December and November, with new oil and the holidays, are the biggest months. How to plan stock around a season like this is in seasonal inventory.

Part 6: the startup budget

The first harvest is the biggest part: the year's oil, paid for before a bottle is sold. The $18,700 spent before working cash is earned back in month 6, May, when the cash reaches $19,711.

Get the template

Download the olive oil business plan workbook. Four sheets: your bottles and tins with price, variable cost and December's volume; the year, month by month, with sales, profit and cash, and month 1 set to December; 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

Two harvests' oil in the tanks for a few weeks each autumn, bottled a few hundred at a time, each bottling with its harvest date and its lab results, 15 shops reordering, and tins that go out by the case. A notebook can't say which harvest a shop's bottles came from, how much of last year's oil is left to sell first, or whether there are enough bottles and labels for Saturday's bottling. Which goes out first, the oldest or the soonest date, is in FEFO vs FIFO, and numbering each harvest's lots in how to create lot numbers.

How TaroStack does it

TaroStack keeps each harvest as a lot, bottles it with its date, and tracks every bottle and tin to the shops.

Each harvest a lot. The oil from each milling is received as a lot with its date, stocked by the liter, and its lab results and taste panel can sit on the batch record as fields of your own, with their limits.

Bottling as a batch. A bottle is a recipe of half a liter of oil, a bottle, a cap and a label, so each bottling takes those off stock and records the oil lot it used, automatically. "What could I make right now" says how many bottles the oil, glass and labels on hand allow.

Oldest oil first. Picking lists put the earliest dates first, so last year's oil goes out before this year's, and the lots each shop got are recorded as it ships.

Lots, recipes, batches and picking 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 an olive oil business profitable?

It can be, from a grove that's already bearing. In the example, six acres end a year about $37,000 ahead on $79,900 of sales, after paying for the next harvest.

How much does it cost to start an olive oil business?

With a mature grove, the example's start is $22,700, and nearly half of it is the first harvest and milling. Planting a grove is a different plan: young trees take years to bear a full crop.

How much oil do you get from a ton of olives?

It depends on the variety, ripeness and mill. The example uses about 115 liters a ton; ask your mill what it gets from olives like yours.

What makes olive oil extra virgin?

Under the USDA's grade standards, excellent flavor and odor judged by a taste panel, with no defects, and a free fatty acid content of no more than 0.8 grams per 100 grams, among other limits.