How to Start a Mushroom

Farming Business in 18
Steps
Do you want to start a mushroom farming business? If YES, here is a
complete guide to starting a mushroom farming business with NO
money and no experience plus a sample mushroom farming business
plan template. Mushroom farming can be a very lucrative business for any
entrepreneur that does not mind to put in the work.

Mushrooms can be harvested in just a few weeks and requires low startup
capital; however, while this might look like an easy business to start, it is
necessary that you study the technique of cultivating mushrooms or you have
the necessary experience. If you have had a mushroom garden, it will be easier
for you to move to the commercial scale as opposed to someone who has had
no experience at all. What you will however need in addition to your
experience is the ability to run a business.

There are different types of mushrooms in existence with each having different
production costs which is why it is necessary that you also conduct a research
to know which type customers prefer and how much it will cost you to produce
and package it.

Knowing the production cost will also enable you to work out a detailed budget
that will state how much you need to spend and also how you are likely to
recoup your investment. Even though there are over 2,000 edible mushrooms
in existence, only a few are eaten in the united states and they are the white
button, criminis, portobellos, shiitake, oyster, wood ear, morels, chanterelles
and enoki.

You will need to decide if you intend to buy ready-to-inoculate spawns from
suppliers or produce the spawns yourself in order to start the culture. Keep in
mind that the former will push your start-up costs higher especially if you
intend to have a large farm.

18 Steps to Starting a Mushroom

Farming Business
Table of Content [hide]
o 1. Understand the Industry
  2. Conduct Market Research and Feasibility Studies
 3. Decide Which Niche to Concentrate On
 4. Know Your Major Competitors in the Industry
 5. Decide Whether to Buy a Franchise or Start from Scratch
o 6. Know the Possible Threats and Challenges You Will Face
o 7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
o 8. Choose a Catchy Business Name
 9. Discuss with an Agent to Know the Best Insurance Policies for You
 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
 11. Get the Necessary Professional Certification
 12. Get the Necessary Legal Documents You Need to Operate
 13. Raise the Needed Startup Capital
 14. Choose a Suitable Location for your Business
 15. Hire Employees for your Technical and Manpower Needs
 16. Write a Marketing Plan Packed with ideas & Strategies
 17. Brainstorm Possible Ways to Retain Clients & Customers
 18. Develop Strategies to Boost Brand Awareness and Create a Corporate
Identity

1. Understand the Industry

Globally, the market value for mushroom is expected to exceed $50 billion
between the period of 2015 and 2022 and this is due in high part to the
growing demand for mushrooms recently. The reason why the demand for
mushrooms has grown tremendously is due to the fact that they are
considered good for the health because they have low fat and cholesterol
content.

Mushrooms also contain negligible sodium as well as gluten content and have
various nutrients such as vitamins, potassium and selenium. Mushrooms can
be consumed dried, fresh, frozen or canned, which has broken down the
market into fresh and processed categories.

Mushrooms can be used for medicinal purposes especially due to its

possession of vitamin B, D, calcium, potassium, phosphorus, magnesium and
other mineral content. Mushrooms are parasitic in nature because of their
dependence on other plants for food. Industrial wastes such as animal and bio-
based are valid options for the cultivation of mushrooms.

Mushrooms do not require much land usage as they can be grown in

polytunnels, lawns and in woodlands and this fact has encouraged more
people to go into the cultivation of mushrooms especially as they also have a
different life cycle in comparison to green plants.

In the near future, it is expected that the industry will have supermarkets,
restaurants, hotels and cafeterias play a vital role that will help shape the
industry. Another factor that will aid the mushroom market is the growing
preference by customers for vegan food and also the need to substitute meat
for something close.

The button and shiitake mushrooms for instance are regarded as meat
substitutes and desired by consumers because of their rich protein sources.
The growing shift in consumer preferences towards processed food
consumption is also expected to aid the market between 2015 and 2022.

The cultivation of mushrooms is something that is considered as having high

operational costs due to its high intensive labor. In order to be able to keep up
with the high demands and also keep production costs down, some mushroom
farmers have started engaging in unwholesome cultivation methods by using
excessive fertilizers and chemicals.

This growing harmful trend is expected to hamper the growth of the market as
growing health awareness will result in consumers shifting away from
mushrooms. Another limiting factor is the fact that mushroom spores are
harmful to the growers as they can cause respiratory diseases and so make
growers make use of respirators further driving up their production costs.

Currently, various governments and international agencies are making

contributions that will encourage mushroom farmers to develop new research
and development technologies in order to ensure that the quality of
mushrooms are being improved. Biotech laboratories have been playing a vital
role in the breeding process of mushrooms as they have been optimizing the
cultivation environment of mushrooms in order to have a better yield.

These sort of technological advancements coupled with the efforts of the

government have allowed industry participants to experience growth
opportunities. The low shelf life of mushrooms has however hindered the
growth of the mushroom market as manufacturers are having to battle with
increase in preservation costs.

Globally, the market has been dominated by North America as well as Europe
with the Asia Pacific, the Middle East and Africa following close behind. China
and india are however expected to also witness rapid mushroom demand due
to their rising high population as well as growing health awareness.

The escalating food chain as well as food markets in developing countries as

well as the ongoing research for other possible but undiscovered uses of
mushrooms is likely to ensure that new opportunities are being made available
for the mushroom market in the years to come.

In 2015, the Asia Pacific accounted for the largest market share and has been
predicted to grow at a pace that is much faster between the periods of 2015
and 2022. The reason for the fast growth pace is the high consumption rate in
countries like Japan, China and India.
The highest market share was however held by Europe in 2015 as the region
accounted for the largest production of mushroom owing to the increase in
demand for organic food from consumers. North America’s growth is getting
elevated as there is a growing demand for processed food.

2. Conduct Market Research and

Feasibility Studies
 Demographics and Psychographics

The demographic and psychographic composition of those who consume

mushrooms or buy them are the local health food stores, supermarkets,
farmer’s markets, hotels, restaurants, cafeterias and health conscious
individuals.

3. Decide Which Niche to Concentrate

On
There is little or no monopolist business in existence, therefore as an
entrepreneur you must be ready to face similar businesses such as yours and
then look for how to excel and stand out. One sure way by which you can do
this is to find a niche that will allow you offer services that only a few can and in
this way you can generate more revenue for your business.

It is however worthy to note that not all niches are profitable, so it is essential
that you conduct a thorough research in order to find what niches will be most
profitable for your business so that you do not end up wasting time and
resources on a niche that will not allow you generate anything.

Below are some of the niche ideas that exist within the mushroom market that
you can specialize in;

 Fresh Mushrooms
 Processed Mushrooms
 Gourmet Mushrooms

The Level of Competition in the Industry

In every industry, there is always a level of competition that exists and the
mushroom market is no different. The level of competition that exists in this
industry totally depends on what your niche is. If for instance you are selling
only fresh mushrooms, then you have to be near your target market as
opposed to the mushroom farmer that is into processed mushrooms.
What customers who are after fresh mushrooms want are quality mushrooms
that have not stayed too long on the shelf and what customers who eat
processed mushrooms want are quality mushrooms as well. This then means
that no matter how customers want their mushrooms to be, all they are after is
that the mushrooms are of high quality.

If you are therefore looking to start your mushroom farm in the United States,
you should be aware that not only will you face stiff regulations in the industry
but you will also face lots of competition from already established and
successful mushroom farmers and you should therefore be prepared.

4. Know Your Major Competitors in the

Industry
In every industry, there are brands that stand out and the mushroom market is
not all different. These well-known mushroom farms or companies have either
been long in business, have generated enough publicity or deal with quality
mushrooms only. The reason why you should know popular brands is so that
you can know how they operate and adapt some of their strengths into starting
and running your mushroom farm.

Below are some of the well-known mushroom farms in the United States of
America as well as globally;

 California Mushroom Farms Inc

 Detroit Mushroom Factory
 Fresh Stock
 Monterey Mushrooms, Inc
 Monaghan Mushrooms
 Modern Mushroom Farms
 The Mushroom Company

Economic Analysis
Mushrooms are usually processed, produced and consumed on a large scale in
so many countries and the demand for mushrooms has been on the increase
coupled with high demand for organic and healthy food products. Mushrooms
are very popular in many Asian countries and as such Asia has a majority of the
market share followed closely by North America and Europe. Europe however
leads in mushroom production and processing.

The mushroom market on a global level is divided on the basis of types into
oyster, button and shiitake. On the basis of category, it is divided into canned,
fresh, chilled, frozen and processed categories. In applications, the mushroom
market is segmented into direct consumption, recipes and F&B processing and
by geography into North America, Asia-Pacific, Europe, The Middle East and
Africa.

The mushroom market is driven by certain factors such as the continuous

development of high yield systems, increasing saturation in demand as well as
shifting consumer preference for value-added products. Other factors are the
rising health awareness, increase in demand for organic products as well as
increasing power of supermarkets.

The mushroom market is also facing several inhibiting factors as well especially
the due to the short shelf life of mushrooms as well as the use of harmful
ingredients in the cultivation which has been due to the increase in
competition as mushroom growers look to keep up.

5. Decide Whether to Buy a Franchise or

Start from Scratch
When looking to start any business, one of the decisions that you have to deal
with is whether to start your business from scratch or whether to buy a
franchise. Be reminded that while each of the option has its pros and cons, it is
necessary that you choose only that which will bring you closer to achieving
your goals and objectives.

Franchises in the mushroom market aren’t that popular and so most

entrepreneurs usually prefer to start off by themselves especially if they are
starting on a small scale. If you are however starting alone, having experience
in growing mushrooms help, all you might have to grapple with is how to
attract customers and generate revenue that will grow and sustain your
business.

6. Know the Possible Threats and Challenges

You Will Face
When starting any kind of business, it is necessary to understand that you will
be facing several threats and challenges to the business and therefore you
must be prepared to handle them whenever they arise. Some of these threats
and challenges are ones that cannot easily be handled and so when they occur,
all you have to do is remain optimistic.

Some of the threats and challenges that you are therefore likely to face when
starting your mushroom farm is handling the mushrooms properly as you do
not want to deal with lawsuits from food poisoning, having to deal with
competition from already existing mushroom farms, and having to deal with
strict regulations in the industry.
7. Choose the Most Suitable Legal Entity (LLC, C
Corp, S Corp)
When starting any business, it is important that you choose the right legal
entity that will have a positive impact on your business. Every farmer in the
United States usually chooses from four basic legal entities especially if the
business they are running is aimed at generating profit; sole proprietorship,
partnership, Limited Liability Company (LLC) or corporation. If however you are
running a non-profit business, then a nonprofit corporation must be formed.

If you are running a nonprofit entity, then you should know that it may be
formed under state and federal law. If the corporation will be formed under
the state law, then it must adhere to the following characteristics which are
that; no stock is issued; income isn’t distributed to member, director or officer;
the entity is operated for charitable purposes and that upon dissolution, the
assets are distributed to another charitable organization or government entity.
This does not however mean that nonprofit organizations cannot conduct
business as a means to generate revenue.

In running a for-profit entity, there are some distinct characteristics that you
can use to decide which legal entity will best suit your business. Some of the
features are; flexibility and ease of control, taxation issues and liability issues. If
for instance you intend to run a business that has lots of risks, then it would be
to your benefit to go for an entity that will not leave your personal liabilities
exposed.

A sole proprietorship is one of the most common legal entities that most

entrepreneurs starting out usually go with. One thing with a sole
proprietorship is that as soon as the business expands, the entrepreneur can
later change without much hassle to another legal entity. While a sole
proprietor might be the easiest to form, it leaves the entrepreneur exposed
when it comes to personal liabilities. A general partnership is much like a sole
proprietor; the only difference is that two or more people are involved.

In an LLC, the owners are regarded as a separate entity from the business,
which means should there be any claims against the business; their personal
liabilities are being protected. In dealing with tax, owners under the LLC usually
report on their personal tax returns just like a sole proprietor and partnership
form of legal entity. The corporation though similar to the LLC is more formal
and taxation is usually double for members.

8. Choose a Catchy Business Name

One of the first things that you must have to deal with when looking to start
your mushroom farm is what name you will call the farm. A business name is
just like a personal name, if it is distinctive enough, it is likely going to attract
attention. While, it is necessary that our business name be distinct, it is also
necessary that it be easily pronounced.

Below are some catchy business names for your mushroom farm;

 Quality Mushrooms Inc

 Divvy Mushroom Farm
 Mush-Room Farms
 Variety Mushroom Farms
 Bob’s Mushroom

9. Discuss with an Agent to Know the

Best Insurance Policies for You
Having insurance policies when starting any sort of business in the United
States of America is very necessary as insurance should be part of your risk
management strategy. When you have insurance, you shift some of the risk
associated with your business to that of the business carrier.

As an entrepreneur, you should know that there are many insurance policies in
existence and it is best you meet with an insurance agent or broker who will
help point out which insurance policies will be best for your mushroom farm.
Below are the basic insurance policies that you might need to consider buying
if you are looking to start your mushroom farm in the United States of America;

 General Liability
 Property Insurance
 Workers’ Compensation Insurance
 Vehicle Insurance
 Crop Insurance
 Business Interruption Insurance
 Health Insurance
 Employee Dishonesty Insurance
 Key Employee Insurance

10. Protect your Intellectual Property

With Trademark, Copyrights, Patents
Intellectual property protection is one very serious aspect of business
especially if you are going to be designing or building something that no one
has. While the mushroom business is pretty straightforward, it doesn’t mean
that you cannot stumble on a technology that no one has thought about.
Should this ever happen, it is always best to engage the services of an attorney
experienced with patents and trademarks to help you out.

If you haven’t invented anything and wish to protect your company name, logo
or domain name, you can do so. However, most entrepreneurs in this segment
do not usually bother with getting an IPP.

11. Get the Necessary Professional

Certification
While experience and skills are needed to start and run a mushroom farm,
having professional certification is not one of them.

If you are however looking to improve your management, finance or marketing

skills, there are professional certifications available for you. All you need to do
is ensure that you are getting the certifications from an accredited place.

12. Get the Necessary Legal Documents

You Need to Operate
Any business that is started in the United States requires legal backing i.e an
identity as well as legal documents. Except you are looking to run a business
that is illegal in nature, getting legal documents is a must especially if you do
not want to get in trouble with the authorities.

If you do not know what legal documents you will need before starting your
mushroom farm, it is best to ask other mushroom growers, visit the city council
or best engage the services of an attorney. Below are some of the legal
documents that you will need to start and run your mushroom farm;

 Insurance policies
 Sales Tax
 Business Permits and License
 Service contract or agreement
 Employee Injury Report
 Safety Signage
 Certificate of Incorporation
 Operating Agreements for LLCs
 Business Plan

13. Raise the Needed Startup Capital

The fact that you will require money to run your mushroom farm and also pay
for the labor that you will use goes to show that having the required finance to
start off the business is not something that can be overlooked. Sourcing for
start-up capital is not always easy especially if you are just starting your
business, which is why it is advised that every entrepreneur has a business
plan as this is the document that can easily convince your potential investors
on your seriousness and commitment to the business.

Below are some of the ways you can finance your mushroom farm;

 Generate part of the capital from personal savings and sale of stock
 Source for soft loan from family members and friends
 Apply to the bank for a loan
 Get a business partner to invest in your mushroom farms

14. Choose a Suitable Location for your

Business
One serious decision that you must take into cognizance is where you intend to
locate our mushroom farm. The location of your mushroom farm will be
determined by your niche and in extension who your target market is. If you
are targeting the locals who prefer fresh mushrooms, then you will need to be
located somewhere close by.

If your home has enough space outside, then starting your mushroom farm in
your home is not totally a bad idea especially if you are looking to keep down
overhead costs involved in starting the mushroom farm. If your home is not big
enough or you are planning to run a very large scale mushroom farm, then
leasing a place will not be a bad idea.

Wherever you intend to lease for growing your mushroom farm, it is important
that you are able to control illumination as mushrooms do not require light
before they can grow. Therefore, you might need to build rooms to grow your
mushrooms so that they can be protected from direct sunlight. When working
on the mushrooms, you can use miners’ lamps rather than illuminating the
entire room.

It is important that the location is well ventilated and that you are able to
control the humidity and temperature of the place. If the mushrooms need
more moisture, you can add it to the air, wet the floors or the wall and if the
moisture is too much, you can introduce drier air.

If you are going to be leasing a place to grow your mushrooms, ensure that you
have set aside a budget and that you do not spend more than your budget so
that you do not end up causing a strain on your overall budget.
15. Hire Employees for your Technical
and Manpower Needs
Mushrooms are normally easy to grow but some varieties are easier than
others. The oyster mushroom is considered one of the easiest mushrooms to
grow followed by the shiitake mushrooms. The mushroom business is a hands-
on kind and requires everyday attention, so it is necessary that you possess the
skills and knowledge required to grow your mushrooms.

The start-up expenses required to start a mushroom farm are usually minimal.
A commercial mushroom farmer needs to have at least 500 square feet of
space to grow at least 12,000 pounds of mushrooms every year. This amount
of space can be provided in the homes of most farmers, so leasing a space is
usually not necessary. However, it is necessary that the farmer is able to
control the humidity, light and temperature of the space.

The operating cost that is involved in growing mushrooms involves buying

medium and spores, getting logs of wood, straw, cardboard, used coffee
grounds and any other cheap materials that can serve as growing mediums.
Asides from what you will use to grow the mushrooms, you will also need
packaging materials as well as office supplies. In getting office supplies, you can
go for new or fairly used ones.

If you are just starting off your mushroom farm, this is a business that you can
totally run on our own or get another hand to help out. If however, your farm
expands or starts to generate revenue that will support you paying the salaries
of employees, then you can do so.

This therefore means that for you to be able to run your mushroom farm
effectively, you can make do with just one or two people especially as
mushrooms demand only little attention when compared to some other kinds
of businesses.

The Service Delivery Process of the Business

In growing mushrooms, there are three basic steps that are usually
undertaken, the first step is to prepare a growing medium which usually takes
a few hours and can be done once every week.

The next step is to mist the growing mushrooms. This is not a hard task except
you have a huge farm as the misting of the mushroom should be done every
day till they are harvested. Once the mushrooms are mature they can then be
harvested. Mushrooms don’t take too long to mature.

The mushroom farmer must then look for ways to package the harvested
mushroom depending on if the farmer is delivering fresh or processed
mushrooms. Once the mushrooms have been packaged, the farmer must then
deliver the mushrooms to customers that would have already been sourced as
soon as the mushrooms started growing.

16. Write a Marketing Plan Packed with

ideas & Strategies
Marketing is one sure way of generating the needed revenue that will sustain
and grow your business. However, marketing not only allows you to generate
revenue for your business, it also ensures that your products or services get
the required notice it deserves from your target market – existing or potential.

Even if you have the needed experience to grow your mushrooms and extend
its shelf life or package it, without marketing, you will be struggling to generate
sales which might affect your business so much that you might need to close
down. Therefore, marketing can be said to be a very important aspect of a
business either new or already existing.

Marketing involves knowing what it is your intended target market wants and
ensuring that you are able to meet this need. You can either conduct marketing
physically or via the internet; however you must ensure that all is in order
before you market your mushrooms. If you have good marketing strategies,
you cannot only compete effectively against your competitors; you can also
penetrate the market as well and get a fair share for your business.

Before you can however create any marketing strategy that will be very
effective, there is need to conduct a thorough market research because this
will enable you to identify your target market, know what to expect from them
and what they also expect from you. Also, your market research will enable you
identify who your competitors are, what their weaknesses and their strengths
are and how you can best them and become the preferred brand of your
intended target market.

Most entrepreneurs that start out are often overwhelmed by the marketing
process and so either get an experienced marketing consultant or hire a
marketing team that will help achieve its marketing goals and objectives.
Whether you are hiring experienced individuals to help you out as regards
marketing or you are doing it all by yourself, it is important that you continue
to review the strategies so that you can remove the ones that are ineffective
and will not allow you achieve your goals and objectives.

Below are some marketing ideas and strategies that you can use for your
mushroom farm;

 Ensure that you have a stand in the farmers’ market in your locality as
this will help market your products to visitors and other farmers
  Encourage your loyal customers to help spread the word about your
mushrooms
 Send out mushroom samples with an introductory letter to restaurants,
hotels and cafeterias around you
 Use your social media platforms such as Facebook, Twitter and
Instagram to spread the word about your mushroom farm
 Pay for adverts spots in your local newspapers and related magazines as
well as radio and television stations in order to spread word about your
mushroom farm
 Distribute handbills and fliers in various strategic locations

17. Brainstorm Possible Ways to Retain

Clients & Customers
Businesses that are succeeding know that without their customers they
wouldn’t be where they are which goes to show how important customers are.
Mushrooms are consumed by humans – either ones that have health goals or
those that consume it as they do other meals – and so it is vital that these
humans are courted in such a way to make them loyal to your own brand.

However, while it is very important to have strategies in place that will attract
the customers you will need for your business, it is more important that you
retain a high number of the customers that you are patronizing your business.

According to research, companies that always spend to attract customers

spend higher than those that have high retention of customers and this is due
to the fact that retained customers also helps a company attract new
customers, thereby making it a win-win for the company.

There are several reasons why customers stick to a brand as opposed to going
to another and that is the quality of the product or service. In growing your
mushrooms, it is important that you are consistent with the quality so that your
customers know that they can always rely on you for quality mushrooms.

Customers love incentives and are always on the lookout for where they can
get incentives on their purchase. To this effect, it is important that you
incorporate an incentive or reward program into your customer retention
strategy. You could give customers that refer others an extra pack of
mushrooms to motivate them in continuing to refer more customers to you.
Customers also love a company that attends to their complaints and is quick
with their orders, it is therefore important that you imbibe an excellent
customer care relationship with your customers.
18. Develop Strategies to Boost Brand
Awareness and Create a Corporate
Identity
If you grow gourmet high quality mushrooms that no one knows about, you
will still find yourself failing, which is why publicity is very important to the
success and growth of the business. There is no entrepreneur that does not
want to be known even if he or she is engaged in a niche product or service or
in a local town somewhere. Every entrepreneur knows that for the goods to be
sold or services to be paid for, a good amount of publicity has to be carried out
– either paid for or not.

Mushrooms grow quite quickly and have a short shelf life and so as an
entrepreneur in the perishable food business, it is important that publicity is
part and parcel of running our business especially as there are some
consumers that do not want their mushrooms dried, canned or frozen.
Publicity helps ensure that you not only get awareness for your products but
that you are able to generate the revenue that will sustain and grow your
business whilst also competing favorably against your competitors.

Before you can however decide on the best publicity strategies for your
mushroom farm, it is necessary that you conduct a research on your target
market – potential and existing – so that you know where they likely congregate
or visit, that way they will be able to see your brand when it is being publicized.

It is worthy to note that not all publicity strategies will cost you an arm and a
leg before it is very effective especially as the internet has opened up several
possibilities for entrepreneurs of this age. Ensure that you set a budget so that
you do not end up spending more than you already intended.

Below are some of the strategies that you can use to boost the awareness and
create a corporate identity for your mushroom farm;

 Ensure that you create a website and deploy SEO strategies so that your
website can rank tops in search engines
 Ensure that you distribute fliers and paste notices in strategic locations
around the area where you intend operating your mushroom farm
 Participate in community events such as food festivals, trade fairs and
other such programs in order to network and generate awareness for
your mushroom farm
 Take advantage of your social media platforms such as Facebook,
Twitter, Instagram and Google Plus to generate awareness for your
business
 Place adverts for your mushroom farm in local newspapers, food and
lifestyle magazines as well as on radio and television stations
 Create a unique and distinct logo and ensure that it is used on your
delivery truck as well as on customized tee shirts for your workers