How to Start a Profitable Mushroom Farming Business

A mushroom farming business can be a means of big profit in just a few weeks with considerably low start-up capital investment to start a business.

A person who has a little bit of idea in the science & technology of mushroom growing and has their own building for having the farm – mushroom business will be the perfect option for him to start. The cultivation of mushrooms is an art and requires both study and experience.

Also, Read: Most Profitable Livestock Farming Business Ideas 

Mushroom Farming Business Plan Guide for Beginners

Here are the 18 steps to follow to start a profitable mushroom farming business:

Understand the Process of Farming Mushrooms

1. Choose the Type/Variety For Mushroom Farming

Different types of mushrooms have different production costs and it is important to decide on a budget depending on the amount of money available and the long-term investment benefit.

Broadly, there are three types of mushrooms that are cultured. They are Button Mushroom, Oyster Mushroom, and Paddy Straw Mushroom.

A good variety to start mushroom farming with is the Oyster mushroom. Other profitable and easy to grow varieties are Shiitake, Lions Mane, White Button, and Portobello.

2. Environment For Mushroom Farming

In a mushroom farming business consider the environment for mushroom production. Different varieties require a different kind of environment. For example, the oyster mushroom has some basic environment requirements like a temperature of 15 to 20°c, the humidity of 80 to 90%, good ventilation, light, and sanitation.

3. Get Spawn For Mushroom Farming

You will need to have spawned to start the culture. You can produce your own spawn by using a sterile culture or you can buy ready-to-inoculate spawns from the suppliers. Producing spawns can be cheaper in the long run, because the startup cost will be high in this case.

4. Prepare Substrate For Mushroom Farming

Mushrooms can be cultivated on a large number of agro-waste having cellulose and lignin that helps in more enzyme production of cellulose that is correlated with more yield. You can use straw of paddy, wheat and ragi, stalk and leaves of maize millets and cotton, sugarcane bagasse, sawdust, jute and cotton waste, dried grasses, used tea leaf waste, etc.

You can also use some industrial waste like paper mill sludge, coffee byproducts, tobacco waste, etc. Some of the popular methods of substrate preparation are steam pasteurization, hot water treatment, fermentation of composting, and chemical sterilization.

Some of the popular methods of substrate preparation are steam pasteurization, hot water treatment, fermentation of composting, and chemical sterilization.

5. Pack the Bags/ Boxes/ Trays For Mushroom Farming

The bag making process normally involves composting the substrate, filling the bags with composted material, spawning, and then incubation till the maturity stage.

6. Incubation For Mushrooms 

Arrange the spawned bags/ boxes/ trays in a dark cropping room on a raised platform concentrate to stop any threats any natural light from getting into the room. Keep the growing area at a specific temperature that depends on the variety.

7. Fruiting in Mushroom Farming

While various species require different temperature regimes all require high humidity 70-80% during fruiting. Frequent spraying of water is necessary for the cropping room depending upon the environmental humidity.

8. Protection Measures in Storing Mushrooms 

The mushroom is suspect to attacks from flies’ springtails and mites. The crop is prone to fungal disease and also can have the diseases of yellow blotch, brown spot, etc. you will need to have some specific control measure according to the attacks.

9. Mushroom Farming Harvesting & Storage

The right shape for harvesting can be judged by the shape and size of the fruit body. The mushroom should be harvested before spore releases. It is advisable to pick the mushrooms at one time from a cube.

There are two types of storage involves in mushroom processing- long term and short term. Freshly harvested mushrooms can be stored at low temperatures (0-5°c) for a maximum of two weeks. Dried mushroom with 2-4% moisture, can be stored for 3-4 months in sealed pouches without any change in taste.

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Basic Steps to Start a Mushroom Farming Business

10. Decide Whether Mushroom Farming Business is Right For You?

Mushroom farming suits best people who enjoy gardening, growing plants, and takes a keen interest in agricultural activities. Since you plan to launch a business, communication abilities will be an added advantage in networking with sellers and buyers.

An individual who has worked before on a mushroom farm can start his own mushroom farming business. Otherwise, it is always better to have technical training on mushroom farming to gain expertise.

11. Write a Mushroom Farming Business Plan

Starting a small business like mushroom farming requires a specific business plan. Work out a detailed budget; write out a clear strategy and objectives for your business, what will be the variety you want to grow, and what will be your target market like domestic or export.

The topics that must be addressed in your business plan for your home-based or small mushroom farming business are the following:

  • What are the start-up cost and recurring costs?
  • Your Target Customers
  • Pricing Strategy
  • Procurement of spores and other raw materials
  • How much profit you are expecting?
  • Where you plan to sell mushrooms?

12. Calculate the Cost of Mushroom Farming Business

The cost of starting a mushroom producing unit is not much. An area of 300-500 Sq. ft is enough to produce more than 10,000 pounds of mushrooms.

The other costs include LED fluorescent lamps for warming, mushroom spores, casing soil, manure, polythene bags, wooden shelves, and the initial construction expenses in setting up the rooms. So, anyone can start a mushroom farming business investing a few thousand dollars.

13. Fix the Pricing & Estimate the Profit Returns

Proper pricing strategy will play a critical role in the profitability of the business. The best way before deciding on prices is to collect the price of similar items being sold by existing mushroom sellers from the market.

For example, in the United States, you will find good quality specialty mushrooms in the range of $15 to $20 for each pound. For Oyster mushrooms, it is less and is around $5 to $10.

14. Name Your Business

Choosing a catchy and relatable name for your mushroom business is essential. The name must address the customers in clarity for the kind of products you are selling.

Learn More: How to Name Your Business? Step-By-Step Guidelines

15. Register your Mushroom Business

Registering your business is a must if someone is planning to run a hassle-free legally compliant company. Every country and state offers different business structures. Select the one that suits you the most.

For example, in the United States, broadly there are three structures popular for small businesses. They are a proprietorship, partnership, and limited liability companies. Forming an LLC protects you in protecting your personal assets in case the company is sued for financial disputes.

You can form an LLC directly or hiring a business service provider.

16. Licenses & Permits

Again requirement of licenses will depend on where you are planning to open the business unit. In the United States, there are several state and federal taxes you need to procure before launching the business. For taxes, you must apply for EIN(Employer Identification Number) here in the US.

17. Where to Sell Mushrooms

Unless you have a clear idea of where to sell the mushroom products, it is advised not to launch it commercially. Other than wholesalers and retailers, reach out to restaurants and showcase your products.

Restaurants are a good consumer for purchasing bulk mushrooms. Nowadays, having a website is a must for businesses. It not only enhances your brand but also create a new avenue of sales.

12. Create a Mushroom Farming Marketing Plan

High-quality commercial cultivation of mushrooms is a very profitable proposition as it is in good demand both in the domestic and foreign markets. You can go for local market penetration by making available your product to the retailer and vegetable shop. Also, you can go for an export option. The export market is mainly the USA, with some quantities going to the UAE, Russia, Germany, Switzerland, UK, and other countries.