Business Plan for:

(INSERT GENERALLY CATCHY AND UNFORGETABLE NAME HERE)

ECOSHROOMS
West Coast Mushrooms
Index:
1. Executive Summary
2. Company Overview
3. Products and Services
4. SWOT Analysis
5. Market and Competitor Analysis
6. Industry Analysis and Forecast
7. Compound Layout and Facility Plan
8. Operational Plan and Schedule
9. Cost Reduction Plan
10. Start-up Cost Estimation
11. 2-year Financial Projection
12. Funding Allocation Schedule
13. Break-Even Analysis
14. Conclusion
15. Addendums
16. References
Executive Summary
(INSERT THAT CATCHY NAME IN HERE) is a sole-proprietorship and micro-scale
Agribusiness that specialises in the production of “Specialty” mushrooms. (HERE
COMES THAT UNFORGETABLE NAME AGAIN) focusses on sales to the public and
businesses, whilst striving to produce the highest quality produce. Integration of eco-
friendly technology is at the core of (NAME)’s business plan, which allows for sustainable
growth in an ever changing climate. Sustainable growth will be a crucial theme for South
Africa in the future, and (NAME)’s eco-friendly technology will help to ensure the
sustainable growth our business needs. (NAME) will strive to enhance South Africa’s
(S.A) food security and local enterprises, as well as developing our staff’s skills and
expertize.
Company Overview
Milestones – The transition from micro scale facility to medium scale facility (production
of at least 500kg/week); Partnership formation and expanding of mushroom
housing/production; Employing more personnel and expanding the in-house facilities;
Transition to large-scale facility(1000kg/week and more) and commencement of outreach
programs; Opening “head-shop” in order to have a more public presence and sales
opportunities; Diversifying produce to other related produce; Formation of non-profit
organization to take care of stray/rescue dogs.
Business Model – Manufacturing; Retailing; Service Delivery; Training
Timelines – Start in 2018, Experimental phase late 2018, First sales 2019,
XXXXXXXXXXXXXXXXXXXXXXXX
Ethical code – At (NAME), we believe that :
 All life is equal
 Respect Mother Nature
 Gender equality must be respected at all times
 The workplace is a place for happy, motivated employees
 Knowledge and planning is key to success
 Problems should be addressed sooner rather than later
 All problems are equal
 Communication is key for team work
 Respect your business because you are part of the family
 It is in every citizen’s best interest to aid in National food security
Mission Statement – “To provide organic produce at affordable rates. To aid in food
security and job creation. To teach and train the staff and public about the integration of
eco-friendly sustainable technology.”
Staff code of conduct – All staff must adhere to the following:
 All staff should be kind and helpful
 No swearing at fellow staff or customers
 No sexual comments or acts whatsoever
 Always don a clean uniform at shift commencement
 Make use of the sterile technique where necessary
 Clean the work area AND compound as you come across dirt
 Refrain from taking shortcuts, do everything as it should be done
Environmental code – The business will try to aid in the rehabilitation of the property it is
located on, as well as the local area, through:
 Removing invader species from the area according to the guidelines of the
Department of Forestry.
 Promoting recycling, up-cycling and the “No-waste” movement.
 Spreading awareness to the staff and the public about self-sustaining living and
eco-friendly technology.
 Providing skills development through teaching COB/alternative housing
building.

Disciplinary code – (NAME) will follow the governmental set laws as stipulated in the
Basic Conditions of Employment Act 2002. Final decision making would always be up to
the General Manager, before external mediators would need to be notified (as per law).
Products and Services

(NAME) will produce the following:

 Oyster Mushrooms
 Blue/Pink Oyster Mushrooms
 King Oyster Mushrooms
 White Elm Mushrooms
 Turkey Tail Mushrooms
 Mushroom Substrate
 Mushroom Compost (for plants)
 Blackberries
 Raspberries
It is also important to note that (NAME) will produce solar dried and frozen produce.
The following services will also be on offer:
 Tutoring in Permaculture
 Tutoring in COB building
 Tutoring in Mushroom growing
 Tutoring in Composting
 Troubleshooting gardening
SWOT Analysis
Strengths:
- Eco-friendly
- Sustainable
- Modular
- Agribusiness
- Quick crop rotation
- Integrates technology
- Many products
- Low running costs
- Food security
- Small industry
- Organic
- Job creation
- Small workforce needed
- Small area required
- Maximizes productivity
Weaknesses:
- Public unfamiliar with “specialty” mushrooms
- Economy driven
- Perishable goods
- Labour intensive harvesting
- Sterility of mushroom housing/areas
- Visitors not adhering to protocols
- Unreliable workforce
- Load shedding (if using “the grid”)
- Marketing
Opportunities:
- Farmer’s Markets
- Local Asian markets
- Internet/Social media
- Retail stores
- Own head shop
- Local hotels
- Local restaurants
- Culinary schools
- Caterers
Threats:
- Competition
- Poor economy
- Customer unfamiliarity with products
- Staff negligence
- Poor environmental control
- Crime
In order to combat some of our weaknesses/threats, the business will do the following:
- Proper marketing on social media and local
newspapers.
- Outreach programs to teach the communities to use
mushrooms to cook.
- Use solar dehydrators to dehydrate products for
increased shelf life.
- Use thermally insulating COB for mushroom housing.
- Use solar panels for mushroom housing.
- Make a double fence compound with a living wall for
extra security.
- Automate environmental control as much as possible.
- Provide in-facility sterility training and have staff
- Have company transport to pick up staff and/or
complete deliveries
- Have a company garden to produce food for staff to eat
during lunch.
- Have showering facilities as well as BSI attire for
visitors.
Market and Competitor Analysis
In the past, mushrooms were labelled as poisonous, lethal and best to be avoided. This
has negatively affected the relationship humans have with fungi. Even to date, 90%+ of
the mushrooms sold are the common white button and brown button. It is unfortunate, but
at least the common white button mushroom has some of the beneficial traits that most
mushrooms have. However, these common mushrooms are definitely not as complex in
flavour as most mushrooms are. Knowledge about “specialty” mushrooms remains
uncommon in S.A and the industry could benefit from better/more effective marketing.
Social media has become a great tool for marketing, but the presence of the mushroom
industry on social media is low. As social media potentially has the widest reaching sphere
of influence, it is almost ridiculous that the mushroom industry has not increased its
presence drastically.
In 2015, Mushroom farming in S.A (Online) claimed the mushroom industry is still in its
infancy. It also speculated that electricity expenditure is high in the industry. Insect
pressure was also identified as one of the biggest threats to the industry. A business in
the Boland district produced 3t per week, until it procured enough funds to double its
production to 6.5t per week. This process took the business little over a year, and currently
the business employs 36 locally sourced personnel. This information/case study follows
the predictions in this business plan, however there was no information about Integrated
Pest Management (IPM). IPM could have alleviated some of the insect pressure, as the
Boland area already have some zones for pest control spread throughout the district.
According to the South African Mushroom Industry (van Greuning; 2018), only 8-10% of
the market consists of “speciality” mushrooms. There are a total of 17 producers of
mushrooms across S.A, producing a total of 21 000t per annum (or R940m/annum). 28%
of the mushroom industry is situated in the Western Cape area, and the mushroom
industry showed 5% growth in 3 years. Currently, there is great potential for small to
medium scale farming. Rapid growth as a business could be possible due to the low
number of competitors, especially in the “specialty” mushroom industry. For this reason,
the successful mushroom business should be modular, as this allows for easy transition
from being a small to medium scale facility, to eventually being a large scale facility. The
potential for growth increases even further when eco-friendly technology is integrated into
the business. Eco-friendly technology does not only have less of an impact on the
environment, it also can be harnessed in ways to make it as competitive (if not more) than
conventional technology. Eco-friendly technology trades money for man-power, as the
technology requires many hours of labour. This does not decrease the value of the money
saved by using these techniques, as these structures greatly out-perform conventional
buildings in terms of thermal regulation (which is crucial for any crop production OR
storage).
Entrepreneurs who wish to enter the mushroom industry can mainly do so in 3 ways:
manufacturing (farming), fabricating (using mushrooms to make other products) and
retailing (selling mushrooms and related products). For manufacturing, it can be further
divided into: micro, small, medium, large and commercial. Although (NAME) makes use
of modular facilities (allowing it to change its size without much influence to current
structures), it is still advisable for all businesses to start at a micro scale. This allows the
entrepreneur to build expertize before endeavouring to increase scale. The current
industry does have micro-scale businesses, but these tend mostly to rural areas of S.A
and the world. As mentioned earlier, a few large producers of mushrooms provide S.A
with all the mushrooms it can, but these mushrooms are 90%+ common variety. There
certainly is a potential for medium to large enterprises to exist in S.A, even more so if
these enterprises does not compete with the common variety market.
The current industry makes use of chemicals to prevent and treat insect pressure, even
though IPM has been existing for many years. If the techniques of IPM is applied
effectively, there can be a drastic decrease in insect pressure without the use of any
chemicals. Chemicals in S.A has become a point of irritation and frustration for many
Agribusinesses in S.A, as there is a substantial backlog of chemicals to be certified for
use within the industry (van Greuning, 2018). This is partially due to the low number of
departmental workers, and this can cause great difficulty for the Agribusinesses who use
chemicals. Thusly, it is advisable to use as little chemical products during the production
process, as this limits interaction with the relevant departments. Mushroom biology does
allow for complete organic growing, therefore IPM and environmental control should be
the top priority of the successful mushroom business. There are many organizations
world-wide that agree with this principle, and have adopted the IPM regime. The Peace
Corps (1987;85) is a good example of IPM being used for mushroom production.
There has been a shift towards solar-energy in the industry and S.A as a whole. This is
largely due to unreliable electricity supply that S.A has. Solar-energy has great benefits,
however the start-up cost for solar-energy is substantial. The benefit of having a reliable
energy source (that is renewable) does outweigh the money spent, and in an average of
10 years the panels would have paid for itself in money saved (without taking into
consideration money saved due to not having to repair equipment damaged by electrical
surge).
The successful mushroom business revolves around high quality compost (for substrate
production). This compost feeds the mycelium the nutrients (and water) it needs to survive
and produce mushrooms. Currently, the industry uses the following compounds to
produce substrate: straw hay, agricultural lime, chicken manure and more recently Mabu
(waste from sugar cane, more specifically: sugar cane pith). The substrate is then
pasteurized either chemically or via heat sterilization. Once the substrate is pasteurized,
it is then inoculated with mushroom spawn and allowed to become colonized. It is
important to notice, once again, that mushrooms do not need inorganic pesticides or
fertilizers to grow.
The current industry standard in S.A is to inoculate substrate at a ratio of 1kg inoculant to
10kg substrate. This allows the spawn to colonize the substrate at a good speed. A study
done in Pakistan (Bhatti; 2007) recommended that Oyster mushrooms be inoculated
using 70g of spawn per kg of substrate (700g of spawn per 10kg). Interestingly enough,
the study concluded that even if more spawn is used (100g per kg), it had no benefit over
using 70g per kg (it produced 3.6% product per dry weight whilst 70g produced 4.1%
product per dry weight). Due to the nature of the industry, it is bound to be subject to
change as it is a relatively new industry. The successful business would need to keep up
with not only new eco-friendly technology, but also developments in the mycological field.
Most mushroom businesses have its own capacity to produce compost, sterilized
substrate, spores (and liquid spore cultures), mushrooms and plant compost. (NAME)
feels that for a eco-friendly business to be successful, it would need to be able to dry
produce should the need arise. Dried mushrooms have become more popular in recent
years, and it has a substantially longer storage life than fresh mushrooms. Dried
mushrooms have been compared to “biltong”, and can be rehydrated or ground up to be
used in cooking. There is also mushrooms that could be cultivated as nutritional
supplements, which may also have medicinal value. There have been studies showing
the immune boosting effects of mushrooms like Cordyceps, Turkey tail and Lion’s Mane.
There is possibility for future commercialization of mushroom “leather”, but that falls out
of the scope of the current market.
Industry Analysis and Forecast
The mushroom industry should more than likely continue to grow at a steady pace. It
seems to change a lot slower than other industries, as the mushroom industry grew 5%
over 3 years (many other established industries change yearly, even bi-yearly). This could
be attributed to public unawareness of mushrooms. The total amount of mushroom sales
have increased by 2.1% on average per year (with 2.3% for 2018), which may contradict
the claim that the public is unaware. Mushrooms may pose a threat to revolutionize the
food industry, as mushrooms have large amounts of protein (has no carbohydrates as
well, vegan friendly) but cost a fraction of the price of meat. It could supplement or even
replace meat for low income areas.
The mushroom industry has been established firmly in 1st and 3rd world countries.
Currently there is no automated picking and sorting methods, therefore these tasks are
performed by employees (Chetty S, 2017:Online). Producing mushrooms will therefore
remain a labour intensive task, for the foreseeable future. This can ensure steady job
creation as the business grows, and this also emphasizes the need for in-house training.
Given the trend of usage in 1st and 3rd world countries, it is apparent that mushrooms will
increase in popularity over time in S.A. According to The Spawn Run (2017:Online), the
demand for mushrooms has been steadily increasing, with prices (per kg) increasing by
157% over 15 years (2001-2016). The total amount annually produced has also been
steadily increasing, as well as the amount of facilities producing mushrooms. 50% of the
industry is situated in Gauteng province currently, which could indicate the potential for
growth in other areas of the country.
S.A has been trying to improve the presence of mushrooms in the media, with various
means like “The Pink Punnet” campaign or “Spawn Run” (the online journal). Whether or
not these means are effective could be debated, however sales of mushrooms in S.A has
increased (as well as pricing). The amount of research S.A is dedicating to mushrooms
has also been increasing steadily, with research in many different fields. Some research
has even speculated mushrooms for use in eco-friendly bio-filtration of water, which could
be used to grow mushrooms and filter natural rivers.
There is some structures in place to assist mushroom farmers/producers in S.A. The
South African Mushroom Farmer’s Association (SAMFA) and “Fungkifriends”
(https://www.mushroomguru.co.za/fungkifriends-explained.html) are 2 potential sources
of assistance for mushroom growers in S.A. Also, recently S.A started to fund
Agribusinesses, in order to promote food security and trade. This could also assist the
potential mushroom business to secure financial aid.
Compound Layout and Facility Plan
The following facilities will be needed when the business grows to a large scale facility:
 General Sterilization areas (outdoor and indoor)
 Ventilation- and water treating facility
 Laboratory
 Packaging and storage facility
 Dehydration facility
 Modular mushroom housing
 Workshop and Vehicle bay
 Staff facilities
Operational Plan and Schedule
(NAME) will have 3 aspects that would need to run concurrently in order to be successful,
namely: Composting; Spore formation and inoculation; harvesting, storage and re-setting.
Operations will start at composting. The composting area will be divided into 2 areas,
namely: storage and production. In the storage area, compost will be stored for a
maximum of 6 months while its being turned. In the production area, compost will be
produced. This process entails the shredding of organic waste materials; and mixing it
with sources of nitrogen, carbon and beneficial bacteria. This starts to decompose the
material and prepare it for consumption by the mycelium. In total, the process can take
up to 6 months; however, this process can be hastened though various means. After the
compost is produced, it can be mixed with more straw and sterilized.
Once the compost is ready for sterilization, it should be moved to the sterilization area.
The sterilization area would be close to the composting area, ideally. This would reduce
the amount of labour required to move the compost. The compost will be steam-sterilized
under pressure in large containers for 8-10 hours. When the sterilization process has
been completed, the now-called substrate will be mixed with spawn, moved to its housing
and allowed to colonize. This process may take between 12 and 21 days (Reynders and
Reynders, 2012). Environmental conditions will dictate the phase of growing from this
point onwards.
After colonization has been completed, the substrate “logs” will start fruitbody formation.
This process can take up to 12 days, which would make the whole process about (with
waiting periods between flushes) 45-55 days. Mushroom “logs” will produce up to 4 times,
with the 1st flush being the most amount of produce. When the mushrooms are ready to
be picked, they have to be harvested in a very short window-period, which may only last
48 hours. Harvesting will be done by hand, and mushrooms will be sorted as they are
picked. After sorting, the mushrooms will be chilled to 2°C before being packed for
transportation/selling.
Spent mushroom “logs” will be used to produce high quality plant fertilizer. These logs will
be broken to smaller pieces, mixed with more organic matter and allowed to decompose.
After the fertilizer has been thoroughly decomposed and sterilized, it will be packaged
and stored, ready for sale. Fertilizer produced this way will also be used for the company
garden, in order to cut costs and promote high yielding crop returns.
Storage for mushrooms will be in a dark, refrigerated area, cooled to 2°C. Mushrooms
can be stored for a maximum of 8 days in this manner, however moisture content can
quickly deteriorate mushroom quality. Storage for compost can be done in many ways,
as long as there is ample space for storage. Storage areas need to be sealable and clean,
as this can help maintain shelf-life for longer. All spores/inoculated spawn will be kept in
the laboratory, as they are sensitive to environmental factors.
(MAKE FLOW CHARTS ON HOW BUSINESS HANDLES DIRECT SALES AND
INDIRECT SALES; HOW THE MUSHROOMS ARE PRODUCED; TIMELINES OF
PRODUCTION; COMPOSTING AS WELL)

Integrated Pest Management (IPM) – IPM is a system that was created to deal with the
multitude of pests crop may encounter. IPM can be applied to any crop, and The Spawn
Run (December 2015; 14) stated that IPM forms the basis of “Good Agricultural Practice”.
(NAME) will adopt a IPM outlined by the following:
Exclusion – Proper sterilization of items will ensure that contaminants do not enter
the substrate and compete with the mycelium. Clean the equipment, staging areas
and general area regularly, as this makes the environment non-conducive to pests.
Always ensure staff/visitors wear appropriate Body Substance Isolation (BSI)
attire, to prevent contamination.
Delay access – Use nature to your advantage when dealing with pests. Plant
shrubs/flowering plants to keep plants away from compound, attract pests with
plants away from compound and ensure all grow/sterilized areas are sealed
properly.
Control culture – Compost effectively to deter pests from breeding, sterilize
compost properly before use, keep the mushroom’s environment optimal to ensure
good health and harvest in a timeous manner.
IPM is only as effective as it is applied, therefore staff should observe these rules at all
times.
Cost Reduction Plan
In order to maximise profits and reduce expenditure as much as possible, (NAME) will do
the following:
1. Produce its own substrate, spores, inoculant, compost, sterilized items and
eventually electricity.
Producing items will allow the successful business to cut cost by reducing the
amount of taxes paid on items. This would also allow the business to sell these
items, which could produce revenue from excess production (sometimes
favourable conditions produce more crop than expected). Producing electricity
for the business as a whole is not a must, but it may a long term investment
worth pursuing. Priority for solar electricity must be given to the mushroom
production and ventilation facility, however.
2. Install durable and eco-friendly components.
It is advisable to prioritise durability over cost. Items that are durable require
less maintenance and last longer than cheaper counterparts. This saves money
over time (It is important to note that disposable items do not follow this rule,
as they are not re-used they should be the cheapest usable option available).
3. Reduce workforce to minimum amount required and automate the business as
much as possible.
S.A has had much difficulty in recent years with an unreliable workforce. This
has pushed some businesses to move towards the automation of production,
in order to continue production in times of striking and civil unrest. Having a
small workforce also allows the workforce to potentially have a better skillset
than normal. This allows few workers to manage many tasks, and increases
productivity as long as staff remain competent and aware.
4. Have a small company fleet of 2-3 vehicles.
S.A has difficulty with public transport currently. It could increase productivity
and staff satisfaction if the business has vehicles for transport. Staff could be
ferried to and from pickup points, and the vehicles can also do deliveries
whenever possible. The vehicles might also be able to pick up items for the
business, making this a very useful asset to the business. Potentially, the
business could also produce bio-diesel with waste, reducing the fuel
requirements of the company fleet drastically.
5. Provide training to staff (and public).
Having the facility and capacity to provide staff with training can reduce
expenditure by improving the business’ expertise. This will allow fewer staff to
perform more tasks, therefore increasing productivity. There is a possibility that
staff may opt to seek employment elsewhere after acquiring skills, however
(NAME) prioritises the capacity to provide training as essential for success.
6. Using COB for mushroom housing and ventilation facility.
It is a common requirement for agricultural facilities to be temperature
controlled. Conventional masonry offers low thermal regulating capacity at a
high cost, making it extremely ineffective for thermal regulation. COB offers a
high thermal regulating capacity at a very low cost, however it is more labour
intensive than conventional masonry (it is also quite a dirty job).
Start-up Cost Estimation
Start-up cost of (NAME) was initially:
As for the purposes of this document, the cost of expanding the business will be used as
the estimation for this section of the document. (NAME) plans to expand and formally
enter the market, as the experimental phase has been completed since 2019 (the
business was registered at SARS in 20XX).
General laboratory: R500 000
The laboratory will be used for many aspects of the business, and has a few basic
requirements. A thermally-controlled building with: sealed interior and one way air
movement, temperature controlled storage and fridges, general storage, working areas,
microscope and laminar flow hood, and potentially a centrifuge could be considered
essential. The allocated money is only for the building and basic equipment, however
(solar electricity would also need to be added as the business grows).
Ventilation and water treatment facility: R700 000
These facilities are essential to the business and ensures crop health. The water and
ventilated air has to be at a certain quality, in order to prevent contamination of the facility.
As all the mushroom housing will have sealed environments, air quality can drastically
influence crop health if not kept within a range suitable for the variety of mushroom
growing in the environment.
General sterilization areas (indoor and outdoor): R350 000 + autoclave unit
(NAME) will need the ability to sterilize substrate, compost and other items. An outdoor
facility with wood-fire based steam sterilization units could be constructed to sterilize
compost and bulk amounts of substrate in an eco-friendly fashion. The indoor facility
would need an autoclave-type unit, as this could be used to sterilize mass amounts of
items for use(i.e. laboratory).
Packaging and storage facility: R650 000
It is important that (NAME) has proper storage and packaging facilities. Storage has to
be done in cooled/refrigerated units, whereas packaging areas need enough workspace
and ergonomics to ease packaging and lessen damage to the product. This facility would
also need to use solar-energy, as this could drastically reduce monthly costs (but it would
need a substantial amount of electricity, therefore the business should save for it).
Dehydration facility: R50 000
The dehydration facility would be constructed outside, in a sunny and semi-sheltered
area.
Workshop and Vehicle bay: R300 000
The workshop and vehicle bay needs to have front-facing garage doors and enough
interior space for 3 vehicles and a small working area with tools. The tools will need to be
locked in storage and the garage doors need to be heavy (for better security).
Staff facilities: R400 000
Staff will need toilets, showers, a kitchenette and change rooms. A small indoor dining
area will be available, but staff will be encouraged to use the outdoor dining areas.
Mushroom housing: R2 000 000
The total cost for 100 mushroom production facilities is R2 000 000. The facilities are built
10 at a time (R200 000) and is built in a modular fashion as funds become available. 100
of these facilities will require a good amount of man-power, therefore a total of 5 years is
to be expected to finish all 100 facilities. These facilities can produce a substantial amount
of produce, as they are 78m2. Therefore, 10 of these facilities can produce R280 000 per
harvest (90 per kg x 4kg per m2 x 78 x 10).
Total cost: R2 950 000 + R2 000 000 = R 4 950 000
2-year Financial Projection
Funding Allocation Schedule
Priority will be given to assets that generate income. Expansion of the compound will be
part of the latter aspects of funding allocation, as productivity should always be maximised
before expansion is attempted.
Break-even Analysis
Conclusion
Addendums
References
https://www.google.com/amp/s/www.farmersweekly.co.za/crops/field-crops/mushroom-
production-tips-boland-farmer/amp/ chetty s