This is my first article in the business series, this article will help anyone in business. When you start business there are many things to consider to make it successful. I will touch on a few things and hope to cover more in the future.
Pricing is critical to business its either you price under cost, at cost or above cost. The bigger the margin above cost the better, a mushroom farmers pricing its trick in the sense that crops are spread apart on the same block so its important to know you biological efficiency before selling.
Cost of production
Most growers struggle to cost because as highlighted above crop is spread, three to four months depending on system, usually growers just look at the obvious cost: cost of producing the bag and packaging costs and ignore all costs in between. We can help you build an excellent costing model.
One way to kill any business is poor cashflow. This can surely kill even a profitable business. A mushroom operation like any business requires regular cash inflow to survive. From spawning to first harvest takes 30days on average for oyster mushroom, if you sell on credit say 21days payment terms it means you need 51 days for you to get cash assuming client pays on time. For someone who sells on cash by day 51 they ate about to harvest second or already on crop three. My experience tells me most growers fail here. The bigest challenge is input cost largely driven by cost of spawn, if spawn is not on credit or lowly priced any mushroom venture will collapse. Further most growers buy inputs on cash but sell on credit. With no financing its just a matter of time before the operation collapses.
A grower needs to understand that process loss will eat into their profits. Most of the process loss is caused by contamination no matter how high the price contamination will guarantee loses. Its important to manage the whole growing process to minimise it.
Don’t just grow mushrooms, start and grow your mushroom business don’t cut corners seek appropriate guidance, we are there to help you all the way.
If you are growing mushrooms what has been your greatest challenge to date? Do not hesitate to give feedback in the comments section or on our social media platforms.