How to Start a Mushroom Farm

Love the idea of farming but without the expensive equipment and huge land costs? Mushroom farming may be the perfect venture for you.

Minimal startup costs, high profitability, and a rewarding process are just a few of the many reasons mushroom growers get into this business.

You don’t need to be a mycophile to succeed with your farm (although passion helps!). But you do need a sound plan and a thorough understanding of what it takes to launch your own mushroom farm.

Why start a mushroom farm?

Whether you’re a mushroom enthusiast or passionate about gardening, you’ll find that mushroom farming has many advantages. 

The biggest advantage of all? The high profit potential. Mushrooms have a high yield and a quick growth cycle. Gourmet varieties, like oyster and shiitake, fetch high price tags. Under the right conditions, profit margins can exceed 150%.

“We grow about 500-700 a week. Our revenue is about 20k per month,” says one Redditor.

Profit potential is just one of the reasons to start a mushroom farm. This venture also offers:

High demand

Demand for mushrooms is on the rise, especially those grown in small-scale operations. In fact, the global mushroom cultivation market is expected to reach $32.75 billion by 2032.

Why is demand so high?

• A rise in health-conscious and plant-based consumers, who rely on mushrooms as a source of protein, vitamins, and minerals.
• Demand for functional mushroom supplements is skyrocketing. The market is projected to hit $33.72 billion in 2025.
• A growing interest in culinary and medicinal mushrooms.
• Demand for processed mushrooms (powders, dried mushrooms, etc.) is growing, especially in the convenience food industry.

More consumers and restaurant owners are searching for hyper-local, high-quality food. Mushroom farms fill this need.

Low startup costs

The average small business owner will spend $45,000 in the first year to launch their operations. Mushroom farmers? They will spend a fraction of that to get up and running.

When people hear the word “farm”, they envision needing lots of space and expensive equipment. In reality, mushroom farming can be done in small spaces with basic lab supplies and growing materials.

Low entry costs make this business an attractive option for any mushroom enthusiast. 

Year-round growing

Unlike traditional crop farming, mushrooms can be grown year-round with indoor, controlled setups. Year-round growth means year-round revenue and fewer cash flow concerns (with proper management).

Versatility

The mushroom farming business is so versatile. What can’t be sold fresh can be dried and packaged for sale. 

If you’re ambitious, you can create mushroom jerky products. 

Even your spent substrate can be sold to gardeners and farmers as a soil amendment or compost.

Having multiple income streams will not only minimize waste but also help provide steady revenue throughout the year. 

Variety

A wide range of culinary and medicinal mushrooms can be grown, including:

• Oyster mushrooms
• Shiitake mushrooms
• Lions mane mushrooms
• Reishi mushrooms

If you have the means and suppliers, you can even cultivate less common varieties of mushrooms, like:

• Tea tree
• Shaggy mane
• Almond mushrooms
• Pioppino

You can focus on a single mushroom type or grow multiple varieties to offer a wider selection to your customer base.

Is a mushroom farming business right for you?

Mushroom farming can be lucrative, but is it right for you? Before you dive into mushroom production, consider the following:

• What’s your “why?” Are you passionate about farming or mushrooms? Profit shouldn’t be your only motivator.
• Do you have any experience? You don’t necessarily need to be an experienced grower to launch your farm, but you may want to consider cultivating smaller batches of mushrooms first to learn more about the process.
• What type of mushrooms do you want to grow? Some varieties are more complex than others and may be more challenging to sell. 
• Are you prepared for the physically demanding aspects of farming? Even mushroom farming is physically demanding. You’ll be getting your hands dirty and lifting large objects regularly. 

It’s also important to remember that this business is more than just growing mushrooms. You’ll need to build a network of contacts and relationships with chefs, distributors, and local customers. These connections and relationships will be key in promoting your business and establishing your first sales.

If you decide that mushroom farming is right for you, the next step is to look at costs and start investing in your setup.

What about startup costs?

You know that mushroom farms have low startup costs. But how low is low? The answer really depends on your goals and the size of your operation.

Small-scale mushroom farms typically only require a small investment. Aim to have at least $2,000-$5,000 to get started if you already have basic equipment and space for your growing operations.

Large-scale operations can cost $10,000-$100,000+. The bigger your operations, the larger the costs. 

Since you’re just getting started, consider launching as a small mushroom farm and growing organically over time.

What do you need to get started with mushroom farming?

Most of your startup costs will go towards your equipment and supplies. Here’s a basic rundown of what you’ll need:

Spawn and substrate

Mushroom jargon can be confusing for beginners, so let’s start with the basic terminology:

• Mycelium is the root-like structure of a fungus, made up of thread-like hyphae, that typically grows underground. A mushroom is the fruiting body of the mycelium.
• Substrate is the material that the mycelium grows in, and provides the nutrients needed to produce mushrooms. In a forest it could be rotting wood; in a mushroom farm it could be sawdust, coco coir, cardboard, or even old coffee grounds.
• Spores are the tiny, single-celled structures that contain the genetic material of a fungus.
• Spawn is a piece of substrate that’s been inoculated with spores and is full of mycelium. 

The simplest kind of mushroom farming involves inoculating substrate with pre-prepared mushroom spawn, then taking care of it while the mycelium grows until the point it can produce mushrooms. 

Medicinal and gourmet mushrooms are typically grown on grain spawn, but some mushroom growers use sawdust or plugs. While sawdust is cheaper, grain spawn tends to support stronger mycelium. 

If you’re just starting out, your first task is to find a good supplier of spawn and sterilized substrate.

Grow bags

The spawn and substrate need a place to live as your mushrooms grow. Grow bags are the most common option for farmers because they deliver the high levels of humidity and CO2 that the mycelium needs to colonize the substrate.

Mushroom growing bags are specially designed for this purpose and are the best option for new farmers.

Thermometer

Every species of mushroom has its own requirements for humidity, temperature, and light. Having a thermometer is essential. 

Look for ones that can handle higher humidity so that you can use them throughout the growing process.

Water sprayer or humidifier

Mushrooms need the right level of humidity to grow and thrive. You have two options here: a simple spray bottle or a humidifier. 

For ultra-small growing operations, spray bottles may suffice. But if you want to do this on a commercial level, it’s worth the investment to buy a humidifier or misting system.

Sterilizer

Mushrooms are fungi — and so is mould. You want to harvest sellable mushrooms, not just grow interesting science experiments, so sterile substrate is essential. 

Unless you’re purchasing pre-sterilized substrate, you’ll need a way to either sterilize or pasteurize large amounts of substrate at once. A steam barrel system or pressure cooker can super-pasteurize your substrate without requiring a hefty investment. Sterilization is essential for most indoor grow setups, so invest in a reliable system.

Shelving or hanging rails

You’ll need space for all of your mushroom bags. Industrial shelving is ideal for this purpose. Steer clear of wood shelves, as your mushrooms need to grow in a high-humidity environment. 

Another option is to install rails to hang your bags on.

Incubation chamber

A separate incubation chamber will give your bags space to rest as they colonize. The chamber needs to be warm and dark. 

If you don’t have a spare room in your home or commercial space, a walk-in fridge or shipping container can work just as well.

Fruiting chamber

The fruiting chamber is where the magic happens. But this space needs to be more controlled to create optimal conditions for mushroom growth.

A hydroponics tent or even greenhouses can work well for this purpose.

Air exchange fan

Your fruiting chamber will also need an air exchange fan to keep the CO2 levels from getting too high. The fan should be hooked up directly to your ducting to bring fresh air into the space. 

LED lights

Lighting will also be an essential component of your fruiting chamber setup. Look for LEDs in the 6500 – 9000K range and make sure they’re waterproof.

How much space do you need?

We’ve covered the most essential supplies you’ll need to start your farm, but what about your space? As we mentioned above, you’ll need separate spaces for incubation and fruiting.

Exactly how much room will you need?

According to GroCycle, commercial farms should aim to have at least 500 square feet of space. Check out this excellent video that covers space requirements in greater detail (see it below).

How to grow mushrooms — the basics, step by step

Having the right setup is key if you want to start a commercial mushroom farm, but you need to know how the growth process works.

The first step? Figure out what you want to grow and then purchase your spawn (or spores) and substrate.

Once you have everything you need, you can move through the steps below.

1. Inoculation

To get things started, your spawn needs to come into contact with your substrate to start the colonization process.

Substrates like agar, grain, and sawdust should be sterilized first to avoid contamination.

2. Incubation

Once you’ve inoculated your substrate, it’s time to transfer your bags to your incubation room or chamber. Here is where your substrate will be colonized.

Incubation can take anywhere from 10 days to several months, depending on what type of substrate you use. 

During this stage, keep your bag a hands-width apart to avoid overheating. 

3. Initiation

Once your substrate is fully colonized, you can move on to the initiation phase to encourage fruiting. Lower temperatures and higher oxygen levels are key.

Most growers achieve this by cutting holes in the plastic grow bags to expose small areas to the high-oxygen environment.

How and where you cut will depend on the species.

4. Fruiting

The fruiting stage is where everything comes together. To maximize yield and quality, you’ll need to make sure that the:

• Temperature is right (50-65 F is optimal for most species).
• Relative humidity levels are high (above 85%).
• Lighting is optimal. Yes, mushrooms do need light to grow.
• Oxygen levels are high. Here’s where your exchange fan will come into play. Most species prefer CO2 levels to be below 1000 PPM.

5. Harvesting

All of your hard work has paid off. But mushrooms, like any other crop, need to be harvested at the right time. Daily harvests are key to ensuring the highest quality product.

Remember: these are just the basic steps of mushroom growing. Success can only come with practice, so start growing before you launch to understand how the process works firsthand. 

Creating a business plan for your farm

You’re ready to dive into the mushroom industry. You even have a few growth cycles under your belt.

But before you take another step, sit down and create a business plan for your farm.

Having a solid plan will set you up for success. Use our Business Plan Template to save time and make sure you cover all of your bases.

Here are a few key things to consider when creating your plan.

1. Market research

Is there local demand for mushrooms? If not, you may struggle to keep your doors open.

Conducting market research is essential to weigh demand levels and scope out the competition. 

Here are some tips:

• Survey local buyers. See what people are buying at restaurants, grocery stores, ethnic markets, food trucks, pop-ups, farmers markets, and co-ops.
• Check out your local farmer’s market. What sells fast? Note your competitors and what they’re offering.
• Talk to former growers. What went wrong? What pitfalls should you avoid?

Understanding local demand and opportunities will help you determine whether your farm will be viable. 

2. Financial projections

Market research will play an important role in creating your financial projections. These will shed some light on your farm’s expected profitability and cash flow.

This part of your plan should include:

• A sales forecast based on your estimated price per unit and the number of units you expect to sell each month/year. 
• Operating expenses, including your production costs and overhead.
• Financial statements: profit and loss, balance sheet, and cash flow.

3. Legal and regulatory considerations

When fleshing out your plan, don’t forget to consider any legal or regulatory requirements that may affect you. Regulations will vary from state to state, so check with your local chamber of commerce to see which requirements you need to meet.

Market research and financial projections will establish demand and profitability. While these are only two components of a business plan, they are some of the most important. 

How to find customers

Customers are the lifeblood of your business, but finding them isn’t as simple as getting your product on store shelves. As a small, local mushroom farmer, relationships will be the key to your success.

In this business, knowing the right people can help you find customers and success early on.

For many mushroom growers, their customer base consists of:

1. Restaurants

If you can keep up with demand, restaurants will provide you with a steady stream of business all year long. 

Reach out directly to local owners and chefs. Offer tastings of specialty varieties that chefs pursue, like shiitake and oyster mushrooms.

2. Farmer’s markets and events

The simplest way to find customers is to sell your goods at local farmers’ markets. Here, you can sell directly to consumers and charge premium prices. Be sure to rotate local markets to expand your reach.

Events are another great opportunity to find customers and build relationships. Set up a booth at food festivals or related events that attract your target audience. Offer samples and engage with the community.

3. Grocery stores

Like restaurants, grocery stores can be a reliable stream of revenue for mushroom growers (if you can meet their demand).

Reach out to local grocery stores or specialty markets and pitch your products. Focus on freshness, quality, and the fact that your mushrooms are locally grown.

Getting your mushrooms to market: Efficient delivery systems are critical

Making your own deliveries is one of the best ways to make sure your fresh mushrooms are always available at premium quality.

Routific customer EightFold Farms DC, for example, is an urban mushroom farm that’s helping local communities eat smarter and healthier. They offer free delivery to customers in DC, Maryland, and Virginia.

Getting started doesn’t have to be complicated:

• You can begin with a single vehicle and expand over time.
• Consider using a third-party courier or local delivery service. 
• Partner with local farms or co-ops that already offer delivery. They’ll handle the logistics and offer your products to customers.

We have an excellent guide on how to start a delivery service here.

💡When you’re ready to deliver your first harvest, check out Routific to see how easy delivery management can be. It’s free to try for 7 days, and for up to 100 deliveries a month.

Scaling your operations

Once you have an established customer base and steady sales, you may consider scaling your operations.

When should you scale?

When you’re consistently:

• Selling most or all of your harvest every week
• Getting repeat buyers

If you can’t keep up with demand, this is a clear sign that it’s time to expand by:

• Expanding your grow rooms and racks
• Hiring staff to help with harvesting and packaging
• Investing in cold storage to keep your mushrooms as fresh as possible
• Adding new CSAs, farmers markets, and restaurants to your customer base
• Expanding your delivery service

As your operations grow, you’ll need to start thinking about delivery logistics if you’re offering this service.

That’s where Routific comes into play. We help delivery businesses (small and large) slash their delivery costs by 25%.

Common mushroom farm challenges 

Like other farmers, mushroom growers face their fair share of challenges. Some of the most common ones include:

• Starting too big. It’s great to be ambitious, but starting too big comes with risks. You may struggle to move inventory. You may make costly mistakes. Instead, start small and grow with demand to minimize risk.
• No plan for waste disposal. Once your substrate is used up, you’ll need to dispose of it either in a compost pile or something similar. Spent substrate piles can quickly grow into a large problem, so have a disposal plan before you launch.
• Failed growth or contaminated substrate. Mushroom farming is both an art and a science. Improper moisture and temperature management can lead to failed growth. Contamination can force you to toss out an entire grow bag. Following the advice of other growers and standard practices is the best way to avoid these issues. 
• Poor marketing. If you’re not effectively promoting your farm, you’ll struggle to stay in operation. Make sure that you’re networking with local businesses, building a strong and active online presence, and making yourself seen at local markets and events.

Final thoughts

Mushroom farming can be a profitable venture if you have the right plan and a passion for farming. Start by assessing local demand and trying small-batch grow cycles to get a feel for how the process works. 

Once you establish your business, making connections and building relationships will be the key to success. Offering delivery can be another effective way to stand out from your competitors and reach more customers.