ORIGIN: This simple overview of small-scale, indoor microgreens farming was stimulated by this story posted on Facebook, accompanied by a comment that parts of some failing US shopping malls have been converted to indoor farming, to which we replied...

Executive Summary

This document examines the startup requirements and possible outcomes for a small, one-room gardening operation growing micrograms. The project begins with the smallest possible configuration of equipment and supplies and expands to any scale supportable within the available floorspace and utilities. The required investment is small, and income can quickly match or exceed low-wage jobs.

Marketplace

The intended market is farmers' markets, which may be seasonal, plus year-round delivery to consumers near the garden. Demand for microgreens is growing. These small plants, usually with a growth cycle under 14 days, are highly nutritious and desirable as part of a balanced diet.

Operations

The gardener will cultivate microgreens using standard technology consisting of shelving (aka "racks") and trays with hand watering and disposable media. The process usually consists of sowing, sprouting in darkness for two to four days, followed by cultivation under artificial lighting for seven to ten days. The times vary somewhat with the varieties grown. The minimum space required is only around 30 square feet (3 m2). A typical spare bedroom can accommodate four racks.

Labor requirements are low. One person can easily manage a garden of up to eight racks or 160 trays. A single rack requires about one hour per day; economies of scale apply to increasing number of racks. Delivery and/or attendance at a farmer's market might take one full day equivalent weekly. Thus the labor requirement can vary from two to six days per week. The startup plan assumes that all labor is initially performed by the owner-operator.

Product

Produce may include any of around 40 common varieties. The plan assumes that produce is delivered either as flats (trays) or in retail packages either as living plants or cut greens. Retail packages have a higher value but require additional labor.

Trays are a standard 10x20 inch area, approximately two inches deep. They may contain an internal secondary tray used to raise the growing medium and seeds off the tray bottom to control possible infestations by mold or other contaminants. The specific format will vary with the crops selected.

Revenue & Expenses

We might assume operating scales of a single rack and four racks, all of which can easily fit into a typical spare bedroom including a work table and storage. A tray of uncut microgreens will have a value of around $20 to $25 dollars depending on the variety. A rack can hold 20 trays. We assume that a sprouting rack is used for the dark phase of germination leaving the whole cultivation rack available during the balance of the cycle that averages one week.) The associated spreadsheet model converts this to a monthly value. Various assumptions about crop success and annual weeks worked with create additional variation in revenue. For estimating purposes we assume 95 percent success and a 50-week year.

Modified to the low-price scenario with half of output sold in retail packaging at $4/unit and the rest as trays at $20/unit, we project revenue of $2,190 per month. Since the labor is provided by the owner-operator, the only cost is about $1 per day for electricity, about $1 per tray for seeds, and about $332 for retail packaging, giving a gross profit of around $1,858.

The same scenario for four racks produces revenue of $5,110 and gross profit of $3,781, including higher G&A expenses. All values may vary from this summary due to rounding and crop choice, market conditions, seasonality and other factors.

General & Administrative Expenses

G&A varies widely depending on how the owner-operator's business is organized. To be sure there will be legal, accounting, insurance and management expenses, but that variation is beyond the scope of this analysis. If we assume a 25 percent G&A rate, relative to gross profit, then the net income from a small microgreens gardening venture can vary from $500 to $1,800 monthly — from a single rack. Many local factors will determine actual results, which cannot be guaranteed.

Required Investment

The total investment needed to start the business described herein can be as little as $2,000, assuming only repairs and enhancements to the growing space if the space has all the required water, drainage, electricity, insulation, etc. If the owner-operator invests 20% (~$450) of that, the monthly burden will be around $100, which would reduce net income accordingly, to about $1,550 at the upper end.

Conclusion

These outcomes compare quite favorably to a minimum-wage job, which would have additional expense for clothing, commuting, childcare and any job-specific requirements.

The key to success is not in growing microgreens. It lies in understanding the local market and choosing and recruiting the right client base. This requires thorough market research and tailoring the product to actual demand.


What's next?

We welcome the opportunity to discuss the creation of a home-based business with interested persons.
In this one-rack scenario, the owner-operator is also the labor force. This means that the cash flow is a better index of the value of the business than the ostensible profit (net income).

Note that the values in the following scenarios may not precisely reflect the summary examples above.