The project is a down-to-earth one; no ivory tower is there and no Dutch courage is needed. It’s all about mushroom- its cultivation and marketing where investment is extremely possible minimum. No down time exists here, as the state of art technology is not needed. Even it’s neither a capital intensive one. The project is aimed at fulfilling with the very number one basic need i.e., food along with the ex gratia, nutrition, staying at the heart at the agriculture sector, the mother of all industries. The projected outcome is that by investing BDT 2,000,000.00 (equivalent of US$ 25000.00), net income would be BDT 5,995,635.37 which states about 299.78% ROI without any substantial variation, due to the existence of antithesis relationship in between risk and return (because, here risk is at rock-bottom but the return is sky-rocketing).

Mushroom Mavens, LLC (proposed) plans to produce and market mushrooms in Bangladesh, a country with a conducive climatic condition for the cultivation of mushrooms. In Bangladesh due to escalating population growth, land to man ratio is decreasing every year. As a result, the land available for cultivation of vegetables is decreasing. These circumstances create a potential market for mushrooms, a vegetable with high nutritious value in it. The price of vegetables is skyrocketing and it is getting beyond the reach of the common people. This inadequate consumption of vegetables has created malnutrition in the general public. In such a situation, the cultivation of mushrooms would not only bring profit for the company but also meet the needed nutrition for the people of the country. Moreover, the Bangladesh Government is also providing a tax holiday for entrepreneurs cultivating mushrooms. The government and private banks are offering loans to encourage entrepreneurs to be engaged in mushroom business. A few companies are producing mushrooms for export, however, for the local market; there are an insignificant number of producers. Therefore, the main objective of this company would be to profitably serve the people of Bangladesh, who are suffering from malnutrition due to the inadequate consumption of vegetables.

The main challenge of the company will be to position mushrooms as a high quality and high value-added alternative vegetable in the local market. To achieve this, a heavy promotional campaign will be undertaken. In the first two years, this campaign will be concentrated only in Dhaka district. The company gradually will extend to other divisions such as Chittagong, Sylhet, Rajshahi, Khulna,Rangpur, and Barisal. The company will also popularize mushrooms in the rural areas through the influence of reference groups. The owners’ policy of retention of earnings within the company would support this growth strategy financially. In addition, the company would maintain a good relationship with its current creditors; this would help the company in case of a sudden need of funds.

The location of the cultivation plant in the tree-shaded rural areas with an easy communication system from the urban areas would help the company to produce quality mushrooms through the proper maintenance of temperature. Besides, the company’s precautionary measures to tackle the various natural and human created barriers would further enhance the quality and regularity of its service. In addition, the company would maintain a close relationship with the Mushroom Development Center (MDC), at Savar, Dhaka, to be acquainted with the recent developments in research and development of the cultivation of mushroom at home and abroad.
Company Overview

The name of the company will be “Mushroom Mavens, LLC”. The cultivation plant of the company will be located at Hayat-kar-Chala village of the Sreepur police station in Gazipur district. The company will employ 16 employees. The management of the company will consist of one general manager (GM), one manager for the cultivation plant office, an agriculturist at cultivation plant office, and one manager for the sales center. The company will start with an initial investment of BDT 2,000,000, of which BDT 800,000 will be invested by the founding owner. The rest of the initial investment will be obtained through a bank loan.

Mission Statement

To grow and to reach the track of substantial profitability through customer satisfaction by providing top quality mushrooms.

Vision Statement

To meet the daily vegetable needs for the people of Bangladesh.

Key Products

Different types of mushroom are available in this country such as - oyster mushroom, milky white mushroom, straw mushroom, shitake mushroom, button mushroom and reishi mushroom. These different types of mushroom are generally grown in the different seasons of the year. Only the oyster mushroom is generally grown throughout the year. The climatic and other environmental conditions of Bangladesh are also suitable for the production of oyster mushroom. As the company plans to produce in mass to serve the customers, it will now only focus on the production of oyster mushrooms. This oyster mushroom will be sold fresh, as well as dried.

Strategic Goals and Objectives

Short term Goals

To create awareness and to educate the people about the nutritious and medicinal value of mushrooms.

Long term Goals

To be the market leader of the vegetable industry in Bangladesh by positioning mushrooms as a high-quality and high value-added alternative vegetable.

Objectives

The main purposes of the company are to • serve the customers with top quality mushrooms, • set-up cultivation plants throughout the country, • establish an extensive distribution channel so that mushrooms of this company will be available throughout the country, • improve the livelihood of the rural people by employing them in the cultivation plants.

Industry Overview and Analysis

The commercial cultivation of mushroom was first started in Europe in the beginning of the 20th century. Afterwards it spread to the other countries. In the ancient Greek, Roman, and Indian cultures, mushrooms have been considered a delicacy associated with the royal class.

Mushroom cultivation in Bangladesh is a recent development. The Government of Bangladesh is promoting the culture of mushrooms to a large extent. Scientific mushroom production in Bangladesh started in the late 1970s by volunteers from Japan named “Overseas Co-operative Volunteers”. In the early 1980s, commercial mushroom cultivation was initiated by the Bangladesh Agricultural Research Council (BARC) when a Mushroom Development Centre (MDC) was established at Savar, Dhaka. The commercial production of spawn packets of oyster mushroom started in 1989. Over time, production increased from one metric ton (MT) in 1989/90 to five MT in 1991/92. Today, there are three mushroom culture centers in the country. The first one was established in MDC at Savar. The other two are situated in Mymensingh and Dinajpur. These culture centers mainly train people on mushroom cultivation and also provide mushroom growing bags containing "mycelium" (growing media) inoculated with mushroom spawn. The cultivators need to germinate the spawns and later harvest the mushrooms.

There is an active interest among local industrialists to commercially produce mushrooms with a view to processing mushrooms for export. Mushrooms generally are not considered as a part of the regular diet in this country. Currently, mushrooms produced on farms are locally marketed. Mushrooms are supplied to hotels, Chinese restaurants, and markets in close vicinity to the residence of foreigners. One agro-processing company also exports mushrooms to European markets. Besides, only a few individuals cultivate mushrooms upon receiving training on mushroom cultivation. However, most of them cultivate mushrooms as a hobby, rather than a business.

Estimation of Demand

A convenience sampling was used to estimate and identify the demand of the product and the perception of the customers about the product. The sample size of the study was 200. The study showed that the people with income range more than BDT 15,000 prefer mushroom as vegetables. According to Bangladesh Bureau of Statistics (BBS), there are 5 million people who belong to the household with a monthly income above BDT 15,000. The study also shows that people perceive an average consumption of 1 kg per month per person. Therefore, the yearly estimated demand is 60,000,000 kg.

Operational Plan

Product Overview

A mushroom is the fruit of a fungus. Its purpose is to disperse spores, microscopic single cells that can grow into new fungi. The fungus looks like a series of branching threads infiltrating the soil or leaf litter, or in the wood of living or dead trees. These higher fungi, which produce mushrooms, consist of many cells. There are different types of mushrooms available in this country. The climatic and other environmental conditions of Bangladesh are extremely suitable for the production of oyster mushrooms. Therefore, the company has selected this type of mushrooms to produce in its plant.

Facilities and Plant

The company will establish a 144,000 square-foot plant in Hayat-kar-Chala village of Shripur district, which is located close to a paved road. Here, the price of land is very low compared to other places. The labor is also cheap in this locality. The plant includes the production plant, drying and storing house, and an office building. In addition, the company will also locate a sales centre in Karwan Bazar, Dhaka

Production Process

The company will collect poly bags called “spawn” from MDC, Savar. Such bags include "mycelium" (growing media) inoculated with mushroom spawn. After placing/planting these bags on the racks of the mushroom house, harvesting can be completed on an average of 8 days. Harvesting is done at the early stage of ‘fruiting’ just before the spreading of umbrella like fruit body. Oyster mushrooms begin to grow through holes in the poly bag and form a cluster. Mushrooms can be harvested over three months after plantation. After harvesting, part of the produced mushrooms will be packaged fresh and sold immediately. The rest of the produce will be dried by the heat of electric bulbs or sunlight. The dried mushrooms will be packaged in airtight poly bags and stored. These would be sent later to the company’s sales centre.

Research and Development

The company would maintain a close relationship with the Mushroom Development Center (MDC), located at Savar, Dhaka, to be abreast of the recent developments in research and development of cultivation of mushroom at home and abroad. Also, the company’s own agriculturists will constantly observe its cultivation plants so as to increase production and to ensure quality.

Quality Assurance

The production of quality mushrooms requires a high level of competence and skill. The principal management factors that draw attention are temperature monitoring, watering, carbon dioxide monitoring, humidity control, air movement and hygiene, pest and disease control. The manager and labourers of the plant will be provided training on these aspects. Moreover, an agriculturist will be employed to constantly monitor the mushroom houses. Careful attention would be given to cleanliness and air-tightness during the packaging of the product.

Marketing Plan

Marketing Objectives

▪ Maintain positive, steady growth each month. ▪ Experience an increase in new customers who are turned into long-term customers. ▪ Generate brand equity at the current individual consumer’ market as well as within the business customers’ market.

Market Overview and Analysis

More than 30% of the people of Bangladesh live below the international poverty line. While agriculture remains the main source of income for around 80% of the people, the country’s per capita arable land stands at 0.12 hectares. Therefore, there is limited land available for the cultivation of vegetables. Moreover, a population growth rate of 1.7% per annum is also reducing per capita land holding of the country. It is obvious that with the increasing population, the country’s cultivable land area cannot meet up with the demand for vegetables. The price of vegetables is also very high. Thus, there is a big gap in between the supply of and demand for vegetables, which can be profitably met by introduction of mushrooms.

Competitor Analysis

There is only one company at present located at Savar, which produces mushrooms both for the domestic consumers as well as for export. Though that company’s utmost emphasis is on export, it supplies dried mushrooms to some retail stores such as Agora, Nandan, and PQS. According to MDC, there are about 10 micropreneurs scattered in Dhaka city, who cultivate mushrooms. These cultivators, most of whom cultivate mushroom in their homestead gardens or rooftops, have very limited capacity and produce mushroom to sell mostly in their neighborhoods. A few of them, however, also supply fresh mushrooms to the above-mentioned retail stores. The company producing commercially and the individual cultivators purchase the spawn from the MDC. The average purchase of spawn by the company at Savar is not more than 2000 bags per month. The average purchase of spawn by individual cultivators is around 20 spawn bags per week.

There has not yet been a well-established distribution channel for mushrooms. The company at Savar and the individual cultivators supply to the retail stores based on orders.

Marketing Strategy

Marketing strategy entails discussion of product, target market, the planned product positioning, and sales, market share, and profit goals for the first few years. This plan specifically discusses these issues for the first two years.

Target Market

The company will cater to both business and individual customers.

Business customers

All hotels and Chinese restaurants of the country are the potential business customers for mushrooms. These customers will be the bulk buyers for this product. This segment is very important to make a profit for this company. Therefore, the company will maintain good relations with these customers through instant delivery to ensure their retention.

Size and Growth of Market

According to Bangladesh Bureau of Statistics (BBS), there are 5 million people who belong to the household with a monthly income above BDT 15,000. The current population growth rate is 1.7% per annum. Even if the growth rate among the target market is 0.5% the size of the market of the company would increase to 5.025 million in one year.

According to the Bangladesh Yellow Pages, there are around 200 Chinese restaurants in Dhaka city, 60 Chinese restaurants in Chittagong city, 6 in Rajshahi, 4 in Khulna, and 15 in Sylhet. A close look at the list reveals that many of the existing restaurants have not been documented here. Moreover, many restaurants open up shop every year.

Product

As mentioned earlier, the company would cultivate only oyster mushrooms. It will sell these mushrooms both fresh and dried. Both fresh and dried mushrooms will be packaged in polythene bags. The package will also display the logo of the company. According to MDC, this type of mushrooms consists of-

Protein 25-35% Vitamin & Mineral 57-60% Fat 04-06% Carbohydrate 05-06%

Price

A cost-plus pricing strategy will be adopted to set the price of the product. As the economy of the country is weak, the common people will not be able to purchase the product at a high price. Besides, Mushroom Mavens, LLC aims to be the market leader of this industry by establishing a higher quality product at lower price. This will restrict the entry of new competitors and defeat foreign competitors in the market. A 50% average unit (kg.) profit margin would be achieved by pricing fresh mushroom at BDT 180 per kg and dried mushroom at BDT 320 per kg.

Distribution

The company will establish an extensive distribution channel for mushrooms to make it available throughout the country. It will build six distribution centers in the eight divisions of Bangladesh. From these distribution centers, the sales representatives will supply the mushrooms to different retail shops on the basis of their demand. The small vegetable traders will purchase mushrooms directly from the distribution centers. On the other hand, the business customers such as hotels and Chinese restaurants will place order 15 days prior to delivery and the company will supply them directly from the cultivation plant. The following figure shows the distribution channel of the company.

Figure 4: Distribution channel of mushroom

Positioning

Mushroom Mavens, LLC plans to position itself on the following bases:

• High-quality producer • Provider of good value for money • Local producer • Reliable partner of all stakeholders

Advertising, Trade promotion, and Fairs

The retail shops selling mushrooms will be decorated with attractive posters of mushrooms indicating the availability and containing the information about the benefits of mushroom consumption. Leaflets will be distributed to the consumers through the national daily newspapers. The leaflets will contain the consumption benefits and cooking process of mushroom. In the first two years, such campaign would be conducted only in Dhaka division. Afterwards, when the company moves to other divisions, similar campaigns would be conducted there as well.

The retail shops and local vegetable traders would be provided with a trade discount. Moreover, retail shop salespersons and vegetable traders would be handed out T-shirts displaying the company’s logo as part of the motivational technique.

The company will participate in trade fairs. The stalls will serve the visitors several kinds of food, pickles etc made from mushrooms. Free cooking recipes, and free mushroom sachets will also be provided as part of the sales campaign.

As the company targets the rural as well as the urban market, it will launch radio advertisements and word-of-mouth communication will be spread with the help of reference groups such as the imams, doctors (rural) and teachers. It will also provide free samples to this reference group for promotion.

Customer Service

The company believes in relationship marketing. Therefore, it wants to build a lifetime relationship with its customers. This will be achieved by paying attention to the customer needs. Thus, the company will provide its phone numbers to the customers so that, they can promptly inform about any of their demands or complaints.

As it is a new kind of vegetable introduced to the market, people will be very much confused about preparing food items with mushroom. Therefore, the company will also train and advice customers on preparing foods containing mushroom. A book of recipes of exotic foods prepared with mushroom would be distributed in the urban areas.

Market Research

The company plans to undertake market research as a regular activity. A very potent way of dynamic market research is a feedback mechanism based on a suggestion card system. The company would embrace this system. It contains several statements that customers are asked to rate in terms of a given scale. There are also several open-ended questions that allow the customer to freely offer constructive criticism or praise. Customers who will be provided free sample of mushrooms will also be requested to complete the suggestion cards and to return them one week later. Mushroom Mavens, LLC will work hard to implement the reasonable suggestions of these customers in order to improve its service offerings as well as to show its customers that their suggestions are being valued.

SWOT Analysis

Strengths

Food value of mushrooms

Mushrooms contain Chitin, a non-soluble protein that precipitates bile in the large intestine so that the bile is eliminated from the body instead of being reabsorbed, forcing the body to make new bile. It does this by breaking down cholesterol, and improving cardiac health. Traditional Chinese herbalists knew of this effect for centuries. They always argued that eating mushrooms cleans the arteries. For the most part, these health benefits center on the effect these mushrooms can have in enhancing and bolstering the immune system. Contained in the cell walls of many medicinal mushrooms are compounds that interact with the body's immune system, helping to modulate and enhance it.

Cancer treatments that employ the compounds extracted from medicinal mushrooms have shown tremendous effect on survival rates and disease free rates for patients. However, it is also being investigated that these mushroom species can be considered to be effective in alleviating the effects of HIV/AIDS. As mushrooms have a great food value the consumers will accept it very rapidly.

Pioneer company

There is no mushroom company which produces purely for the domestic consumers. Therefore, Mushroom Mavens, LLC will be the pioneer of the market and it will be easy for it to build a position in the mind of the consumers.

Neither Capital-intensive nor Labor-intensive

This business does not require a large amount of capital so does for labor force. It does not require a lot of land, equipments or machinery. A simple cropping house, built from locally available material is adequate. Sufficient watering of the cropping house provides the moisture level required to trigger mushroom fruiting.

Government facilities

The Government of Bangladesh is encouraging the business people to invest in agro-business. It is also providing different types of loan facilities for these types of programs. Therefore, it will be easy for the company to obtain loans and thus to expand the business.

Weaknesses

Image of the product

In the local market many people believe that mushrooms are a poisonous thing and that it is not edible. This image of the core product is a major weakness of the company.

Consumer illiteracy

As it is a new product and consumers have a negative image about mushrooms, it will require educating the consumers about the benefits of mushrooms.

Price

As high costs are involved in the production process of mushrooms, the price of this product is much higher than of general vegetables. Therefore, it will not be possible for the company to serve the lower income groups in the beginning stage.

Opportunities

Expand the product line

At the very beginning the company will just produce oyster mushrooms but it will have the opportunity to produce other types of mushrooms in different seasons. It will also be possible to grow the other types of mushrooms by creating an artificial environment using technology.

Expand the market

If the company can educate the rural consumers through a heavy promotional campaign, it will be able to expand its market to a large extent. The company also has the potential opportunity to export mushrooms to other countries.

The production of spawn

In initial few years the company will be dependent on the government agency for spawn. But in three to four years, when it has accumulated earnings, it can buy the technology for production of spawn itself. Besides, as raw materials for production of spawn such as sawdust, grass straw, maize cobs, wheat/maize bran etc., are cheap, the variable cost of producing spawns will not be high.

Threats

Competitors

The Government of Bangladesh is vastly encouraging the business people to invest in agro-business and is also providing different types of loan facilities for these businesses. Thus, it is likely that very soon the company will face extensive competition.

Government Agency

In the first few years, the company will be collecting spawns from the government operated MDCs. If the government decides to close down this project, the company will be in trouble. In that eventuality, the company will have to procure a considerable sum on loan to buy the technology for producing mushroom spawn.

Management and Organization

Directors Legal Status and Managerial Operations (Board of /BOD)

It will be a private limited company with limited liability . The board will be constituted by the owner and two other directors.This BOD will be the full time management authority. The CEO will hold the CEO position.

Human Resource Strategy and Planning

The founding owner will supervise the entire operation of the company until a general manger (GM) is recruited and appointed. The GM will be provided training on the cultivation of mushrooms and the accounting systems of the company. The GM would be responsible for supervising cultivation and sales activities. S/he would also be responsible for executing promotional campaigns to achieve target sales. S/he must be a business graduate with previous experience in managing business in a similar capacity.

The company will also recruit a manager, an agriculturist, seven laborers, two security guards, and a cook for its cultivation plant. The manager will supervise the activities of the entire plant. S/he will also hold the whole husbandry. Thus s/he must be at least a business graduate with a few years of previous experience of supervising and keeping accounts. S/he must also be a computer literate with skills in using MS-word, spreadsheets and accounting software. The manager would be provided with training on the cultivation of mushrooms and the accounting systems of the company. The agriculturist will work under the manager. S/he will serve as an operations and quality control manager of the plant. S/he will also conduct R&D activities to increase the production and to ensure the quality of the mushrooms. Moreover, s/he will train and supervise the labors in taking care of mushroom spawn, harvesting and packaging mushroom. In case no competent agriculturist can be recruited, the Thana Agriculture Officer will be engaged on a part time basis for the job. Seven laborers will be employed to work from 10:00 am to 6:00 pm. The laborers will have at least primary schooling so that they can understand directions. They will spray water on spawns and harvest the mature mushrooms. The job of the security guards would be to protect the mushroom houses from animals and humans.

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In the sales center, one manager, one accounts officer and one sales representative will be employed. A driver will be recruited for the pick-up. The manager of sales center would supervise sales activities. S/he would establish contacts with the restaurants and retail stores to sell mushrooms and execute promotional campaigns. S/he must be a business graduate with previous experience in selling. The accounts officer must be a business graduate in accounting with skills in utilizing MS-word, spreadsheets and an accounting software. S/he will be given training on the accounting system of the company. The sales representative will procure orders, deliver mushrooms and assist in executing promotional activities. S/he must also be a business graduate as well.

The company would provide attractive salaries. Besides basic salaries, it would provide two festival bonuses to all the employees: each equivalent of one month’s basic salary. The company will be an equal opportunity employer. The owners would continually measure the job satisfaction of the employees in order to take steps to increase the employees’ work effort and commitment.

Financial Management Planning

The business would require an initial investment outlay of BDT 2,000,000 (equivalent of US$ 25000.00). The founding owner will provide BDT 800,000. The rest BDT 1,200,000 would be borrowed from Small and Medium Enterprise (SME) division of Prime Bank Ltd. at an annual interest rate of 13%. The loan will be borrowed from the inception of project operation and would be repaid in 10 years through 120 monthly installments.

Though the potential consumer base is very large, the company will not start with cultivation capacity to fully meet all demand. The company plans to start with 25 houses and continue with this cultivation capacity in the first two years. The raw materials used in cultivation/production are mushroom spawn and polythene. Mushroom spawn will be purchased on credit every three months. The next month’s polythene requirement will be purchased on the 25th of the current month. Payables deferral periods of spawn and polythene are 20 days and 10 days respectively. Current month’s salary will be paid on the 5th of the following month. Twenty percent of the mushrooms produced in the first three months of the first year will be sold fresh and the rest will be sold after drying. The effects of promotional campaign would be to increase sales of fresh mushrooms by 10% every three months. The same trend will continue in all quarters of the first two years.

One percent of the revenue from both fresh and dried mushrooms will be expended to provide trade discounts and free samples. Fresh mushrooms will be sold out immediately after its production while 12% of the produce of dried mushrooms will be in inventory. Twenty percent of the fresh mushroom will be sold on credit with an average collection period of receivables of 8 days. The dried mushroom will be sold 100% on credit with an average receivables collection period of 10 days. The advertisement expenses for year one and year two is expected to be 5% of the net revenue of the respective years.

The profit of the first and the second year will be completely retained in the company, i.e. there would be no dividend paid to the owners. In the end of the first year, an amount of BDT 6,000,000 will be invested in FDR and ICB investment portfolio. The average annual interest yield from such a portfolio is expected to be 10%. In the end of the second year, an amount of BDT 8,000,000, which includes interest income of the second year from the portfolio, would be reinvested in the same portfolio. The investment in government securities would help the company enjoy a tax holiday. In the third year, the company plans to establish sales centers in Chittagong and Sylhet . The retained earnings would provide sufficient funds for this purpose. The company would not be forced to borrow. However, the company would maintain a good relationship with the current loan providing banks through regular repayments. This relationship would help the company out, in case of a sudden need for external funds.

There is a huge untapped opportunity in the mushroom industry . The Mushroom Mavens, LLC business plan proposed here is believed to be technically sound and commercially viable. If this business proposal can be worked out according to the plan, it has the full potential to be a profitable and market leading venture.
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Business customers Consumers

Local vegetable traders

Distribution
Centers

Production plant

Consumers

Retail shops (small & mega)

Figure 6- The Organizational Structure of Mushroom Mavens, LLC

Labors (7)
Driver (1)

Agriculturist (1)

Sales rep (1)

Accounts officers (1)

Manager- Cultivation Plant (1)

Manager- Sales center (1)

General Manager (1)

Executive Summary

Owner (1)

Figure 5: Medicinal Value of Mushroom

Increase libido

Control blood pressure

Chitin

Diabetes protected Kidney tonic

Lower cholesterol

Cardio Vascular

Immune enhancer

Anti tumor

Anti Viral

Mushroom