How to Start a Microgreens Business

You might not have heard of them, but microgreens are booming! Edible seedlings of herbs and vegetables have seen a surge in popularity in recent years due to their strong flavor and many health benefits. 

Globally, the microgreens industry is expected to expand by more than half in the coming years, which means now is the perfect time to start your own microgreens business, help people live healthier lives and grab a shoot of this growing market. You could even grow them in your home if you have the space, then sell them directly to grocery stores, restaurants, cafes, juice bars and the like. 

But first, you will need to know how to launch and run a business. Luckily, reading this step-by-step guide is all the studying required to get to work growing some green for your wallet.

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a microgreens business has pros and cons to consider before deciding if it’s right for you. 

Microgreens Industry trends

Industry size and growth

• Industry size and past growth – The US vegetable farming industry is worth $19.2 billion and has dipped slightly in recent years.((https://www.ibisworld.com/industry-statistics/market-size/vegetable-farming-united-states/)) 
• Growth forecast – The global microgreens industry is expected to grow a stunning 60.6% by 2028.((https://www.alliedmarketresearch.com/microgreens-market-A08733))
• Number of businesses – There were 46,411 vegetable farming businesses in the US in 2021.
• Number of people employed – There were 124,265 people employed by the US vegetable farming industry in 2021.((https://www.ibisworld.com/united-states/market-research-reports/vegetable-farming-industry/))

Trends and challenges

Trends in the microgreens industry include:

• The most popular microgreens and the best to grow in containers are arugula, broccoli, beets, kale, collards, radish, red cabbage, sunflowers, wheatgrass, and, in particular, pea shoots.
• Microgreens have been used in salads for some time, but now they’re being used as drink garnishes, in juices and smoothies, as soup seasonings, on pizzas and more.
• New evidence shows microgreens are high in antioxidants, which reduce the risk of many diseases, as well as vitamins, minerals, and fiber.

Challenges in the microgreens industry include:

• Microgreens dehydrate quickly so they must be sold while fresh. 
• Mold and mildew can be an issue when growing microgreens, increasing the need for proper ventilation and drainage.

Demand hotspots

• Most popular states – The most popular states for growing in greenhouses or indoors are Alaska, Pennsylvania, and New Jersey.((https://www.zippia.com/grower-jobs/best-states/))
• Least popular states – The least popular states for growing in greenhouses or indoors are New Mexico, Arkansas, and Alabama.

What kind of people work in Microgreens?

• Gender – 34.7% of growers are female, while 60.6% are male.((https://www.zippia.com/grower-jobs/demographics/))
• Average level of education – The average grower has a bachelor’s degree.
• Average age – The average grower in the US is 40.7 years old.

How much does it cost to start a microgreens business?

Startup costs for a microgreens business range from $1,800 to $4,500. The largest expense is for a website to market your business. Other expenses include seeds, trays, and equipment. If you need to brush up on your indoor gardening skills, you can take a microgreens course on Udemy for less than $20. 

You’ll need a handful of items to successfully launch your microgreens business, including: 

• Trays
• Growing lights
• Growing mats
• Packaging supplies

How much can you earn from a microgreens business?

You should make about $20 per tray of microgreens, so your revenue will depend on how many trays you can fit in your space. Most microgreens grow in 2-3 weeks, so you should be able to average 1.5 grows per tray per month. Your profit margin will be about 90%.

In your first year or two, if you can sell 150 trays per month, you’ll bring in $36,000 in annual revenue. This would mean more than $30,000 in profit, assuming that 90% margin. As your business gains traction, you may be able to build a small greenhouse and sales could climb to 600 trays per month. With annual revenue of approaching $145,000, you’d make a tidy profit of $130,000.

What barriers to entry are there?

There are a few barriers to entry for a microgreens business. Your biggest challenges will be:

• Having ample space to grow enough to make money
• Building relationships with grocery stores and restaurants to make sales

Related Business Ideas

If you’re still not sure whether this business idea is the right choice for you, here are some related business opportunities to help you on your path to entrepreneurial success.

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Step 2: Hone Your Idea

Now that you know what’s involved in starting a microgreens business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

Research microgreens businesses online and in your area to examine their products, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a business that sells pea shoots.

You might consider targeting a niche market by specializing in a certain aspect of your industry, such as pea shoots.

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products or services

You’ll need to determine which microgreens to grow and sell. Your best bet might be to go to local restaurants, particularly high-end restaurants, to ask what microgreens they use, and which they might be looking for. You could also go to high-end grocery stores.

How much should you charge for microgreens?

Prices for microgreens average $2 per ounce, and each microgreen tray should produce about 10 ounces, for a total of $20. Your ongoing costs will be limited to seeds and supplies, so you should aim for a profit margin of 90%. 

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be mainly high-end restaurants and grocery stores. You can find their owners and managers on LinkedIn, and find the businesses on Google or Yelp. You could also set up a farmer’s market stand to sell direct to consumers.

Where? Choose your business premises

If you have adequate space, you can probably always run your business from home, and perhaps even build a small greenhouse in your backyard. If you don’t have space, you could rent a growing space. Find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Microgreens Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “microgreens” or “organic microgreens”, boosts SEO
• Name should allow for expansion, for ex: “Green Oasis” over “Superfood Sprouts”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step Business Name Generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Microgreens Business Plan

Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:

• Executive Summary: A brief overview of the microgreens business plan, highlighting its key aspects and objectives.
• Business Overview: A concise description of the microgreens business, including its mission, vision, and location.
• Product and Services: Details about the specific microgreens products and services offered, their unique features, and benefits.
• Market Analysis: Insights into the microgreens market, including target customer demographics, size, and growth potential.
• Competitive Analysis: Examination of competitors in the microgreens industry, their strengths, weaknesses, and market positioning.
• Sales and Marketing: Strategies for promoting and selling microgreens, encompassing marketing and sales tactics.
• Management Team: Information about the individuals leading the microgreens business, their roles, and qualifications.
• Operations Plan: A plan outlining the day-to-day operations of the microgreens business, from sourcing to distribution.
• Financial Plan: Projections and financial details, including revenue, expenses, and funding requirements.
• Appendix: Supplementary documents and information that support the microgreens business plan, such as resumes, research data, and additional references.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to microgreens businesses.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your microgreens business will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Form Your LLC

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Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist, and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best option, other than friends and family, for funding a microgreens business. You might also try crowdfunding if you have an innovative concept.

Step 8: Apply for Microgreens Business Licenses and Permits

Starting a microgreens business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your microgreens business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.

You may want to use industry-specific software, such as Fancom, Hectre, or Si, to manage your growing, harvesting, billing, and costs.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial. 

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

Launching a microgreens business requires creative and strategic marketing to stand out in a competitive market. Here are some effective strategies to consider:

1. Local Farmers Markets and Food Festivals: Attend these events regularly to showcase your products. It’s a great way to interact directly with potential customers, get immediate feedback, and build a loyal local customer base.
2. Social Media Marketing: Use platforms like Instagram, Facebook, and Pinterest to showcase your microgreens through high-quality images and videos. Highlight the freshness, health benefits, and ways to use them in cooking. Engaging content like ‘behind-the-scenes’ farming processes or recipe ideas can attract a broader audience.
3. Collaborations with Local Restaurants and Chefs: Partner with them to include your microgreens in their dishes. This not only provides a steady business but also acts as a testament to the quality of your product.
4. Subscription Services: Offer a subscription model where customers receive a regular supply of fresh microgreens. This ensures a consistent revenue stream and builds customer loyalty.
5. Workshops and Educational Sessions: Host events where you teach about the benefits of microgreens, how to grow them at home, and their nutritional value. This positions you as an expert in the field and can attract health-conscious consumers.
6. Target Health and Wellness Platforms: Collaborate with health bloggers, dieticians, and wellness platforms to feature your microgreens. This can help you reach an audience that is already interested in healthy eating.
7. Sampling and In-Store Promotions: If your microgreens are sold in local stores, arrange for sampling sessions. This allows potential customers to taste the quality firsthand, increasing the likelihood of purchase.
8. Leverage Customer Reviews and Testimonials: Encourage your customers to share their experiences and feedback. This can be showcased on your social media and used as a powerful tool for attracting new customers.
9. Offer Diverse and Unique Varieties: Experiment with and offer a range of microgreens that are not commonly available. This uniqueness can set you apart from competitors.
10. Participate in Community Events: Engage in local community events to increase brand visibility and connect with potential customers in a more personal setting.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your microgreens business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your microgreens business could be: 

• Organic, home-grown microgreens – can’t get any fresher than that!
• Fresh pea shoots, great taste and great for your health!
• Boost your immunity with antioxidant-rich microgreens

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a microgreens business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been in microgreens for years and can offer invaluable insight and industry connections.

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in microgreens. You’ll probably generate new customers or find companies with which you could establish a partnership.

Step 12: Build Your Team

You will probably never need any employees unless you want to hire a salesperson to visit restaurants and grocery stores for you.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Run a Microgreens Business – Start Making Money!

Microgreens are booming and you can get in on the action, help people live healthier lives and make a good living with your very own microgreens business. It’s easy, low-cost, and requires minimal labor. Now that you’ve done your business homework, it’s time to get your seeds and supplies and start walking down the garden path of entrepreneurial success.