Looking for a hydroponics farm business plan? You're in the right place.
A bank or an investor reading a greenhouse plan wants a short list answered. What does the retrofit cost, and how much cash must sit behind it before the first head of lettuce sells? How much of the house is full each year? Who buys the crop, at what price? When does the farm stop losing money, and what happens if sales come in a fifth short?
In this article we'll walk through a complete sample business plan for a leafy-greens greenhouse near Louisville, Kentucky, section by section. We'll cover the executive summary, the SWOT analysis and, in particular, all of the financials.
Here's what you'll take away:
- The one-page summary: see how to set out land, crop, buyers and the funding ask so a reader knows what you need within a minute
- The SWOT analysis: learn how to put a heating bill and a summer heat problem on the table without losing the reader
- The start-up budget: find out how a retrofit, lights and a cooler compare with the cash reserve that carries the farm to its first sale
- The sales mix: compare stores, chefs and weekly boxes, and see how each one fills the house and pays for the crew
- The first year, month by month: spot the months with payroll and no income before you reach them
- The five-year profit, cash flow and balance sheet: understand how each hire, loan payment and price rise shows up in the numbers
- The shortfall case: have an answer ready for the "what if sales run 20% short?" question, with the steps the owner takes in response
If you're planning a hydroponic farm, read this before you write your own. Copper Field is fictional, so take what fits your greenhouse and change the rest.
In this plan
If you need a hydroponics farm business plan template for your own plan, start it in the Toolkit.
Copper Field in One Page
Copper Field is a hydroponic greenhouse that grows lettuce, herbs and microgreens on leased ground on the edge of Louisville, Kentucky. It takes over a former nursery house on January 1, 2027, starts seed in the propagation benches that month and sells its first heads in March. Dana Whitfield, founder and general manager, owns 55% of the company. Ray Sutter, a Kentucky grain farmer and landowner, owns 45% and has no day-to-day role.
The farm needs $780,000: $120,000 of Dana's savings, $400,000 from Ray and a $260,000 bank term loan. The retrofit and equipment take $429,000, legal work, licensing and the launch take $29,000, and $322,000 stays in the bank as a reserve.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $328,892 | $650,800 | $835,200 |
| Net income after start-up costs | ($203,722) | ($36,534) | $48,649 |
| Closing cash | $174,784 | $155,813 | $217,525 |
Sales come from four places: live lettuce to independent grocers and co-ops, herb and microgreen orders from chefs, a weekly greens box for households, and paid workshops and school visits. The farm loses money in Year 1 because the full growing team is on payroll from April, while the channels fill over nine months. Year 2 turns positive at EBITDA, and Year 3 is the first profitable year.
A shortfall case closes the financials. With sales 20% lower, Dana skips one hire, delays two others, cuts marketing and her own pay, and the farm still ends every year with cash in the bank.
The pitch is specific. Stores buy volume, boxes carry the margin, and the same greenhouse feeds both.
The Greenhouse and the Lease
Legal name: Copper Field LLC, a Kentucky limited liability company. Owners: Dana Whitfield, 55%, and Ray Sutter, 45%. Premises: a 16,000 square foot gutter-connected greenhouse and about two acres, leased from a retiring nursery grower. Lease: ten years with two five-year renewal options, and the right to remove all fixed equipment at the end. Stage: pre-opening. The lease is signed in December 2026, and the retrofit starts on January 1.
What the house holds
Nutrient film channels cover 10,400 square feet of the floor: 8,800 for lettuce and 1,600 for basil, mint, cilantro and other cut herbs. A small insulated room holds microgreens trays. The rest of the house is propagation benches, a pack room, a walk-in cooler and aisles. Heat comes from gas unit heaters and LED lights extend short winter days. In July and August, fans and evaporative pads hold the house down, and lettuce still slows in the worst heat, which the plan builds into the summer sales.
Why a retrofit
The house already has a concrete floor, a gas supply, a water line and three-phase power. The retrofit comes to $265,000, about $17 a square foot, and Dana gets a new-build quote for comparison before signing. The trade-off is that the structure belongs to the landlord, so the lease terms matter more than usual.
Targets for the first three years
- Seed in January 2027, sell in March, and reach 160 box subscribers and 8 store accounts by December.
- Earn EBITDA in 2028 and a net profit in 2029.
- Take lettuce use from about 35% of capacity in 2027 to about 71% in 2029.
Food safety and water
The farm uses municipal water, tested before the first crop and on a schedule after. Whether the FDA's Produce Safety Rule covers Copper Field depends on its sales and its crops. Dana confirms coverage with the Kentucky Department of Agriculture, including whether sales to in-state grocers and restaurants change the answer, and runs a written sanitation and traceability routine either way. Some grocers ask for a third-party audit, and $3,200 is budgeted in Year 1 for testing, audit and certifications.
Greens Demand Around Louisville
Who sells to the same buyers
Louisville has independent grocers, co-ops, restaurants and households that already buy local produce in season. Hydroponic greens can supply the winter and early spring months, when local field lettuce is scarce. The volumes in this plan rest on buyer types and on the farm's own price and order-size figures, not on a market-size count.
The alternatives a buyer has
| Alternative | What it offers | Why a buyer picks it | How Copper Field differs by design |
|---|---|---|---|
| Large greenhouse and indoor growers selling nationally | Packaged greens with steady supply | Price and shelf presence | Picked and delivered within about a day, with a named local grower |
| Field growers in Kentucky and nearby states | Seasonal greens at low prices | Cost and familiarity | Year-round supply, including winter |
| Other local hydroponic and indoor growers | Similar product in a similar market | Existing relationships | A box program and chef service on the same crop |
| Meal-kit and grocery-delivery services | Convenience | One order for everything | Greens only, delivered fresh, at a fixed monthly price |
| Home gardeners and community plots | Free or cheap greens | Cost | Reliable weekly volume |
The table lists categories rather than companies, because prices and product ranges change often.
Strengths and exposures
| Strengths | Weaknesses |
|---|---|
| A founder with nine years in commercial greenhouse production | No brand and no customer list on day one |
| A retrofit priced at about $17 a square foot | Gas and power costs the farm cannot control |
| Three revenue channels that fill the same house | Year 1 loses money and draws on the reserve |
| Opportunities | Threats |
|---|---|
| Stores wanting local, short-supply greens in winter | A large indoor grower cutting its prices |
| Chefs looking for herbs and microgreens delivered fresh | A summer heat wave that hurts a lettuce crop |
| School and workplace demand for tours and workshops | Pump or controller failure on a weekend |
Who Buys, and What They Expect
The independent grocer or co-op
A produce manager who orders weekly, wants a steady count of live heads on a set day and pays within 30 days. Eight stores are the target by December 2027, each taking 300 to 350 heads a week. Eleven stores take about 172,000 heads in Year 3.
The chef
A kitchen buying herbs, mixed lettuce and microgreens, usually ordered by text on Sunday and delivered Tuesday. Nine accounts spend about $160 a week by December 2027, and 14 by Year 3. Chefs also bring the farm its first referrals to other kitchens.
The household on a weekly box
A household of two to four, paying $98 a month for four boxes. Each box holds two heads of lettuce, a bunch of herbs and a tray of microgreens. About 6% of subscribers leave each month, mostly after a move or a change in routine. The ones who stay do so because the box arrives on time and the lettuce is fresher than the shelf.
The school or workplace group
Teachers, scout leaders and workplace wellness coordinators book tours and workshops of 90 minutes. The average session earns $450 in Year 1.
How the Greens Get Sold
From order to delivery
Stores and chefs order by text or email and are delivered on fixed days. Boxes are packed and delivered on three days a week, about 55 stops a day by December 2027 and about 90 by Year 5. Orders are picked after they are placed, which holds wasted heads near the 12% allowed for grading losses and returns.
Prices
Live lettuce sells to stores at $2.15 a head in Year 1, and chef prices are quoted by the week. The box is a flat $98 a month. All prices rise 3% a year from 2028. Dana sets them against current wholesale quotes before the first order.
Year 1 revenue by channel
| Channel | Year 1 revenue | Share |
|---|---|---|
| Live lettuce to stores | $194,360 | 59% |
| Weekly greens boxes | $91,532 | 28% |
| Chef accounts | $36,700 | 11% |
| Workshops and school visits | $6,300 | 2% |
Box subscribers
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Subscribers at year end | 160 | 224 | 252 | 264 | 270 |
Growth slows after Year 2 because delivery routes and lettuce channels both approach their limits.
Winning Boxes, Doors and Kitchens
What the first year costs
The Year 1 budget is $40,000: $16,000 of launch spend paid from start-up capital plus $24,000 of running costs. That is 12.2% of Year 1 revenue, or 7.3% counting running costs alone. Running costs fall to 3.1% of revenue by Year 3 and 2.7% by Year 5. Box-related spend of $20,500 across about 216 gross new subscribers works out at $95 each, about one month's fee.
| Channel | Year 1 spend | What it is expected to do |
|---|---|---|
| Brand, website and box sign-up (launch) | $7,000 | A site with a delivery map, a sign-up form and a pre-launch list; about 52 subscribers |
| Chef tastings and sample cases (launch) | $4,000 | Introductions to the first 15 kitchens |
| Store demo days and shelf talkers (launch) | $3,000 | A tasting day at each early store |
| Van wrap and signage (launch) | $2,000 | A moving advertisement on every route |
| Paid search and social ads | $7,500 | Searches such as "local salad delivery Louisville"; about 88 subscribers |
| Referral credit for subscribers | $3,500 | A free week for each referred household; about 50 subscribers |
| Workplace and neighborhood pickups | $2,500 | Group deliveries to offices and apartment buildings; about 26 subscribers |
| Chef and buyer outreach | $4,500 | Monthly samples and a short availability list |
| Store demos and shelf signs | $3,500 | Repeat tasting days at stores that reorder |
| School and workshop outreach | $1,500 | Flyers and a booking page for teachers |
| $1,000 | A weekly harvest note to subscribers and buyers |
Marketing milestones
- January 2027: sign-up page live, pre-launch list open, first seed sown.
- March 2027: first heads sold to stores.
- April 2027: first boxes delivered.
- September 2027: 128 subscribers and the first month of positive EBITDA.
- December 2027: 160 subscribers and about 8 store accounts.
Inside the Greenhouse Week by Week
The crop cycle
Seeds are sown into rockwool plugs in the propagation bench and move to the channels after about three weeks. Lettuce is ready about three weeks after that, which is why the first seed goes in on January 1 for a first sale in March. One seeding goes in every few days so that a full tray of heads comes off the channels on every picking day. Herbs are cut repeatedly. Microgreens turn over in about ten days.
The weekly rhythm
Monday, Wednesday and Thursday: pick, pack and deliver boxes. Tuesday: chef deliveries and a store drop. Friday: store deliveries. Seeding and transplanting continue every day, and the head grower tests nutrient strength and pH each morning. A cold chain runs from the channel to the cooler to the van, and heads leave the cooler only at loading.
Heat, power and water
Gas unit heaters cover winter, LED lights add hours on short days, and fans and pads cool in summer. Utilities are $42,000 in Year 1, rising to $66,000 in Year 3. Gas and power quotes are the least certain figures here, and they are a main reason the reserve is larger than the base case needs. The standby generator covers the pumps and controller during a power cut, because channels dry out within hours.
Equipment
The $429,000 of equipment is the retrofit ($265,000), a standby generator ($22,000), lights and controller ($48,000), pack room and cooler ($46,000), a used refrigerated van ($34,000) and the microgreens room ($14,000). A second van is leased from June 2029. Pumps, fans and lighting are replaced from Year 2. The $322,000 reserve is also the contingency for a retrofit overrun.
Who does the work
Dana, a head grower from February, a technician from March and a packing and delivery lead from April. A part-time coordinator joins in July, a trainee grower in December, a driver and a second leased van in June 2029 and a second technician in April 2030. One trainee place is open at a time. The place runs for twelve months, is filled through a local workforce agency, and includes paid time with the head grower on the crop and the controls.
Licenses and insurance
- Kentucky and Louisville Metro business registration, and the building, electrical and gas permits for the retrofit, filed in December 2026.
- A written sanitation and traceability plan, and a call to the Kentucky Department of Agriculture on Produce Safety Rule coverage.
- Property, product liability and vehicle insurance, budgeted at $11,000 in Year 1.
- A third-party food-safety audit if a grocer asks for one.
Suppliers and advisers
Seed and plug suppliers, a nutrient supplier, a greenhouse equipment dealer and a gas supplier. University of Kentucky horticulture extension is Dana's first call on pests and disease.
Dana Whitfield and the Grow Team
Dana Whitfield, founder and general manager
Dana spent nine years at a commercial greenhouse grower in central Kentucky, the last four as production manager for a lettuce and herb range with a crew of eight. She holds a degree in plant science. Her $120,000 is the savings from those years and the sale of a house.
Where the team is thin
Dana has not sold to grocers as the owner, has not run a subscription box or managed a bank loan. The plan answers this with a part-time coordinator from July, a monthly review of box sign-ups and churn, and a local accountant on retainer.
If Dana is out
The head grower runs the crop day to day, and the packing and delivery lead runs the routes. Disability insurance on Dana is part of the insurance budget. A controller alarm text goes to three phones.
Ownership and the bank
Dana owns 55% of Copper Field LLC and Ray Sutter owns 45%. No distributions are paid in the first five years, and the operating agreement allows them afterward only once the bank covenants are met. Ray's return comes from later distributions and from a buy-sell clause that lets Dana buy his units from Year 6 at a formula price. The bank holds a lien on the movable equipment, about $142,000 of the $429,000, and Dana gives a personal guarantee. The $265,000 retrofit sits on leased ground, so the lease, with its renewal options and the right to remove fixed equipment, is a condition of the loan, and the landlord signs a waiver that lets the bank enter to remove equipment. The loan carries a covenant to deliver quarterly accounts and a first debt service coverage test at the end of Year 3.
Copper Field in Numbers
One five-year model produces every table that follows. It is monthly for 2027 and yearly from 2028. The growing, pricing and cost figures come first, so each line can be traced to a yield, a price or a payroll date.
Retrofit and start-up funding
| Use of funds | Amount |
|---|---|
| Retrofit of a leased 16,000 sq ft greenhouse: NFT channels, benches, heating, curtains and fertigation | $265,000 |
| Standby generator and transfer switch | $22,000 |
| Supplemental LED lighting and climate controller | $48,000 |
| Pack room, walk-in cooler and wash station | $46,000 |
| Used refrigerated van | $34,000 |
| Microgreens room: racks, lights and trays | $14,000 |
| Business licenses, food-safety training and water testing | $3,500 |
| Legal: entity, greenhouse lease and investor agreement | $9,500 |
| Launch: brand, website, box sign-up drive and chef tastings | $16,000 |
| Cash reserve for the build and the months before the first harvest | $322,000 |
| Total uses | $780,000 |
| Source of funds | Amount |
|---|---|
| Dana Whitfield's savings | $120,000 |
| Equity from a Kentucky grain farmer and landowner | $400,000 |
| Bank term loan | $260,000 |
| Total sources | $780,000 |
Dana puts in $120,000 and Ray Sutter, a Kentucky grain farmer and landowner, puts in $400,000 for 45% of the company. Equity is $520,000, or 67% of the $780,000 total. A bank lends $260,000 over ten years at 9.25%, interest-only for the first 18 months, secured on the movable equipment with Dana's personal guarantee. The rate is a planning figure and a lender's quote will differ. The retrofit, generator, lights, cooler, van and microgreens room take $429,000, and $29,000 is expensed at opening. The other $322,000 is held as a reserve. The base case never needs all of it: its lowest month-end cash is about $153,000. The reserve covers a retrofit overrun and the shortfall case at the end of the plan, where year-end cash falls to about $70,000 in Year 3. The loan stays even though equity could carry the base case, because it holds Ray's stake below half and keeps a credit line open for later equipment.
Yields, prices and costs behind the model
- Growing area: the leased house is 16,000 square feet under cover. Lettuce takes 8,800 square feet of channel surface and herbs 1,600, while a separate room holds 600 square feet of microgreens trays. The rest is propagation, the pack room, the cooler and aisles. Seeding starts in the propagation benches in January 2027, and the first plants move into the channels in late February.
- Lettuce output is set at 38 heads per square foot of channel a year, or 334,400 heads at full use. After 12% for grading losses and returns, 294,300 heads are left to sell. Heads sold, counting those in boxes and chef orders, are about 103,000 in Year 1 (35% of that), 210,000 in Year 3 (71%) and 244,000 in Year 5 (83%). Year 5 is the tightest year for space. Gross profit in the tables is after direct costs only. Labor, heat and power sit in operating costs.
- Grocers and co-ops buy live lettuce at $2.15 a head in Year 1, rising 3% a year. Heads sold to stores are 90,400 in Year 1 and then 141,000, 172,000, 188,000 and 200,000. That is about 8 store accounts at 300 to 350 heads a week by December 2027 and 11 stores by Year 3. Stores pay in 30 days. Dana tests the price against current wholesale quotes before the first order.
- Chef accounts buy herbs, mixed lettuce and microgreens. December 2027 is about 9 accounts at $160 a week, with 14 accounts at about the same weekly spend in Year 3 and 18 in Year 5. Roughly 35% of the line is lettuce, at about $2.55 a head in Year 1. Herbs and microgreens make up the rest.
- The weekly greens box costs $98 a month, billed by card: four boxes at $24.50, each with two heads of lettuce, a bunch of herbs and a tray of microgreens. Subscribers at month end are 160 in December 2027, then 224, 252, 264 and 270 at later year ends. With 6% of subscribers leaving each month, Year 1 needs about 216 gross new subscribers and Year 2 about 202.
- Workshops, school visits and paid training days bring in $6,300 in Year 1, about 14 sessions at an average $450. With prices up 3% a year, the line reaches $28,000 in Year 3, about 58 sessions, and $38,000 in Year 5, about 75.
- Direct costs are 17% of lettuce sales, 20% of chef sales, 26% of box sales and 8% of workshop income. That blends to 19.7% of revenue. They cover seed, rockwool plugs, nutrients, clamshells and boxes, ice packs and card fees. Van fuel is separate, in operating costs.
- Payroll adds 27% to wages for payroll taxes, health insurance and workers' compensation, and 15% for the part-time coordinator. The lowest wage, the trainee's $32,000, is about $15.40 an hour on 2,080 hours. Pay raises of 3% a year are charged as a separate line from Year 2. Dana confirms current Kentucky wage and overtime rules with the state labor cabinet before hiring.
- Utilities are $42,000 in Year 1 and $66,000 in Year 3, or 13% and 8% of revenue. They cover natural gas for winter heat, power for supplemental LED lights, pumps, fans and the cooler, and water treatment. Gas and power quotes drive this line, and it is the cost the farm can least control.
- Rent is $3,500 a month for the house and about two acres, with a 3% annual rise. Insurance is $11,000 in Year 1 for property, product liability and the van. A second van is leased from month 30 at $900 a month, when the driver starts. Louisville Metro charges an occupational license tax, and $4,000 in Year 1 and $8,000 in Year 3 is carried for it and for local fees as a placeholder until the Metro revenue office confirms the rate.
- Replacement of pumps, fans and lighting is budgeted at $4,000 in Year 2 and $16,000 in Year 5, as the first equipment reaches the end of its warranty. The retrofit and generator are depreciated over ten years, to match the lease term.
- Receivables average 16 days, because stores pay in 30, chefs in about 14, boxes are charged by card in advance and workshops are invoiced. Suppliers are paid in 20 days, and inventory of seed, nutrients and packaging is held at 2% of sales.
- Tax is charged at the federal corporate rate of 21% and a Kentucky rate of 5%, with early losses carried forward, so no income tax is due in any of the five years. The state rate may change, and a greenhouse company like this would often be taxed through its owners, so the tax line is a planning placeholder. No distributions are paid in the five years.
Revenue by sales channel
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Live lettuce to grocers and co-ops | $194,360 | $312,200 | $392,300 | $441,700 | $484,000 |
| Chef accounts: herbs, mixed lettuce and microgreens | $36,700 | $88,000 | $118,000 | $138,000 | $152,000 |
| Weekly greens box subscriptions | $91,532 | $232,600 | $296,900 | $331,500 | $353,400 |
| Workshops, school visits and training days | $6,300 | $18,000 | $28,000 | $34,000 | $38,000 |
| Total revenue | $328,892 | $650,800 | $835,200 | $945,200 | $1,027,400 |
| Growth on prior year | – | 98% | 28% | 13% | 9% |
Stores are the volume channel. They bring in 59% of Year 1 revenue and 47% of Year 5. Boxes are the margin channel. They grow from 28% of Year 1 to 34% of Year 5, because a household pays $98 a month for product that costs 26% to produce and pack. Chef accounts are small and steady, and workshops are the smallest line at 2% to 4%.
Month by month through 2027
| Month | Live lettuce to grocers and co-ops | Chef accounts: herbs, mixed lettuce and microgreens | Weekly greens box subscriptions | Workshops, school visits and training days | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $0 | $0 | $0 | $0 | $0 | ($30,827) |
| Feb 2027 | $0 | $0 | $0 | $0 | $0 | ($30,827) |
| Mar 2027 | $5,160 | $300 | $0 | $0 | $5,460 | ($26,441) |
| Apr 2027 | $12,900 | $1,000 | $2,352 | $300 | $16,552 | ($17,530) |
| May 2027 | $18,490 | $2,000 | $4,900 | $500 | $25,890 | ($10,029) |
| Jun 2027 | $21,070 | $3,000 | $7,252 | $700 | $32,022 | ($5,103) |
| Jul 2027 | $17,630 | $3,700 | $9,212 | $800 | $31,342 | ($5,649) |
| Aug 2027 | $16,340 | $4,100 | $10,780 | $500 | $31,720 | ($5,345) |
| Sep 2027 | $23,650 | $4,900 | $12,544 | $900 | $41,994 | $2,908 |
| Oct 2027 | $26,230 | $5,600 | $13,916 | $1,100 | $46,846 | $6,806 |
| Nov 2027 | $27,090 | $5,900 | $14,896 | $900 | $48,786 | $8,364 |
| Dec 2027 | $25,800 | $6,200 | $15,680 | $600 | $48,280 | $7,958 |
Heads start moving in March, and the first box leaves the van in April. Sales climb through the spring, fall back in July and August when heat slows lettuce, and recover in the fall. EBITDA is negative from January to August and positive from September to December. After allowing for 16 days of receivables, the lowest month-end cash balance in 2027 is Sep, at about $153,000. Payroll and costs are spread evenly across the months, so heating in the first two months is likely to run heavier than shown.
The grow team on payroll
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and general manager | $58,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Head grower | $52,000 | Month 2 | 1 | 1 | 1 | 1 | 1 |
| Grow technician | $36,000 | Month 3 | 1 | 1 | 1 | 1 | 1 |
| Packing and delivery lead | $36,000 | Month 4 | 1 | 1 | 1 | 1 | 1 |
| Trainee grower (paid training cohort) | $32,000 | Month 12 | 1 | 1 | 1 | 1 | 1 |
| Accounts and box coordinator (part time) | $26,000 | Month 7 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Second grow technician | $36,000 | Month 40 | – | – | – | 1 | 1 |
| Delivery driver | $35,000 | Month 30 | – | – | 1 | 1 | 1 |
| Total payroll incl. on-costs | $224,923 | $301,680 | $327,609 | $380,420 | $391,850 |
Dana is alone in January. The head grower starts in February, a grow technician in March and the packing and delivery lead in April, as the first boxes are about to go out. A part-time coordinator for stores and boxes starts in July (month 7). The trainee grower starts in December 2027 (month 12). The delivery driver starts in month 30 (June 2029), when box routes outgrow the lead and one van, and a second van is leased that month. The second technician starts in month 40 (April 2030), when lettuce sales pass 75% of capacity. Full-time headcount at year end is 5, 5, 6, 7 and 7, plus the half-time coordinator.
Profit and loss
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $328,892 | $650,800 | $835,200 | $945,200 | $1,027,400 |
| Direct costs (seed, plugs, nutrients, packaging, card fees) | ($64,684) | ($127,993) | ($164,260) | ($185,893) | ($202,060) |
| Gross profit | $264,208 | $522,807 | $670,940 | $759,307 | $825,340 |
| Payroll incl. on-costs | ($224,923) | ($301,680) | ($327,609) | ($380,420) | ($391,850) |
| Rent | ($42,000) | ($43,300) | ($44,600) | ($45,900) | ($47,300) |
| Utilities | ($42,000) | ($58,000) | ($66,000) | ($70,000) | ($74,000) |
| Marketing | ($24,000) | ($26,000) | ($26,000) | ($27,000) | ($28,000) |
| Insurance | ($11,000) | ($13,000) | ($14,500) | ($15,500) | ($16,500) |
| Professional fees | ($6,000) | ($6,500) | ($7,000) | ($7,000) | ($7,500) |
| Software subscriptions | ($3,600) | ($4,800) | ($5,400) | ($5,800) | ($6,000) |
| Van fuel, maintenance and registration | ($6,000) | ($9,000) | ($10,000) | ($10,500) | ($11,000) |
| Water testing, food-safety audit and certifications | ($3,200) | ($3,800) | ($4,200) | ($4,400) | ($4,600) |
| Pump, fan and lighting replacement | $0 | ($4,000) | ($9,000) | ($13,000) | ($16,000) |
| Second delivery van lease (from month 30) | $0 | $0 | ($6,300) | ($10,800) | ($11,100) |
| Louisville Metro occupational license tax and local fees | ($4,000) | ($6,000) | ($8,000) | ($9,000) | ($10,000) |
| Phones, supplies and uniforms | ($2,400) | ($3,000) | ($3,400) | ($3,600) | ($3,800) |
| Bad debt allowance | ($800) | ($2,400) | ($3,200) | ($3,600) | ($3,900) |
| Annual pay raises (3% a year) | $0 | ($9,050) | ($19,951) | ($35,275) | ($49,181) |
| EBITDA | ($105,715) | $32,277 | $115,780 | $117,512 | $144,609 |
| Depreciation | ($44,957) | ($44,957) | ($44,957) | ($44,957) | ($44,957) |
| Interest | ($24,050) | ($23,853) | ($22,174) | ($20,040) | ($17,700) |
| Income tax | $0 | $0 | $0 | $0 | $0 |
| Net income before start-up costs | ($174,722) | ($36,534) | $48,649 | $52,515 | $81,952 |
| Start-up costs expensed at opening (legal, licensing, launch marketing) | ($29,000) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($203,722) | ($36,534) | $48,649 | $52,515 | $81,952 |
Year 1 loses $174,722 before start-up costs and $203,722 after them. Payroll takes 68% of revenue because the full growing team is in place before the channels are full. Year 2 earns $32,277 at EBITDA but loses $36,534 after $44,957 of depreciation and $23,853 of interest. Year 3 is the first profitable year, at $48,649 and a 13.9% EBITDA margin. Year 4 adds $52,515. EBITDA is almost flat that year, because the second technician, rising utilities, pay raises and replacement parts absorb the extra revenue. Year 5 reaches $81,952. No income tax is charged in any year.
Cash through five years
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($176,216) | ($8,657) | $83,822 | $91,635 | $122,548 |
| Greenhouse retrofit and equipment | ($429,000) | $0 | $0 | $0 | $0 |
| Funding received | $780,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | ($10,314) | ($22,111) | ($24,245) | ($26,585) |
| Owner distributions | $0 | $0 | $0 | $0 | $0 |
| Net change in cash | $174,784 | ($18,971) | $61,711 | $67,390 | $95,963 |
| Closing cash | $174,784 | $155,813 | $217,525 | $284,915 | $380,878 |
Closing cash is positive at every year end. The low point at year end is $155,813 in Year 2, after the first $10,314 of loan principal. The model spreads Years 2 to 5 evenly across the months, so it cannot show the spring 2028 trough, which will sit lower than that figure. No distribution is paid, so the cash builds to $380,878 by Year 5 while the loan falls from $260,000 to $176,745.
Balance sheet
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $174,784 | $155,813 | $217,525 | $284,915 | $380,878 |
| Accounts receivable | $14,417 | $28,528 | $36,612 | $41,433 | $45,037 |
| Inventory (seed, nutrients, packaging) | $6,578 | $13,016 | $16,704 | $18,904 | $20,548 |
| Greenhouse retrofit and equipment (net) | $384,043 | $339,086 | $294,129 | $249,171 | $204,214 |
| Total assets | $579,822 | $536,443 | $564,969 | $594,424 | $650,677 |
| Accounts payable (seed, nutrients, packaging) | $3,544 | $7,013 | $9,001 | $10,186 | $11,072 |
| Bank term loan | $260,000 | $249,686 | $227,575 | $203,330 | $176,745 |
| Paid-in capital | $520,000 | $520,000 | $520,000 | $520,000 | $520,000 |
| Retained earnings | ($203,722) | ($240,256) | ($191,607) | ($139,092) | ($57,140) |
| Total liabilities and equity | $579,822 | $536,443 | $564,969 | $594,424 | $650,677 |
Margins, break-even and debt cover
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -32.1% | 5.0% | 13.9% | 12.4% | 14.1% |
| Net margin (before start-up costs) | -53.1% | -5.6% | 5.8% | 5.6% | 8.0% |
| Payroll incl. pay raises as share of revenue | 68% | 48% | 42% | 44% | 43% |
| Revenue per full-time equivalent at year end | $59,799 | $118,327 | $128,492 | $126,027 | $136,987 |
| Average monthly revenue | $27,408 | $54,233 | $69,600 | $78,767 | $85,617 |
| Monthly revenue needed to cover operating costs | $38,374 | $50,885 | $57,590 | $66,577 | $70,616 |
| Debt service cover (EBITDA / interest + principal) | -4.4x | 0.9x | 2.6x | 2.7x | 3.3x |
Year 1 averages $27,408 of revenue a month against $38,374 needed to cover operating costs. Year 2 averages $54,233 against $50,885, so EBITDA turns positive, though interest and depreciation still leave a loss. Debt service coverage, the last row, is 0.9x in Year 2, when principal starts in month 19, and the reserve pays part of the loan that year. The bank sets its first coverage test at the end of Year 3, when the ratio is 2.6x. Revenue per square foot of house runs $21 in Year 1, $52 in Year 3 and $64 in Year 5. Year 5 is the figure a lender will test hardest against a working greenhouse.
If sales run 20% short
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $263,114 | $520,640 | $668,160 | $756,160 | $821,920 |
| Net income before start-up costs | ($199,845) | ($96,380) | ($23,002) | $27,354 | $25,053 |
| Net income after start-up costs | ($228,845) | ($96,380) | ($23,002) | $27,354 | $25,053 |
| Closing cash | $153,152 | $77,751 | $69,768 | $113,165 | $153,101 |
This case cuts every revenue line by 20% in every year. The response: the second grow technician is never hired, the trainee starts in month 18 rather than 12, the driver and the second van wait until month 54, marketing is cut 20%, Dana takes a 20% pay cut to $46,400, utilities fall 8% with the lower output, and van fuel and bad debt fall 20%. No distributions are paid in either case. On those terms the farm ends every year with cash in the bank, never below $69,768, loses money through Year 3 and earns a profit from Year 4. Equity ends Year 1 at $291,155. The case tests lower sales only. A crop loss, a gas price spike or a heat failure would hit the same thin margin. Dana's pay cut cannot last more than a season or two, and the bank would be told early.
Sources
- FDA, FSMA Produce Safety Rule. Coverage depends on a farm's sales and crops; confirm with the Kentucky Department of Agriculture (kyagr.com).
- Federal corporate income tax rate of 21%: Internal Revenue Code section 11(b).
- Kentucky corporate income tax rate of 5%: Kentucky Department of Revenue (revenue.ky.gov). The rate page could not be opened for this plan, and the rate may change.
- Louisville Metro occupational license tax: Louisville Metro government (louisvilleky.gov). Rates are not quoted; confirm with the Metro revenue office.
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