753: The $2k/Month Side Hustle That Led to Buying a 70-Acre Farm with Zero Down

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1:13What's up? Nick Loper here. Welcome to the side hustle show. It's the entrepreneurship podcast you can actually apply. And I've got an awesome story for you today. One with an unexpected twist. They say money doesn't grow on trees, but in this case, I guess it grows in bags. From ProGrowClub.com, Kyle Beaver. Welcome to the Side Hustle Show. Hey, Nick. Thanks for having me on. Appreciate it. You bet. So Kyle, my understanding is you stumbled into a mushroom growing side hustle, edible gourmet mushrooms, as the result of a specific Google search. What were you looking for? Yes, absolutely. I was looking for something that was different.

1:51So that was part of the search parameters, but the real search that kicked off the mushrooms in particular were things to do with small amounts of space or businesses to run with small amounts of space. And a UK mushroom growing page came up and I was like, okay, this is cool. Per square meter, you can yield X amount of dollars per year. And being from another niche small business, I was looking for other niche small businesses. And this was one where it was like, nobody's doing this in the area. I haven't even heard of these mushrooms. They kind of just went from there. What were you doing previously?

2:28I was working actually as a carny for two years, traveling, doing state fairs here in Pennsylvania. I say carny, but we were a small business as well. We were doing food production out of a food truck and it was a very niche product. They were doing stuffed pretzels and I had seen how their particular product was drawing folks to drive three hours to get their pretzels. So when I went to start looking for a side hustle for myself, I was like, okay, it has to be niche. It has to be something that's not being done. And it has to draw a crowd, you know, and I have very little space to do it. So what's going to fit within that box?

3:08Okay. Yeah. Like these different criteria, we've seen other people go through, oh, it's got to be somewhat time leverage where I could set it up and then it can make money while I'm not working on it. It's got to be location independent. It's got to be whatever your criteria happens to be. But in this case, okay, small space, niche product, something that doesn't appear to have a lot of local competition. Did you do any cursory searches of people trying to grow this stuff nearby? Yeah, I did. Obviously, I searched around and I went to a couple of local farmers markets, the places where I would potentially be selling at, and there was nothing of its kind.

3:42And what really drew my fascination was that even the large supermarkets here still don't carry these products. And even to this day, almost 10 years later, still aren't carrying these products. And that just goes to show how much growth there is within the specialty mushroom industry. So once I saw nobody else was doing it, I was like, okay, this is something that can catch an eye, right? Okay. What kind of varietals or varieties or species are we talking about here? Yeah, so there's species and varieties, but we're doing oyster mushrooms, all wood loving mushrooms that you'd find in the wild, essentially.

4:19So oyster mushrooms, lion's mane, reishi, a lot of those medicinal ones that you're hearing about in the coffee. Yeah, they're huge right now. And it's just kind of like a little fad that's just just kind of catching a blaze. People have been out of the loop on mushrooms. And I feel as if as a culture, we still are. Yeah, maybe you were early or you were on kind of the leading edge of an interest in these medicinal mushrooms, the lion's mane, stuff like that. Yeah, and I was always a biology guy growing up, and I think a lot of people are fascinated by the mystery of mushrooms, and that's what makes them such a niche thing.

4:56We know so little about them. Lots of folks are like, okay, I want to know a little bit more because this is different. Okay, so identifying, hopefully, an up-and-coming market, definitely a rising area of interest and not a ton of local competition, and something, hey, maybe I can grow these in a small space. So what happens next? What happens next for me personally is was just trial and error. You know, started investing a very little bit of money initially into some techniques that I had saw on that website and then just really started to trial and error all of this crazy amount of information that's out on the Internet.

5:37I mean, you can find anything and everything, and that's sometimes a bad thing, especially when it comes to something that's niche, something that's maybe out of the ordinary. A lot of our success here at 10 Mile Mushrooms, I feel, is kind of just rolled off of that organic, just being a really new fad type of thing really helped us along. So we got a real bump there and got lucky in that sense. What did it cost you to get started? Or like, I'm thinking of if I wanted to do this and I've got, you know, maybe I could dedicate some garage space or some space in the backyard to it. What does it take to get a mushroom grow operation off the ground?

6:16Initially to do it, you don't need much but a closet. They can grow in very low tech type of environments. And that's how we started with just growing them in a stagnant room. We didn't have fans and coolers and all of that stuff. Actually, you'll see behind me here, I have a little grow tent and that's enough to get started. That will grow you 16 pounds of mushrooms every two weeks in just a little tent like that. And that doesn't have a shelf in it yet. So you can really condense and pack these things in, but closets, any extra space, your front porch. If you don't have any experience with it, you need to get a little experience before actually jumping full on and building out a grow room.

6:57but to get into the full thing I mean you're only looking at a couple grand in supplies a full market setup everything that you need if you want to just give it a go yourself okay and yours was even less than that because it's like I'll figure it out as I go I'm not going to buy this whole setup right out of the gate yeah I did not have any money and I did not have any credit which I think you know probably a lot of us are in the same boat when we're looking to start a new venture. You don't usually just start a new venture because your current venture is doing so, so well, you know. So yeah, the initial investment was just 300 bucks and I bought some straw, some poly tubing and just grew oyster mushrooms on straw, which is a really low tech method to do it and quickly realized that growing them on hardwood is the way to go.

7:48But it got me off to the races. And more importantly, I grew my first oyster mushrooms and were able to fry them up and cook them. And it was out of this world, life-changing once I actually tried the mushrooms I'd grown because I didn't know what they were going to taste like up until that point. You couldn't buy them anywhere. Oh, okay. So after I fried them up, I was like, okay, now this is like super reaffirming. These are way different. This is totally something that why wouldn't you want more of in your life. That's really funny. It wasn't even something that you're like, oh, I love this food product myself.

8:22So I'm going to bring it to the masses. I haven't even tried it. That is a funny thing because I was like total anti-vegetable mushrooms all throughout my childhood, you know, so what a 180. Okay. So the first batch goes to some sampling and say, okay, these are actually decent. Let's go out and try and sell them. Yeah. So really the whole way that it evolved for me. And this is how we walk people through starting their own farms now with through our farm, 10 mile mushrooms and our programs that walk folks through just getting started. It's like, get some grows under your belt. You grow some mushrooms.

8:57You make a list of all your potential outlets as to where you can sell these things. And for mushrooms, there's really four main outlets that you're going to be looking at as a small farm. And those are farmers markets, CSAs, direct to customer, also just wholesale stuff, selling to restaurants, selling to other things like that. So you want to make a list of all those spots and just see where there's interest and get some of these mushrooms out into folks' hands. And that's what we did. And truly the farmer's markets is where things ended up shining here for us. It's hard for people to pass by these things at a table and not be kind of like, what is that?

9:37You walk by all the veggie tables and there's stuff you've seen before. So this was a head turner. Okay. Something different. And I can think down at our local farmer's market, there is a mushroom dealer. There is a setup there and it does, it looks unique set out on the table and it does it kind of cool. What's, what's their deal? What's this about? Well, talk to me about maybe in the initial farmer's market setup and sales and, you know, you're doing this once a week or what's the process of getting even accepted to sell there, all this stuff. As far as being legitimate in Pennsylvania to get set up to sell, there's not too much you need.

10:13You need, obviously, a small business insurance policy, usually like a million dollars or something, which is relatively cheap. You need a tent to set up under. You need a table. You need a cash box and a little couple of trinkets and boxes to put on the table. So really, to get into the whole thing, you're only looking at$200 or$300 worth of an investment up front and supplies that you need to sell at the market. And for a long time, we didn't have a sign. We didn't have any of those things and just were showing up and the mushrooms were essentially selling themselves from the beginning. Yeah.

10:46So let's go back to this example of the little tent behind you. And for people on audio, it looks like it's about six square feet. It's not a huge thing. Yielding 16 pounds every two weeks. What's a pound of mushrooms worth at the market? Yeah. So at the market, you're going to get your highest dollar value per pound. And essentially when broken down into half pounds and quarter pounds, you're able to get anywhere between 24 to$30 a pound out of these mushrooms. And that's fresh. Now, if you break them down into dried or other secondary products, you're getting a lot more than that. So essentially the 10 pound blocks that we are growing these mushrooms off of, they're going to yield anywhere between two to four pounds of mushrooms.

11:31So for one block that we sell wholesale for$10, you're yielding three pounds of mushrooms, which is yielding you some sort of revenue between 60 and 80 bucks. And if you do all the work yourself, it's even more. So it's a high profit, high yield specialty crop at the end of the day. Yeah, you're looking at better than 75 % gross margin on that, not counting what you're set up and all this other stuff. But in terms of cost of goods sold, that's pretty good. But then does it repeat where, okay, in another two weeks, I can yield from the same thing or I got to like kind of start fresh? Yeah. So the grow blocks, they usually get between two to three good flushes.

12:16The first flush, we call it, like the first growth, is always the biggest, and that's when you're going to get your largest yield. And most commercial growers, they will only grow that first flush just because you're going to be waiting another two weeks after the first flush is harvested to even start seeing any growth again from the block. So if you're limited on space like we were, it's a good way to get a traffic jam in your grow room to try to second and third flush them. But a lot of these do so great in the garden. If you take a block that you flushed and get a big hefty yield, you can bury them outside and see another pound or two easily.

12:56Oh, okay. There's a way to squeeze a little extra yield out of the same thing. Okay. Versus clipping, I don't know anything about botany, but it's like, you know, clipping a plant and then it regrows and you're like, oh, I can sell the same thing again. Yeah, there's a funny thing online where it's like the infinite mushroom hack and where, so essentially you can take a mushroom that you get from the store, you can take bits and pieces of it chopped up and grow it in cardboard and then grow mushrooms and take a piece of that and grow more mushrooms, which in theory is great, but mushrooms experience something called sessanins, which is where they genetically kind of get beaten down over time when you're continually growing them out.

13:37So for the commercial operations, you just start over fresh every week. Like we'll put fresh blocks in the grow room Grow those out and then you're more on a consistent cycle where it's like You can yield 50 pounds of mushrooms a week and you know pretty dang well that you're gonna get 50 pounds Okay, how many blocks fit in the little tent? Yeah, so the little pro grow club tent is four blocks Okay, so the blocks are roughly one square foot each So really to grow them out, you need essentially just a little tiny bit more space than one square foot per block. So you have to think once you're starting to stack these vertically, that's when there's some money to be made per square foot.

14:20Okay. Because I'm looking at four square feet times 16 pounds every two weeks times call it 25 bucks a pound. Like I'm at$400 just there. And if I could fit four of them in there, okay, now there's$1 ,600. And I go to the market and I cycle it. So I go every week. It starts to be a significant operation. And to your original point, like from a really small footprint. Yeah, which is the beauty of it. I just don't think there's really any other crops out there that you can do so feng shui within your home or within your garage. Yeah. More with Kyle in just a moment, including the wild land acquisition hack that let him finance a 70-acre homestead with no money down, and how selling just$1 ,000 worth of mushrooms a year is the key that unlocks it.

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16:59Plus, Quo integrates with the tools you're already using. HubSpot, Zapier, Cloud, and tons more, so you can save time and stay organized. Money is on the line. Always say hello with Quo. Try Quo for free. Plus, get 20 % off your first six months when you go to quo.com slash hustle. That's quo, Q-U-O dot com slash hustle. I was just talking yesterday with a friend and it's actually the United States Corn Association says that to grow one acre of corn, your net profit is negative$150. So it's insane. It's truly insane. So this is a solution to that. I mean, as a society, commodity goods are only going to continue to get cheaper and cheaper.

17:48And this is kind of like a niche within the agricultural world where it's like, you can still actually make a living doing a small to mid-sized farm selling mushrooms. Whereas Because to do beef, to do chickens, it's tough, man. Yeah. And you're in rural Pennsylvania, because I think of maybe there might be some pushback. Like, well, sure, if you're in, you know, some fancy city selling$25 pound mushrooms. Yeah, of course, there's going to be rich people paying that. But it's like you're kind of out in the country a little bit. We're in a slightly impoverished area, you know. So to be able to sell these mushrooms for as much as they are at the markets, you have to break them down.

18:29you have to sell them in smaller quantities but at the end of the day you're grossing more per pound anyways yeah yeah the sales aspect is really the thing that trips most beginning farmers up in my opinion because sales and marketing the mushrooms can be super easy to grow especially if you're buying grow blocks from a supplier i mean you're just dealing with putting them in the grow room and harvesting them a lot of folks are just getting tripped up at the we need to actually They sell these things, you know. What worked for you on that side? So you got the farmer's markets going, and this is like a once a week or once every couple weeks kind of type of cadence.

19:07What else is going on on the sales side? As far as sales go, we start getting into like mushroom growing supplies, which is a really natural path for a lot of these farmers to go, either selling supplies or selling secondary and tertiary products like the dried mushrooms, the tinctures. So we slowly started adding those type of products to our market stands. We added tinctures first, then we added dry mushrooms, then we started selling the grow blocks. And selling the grow blocks ended up being way more profitable than selling the mushrooms, which is great because everybody tries the mushrooms and they're like, oh, I think we'll try a block.

19:44and with the medicinal benefits of lion's mane and cordyceps and reishi all getting really popular folks would see the tinctures on the tables and instantly be like oh you guys make it yourself i'll take one and that's a 45 little jar of tincture so it really started boosting the revenue greatly once we started adding these little things in and then the restaurant side of things picked up, you start meeting folks at the market who are like, you should try this restaurant. And then you start building this web of relationships, right? You get kind of plugged into the food community and people are like, oh, this is a really good restaurant downtown.

20:23I know the chef, here's his number. And that's, and things kind of organically started building upon themselves like that. A couple of years into the market game, we just caught a huge break where another farm reached out to us asking to supply them with ready to fruit blocks which are what we call substrate which is the growth medium for the mushroom so we sell these essentially grow kits to this other farm in bulk and it kind of changed the whole trajectory of the business and we started advertising selling these starter blocks to other farms and that's when things really started taking off.

21:01And we were like seeing that there was such a need for a supplier for these starters in the industry. Did you have capacity to do, like, I imagine you kind of get the interest and nodding along. Yeah, we can, we can do that. And while also being like, well, how are we going to figure out how to do that? The farm started on my parents' property. They had a little barn. They had just bought this property and there's a tiny barn on it and it was like pig stalls that still had crap in them and stuff. So I dug that all out and I built the production area in there. The grow room was there. Well, quickly outgrew that space.

21:39And now I'm growing mushrooms in my parents' basement. And it is like, just kind of like the classic, like, what is this kid doing? I'm sure all of their friends were like, yeah, this is taking over your house. What's going on? Yeah, this is not great, but God bless them. They were such huge supporters in the beginning and we quickly outgrew that space. But I had a dream, a vision, a goal. And agriculture really opens up some amazing doors for people, especially if you don't have that financing or credit and things like that. there's a lot of programs and loan programs grant programs out there that can help you boost your business within the first three years and so we started to utilize those and that's how we were able to bust the seams open a little bit with the with the grow blocks and get some more space to continue to grow nice yeah you mentioned the the four sales channels farmers markets csa direct to consumer and wholesale through restaurants and stuff.

22:42Did you ever do CSA or direct to consumer sales aside from the market? We do direct to consumer just online. We'll do the grow kits. We sell the dried mushrooms, tinctures all online. CSAs, we've never ran our own CSA here, but we've been a part of multiple CSAs. But now that if we were still focused on selling fresh mushrooms as our main revenue, we would definitely be setting up a full-time CSA because it's just such a great way to connect with your community and really create that relationship with consumers. But CSAs with just mushrooms are a little difficult. So it's nice to work with other farmers and offer the whole deal.

23:23Yeah, you would expect it to be part of your bundle, not, not the, I don't need a whole thing of mushrooms, but like if it was part of my other kit, you know, that would be okay. Exactly. Yeah. So I think a lot of people are finding success, at least our customers are working with other food hub types of deals. And once you can find the distribution for your product, that's when you have a real chance to scale. Okay. And the margins are best at the farmer's market because it's like dealing directly with the end customer. And then I imagine if you're selling to a restaurant, like that's more of a wholesale rate and then they're obviously going to mark it up in their dishes and stuff.

24:02Yeah. So the wholesale profit margins are a little bit less. They're about half. I mean, if you're selling them for$10 to$12 a pound, you're grossing about$30 to$36 per block, which still, if you have your systems and your back end tight, if you have good help, good employees, there's definitely a good profit margin to be had there. Did the farmer's market charge you to set up a table or booth? They do. And it really, it's drastically different for every market. They're all run independently. They all have market managers who want different things. And usually the fees are very minimal, 25 bucks.

24:42Sometimes it's like 500 bucks a year, at least for the markets where we're at here. If you're in the inner city, if you're in an urban area where you're going to be doing 5k a week, then you can expect to obviously pay more. Yeah. No, that's helpful to know because it's like, You almost have to pay the price of admission to get in front of a hungry crowd. We call it the buy buttons audience. They're like, where can I go to make it easy for people to push my buy button and do business with me? And it's like, they're already kind of primed to be spending money on food and local and organic and whatever at the market.

25:15So that's the place where you got to be and you got to pay the price of admission. For me, it was the Seattle home show in college. We wanted to have our painting business have a booth there, but it was a$2 ,000. And maybe that was even the last minute addition. Sure, we'll stick you way in the back if you give us$2 ,000. We're like, oh, do you think we could sell a couple grand worth of paint jobs? And if you sell one or two jobs, you're going to make enough margin. And we ended up booking a ton of work off of that. But it was a little intimidating up front to bite off that investment. So I get that starting out.

25:45But if you have a high margin product that is kind of unique and not every seller at the market is offering the same thing, then you can stand out and make it work. Yeah, it's hilarious. And that's how you always start out in business. I feel as if you think those investments are way bigger than they truly are. You don't see the end goal of it all. It's just incredible how it goes from 30 bucks at the market is a lot to now each week, once your business scales, you're spending thousands of dollars to keep it running. And, you know, just how you grow as a person to be able to actually mentally handle that is just an interesting thing.