Yearly business plan - realistic or not? What else should I account for?

[Moon]

This may or may not have been mentioned already. Has anyone said health insurance? It's one of those things you don't think of until you need it and given the new healthcare mandate it's going to become a requirement. I don't know what premiums run for individuals in small businesses or what plans are offered, however, I know that the company I work for shells out about 450$ a MONTH on my premiums.

[westernbeekeeper]

Thanks, Moon; I did not consider that. I will look into healthcare insurance.

[JRG13]

Yes, health insurance is a must for this business, I would think you have some coverage already Western through your parents. I would think you could find some for a reasonable price, between $100 and $200 a month or cheaper. Once you have a wife and kids and need to cover them, it becomes expensive, but single person coverage typically isn't too bad. I think you're off to a good start, if you need anything let me know. I live in the middle of the almond stuff here, if you make it this far let me know, I will come out and give you a hand.

[ryan]

On the insurance theme....Once you're up and going, look into getting disability insurance for your self. Get your self covered if you get hurt or sick. Totally worth the expense. Price is not all that high for the long term stuff. Meaning, it doesn't pay out until you've been out of work for 12 months. Not fun, but if you have a major accident or illness you'll have steady income for the rest of your life. People don't go bankrupt because of medical bills...They go bankrupt because they get sick and can't work.

[EastSideBuzz]

Oh you think I should keep track of how much money I loose each year. Wow that is scary.

[Moon]

Only if you're trying to be profitable and make money. If you're just throwing good money after bad and enjoying yourself while you do it whose to say that's bad?

[kilocharlie]

Hold on a minute! A start-up / takeover with no capital? Buying health insurance on the company dollar at age 19? Let the kid get some cash flow going first! He has to build up the business to about 1000 hives in short order. For the beginning of the ordeal, his health insurance is an Epi-pen and driving very carefully. The only insurance he can afford until there is cash flow will be comprehensive automobile. Next priority is business liability, AFTER there is positive cashflow. Health insurance is a luxury to be afforded after there is excess cash.

[delber]

I agree with you Kilocharlie. When I started working after college I was without insurance for a good while. a few years in fact before I got another job that carried it. Being young there's typically not much that comes up. I would seriously consider liability insurance before he would go to transporting them, but until then as long as there are yards for them to be kept then it's fine as far as I can see. Honeybees don't cause much problems. Just my 2c.

[ryan]

Major med will cost less per week than the average guy spends on beer. Buy it, no matter what your career path is.

[StevenG]

If you establish a business, and wait until you have positive cash flow before getting liability insurance, one accident might guarantee you'll NEVER have positive cash flow. Some things you just have to do, to protect yourself in today's litigious society. It's one of those things you'll never need, but when you need it, well..... you sell honey, someone can sue. You put bees on someone else's property, some one can sue... you have trespassers, someone can sue...
Regards,
Steven

[Moon]

Hold on a minute! A start-up / takeover with no capital? Buying health insurance on the company dollar at age 19? Let the kid get some cash flow going first! He has to build up the business to about 1000 hives in short order. For the beginning of the ordeal, his health insurance is an Epi-pen and driving very carefully. The only insurance he can afford until there is cash flow will be comprehensive automobile. Next priority is business liability, AFTER there is positive cashflow. Health insurance is a luxury to be afforded after there is excess cash.

No, this is just showing a blatant disregard for the current healthcare laws. The days of 'Consequences be damned! My insurance policy is an epi-pen and driving carefull!!!' Under the new healthcare mandate every American citizen is required to hold some form of health insurance or be subject to a fine of potentially several thousand dollars a year. Source: http://abcnews.go.com/Politics/OTUS/...ry?id=16663839 So whether you agree with it or not, it's a moot point. He needs to factor in the cost of healthcare costs. The loophole being that he can stay on his parents plan until he's Twenty-Six. Which is definitely what I would be doing if I were you westernbeekeeper.

Also looking at your *.pdf you posted earlier your yearly net income will be around $13,000 dollars. If you factor in the cost of rent, the cost of food and utilities, along with health insurance, cell phone cost (I know not an ABSOLUTE necessity but tough to run a business without one) unexpected maintenance and repairs (you're going to be in your vehicles every day pulling around lots of equipment, things are GOING to break down). As well as entertainment costs that 13,000 dollars is going to get chewed up rather quickly. That's just over a $1,000 dollars a month. Sure it's feasible, but not very. I couldn't do it and I admire you for aspiring to do it and wish you all the best. You said you don't have a family now but you plan on having one started within the next five years. Seriously consider pursuing a different line of work in the short term to acquire some sustainable income and some good benefits. Work your way up as a side liner and when you have the resources to go from being a side liner to going full time commercial do that.

I'm currently doing this exact same thing myself. This path offers you a little bit more mobility at the cost of time. I was able to spend about 15k on my beekeeping this year simply because I had a real job that allowed me the financial mobility to do that. I was also able to take care of 2 mortgages, go on a couple of vacations (Hawaii and Vegas) as well as support my wife and I. I'm still learning a great deal about beekeeping and so I continue to make several mistakes. I may have killed off the fifty or so hives I have this year because I didn't prepare them very well for winter but on the flip side I learned a whole slew of new skills and fill confident I could replenish my numbers easily if only a handful of hives make it through the winter. My point being that it's a moot point whether or not they make it through the winter. Yeah it will suck if 40 of my hives die but my livelihood is not tied directly to my beekeeping yet. Ninety-percent of my hives dying doesn't mean I'm going to starve or have the house foreclosed on. The trade off being I have to work about fourteen days a month so that's fourteen days each month in the summer I'm unable to focus on my beekeeping.

I really wish you the best and I hope this endeavor pans out for you. We're not far from one another so if you ever need a hand with something hit me up.

[kilocharlie]

Moon - By all means, buy as much insurance from a Blue-Ribbon insurer as you can afford, but DO NOT LET unnecessary costs (=insurance) make the start-up table in your biz plan mathematically unviable. You won't be able to buy beer, insurance, or a pot to (starts with "p" and rhymes with "kiss") in, guaranteed. This country needs to wake up from this MEGA-STUPID insurance-mentality nightmare and take intelligent risks while paying attention and not making mistakes. When they come to collect their thousands of dollars of non-insured penalties from this beekeeping bastard, there won't be any insurance people left to give it to, nor any judges who would award it to them. Besides, blood does not from a turnip weep - they will be wasting their time and thousands of dollars in fuel chasing a nomadic, multiply non-employed but well-remunerated jack of all trades across several borders for ZERO cash value. I do not make taxable income, but manipulate non-taxable assets in non-taxable ways. I only insure corporate assets, and you can bet that they create capital flow.

[Moon]

I wasn't trying to personalize this for you or to make it about you dodging taxes. I was simply trying to give advice to another beekeeper on unseen costs that should be taken into account; if you're going to be a legitimate small business you're going to need to insure yourself as well as any full time employees. It's a simple matter of fact that doesn't require much chest thumping and stomping around to prove or disprove. That's just the way it is. It's a brave new world.

[kilocharlie]

The post above was incomplete. Either Beesource or the wi-fi only gives us so much time to post, then it kicks us off the server right before we finish editing and amend the post. It happens almost every time I post. One sentence at a time and re-edit seems to be the trick.

I do not dodge taxes, I plan and avoid them legally. That is why we make corporations - to protect assets, to give us legal ways to avoid taxes, amongst other benefits (like going multi-national so we can enjoy captive transfer). That is also why we need to get our businesses started - by hook or by crook - and up to going concern and strongly cash flow positive, so we can afford to incorporate and grow big, pay a small amount of tax to keep Big Brother off our backs, and eventually afford such luxuries as health insurance.

Legitimate and business start-up are rarely compatible terms. That is a pipe dream for anyone but a well-financed MBA, a rich kid born into the culture of wealth, or an experienced, wealthy venture capitalist with an attorney and the Mafia's good graces. The rest of us have to MacGuyver it and play very careful with where that next buck goes until we have cash flow enough to afford to go legitimate. Most of us wouldn't take that risk with auto liability insurance (comprehensive on an old clunker, maybe but not liability on your biz truck) or business liability insurance, but health care insurance at age 19? If you are going to cut corners, that is a good risk for a short while.

I agree that sidelining while working for more money + benefits elsewhere is likely a better bet for Western, but he works where he wants to buy, not elsewhere. Given a job that pays enough and picks up the health care bill, it is a more efficient route. I'm impressed that you practice what you preach. I really respect that.

I hope my business grows quickly to enough profitability that I can pay a small amount of tax that I appear to be the kind of good ol' boy taxpayer the Guvamint just loves. For the meantime, I don't have anything worth them going after, so I sit below their radar screen, a turnip with no blood to give. Heck, they are trying to give me money to become successful at business to pay tax and even to be able to afford such luxuries as health insurance and employees!

As far as a Brave New World is concerned, Aldous Huxley would jump out of his grave and puke on the guy who invented insurance while Thomas Paine would jump out of his grave help Aldous throw rocks at whoever is pushing mandatory insurance. Insurance is a farce, preying upon the fearful. It has been since they started charging twice as much as the risk rate and making a living off it, and probably always will be. Mandatory insurance is a symptom of an economy that is in it's death throes. Taking away options is always more dangerous than what your coverage actually pays for. Don't believe me? Try sending in a big claim. If they give you all that you claim, I'll take it back and go buy at your insurance company!

As far as chest pounding and stomping around is concerned, I apologize for not being able to twist and perversely contort my mind into believing the bravo-sierra that the "Brave, New" generation seems to accept so implicitly - that we are supposed to be wusses, that our government will take care of us, that Big Brother is really in charge, that We, the People could never, ever suddenly stop paying taxes, pick up our sticks, stones, pitchforks, bows, arrows, guns, bullets, grenades, RPGs, those weapons we don't talk about, and Malatov cocktails and go hunting for government employees until their arrogance more closely resembled absolute submission to US. Remember, their stupidity is only exceeded by their arrogance. When that changes, it is usually when their stupidity abruptly and greatly increases, not when their arrogance decreases. Remember 2008? Woopsi-daisy, they needed a bail-out. Arrogance higher than average, but stupidity way up!

If they suddenly get too far out of line and pass new intolerable acts and enough people say, "ENOUGH!" and we really do need to take down this monster, we need the guts to fight and die doing it. Pound you chest if it helps, I prefer a good scope, a ghillie suit, a steady hand, and lots of resolve. I'll take some of that momentum from all those brave people in north Africa, too. Until then, this 2012 version of Common Sense sits in the printer's office and we go on trying to help our bees.

I actually like the attitude of doing it legitimately, and would love to do so myself. Most of us would if we could. Start-up with not much capital does not allow for that too often, especially the more regulation and fees go up. Seems most wusses would rather work for the government and get paid to regulate someone else and charge them too much for it, instead of run a business and actually create wealth. They're a lot like varroa mites - too much blood sucking parasites and the hive collapses. It is just as real as in the bee yard. The window needs to be opened a bit wider to allow the underfinanced to start businesses legitimately. Deferred fees and taxes, looking the other way while a businessman intending to go legit makes by circumstepping a "you can't do that" code in his first year.

Western could include H.I. in his biz plan if he could find it cheap enough and still show enough profit. If I were the loan officer and I saw that in the first year, he wouldn't be getting a loan. I've been looking for 2 years and have not found cheap health insurance. That will just have to come later. It shows up at year 7 in my plan under the current health care insurance rates and that is probably somewhat optimistic. Rates could be much lower in Wyoming. The question and the debate are legit - the goal is the same. It seems a question of when to list it. Meanwhile my cash goes to food, transportation, bee hives and equipment, bee food, and not much else, until I get up to the almonds and get paid considerably more taxable cash.

[ryan]

$2.55 per day. $76.65 per month. $919.80 per year. $5,000 deductible.

Unlimited lifetime payout for medical expenses.

Google it if you're interested.

I wish I was young again. Young guys get the low rates.

[Riverratbees]

Another thing to consider are you going to do pollination, you need to consider buying a trailor.

[Daniel Y]

When I was 14 I started a hog operation through the FFA guilt ring. This means I got a guilt at no cost. I was able to use my fathers land as well as his materials for fencing and shelter. So a large share of the start up costs where covered. My father financed it as far as feed. vet and other medications and treatments until I had some animals to sell at auction. The whole thing went fairly typically for anything agricultural. first to mating resulted in a guilt that was still not pregnant. third mating and 9 months in she finally came up pregnant but all but three piglets where lost of that first litter. 2nd and 3rd breeding where much more successful and after 2 years I had moved to Reno and started another business. When the third litter was weaned my dad sold out everything. 24 pigs total. 11 at slaughter weight. one sow and 12 wiener pigs. After expenses I had $300 in my pocket. By that time I was hanging sheet rock in Reno at the age of 16 making 150 dollars a day.

Now I can't tell you the details of how your efforts will go. But I can say that is about what you can expect from a new business in the first two years.

You have an advantage in that you are buying an established business. But you also have to make the payment on that business plus still make what profit you can.

Your expenses are going to be higher than what I saw. My expenses where actually very low. No land rent. not cots of fencing or materials to build the shed for shelter. I did pay for things like lice powder and the vet bill for sonograms. Otherwise my father was a very good farmer and did almsot everything with nothing. I did buy feed.

I have probably spent a lot more money than I should have on bees this first year. and actually could have done it for next to nothing. But a large apiary is going to have at least some unavoidable costs. You can make your own wooden ware at almost no cost. I know it can be done I made 4 hives and 4 nucs this year for the cost of one 8 foot 1X12. The rest was found wood including nearly all the frames.

I did buy a nuc of bees but it turns out that woudl have been unnecessary because I also got a swarm just a couple of weeks later. My bees suit, actually two of them and my smoker where the most expensive items. their where lower cost options. I did end up buying something like 70 frames but that was a convenience thing and I could have avoided it. I also ordered some other things like a queen excluder, frame grip and sunk some money into playing with a OA vaporizer.

Treatments will be necessary and I have put well over 100 lbs of honey on two hives and two nucs. For for about $400 this year I have 4 hives total anything from a 5 frame nuc to a double deep 10 frame lang. So $100 per hive average and I was not being all that careful about costs. I also did not get one drop of honey. So year one is pretty much down and so far looks typical to me. If I show a profit or even recoup any of my costs I really don't expect to do that until next year. And that is if I have really learned anything , gained any skills and it is at least a decent year.

I actually blew it, Inexperience and left about 30 to 45 lbs of honey on the hive to long. so part of my no income at all this year was nothing but a mistake on my part. that and two much cost in expanding when I needed to be focused on the production of one hive. Such mistakes need to be expected in the beginning. In hind sight I should have saved expansion for next spring when it woudl not have eaten up all the honey I did have. Plus opportunities come when opportunities come. I didn't want to miss this one.

So the way I see it I took my profits and expended with them. I went fro 0 hives last spring to 4 One will be in reserve to produce what I will have next year for further expansion and the rest are going to be used for making something I can sell.

So that is a real story of what it cost to start up and my average so far is $100 per hive. But that was a lot of one time or at least periodic expenses. the suits will have to be replaced some day. but not next year. I won't make the vaporizer again. I may be replacing the smoker and that was a big expense. My smoker cost me $80, I splurged. And wooden ware will continue for now to be made with free wood. New colonies will for the most part come from my own colonies with the exception of the occasional queen. I see no need to buy a queen for every hive I have I can produce them fairly easily and I am not in this as a business.

If I where to expend I woudl immediately be looking at the cost of a truck. trailer, additional hives and possibly apiary rent. My bees stock woudl most likely still come from my own bees. That and I would increase my effort to capture other colonies and swarms.

You have either time or money. when you have no money you spend time on everything. when you have money you have to weigh if the item is cheaper to buy or spend time on. nothing is free.

Learn to count the cost in every way possible not just dollars. I traded 45 lbs of honey this year for two nucs and a trap out. No dollar ever traded hands but I bought those nucs just the same. I would have been far better off harvesting and selling that honey at $6 a lb and then buying the wooden ware. I was not prepared to sell honey this year as I didn't expect to get any.

Right now I am focused on seeing how much winter sets me back. I may loose all my bees. if so I already have a colony in a wall scoped out to get started up again in the spring.

For me it has been very difficult at times. Trying to start two nucs with no drawn frames at a tie of the year that bees don't want to draw comb. Now that is more how you can expect things to be. You have x,y and can't get z to save yourself. so you then have to put to together a.b. and c to make up for it. I had bees to trap out. I had the wooden ware. but bees don't live on foundation very well. So I had to rob my big hive of honey frames just to make a place for the two nucs to live. I then fed everything both nucs and the big hive. the big hive is making 10 med frames of honey just so I can put them over the nucs for the winter. in effect my entire apiary is now doing nothing but getting two nucs started. That is all it has been doing for the past couple of weeks. My hope is that it will be worth it next spring when I have three strong hives bringing in nectar. But who knows I may have a bunch of empty hives. I also have a top bar full of bees but am not expecting much from them.

[Davidnewbeeboxbuilder]

Queens would bee a expence if no
to save hive 4 gentic help

[westernbeekeeper]

Well everyone, thanks so much for all the input you gave me. It is well appreciated. Looks like this thread has run it's course, but I am going to print it out. Any further replys are still welcome. Thanks again!

[Joel]

Benjamin - a great deal of good information in this post. - take whatever you think it's going to cost to do business - double it and them you'll be pretty close to safe. You may want to investigate wintering somewhere South considering some of the brutal winters I recall from Wyoming when wind was 50MPH and ambient temps around 0F for days at a time. Consider the profit increase if you took those 150 hives south and split them to halves or thirds the next spring. Are you working migratory pollination? I doubt with the annual average honey harvest of 50lbs/hive and selling only 20 nucs you'll see any profit. How might you increase that? What are the average winter losses if you stay in wyoming, how much more honey might you harvest bringing strong hives and or nucs back from somewhere South - That alone will close to double your harvest/income. Trailers, trucks, business insurance, marketing, your wages, unexpected expenses. We market in NYC and lost a transmission on our diesel in the Holland Tunnel - It cost me $250 to get home and when I got my truck back 2 weeks later around 3K more for a one day issue. Always invest in the long term, a little more now makes a huge difference down the road. Just had a custom rebuild done on our 1 ton chevy. Could have purchased a factory rebuilt tranny for 2K but invested $1500 in upgrades at a custom shop because I can't break down on I-95 with a load of bees. Do you have the experiance to fully inspect the hives you are buying? If you can't find AFB in the 1st 10 cells of a problem you need an experianced inspector to look over the whole operation. Not your buddy at the bee club but a professional. I realize with the date of these you may have already purchased but always inspect b-4 purchase. An inspector does not need to be state - if you know a commercial operator ask him - offer to pay for the time. Had a friend bought from a "reliable" older beekeeper who had eye problems and thought his "queens were failing". It took about 5 mintures to find AFB in used equipment and then of course hives after the purchase and the 5K he spent went up in flames only after he infected all the beekeepers within a 5 or 10 mile range. One change to be prepared for will be the shift from fun hobby to job. It will still be more fun than working for someone else but many days it will be that "job". Keep a positive outlook, be prepared to work 80 hours a week and be progressive and you will likely do well. Subscribe to American Bee Journal but also develop that business mind with reads like "Fast Company" or "Inc" because good business is good business whatever the base. Good Luck and keep us posted!