Beesource Beekeeping Forums banner

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

42K views 106 replies 38 participants last post by  sqkcrk 
#1 ·
Hello all,
I am looking at buying out my boss. He has 150 hives, and would like to sell out, as he is getting older (65 years old). He treats for most of the pests and diseases, but I would eventually like to go treatment free. He currently only sells honey, no nucs or other hive products. I would like to become migratory when I own enough colonies. Is this a reasonable business plan? Please let me know if there is something you would change. I'd like to be as realistic as possible. Thanks in advance.

150 colonies - annual business plan

Expenses:
Treatments
- 2 Tylan DC-120 ML
- 1 Bee-vert sugar 50lb SG-850 ML
= $134.50
- 5 Mite Away II Quick Strips DC-640 ML
= $684.00
- ParaMoth 35lb bucket DC-132 ML
= $119.95
- 2 Fumagilin-B 9.5g bottles DC-115 ML
= $289.90

Candy/feed
- 7 Bee Pro 50lb bags FD-201 ML
- 115 bags GV Sugar 25lb from Walmart
= $1980.65

Propolis traps
- 100 traps @ $5.95 each = $595.00

Queens:
- Queen rearing supplies = $500
= $500.00

Nuc supply:
- 20 cardboard nuc boxes @ $5.95 each = $119.00
- 20 Nuc box entrance caps @ $0.16 each = $3.20
- 100 deep frames w/ foundation @ $2.30 each = $230.00

Gas:
- $1500

Total cost: -$6,156.20


Profit
Honey:
- 50 lbs per hive = 7500 lbs @ $2 per lb = $15000

Propolis:
- 3 oz per hive X 100 = 18 lbs @ $30 per lb = $540

Pollen:
- 50 lbs of pollen @ $17 per lb = $850

Nucs:
- 20 nucs @ $125 each = $2500

Queens:
- 100 Russian queens @ $30 each = $3000.00
= $3,000.00

Total gross income: $21,890.00

Total net income: $15,733.80
 
See less See more
#34 ·
Just a couple of things that stick out to me.

you did not include the cost of buying your bosses operation in your expenses.
Are any of the nucs or other equipment going to be included in the buy out?

No additional expenses included in the production of honey. Including bottle or other means to package the honey.

No losses are included but that has already been covered in a previous post.

Even if you only rent the extraction equipment you need that expense included.

Loading by hand is not free. Using a forklift with little or no experience may cost even more. Not just in accidents. but simply in the process being slower due to inexperience. It is a major expense to train new employees. Even when the new guy is you.

Otherwise I would just hope your estimates are accurate and wish you the best of luck.
 
#35 ·
Dback probably has it better than anyone. Maybe not the details but the reality really is going to look something like that.

Best way I know to do that is look at last year. better yet look at the last 4 or 5 years and make a list of every unexpected thing that you can recall. Add those things to your list and you will be closer to the real ball park. Keep in mind you may be much busier than you are typically. this will increase the incidence of oh crud factors.

Nothing will give you a better picture than accurate records for a year though. I have had some operations run smooth as silk. and some you could not predict if your life depended on it. I have run out to do some 15 minute job that I was charging $50 for and have a $4000 compressor blow out on me. Next job that payed $7000 and took a month and not one piece of equipment get lost or damaged.

A rule: You never drive over that really old hive you where considering retiring. It is always that brand new one with the extra expensive feeder you where trying out and that new breeder queen you have popped for.
 
#37 ·
Skinner Apiaries
Were you speaking of Disaster Assistance from the USDA?
I believe he was referring to regular (non-disaster) crop insurance. The apiculture version is a pilot program and not available in all counties in 2012. You can see if your county is covered and how at this link:
http://www.rma.usda.gov/policies/ri-vi/12rivitable.pdf

Here is more info on the "vegetation index":
http://www.rma.usda.gov/policies/ri-vi/13viapi.pdfhttp://www.rma.usda.gov/policies/ri-vi/13viapi.pdf
Note there are two other indexes as well.

When searching for more info, keep in mind that the term the government uses is "apiculture" (not honey, and not bees) and the agency involved is the "Risk Management Agency" or "rma" as in the links above.
 
#38 · (Edited)
Best advice that I ever got was from a successful bizz man that wrote;

keep track of all your expenses ALL your expenses. put 6 months worth of operating expenses away & don't touch them.
Farming (is what you are) has many heartwrenching pitfalls. It also is very rewarding to the diligent.
"In the multitude of counselors safety dwells" (& confusion)

Takes a long time to get a grip on good bizz practises, don't get careless. hiring has a whole host of concerns. wait till you get stiffed & stuck between a rock & a hard place. Do as much as is possible with you alone.

Ryan, I respectfully couldn't disagree more (about borrowing). borrower is a slave to the lender. Speaking from experience. nothing worse than having less production than the amount you owe, w/ unexpected costs. Grow @ a rate that is built on experience. one bad season & you are not enjoying your craft. re-invest a pre determined percentage.

Lots of good advice here, chew slowly.
 
#41 ·
In looking over some of this I have a question. . . Your boss. . . Is he a commercial beekeeper or sideline? What do you do w/ him? Is he your bekeeping boss or somethingelse? You may have already answered this question, but how long and how many hives do you / have you had? I am only 2 years in beekeeping but I know what it is to have a full time job, wife and three children, and squashed for time this past spring so that I needed to sell one hive because I couldn't make enough woodenware to keep up. Growing your hives was recommended by many I don't remember if that was here or not, but the reason is you then understand what setbacks come at each stage. You can go from 20 and up fairly quickly from what I understand. This year I went from 3 to 8 (If I had equipment ready I would have gone higher) and sold one because it was CRAZY busy on the flow in the spring. Being 19 you have a great opportunity to do what you love with your life. I was told by a guy I went to church with that "a lot can happen in a short ammt. of time" and he was right.

I agree w/ lakebilly about borrowing. Been there done that and don't want the tee shirt again!!!

Ultimately it's your decision. There's so much good advice and so much that I haven't gone through even on this thread. (62 pages or so I haven't gone through yet) Chose wisely. One more thing. . . If you get downwind and problems / setbacks come up you can always adjust your course. That's easier to do by far w/o debt. With debt and other responsibilities it's much harder to change directions. If this is your passion / desire then it can be done as has been said already. ("It's been done already")

Just some food for thought. The answers to the questions that I asked may / hopefully will direct your thoughts also. (If you work as a beekeeper with your boss then you may not "need" to work with another guy, but I'd love to get the experience closer to the field you're interested in.)
 
#42 ·
Ryan hardly needs me to speak up for him but lets be fair about what his suggestion was. He was only encouraging him to establish a relationship with a lender. Its pretty difficult to become a viable commercial operation without some sort of relationship with a lender. No you dont want to own your soul to them but a line of credit at your disposal can on occasion be quite helpful and far, far better than carrying a balance on a credit card. I have had many times when a short term advance of a few thousand dollars with the resulting few hundred dollars in deductable interest helped me make many times over that on the other end. Credit in itself isnt a bad thing if it is used responsibly.
 
#43 ·
Wow, thanks everyone for the help so far. It is a big help to hear all that you have to say. That being said, please feel free to post more thoughts!

Delber, let me answer some of your questions. They may enlighten some of us. :) My boss retired from his full-time non-beekeeping job 2 years ago, and now does one job: beekeeping. He owns 150 hives, and sells 4-6 tons of honey annually, and also a good bit of beeswax. I have 8 hives of my own, and I have been beekeeping for 3 years, pretty successfully. I had known Terry Booth (now my boss) for a couple of years, and in April 2012, he asked me to work for them at the Cheyenne Honey Company. I started working for him on April 19, 2012. I raised 150 Russian queens, and also have done most of the general hive managment this summer. I also provide alot of needed youthful manpower during harvesting season :) which is just ending here in WY. He would like to sell me the business, and I would like to buy it. I would much rather buy it when it's small, and expand the business on my own nickel and budget, than to buy it in several years after he has expanded it, and having it cost lot's of $$$$ more. My ultimate goal is to make commercial beekeeping my life career and full-time income. I have very little capital to work with, as I have quite a bit invested in my own hives. It also doesn't help to only have a part time job (1-2 days a week). My only recourse is borrowing, and I'd rather borrow small than big. My only area that lacks general know-how is the migratory aspect of beekeeping. (I'm not saying at all that I know everything about bees; I found out that I didn't 2 years ago!) Anyway, thanks again for everything so far!
 
#44 ·
Go get em Ben. Migratory beekeeping is all about moving "far and fast". Start NOW. Enjoy where the ride takes you. Find a place to work bees full time starting Jan 2 if not sooner. I'm guessing CA is your final destination. But any southern state or even HI will do the trick this winter.

Credit is a powerful tool. Learn how to use it and get it BEFORE you need it.
 
#46 · (Edited)
Just a couple of thoughts based on my own experience.... when I was in my early 20's and just casually thinking about commmercial beekeeping an older, by the way, Wyoming beekeeper urged me to first off work for three different beekeepers over three years. Interestingly enough he said don't worry about whether or not they're good beekeepers, you can learn as much from a sloppy beekeeper as a profitable one. Although in this day and age there are few "sloppy" beekeepers. I ended up working for only 2 beekeepers and inspecting commercial outfits. Anyway, after a few years working for others and not really sure if beekeeping for a living was a viable option doors just started opening for me and before I knew it I was self-employed. Being single was a huge help. Have only taken out one small loan to buy a 1 ton and a building besides the gentleman's ageement with a sideliner who entrusted me with his 250 hive operation ( I paid him back in honey over 2-3 years). I've said in the past one of the few management decisions I've erred on was not expanding faster. I started out with maybe 300-400 hives and only expanded 100 hives per year. As Ryan suggested getting to 2 loads is a good idea. Take away Ben; work for somebody else; pay attention; and as Ryan says "enjoy the ride." You'll find a commercial guy or two who will be invaluable in taking it to the next level. There's lots of different ways you can make a living with bees; you'll find the path that works for you. I'm a good example of somebody who has done nothing unique or outstanding; just kind of hung in there; worked hard; didn't make any big mistakes ( I made up for that with lots of small ones) and things have worked out better than I ever could have imagined. Just do it and things will fall in place.
 
#48 · (Edited)
Just a couple of thoughts based on my own experience.... I'm a good example of somebody who has done nothing unique or outstanding;. .
Very Well said Bill.
My story goes something like this, My older brother whent off to college and asked me (14) to take care of his two hives, four years later I gave him back his two hives and kepted my 100. Things were a bit rough in the beginning, I could remember when I took bees to Nevada alfalfa, packed and ice chest full of food, piched a tent and took shower's in the ditch. It can be done, good luck
 
#47 ·
Bill: Nice post from someone who has truly "walked the walk". My experience was considerably different as I ended up taking over management and full ownership of an old family operation in the 1990's that had considerable debt due to low commodity prices, varroa stressed bees and the resulting poor honey crops. It wasn't a fun time, we were in survival mode. 3,000 hives, none of which were on pallets and lots and lots of dead hives and empty equipment left us few options but we did have a willing banker who I couldn't have survived without. I borrowed enough for a used forklift and one good truck capable of pulling it with. We loaded countless truckloads of hives by hand and began the long process of palletizing the operation. Eventually pollination income paid off the notes. A credit line was what I could borrow not what I necessarily chose to borrow. Within a few years our entire outfit was palletized and we were able to eliminate any bee purchases. Since you mentioned being treatment free let me just say it is a laudable goal and one we have made a lot of progress towards but take your cues from the posters here on the commercial forum and not the treatment free forum if you want real life experiences in actually making a living in this business.
 
#50 · (Edited)
Western -

4 things off the top of my head: 1) Treatment-free beekeeping is local beekeeping, not migratory beekeeping - they are opposites, dump the treatment-free idea all together, especially if you come to California's almond pollination pest / disease / poison warfare factory; 2) add another column to the fuel cost - talk to several truckers who go to the places you are thinking about and ask them about actual road trip costs; 3) I understand you already have 150 hives and are buying 150 more - that is less than half the number most commercial beekeepers keep per employee (count yourself as 1.75 employees - you're the boss), which is more like 700 to 1,000 hives per employee; 4) plan for future cost increases.

A few other reflections - a business plan is a document intended to solicit a loan or investment, nothing more. Writing a business plan and NOT applying for a loan is a good exercise for a business person because it teaches him/her a lot about the business, especially if he/she takes it out of the drawer every 6 months, reads it, connects the dots from projections to performance, and updates it accordingly. The gaps are often quite wide at first. This exercise helps refine his/her forecasting skills - a skill viewed as useful by many people who invest money in businesses.

Business planning is not an essential tool of business - many businesses are built in good conditions, at low cost, with good return on investment, with little regulation, with little competition, and some people have good instincts and can "fly by the seat of their pants" so to speak. Business owners whose interests are not subject to such cushy conditions and who write, review, and revise their biz plans regularly tend to rather emphatically insist that a business plan is indeed essential.

Business management has more to do with buying a business for a ridiculous discount, cutting costs where you can and NOT where you shouldn't, managing time, staying ahead of issues, building and maintaining an efficient and reliable team, paying bills on time, knowing your competition, identifying competitive advantages, working relative strengths, running business ratios, etc., than it does with biz planning.

I'd suggest you take Business 101, Accounting 101, 102, and Managerial Accounting at the local community college if you have not already done so. I'd also suggest you have a friend with an MBA or a S.C.O.R.E. counselor help you review your plan.

Best of all possible luck to you should you decide to buy the business.


Keith - that's not bad work for a guy going from age 14 to age 18! I'd really love to watch you work some day.
 
#51 ·
Well, folks, I'm getting the real plan together, going off of a modernized version of the PDF plan afore mentioned. Interesting, but this being my first business transaction/dealing of any sort, I'm dead nervous! I keep telling myself that everything will be fine. I hope it's OK to do that. ;)

KiloCharlie, the 150 described in my outdated signature line is the 8 I own and the 142 (now 150) that I managed for the boss. If I buy him out, I will then own 158 hives. I am treatment-free in my own 8 hives, but that would change as soon as I buy him out and go commercial. I have a good friend who is a trucker (self-owned trucking business), and he owns a big Peterbilt and flatbed; I'll bet he could give me some info on trucking costs.

I have taken or am currently taking Business 101 college courses, and a really good entreprenuership college course that has been a big help to me.
 
#53 ·
Coolers? Tents? Showers in ditches? Those are great experiences but the turning 2 hives into 100 is the one I really like. I'm betting it had something to do with a Eureka moment in the pollen sub formulation.
 
#54 · (Edited by Moderator)
but the turning 2 hives into 100 is the one I really like. I'm betting it had something to do with a Eureka moment in the pollen sub formulation.
Well, I got on the swarm list in Sacramento (pre-mites days), my Mom use to drive me around and catch swarms.

Pollen sub Formulation Jimmy, Hey how about 20+ protein, 8.5 percent fats, no need feed fumagilian. No need to advertize when the product sells itself. :)
 
#55 · (Edited)
Western -
It sounds like you are on the right path. More experience would help, as would more capital. I'd suggest completing the biz and marketing plans, and seeking other beekeepers with whom to merge and do it as a full "C" or "S" corporation. Talk to an attorney about drafting articles of incorporation.

The risk takers can put down the initial outlay for the making / obtaining of equipment (if they don't already have stuff) and wait the 4 or 5 years while the bee population comes up knowing that there is no hope of a short term return, but a very strong return in the long run. Beekeeper/investors will understand the timetable and not frown too much as investors. You need the truck, the forklift, a honey room, queen rearing capacity to go to 1,000 hives per employee, and probably some nuc production capacity.

Study any potential investor/beekeeper's ethics very carefully - you will getting to know them very, very well. You and these other guys or girls are the ones you will be traveling with, getting stung with, getting in arguments with, eating meals with, making money with, losing money with, and depending on. Get an appointment with a S.C.O.R.E. counselor and have him talk you through startup, even though this a buy-out. You've got a lot of growth to do to make it viable, so treat it as startup.

Meanwhile build the business on it's own merits. Purchase items only on money that the bees earn, and then in order of quickest profitability (R.O.I. rate, or ability to produce cashflow quickly). It is the slow, safe path to grow until you have the loans / investments, it will also give you more capital to bring to the table when you join with others, buying you more ownership percent of the pie.

Remember to keep your enthusiasm for it applied to waking up early and working hard, and to keep a healthy dose of doubt about all business activities. Defensive thinkers often make better businessmen. Again good luck!
 
#57 ·
It it advisable to borrow to buy? I have almost no capital to work with, and the only way is to borrow. But I want to make it clear that I won't borrow if I don't have to, and definitely not more than I will need. My goal is, after the loan is paid off or paid up, to only spend money that the bees make. I don't want to be in debt, but I see no recourse here for awhile. Hopefully I'm making myself clear. :)
 
#59 · (Edited)
With no capital at all, you are unlikely to get financing through anyone but the Small Business Administration, www.sba.gov , unless you already have a credit rating.

If you've never used credit, go to several banks in your area and ask about a SECURED CREDIT ACCOUNT. You have to put in $300 to $1,000 in the account, and then borrow against that money CONSERVATIVELY (ask each bank's recommended percentage and stay BELOW it!), buying a pair of pants or shirt or whatever small item each month on the secured credit card AND PAY IT OFF IMMEDIATELY!!!

Stick with one card for 6 months, then add a second one, using it to demonstrate conservative credit use and a perfect record of paying on time. 6 months later, add a third card.

After using a card for 6 to 8 months, request that your bank increase your limit due to your good record. Most will oblige. Most cards will automatically become regular credit cards after one year, but you may need to go to talk to your New Accounts manager at each bank to fill out more paperwork - banks do vary. In this course of action you should have a strong credit rating in 3 years.

Remember - the SOLE PURPOSE of credit card use in the first three years is to establish an excellent rating, not to buy stuff! Paying on time is your new religion! I bring the stamped, addressed envelope with me to do my credit purchase on the same day each month and go straight to the Post Office after purchasing, which sounds fanatical, but it works.

Your other chance is to find a private investor who has a lot of confidence in you. So, you might try to set up that corporation soon in order to buy your boss's business. Try to find other investors with some collateral, capital, or other equity. Your goal is to find some capital of your own to bring to the table first, so you go into the corporation as a principal, not a worker. Do give yourself a job as manager that pays you a salary. You also want to be sure to issue actual certificates of stock-and be sure your's is preferred convertible stock. Talk to a marketing major or a grantwriter or other fundraising / financing wizard about where to hook up with investors. Search the net, using Craigslist, any other site you can think of to shoot a prospectus/biz plan off to potential investors. Finish and polish you Biz plan, you'll be needing it soon. It should more than prove that buying this business is a bargain too good to pass up.

I'd try to stay on with the boss for another year, and get some queen rearing under your belt if you have not been doing so yet. Also, make a point of getting to know all his contacts in his business network. Save every dollar you can, putting it in a separate savings account for buying the business.
 
#60 ·
No Capitol? Learn to be a "McIver". Our truck had 5 good cylinders when we bought it for one dollar. The V8 runs fine now, after I rewelded the head and sunk a new valve seat. Find a cheap saw, free wood, make bottom boards, roofs, and innercovers. Minimize expenses from other people doing service work for you. But keep in mind Dirty Harry and "A man has got to know his limitations".

Crazy Roland
 
#61 ·
Hello, Westernbeek!

One idea that you might consider is buying the operation over time, say 3 to 5 years. You agree with the owner to pay a certain amount in 3 or 5 yearly installments. You make the offer based on the expected price for the operation and the amount you conservatively think you will make from honey sales.

In other words, use the owner as a bank: You get started with the business, he defers payment for most of it based on his expectation that you will succeed and make good on your promise to pay $x each year.

You may think that this is asking a lot of the owner, and it is, but you may not have much competition for buying the operation. So, in effect, you may be his only buyer, or, if other potential buyers are located at a distance, you may be the one that the owner finds easiest to sell to. And, if the price you agree on is fair to him, it might be the best price he can get--better than from nearby commercial beekeepers.

This idea turns your hard work over the 3 to 5 years into full business ownership without getting a loan (i.e., without taking on debt).

Finally, I'm impressed with the insights provided above on this thread. They all add up to planning to set aside time and money to meet the unexpected.

Best to you! You've got the gumption and confidence that are needed. And the wisdom to ask for help and insight as you did here!

Peter
 
#62 · (Edited)
The items posted so far, look to be an annual budget, which is somewhat different from a business plan, altho the budget will become integral to the plan. To be successful, in the longer term, you need at least a semi formal business plan wrapped around that budget, and, it will need to be a formal plan if you intend to borrow money against the business plan.

To develop a full plan around that budget, is not difficult. Altho my experience is not in commercial beekeeping, I've done a few business plans in my lifetime, and executed on them. I have operated my own business for the last 15 years, which has done well enough that we live comfortably from it. As well, I sit on the board of directors for another company. It's a larger company, with a management board, and I provide the top level management advice for my own particular area of expertise. For my own business, which operates debt free, we have an informal business plan, which I can modify on the fly as it suits. For the other company, which is operating in conjunction with bankers, the plan is formal, and all parties 'sign off' on the plan quarterly. The important detail to remember, the plan is made 'in advance' when you are thinking clearly, and, needs to be thought out well enough, that when ca-ca happens, you dont find yourself in a situation where rash decisions need to be made, but rather, refer back to the plan, and execute on the 'if this happens' action plan that was pre-determined. All areas of major risk, should have an 'if this goes bad' stanza in the business plan, and, a road to recovery for that event.

To write a plan for your beekeeping endeavor, you need to start by stepping back, and asking a bunch of high level questions, which will apply to whatever business you decide to head out on, be it beekeeping or basket weaving, you still need to answer a few personal questions that will become the fundamental driver of your plan.

1) Where am I today?
- Do you have a family to support ?
- Are you married ? Intending to become so in the forseeable future ?
- Where do you live? How much does this cost monthly / annully ?
- Why do you want to embark on this business ? Is this a field you have a passion for ? <<-- VERY IMPORTANT QUESTION

2) Where do I want to be in 1, 3 and 5 years ?
- Will you have a family to support in 5 years ?
- Will you have a spouse that is 'good' with the time / energy requirements of running this business ?
- If so, will she be able to cope with the financial stresses in a bad year ?
- How large will the business be at each of the points, 1, 3 and 5 years ?

Answer all of these questions, and, those answers become the framework for how you can build up a plan, with timelines, to get from your starting point, to your desired end result. Note, none of these questions involve actual dollar amounts, but, the answers will become the basis for the philosophy of how, and why, you operate the business the way you do. Contrary to popular belief, a business plan is NOT a boilerplate thing that comes from an academic source. A well thought out business plan is a very personal document, which becomes a roadmap for how you get from point A to point B. An informal plan will give you personal guidance when you have to make important decisions, whereas a formal plan used to gain financing, will become the basis of the 'report card' your funders use to judge progress, and release of future funding (both input and payment schedule) decisions. A formal plan involving external funding, often leaves folks with little choice at some decision points, you cannot just change direction without approval of the lenders.

When you have all the answers to the questions above, the next step is to make up a timeline for execution. For each of the first 5 years, specify a growth and revenue target, then develop a budget, for each year, as you have laid out in the budget built up so far. For this endeavor, if it was me writing the plan, I would not base decision points on calendar timelines, but, rather on the growth metrics. The current operation is 150 hives, with a goal to grow to some number, which would be large enough to support a migratory operation. As others have pointed out, you need a semi-load of bees to start down that route, and, two is better. So, in your timeline, you place 'start searching for migratory customers' at the point which says 'have 2 semi loads of bees'. That may be in year 2, or it may not happen till year 4, depends on the growth mechanism you choose.

Once you have the 5 years rough plan written up, on a year by year basis, with a budget for each year, it's time to go back and re-visit each year individually. You have a number in there for 'honey retail', which is the single largest source of revenue. That cannot be a single number, it's got to be a range, from worst to best case, with a normal case somewhere in between. Using our local area as an example, average harvest for commercial beekeepers last year was 10 pounds per hive, ie, honey crop was almost non-existant. How will a bad year like that affect your plan ? Do you have a way of surviving that possibility ? Since honey production is your primary revenue source, you really need to have a plan of action in place for a crop failure in each of the 5 years moving forward. For the honey production, the primary risk is weather, so note that down clearly now, and make it an integral part of your long term plan, how to survive the crop failure.

On some of the other items, you need to assign a risk factor to each revenue source. The original plan showed some revenue from selling queens, so, you need to ask some hard / honest questions about selling queens and nucs. From my reading here on beesource, queen sales are drivin by price, and reputation of the producer. Do you have a reputation that will allow for a premium pricing model? Will you be able to sell enough to achieve the revenue goal ? Or, will have have to produce twice as many and price them lower? If you do that, can you find buyers for that many ? Producing nucs, can you afford to sell them, or, will they be required for your growth model ? Can you afford to NOT sell them ? Do you have a market lined up for the propolis sales ? If so, leave them in the 'Expected Revenue' column. If not, move them to the 'Planned new revenue sources' column. Keep in mind when you do those numbers, planned new sources dont always pan out, assign it a higher risk category, and, write a stanza about how to overcome the problem if that revenue source doesn't pan out.

Something I would suggest you do, and again, this will help you make a very personal decision on how to move forward. The goal is growth, and there are two methods of achieving that growth. Behind door number one, you can grow organically, splitting hives and expanding. This route may be possible without borrowing a lot of money, altho the 2013 financial projection you have, doesn't include woodenware for expanding the hive count. The other route, borrow a bunch of money, buy everything, and start out with a much higher hive count. On your timeline, that will trigger the 'go migratory' decision point much earlier in the plan, but it'll shift the financial model considerably, because it adds significant debt servicing obligations. So, to figure this out in a way that suits YOU, personally, write your overall plan twice, once via the organic growth model, and once via the 'borrow and buy' growth model. Compare the risk, and reward value for both models, compare the timelines, and ask yourself a very personal question. Am I comfortable with the risk/reward model in each case. When you do that, the answer to a question that's been bantered back and forth here about borrowing, will become obvious to you. Not everybody will see it the same, and input from others is great, but, only YOU can make the final decision on what is right for your own move forward.

Again, I will draw on my own experience. My business is sound, and has allowed us to reach a point of living in a house, where the mortgage got burned last summer. We have two vehicles, nothing owing on either. We have a comfortable lifestyle that we enjoy. Conversly, the other business where I sit on the board, is running on the borrow and buy business model. The financials look good today, and I believe we can make that business a success, but, the risks are much higher.

And on that note, one final bit about your financial projection, there are a couple glaring items missing. Pay yourself. There is no allowance in that statement for putting food on your table. Where is the money going to come from when you stop at the grocery store, and buy a loaf of bread ? Can you go the whole year without eating ? I doubt it, so, factor into that plan, you need to take some of that revenue, and use it to cover the necessities of life, food and lodging. If you dont have that covered in the plan, no banker will take the plan seriously. You may well start the first few years with 'outside job' as the revenue source, and that's fine, but, if that's the plan, put it in your plan. Another item that is glaring in it's absence, administration. At a bare minimum, you will have to file tax returns, even if no tax is owing, and that's going to cost some money to have an accountant do things up properly. Unless you thoroughly understand bookeeping already, you are well advised to hire an expert in that area. A good accountant will save you far more than they charge. The exception to that, is only when you are unprofitable, but, nobody starts out intending to be unprofitable, so, hire a good accountant to help you keep that money come tax time.
 
#63 ·
1) Where am I today?
- Do you have a family to support ?
- Are you married ? Intending to become so in the forseeable future ?
- Where do you live? How much does this cost monthly / annully ?
- Why do you want to embark on this business ? Is this a field you have a passion for ? <<-- VERY IMPORTANT QUESTION

2) Where do I want to be in 1, 3 and 5 years ?
- Will you have a family to support in 5 years ?
- Will you have a spouse that is 'good' with the time / energy requirements of running this business ?
- If so, will she be able to cope with the financial stresses in a bad year ?
- How large will the business be at each of the points, 1, 3 and 5 years ?
1)
- Not yet
- Intend to become so in the forseeable future
- In rural Cheyenne WY
- This is a field I have a great passion for, and we need a second generation of commercial beekeepers

2)
- Planning to
- Yes
- Yes
- Still figuring
 
#64 ·
Ben,

There is some good information in this thread. I'd re-read it a few times if I were you (actually, I might re-read it a few times myself, lol).

I think, and I could be wrong, that you are trying to create a budget (aka a Pro-forma) rather than a business plan. A business plan is a little more than a projection of income and expenses. A pro-forma will give you a better understanding of the viability of the business, and help you make the decision as to whether or not you want to go down that route.

That being said, I looked over your Project Statement. Keep in mind that I'm a business bankruptcy attorney. I do business turn-around for a living. That means that my view point is skewed, and I don't see things the way most people do. I look at a business and I try to find out why they are screwed, how they are screwed, and how we can fix it. When I see your statement, I know there are a ton of expenses that aren't covered in there, and alot of the expenses you have are good guesses at best (which at this stage in the game, is expected). You put down $600 for hive replacement/repair. How accurate is this? It accounts for less than 10% replacement each year. Some of your items will have a lifespan of less than 10 years, and should be planned for accordingly. You also put down $1,000 for equipment repairs. I'm not sure what you mean by that.

But as far as some of the expenses that you don't include there, think of it like this: add up every expense you would have to make in order to do this business, even if you normally would have used the item in your personal life. Cell phone, wear and tear on your vehicle, ect. If you are using it for your business, you need to count it in there. Also, you need to put "debt service" in there. If you are paying back on your loan, account for it. Also, another big one, taxes and insurance. Make sure you account for and plan for them. Also don't forget to pay yourself. You will want to re-invest that back into the business, but make sure you pay yourself something. It isn't a business if you are working for free, it's a charity. Also, you don't really account for how you plan to make up winter losses. I'm assuming you'll be splitting your hives to do that, and selling the extras as "nucs", right?

I think your income projections are on the low side, which is good for planning purposes. I think your expenses (at least some of them) are on the low side as well, which isn't too good.

As someone mentioned earlier, half your income and double your expenses. If you can still make it work, it's a sign that you've got a very viable business. Right now you could double your expenses OR half your income and still make it work, but not both. Not that you can't make it work, but I would be very cautious in your first few years.

Oh yeah, and I would think long and hard about incorporating. Individuals working as farmers are eligible for special governmental assistance/programs that some companies (LLC's, S corp, & C corps) aren't. One in particular is Chapter 12 reorganization. There are still ways to keep it under your name (d/b/a) and still protect yourself from liability.
 
#65 ·
Individuals working as farmers are eligible for special governmental assistance/programs that some companies (LLC's, S corp, & C corps) aren't. One in particular is Chapter 12 reorganization.
Sorry if this is jacking the thread, but what are some of the other things individuals qualify for that corps. don't? (I was thinking of forming an LLC myself for my bee business)
 
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top