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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
 
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#66 · (Edited)
Congrats, Western, you've started a 5-star thread!

Do check out www.sba.gov 's business plan outline. Its a free download and is highly regarded by investors. I use Palo Alto Software's Busness Plan Pro, for initial write-up, first few revisions. I use all the math formulas from the S.B.A.'s biz plan outline, though, as it is very convincing. I will eventually write the finished document in SBA's format.

A bank loan officer told me he does not base his decision on projected return on investment (ROI), but he does look at it! It should be at least 125%, or 25 percent over his money going back to him. It would probably impress him if it showed a profit for you, too.

Remember, the biz plan is only if you decide a loan is an appropriate route to take. It is a good thinking process regardless if you do or don't. As mentioned by the others in these excellent posts, debt is good to avoid.

Bill, Jim, Keith, Peter, SpecialKayme, and Grozzie2 - Nice posts!
 
#67 ·
Brian - Technically, an individual is a sole proprietor, although your attorney can get around that. Two people that do not incorporate can be a partnership. Both of these formats offer no asset protection should you get sued. The plaintiff can go after your personal assets - your house, your car, your bank accounts, to name a few. Generally speaking, partnerships have the lowest life expectancy.

Asset protection (known as "corporate veil") is strongest with a "C" corporation, but there is double-taxing, plus $800 a year in California. An "S" corporation drops the $800 fee and the double tax, and the asset protection is almost as good as in a "C" corporation. LLP stands for Limited Liability Partnership, has slightly lower asset protection, may be a very good tax situation, and has the advantage that principal owners make the daily decisions and the financial owners do not. A Limited Liability Corporation, or LLC is another option. You should ask your attorney and your S.C.O.R.E. counselor which is right for you.

Nolo Press has several books that explain this in detail.
 
#68 ·
I'm less convinced the corporate protection helps small beekeeping operations as much as it does other businesses. The three main reasons an individual would look at incorporating are: 1) asset protection [and to some degree tax preferences], 2) increased transferability, and 3) ease of closing when things get hairy. Most people aren't too concerned with two and three. A corporation (C, S, LLC, or even an LLP or LLLP) does protect an individual from lawsuits, to a degree. If you are incorporated and someone sues you, they can only collect on the assets of the company and can't collect on you individually (i.e. come get a lien against your home). But there is a way around that, called "piercing the corporate veil" that can be done with small businesses that don't follow many of the formalities that large businesses do (i.e. what most people on here would be doing). Essentially, if they pierce the veil, they can collect against the company AND THEN collect against you. There is also a degree of liability that the owners/managers have, so someone may be able to sue you individually anyway. But for many on here, I think it's a moot cause. If you are incorporating your $15,000 business, and all you own is the $15,000 worth of items you put into the business, it doesn't really matter if they collect against the "you" that is the company or the "you" that is holding the assets. It's all the same thing, at least until you acquire non-company collectable assets (which one should look into their state's exempt assets to see what really is collectable. Just because you own it doesn't mean anyone can take it from you).

For most small businesses that are starting out, the only real issue they will have is with loans. If you incorporate and the business takes a loan out, if the company fails or the loan comes due and they can't pay it, the business shuts down but the individual continues on. Not so when the individual is borrowing the money. If the business can't pay it, the individual becomes responsible for paying the debt regardless of whether or not the business side is functioning. However, most banks require personal guarantees for business loans (especially those starting up). So the individual would STILL be on the hook.

And if you are really that concerned about lawsuits, get insurance.

As far as the question about other protections afforded to individuals that is not afforded to companies, in addition to Chapter 12, individuals get exempt assets while companies do not. All told, that could equal hundreds of thousands of dollars worth of protected assets. USDA and government subsidies are often more interested in assisting individuals as opposed to companies, or at least I've been told. You also can't have a trustee or a receiver appointed to run you as an individual. That's not counting the tax savings you receive, or saving on the yearly incorporation costs.
 
#77 ·
As far as the question about other protections afforded to individuals that is not afforded to companies, in addition to Chapter 12, individuals get exempt assets while companies do not. All told, that could equal hundreds of thousands of dollars worth of protected assets. USDA and government subsidies are often more interested in assisting individuals as opposed to companies, or at least I've been told. You also can't have a trustee or a receiver appointed to run you as an individual. That's not counting the tax savings you receive, or saving on the yearly incorporation costs.
THAT was what I was wondering! Thanks!
 
#70 ·
Hello folks,
Wow, I am immensely impressed at the amount of advice and insight y'all have given so far on this thread. I really appreciate it! ;) I will have a meeting with the boss in early-mid October, and I will discuss quite a few things with him then. I really like the idea of paying in installments. I really would rather not have to borrow; and I may not need to. I also could work for equity, but I really like the installments idea. Someone mentioned learning to be a "McIver"; I pretty much am one. I will not throw any equipment away until it is TOTALLY unfixable. I patch knotholes with tin can lids, and I build all my own equipment except for frames. If I find old equipment for cheaper than I can build, I buy and fix up. Anyway, I will be rereading this thread many times! :) Thanks, KiloCharlie, for the congrats; is there any benefits to that (starting a five-star thread)? Thanks all, for everything so far!
 
#71 ·
Benjamin - the benefits are that you stand a much better chance of long-term success in business, and have probably done a lot of good for those who read and take heed of the info presented here. Way to go!

Specialkayme - another nice post!

I am going to print and laminate this thread!
 
#79 ·
If the owner is the financier this is a very good idea. He may want interest to carry you seeing as how he is carrying the risk., Payment in honey is best. Try to get a slight premium for your honey. You should be able to seeing as how it is local honey. The old boy just might like the idea of keeping on selling the honey, without the worry/hassle of hive ownership. If he is selling your honey it affords you more time to work the bees if that is what you like.

To Jim

Why sell a nuc at $125 if several months later you could get $200 worth of honey?

Well if you have limited funds it allows you to cash flow. You do not need to own 3 or 4 honey supers. You do not need to store the said honey supers in the building you do not own/rent. You don't have to super up or pull and extract the honey. I'd say $125 nuc in the spring is about $200 worth of honey later on.I agree that if you want to get your numbers up best to hang on to them but they are very costly in terms of all the other added costs to carry them till you actually get the $200 for the honey. Bankers are good for this. Once you sell it you no longer own it making it harder to increase. If you can use someone else's money to grow under reasonable terms go for it. If the opportunity is there grab it.

Jean-Marc
 
#81 ·
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.
 
#83 ·
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.
 
#84 ·
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.
 
#86 ·
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?
 
#87 · (Edited)
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.
 
#91 · (Edited)
No, this is just showing a blatant disregard for the current healthcare laws. The days of 'Consequences be ****ed! 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...sion-obamas-health-care-law/story?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.
 
#88 ·
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.
 
#90 ·
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
 
#92 ·
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.
 
#93 ·
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.
 
#94 · (Edited)
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.
 
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