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Discussion Starter #1
I'm just wondering what most of you consider to be a progressive step between a hobbyist and a commercial keeper is.

For instance, I know most people that keep five hives do it for personal pleasure. On the other end of the spectrum you have businesses with 10,000 hives signing pollination contracts. But what about the middle guy, or the guy with 25-50 hives? What does he do?

Obviously its too few hives to travel around the country signing contracts in Maine, Florida, and CA. But it's too many hives to pay for it out of "hobby money." How does the middle guy make beekeeping profitable, if nothing more than just to recover costs? Or is he stuck to selling honey, selling whatever splits he makes, and making deals with small local farmers? Is the middle guy stuck there till he lays the capital down for 1,000 extra hives?

Thanks guys.
 

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>But what about the middle guy, or the guy with 25-50 hives? What does he do?

The answer to your question lies in your last paragraph. Oh, and one other thing, be the best beekeeper you can be.
 

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Hobby expenses are not tax deductible according to the IRS. With 50 hives you should be able to produce enough honey to service your local farmers market so with a little marketing savy and a few steps on the computer to register as an LLC with your state you are on your way from Hobbyist to side liner.
 

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The transition from hobbiest to commercial means you have to change your mind set. As a commercial producer your goal is to maintain the health of your bees to produce honey and or pollinate, and or sell quality queens or nucs. Every decision is penciled out. It's where the pencil meets the paper, a good eraser, and good and bad decisons are made. Every decision is dependant on whether or not that will cost or bring in a hopeful profit.
It is a transition in how you spend your money and how you market your product. No longer are you selling because you have extra, and wanting to make a little side dollars. You are pencilling your expenses to know where your profit/loss is.
It is also a transition on how you view your bees. Bees go from being "the pets" to livestock. The view of saving every hive at any cost gets lost since your goal is to keep a business afloat. It comes down to knowing when to cut the loss on a hive. Instead of letting a hive hemorage $ bring down the profits, the decisions, hard ones will need to be made. No longer will bandaids suffice, in bee terms, one more treatment to get the hive healthy, just one more. Each hive will have a cost to it. Each hive will have to pay for itself or be culled.

So going from hobbiest to commercial is as much a mind set as an ability to get to 1000 hives, or maybe 100 hives or 500 hives.
 

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I found the best transition was to add hives in one year, then hold that level the next year. Every time I expanded, I needed a year to climb the learning curve. Once I mastered that level, I was ready to expand again, but the next year was spent learning how to master that level of production.

Also, my expansion followed the development of my markets.

Grant
Jackson MO
 

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A fun, but often sobering exercise is to pick the amount of money you want to make. Then work backwards inputting all the costs and time required to make that amount of money. The more research you put into the exercise, the better your chances of success. Work smarter, not harder! (Don't forget the tax man!)

The fun comes when you manipulate the expenses to show the profit. For instance, if you think you're a good honey salesman, you may find your pencil-pushing shows it's more profitable and less time consuming to buy wholesale honey and just package it yourself, while just keeping a few token hives for fun. On the flip side, say you feel you're a lousy salesman but you have a strong back and like working 7 days a week, then just produce as much honey as you can and sell barrels wholesale.

Bottom line - do an inventory of you own skills and weave them with what you really like about beekeeping.

Steve
 

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But what about the middle guy, or the guy with 25-50 hives? What does he do?

But it's too many hives to pay for it out of "hobby money." How does the middle guy make beekeeping profitable, if nothing more than just to recover costs?
I wouldn't consider 25-50 a middle guy. It's still a hobby at that point. That's ok. You can have fun and still make some money. You have an advantage over the larger producer. You can micro-manage each colony for the greatest production. You can develop customers that are willing to pay top dollar for the honey they buy...local don't ya know. You don't have huge production costs like most commercials do.

Don't know what the average production is for your area of NC. 100? 70?

70 lb avg, with 50 colonies for $5 a pound is $17500.
Winter 50 nucs. Use the best 20 in your apiaries for restocking deadouts and spring requeening. Sell the next best 20 @ $100 for $2000. Keep the last 10 for your supply of nucs in the current year.

Total sales of almost $20,000. Not bad for an apiary of 50 colonies that you could manage on weekends.
 

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As you expand you run into the law of diminishing returns, but also economies of scale. At some point, you also run out of days in the week and have to streamline activities and drop some practices you thought were essential. You go from working bees by the hive to working bees by the yard and then district.
 

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Discussion Starter #10
I wouldn't consider 25-50 a middle guy. It's still a hobby at that point. That's ok. You can have fun and still make some money. You have an advantage over the larger producer. You can micro-manage each colony for the greatest production. You can develop customers that are willing to pay top dollar for the honey they buy...local don't ya know. You don't have huge production costs like most commercials do.

Don't know what the average production is for your area of NC. 100? 70?

70 lb avg, with 50 colonies for $5 a pound is $17500.
Winter 50 nucs. Use the best 20 in your apiaries for restocking deadouts and spring requeening. Sell the next best 20 @ $100 for $2000. Keep the last 10 for your supply of nucs in the current year.

Total sales of almost $20,000. Not bad for an apiary of 50 colonies that you could manage on weekends.
Keep in mind that I don't have first hand knowledge of this, I'm just going off of my experiences and research in the area, but I don't think those numbers work out the same when I calculated them.

70 lb avg per hive sounds good, but bulk honey sells for about $2.50 a lb (from what I have seen). I could get more, but then I have to pay someone to sit at the farmer's market, or I have to drive around to stores looking to sign a contract, of which I can't be sure that I can continue to supply. Then if I bottle, cost increases as I have to bottle myself. Sure there is more money to be made in selling bottles, the cost increases as well, and in starting off it's a cost I can't cover. All in all, if I"m doing this as a weekend thing, it would be more economical (at least to start) selling bulk. So that would be about $8,700 a year in honey sales (70 lbs, 50 hives, $2.50 a lb).

Nucs sell for about $85 for quality. Mine obviously wouldn't start off quality (I don't have much experience grafting queens, or having good drone areas), so it would probably have to sell for about $75 a nuc. Making $1,500 in nuc sales.

In addition, I don't have the land for the bees right now, nor can I afford to buy land off 'honey sales', so I have been using local farmlands, at the permission of the farmers. I tried to find farmers that could pay for it, but with tough economic times none of the small farmers can afford it, and the large commercial farmers want larger numbers, contracts, and only want the hives on the land for a certain time period. End of story, no pollination contracts.

Running those numbers, that leaves a (probably conservative) $10,200 a year in sales. That doesn't involve sales tax (although I could make the buyer pay for it) or income tax (which would be added onto mine, being taxed probably at about 20%, considering that it's the last dollar brought into my income), leaving me with about $8,000 a year. Then I need to replace about 20% of my woodenware a year (if less, great, but 20% is something you should probably rely on). At about $70 a full hive, that would be $700 a year, then there is gas involved, which I can't calculate.

All in all, that leaves about $7,300 in net profit for weekend work, or about $146 a week. If I'm working Saturdays, at about 10 hours a day, that would leave me with $14 an hour (although I could probably take SEVERAL weekends off :)). Not bad, but the question remains where does that leave the guy with 50 hives, if he wanted to grow?

At $7,000 a year, it isn't much to be putting back into the operation. Grow by perhaps 10 hives a year. At that rate, after 5 years he could double his income, leaving him with $14,000 a year. Then he could increase by 20 hives a year. Fast forward 30 years and you are ready to retire, making about $40,000 a year. Not bad in the end, but all along the way you have to work a full time job to pay the mortugage. He has no option but to do it as a side job, burning the midnight oil unless he wants to buy into 1,000 hives and go for the pollination contracts. The larger you go from 50, the more work is involved (multiple yards), while still having to work a normal 40 hour a week job.

The more I run the numbers, the more I'm thinking it just isn't possible without a business loan. Unless your experience tells me I'm wrong (which more often then not, I am).
 

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You seem to be listing a number of reasons why you can't do what you seem to wish you could. So, maybe you shouldn't.

Business loan? Unless you are able to get a really low interest rate loan from the USDA/FSA, I wouldn't bother going that way. You will be in debt for a long time.

Do as Mike Palmer says and you will be alright. You won't make as much money as your neighbors, but if that is what you are judging yourself by you will always loose out. Go into beekeeping as a vocation because you want to live the life of a beekeeper. Otherwise, keep you 50 to 75 hives and enjoy working them and maximizing your "profit" by doing as Mike says.

If beekeeping is the business you want to go into Study Business first or at the same time you Study Beekeeping. Keep your bees w/ a business mind.

Best of luck.
 

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The problem with a business loan is that the money is easier to borrow than pay back. If the business does not generate a profit sufficient to expand while small, you certainly cannot expect to "make it up on volume as you expand.

Your greatest operating profit per hive will be with one or two hives and it will decline as numbers escalate.

At that small scale, capital expense is hard to figure, so most neglect it, but it becomes predictable and significant as hive numbers climb.
 

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Please tell us where you're selling for $2.50 a pound wholesale! Look at ABJ and Bee Culture for the current prices and remember that they vary up and down, usually down, an hour before you arrive with a truckload of honey. :eek:
 

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Discussion Starter #14
You seem to be listing a number of reasons why you can't do what you seem to wish you could. So, maybe you shouldn't.
Best of luck.
I apologize if I seem pessimistic, it isn't my intention. I'm just attempting to be realistic. All things considered equal, I would hate to enter into a business, either part time or full time, and have it end up not being profitable (under any scheme), sucking cash and putting me in the poor house.

I realize it's possible with any enterprise, but with all business aspects it's necessary to do the requisite research and talk to individuals within the field. That is all that I am trying to do.

If Mike's advice appears to be the sound advice of the industry, I will take it. I'm not discounting his advice. I'm just running the numbers myself and they don't add up the same. So, I must be adding something up wrong. I'm just asking what I'm adding up wrong, or discounting, or not accounting for.
 

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Discussion Starter #15
Please tell us where you're selling for $2.50 a pound wholesale! Look at ABJ and Bee Culture for the current prices and remember that they vary up and down, usually down, an hour before you arrive with a truckload of honey. :eek:
I've never sold bulk honey, I"m just going off of what I see adds for, researching internet sales, and the like.

I've found individuals that are selling one gallon for $40, five gallon buckets for $100. At about 12 lbs per gallon, that runs at about $2-2.50 a pound.

Or are those numbers so off that I shouldn't be concerned with them?

I'm just attempting to take the lowest numbers into account. In accounting terms, it's conservatism. I would hate to rely on $5 a lb for accounting purposes, to end up getting $2 a lb and going bankrupt. So when I find the cheapest price around, that's what I account on. If I can sell it for twice that, I pour it back into the business. At least, that's what I'm thinking.
 

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I apologize if I seem pessimistic, it isn't my intention. I'm just attempting to be realistic. All things considered equal, I would hate to enter into a business, either part time or full time, and have it end up not being profitable (under any scheme), sucking cash and putting me in the poor house.

I realize it's possible with any enterprise, but with all business aspects it's necessary to do the requisite research and talk to individuals within the field. That is all that I am trying to do.

If Mike's advice appears to be the sound advice of the industry, I will take it. I'm not discounting his advice. I'm just running the numbers myself and they don't add up the same. So, I must be adding something up wrong. I'm just asking what I'm adding up wrong, or discounting, or not accounting for.
I understand, believe me, I understand. I go through this all of the time within my own mind. You have to keep bees for reasons other than making good business sense.

There is an old adage about winning the lottery and keeping bees until the money runs out. There's more truth to that then most beekeepers would like to aknowledge.
 

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I've never sold bulk honey, I"m just going off of what I see adds for, researching internet sales, and the like.
One thing you need to know about anecdotal information, which is what you are talking about and what is found in the Journals, has little to nothing to do w/ what you or I can sell honey for. Call every bottler that you can find, Soiux Bee, Dutch Gold/McLure's, etc. and poll them. They will tell you what they are paying for honey by the grade and in barrels. That is the price of honey. Sure, there are some folks who can and have sold honey for more, but how much?
 

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All things considered equal, I would hate to enter into a business, either part time or full time, and have it end up not being profitable (under any scheme), sucking cash and putting me in the poor house.
Ahhhh, but such is the case in everything to do with farming. No one can forsee there success of failures in an industry that involves the roll of the dice. The key word being 'IF', if your bees survive the winter, if the bees are strong enough at the honeyflow, if there is a honeyflow, if you do get pollination contracts, and the list of variables go on. It's tough enough on established beekeepers to go through losses but think of the poor fella who has just morgaged out his home to get into the industry.

I'm still increasing my business myself. I was working a full time job and running my 100 colonies on the side comfortably. I think I could still run 300 hives while working there. The plan for me is to allow the bees to pay there own expenses and build up costs. And GOD BLESS all ye who doth have a WIFE with a second income.

Our goal is to get to 600 hives. How long will it take us? It depends on those variables I spoke of earlier.
 

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>I'm just attempting to take the lowest numbers into account. In accounting terms, it's conservatism. I would hate to rely on $5 a lb for accounting purposes, to end up getting $2 a lb and going bankrupt.

Honestly, if you want to be conservative about honey prices, I wouldn't figure on getting any more than $1.50/lb., unless you plan to get some retailers to take some, but it would be a small percentage of your crop I would think. You may be able to find plenty of businesses to sell to without signing any kind of contract, you won't know for sure unless you get out there and peddle your product. Local health food stores, farmers markets would be a good place to start.
 

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[

Not a bad point. I won't know what I can get for honey until I try. But, before I try I need to accumulate a bit of a supply. Not alot, but enough that if I set up buyer, and they want more I won't have to say "wait till next summer." Hopefully I should have that by the end of spring.

Personally, right now, I can only move as fast as is feasible. For me that means I'll do as many spits as is feasible, using up as much if not all of the woodenware that I have. From there I will try to sell my honey for the best price that I can. Whatever profits I can make, I'll put back into woodenware (and possibly nucs or packages next year, although probably not many). The name of the game is slow progress.

The whole point of this thread is that I was trying to get a picture of what the next five moves would look like. As in chess, you always think a few moves ahead. But, the more I realize, the best I can really do is making the most of the supplies that I have right now.

I'm still open to suggestions, comments, or concerns though.
 
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