The Business of Bees
There is an old beekeeping joke that goes something like: Sure, there is a lot of money flowing in the honey business — it flows right out of your pocket. Though it is true that most people keep bees for the pure enjoyment of the activity, there are a select few who are beekeepers for the earning potential. Not everyone takes their beekeeping down this route, but all beekeepers should be familiar with the aspects of the business end.
There is the chance your bees could produce lots of honey — even more than you can use. Why not sell it? There is also the chance that you will accidentally stumble upon a great honey body lotion recipe while playing around in the kitchen. Sell it, become successful, and earn a substantial income; it is possible. See more on products you can produce and sell with your beekeeping in Chapter 7. Business of any kind takes knowledge and experience to succeed, but also a certain amount of luck and timing. Even if you do not decide to make a small business out of your beekeeping hobby, you should understand the basics of how to run one. This chapter will walk you through the steps to success.
Steps to Success
The following six factors are essential to the long-term success of any business:
1. Passion is the prime ingredient. A successful business is more than just a business to its owner.
2. A solid business foundation is built on a well-considered, strategic plan.
3. Excellent customer relations are the hallmark of success.
4. Quality, reliability, and service are emphasized.
5. Procedures, products, pricing, and all the strategic necessities of the business are regularly evaluated and monitored by the owner.
6. A flexible business remains successful as it adapts readily to changes in the industry, technology, and market.
Almost everyone has dreamed of owning his or her own business. Oftentimes, these dreams are the result of dealing with difficult bosses, low pay, long hours, swing shifts, and other frustrations that come from working for someone else. In the safe confines of the imagination, the vision of owning a business is immensely satisfying: You are your own boss, you make your own decisions, and you do not have to answer to anyone else. What could be better?
While there are elements of truth in this dream-world vision of business ownership, it is also true that in reality, business owners have problems, too. The problems are different from the frustrations faced by employees, but they are serious and stomach-wrenching just the same. You will want to know your personal capacity to deal with the problems of business ownership before you jump out of the workforce and take over the boss’s chair.
If you plan to start your business from scratch, you are on your own; however, your costs are lower, and you will not have to follow the plans and policies of a franchise, or deal with the reputation of a previous business owner. You will be in complete control and will have the prospect of success or failure on your shoulders. It will be up to you to find customers, market your services, research your vendors and potential partners, hire any employees, and set up your office. This is a huge challenge, but if you have a vision in mind, you may be eager to take it on. Remember — planning is key.
Author’s Apiary
Beekeeping College 101
What is Beekeeping College? Well, it is basically getting your Ph.D. in beekeeping without going back to college. It is a five-year program designed to provide a concentrated educational track to teach beekeepers all there is to know about honey bees. There are four levels of advancement. Level names and requirements may vary from state to state, but overall the programs are very similar and have the same goal. Even beekeepers with 30 years of experience have to begin at the first level.
Apprentice Beekeeper: Be a registered beekeeper for at least one year; pass written and practical exams.
Advance Beekeeper: Hold the rank of Apprentice Beekeeper for at least one year; pass six training modules; pass written and practical exams; perform five community service credits.
Master Beekeeper: Hold the rank of Apprentice and Advance Beekeeper for one year each; perform 10 community service credits; demonstrate expertise in several subspecialties; choose a major in a subcategory; pass a written exam.
Master Craftsman Beekeeper: Hold the rank of Master Beekeeper for at least two years; perform 15 public service credits; demonstrate expertise in communication skills; satisfy major requirements; pass a written exam.
Develop a Business Plan
If the previous section got you thinking about the what-ifs of starting your own business, you may want to sketch out a business plan. The only way you can reach your goal of succeeding with your business is by having a plan. It is difficult at best to establish and operate a business when you do not quite know how to go about it — let alone to try to accomplish it without a thorough assessment of what you want to accomplish, how you plan to go about it, and what financial support you have to accomplish it. As you prepare to undertake the enormous task of starting a new business, evaluate your situation as it stands today and visualize where you want to be three to five years from now. To work your way from today’s standpoint to owning and operating a successful bee-related business, you must set yourself goals to reach along the way that will serve as benchmarks on your road to success.
The most important and basic information to include in a business plan include:
- State your business goals.
- Describe the approach you will take to accomplish those goals.
- Discuss what potential problems you may encounter along the way and how you plan to address those problems.
- Outline the organizational structure of the business (as it is today and how you plan it to be).
- State the capital you will need to get it started and to keep it in operation.
There are various formats and models available for developing business plans. There are even entire books devoted to guiding you through the development of a business plan. However, before you constrain yourself to any one business plan format, take into consideration that business plans should be as unique as the business for which it is being written. No two businesses are the same, and even though there may be some basic similarities, each business is as individual and unique as people. Therefore, even though it is recommended that you follow the basic structure of commonly used templates, you should customize your business plan to fit your bee-related needs. There are a number of Web sites that provide you with a variety of samples and templates that can also be used as reference, such as www.bplans.com, www.nebs.com/nebsEcat/business_tools/bptemplate, and www.planmagic.com. You can also use http://honeybeesbeekeeping.wikispaces.com/Beekeeping+Business+Plan and www.buzzle.com/articles/beekeeping-business.html.
When writing your business plan, stay focused on its ultimate purpose and take into consideration the many reasons why the plan is developed and its possible applications. For instance, if you do not have a loan proposal — essentially a condensed version of the business plan and used by businesses to request financing — when trying to secure financing for your business, business plans are great supporting documentation to attach to a loan application. Plans are also used as a means of introducing your business to a new market or presenting your business to a prospective business partner or investor. Look at the following template for gaining an idea of what your business plan can look like, which follows the basic structure of a generic plan and incorporates key elements of a business.
Parts of a business plan
Cover page
The cover page should be evenly laid out with all the information centered on the page. Always write the name of your company in all-capital letters in the upper half of the page. Several line spaces down, write the title “Business Plan.” Last, write your company’s address, the contact person’s name (your name), and the current date.
NAME OF COMPANY
Business Plan
Address
Contact Name
Date
Table of Contents
Mission Statement
I. Executive Summary
II. Description of Proposed Business
III. Management and Staffing
IV. Market Analysis
a. Industry background
b. Target market
c. Product description
d. Market approach strategy
V. Marketing Strategy
VI. Operations
VII. Financial Projections
VIII. Conclusion
IX. Supporting Documents
Body of the Business Plan
MISSION STATEMENT
When writing your mission statement, three key elements that must be taken into consideration and discussed are the purpose of your business, the goods or services that you provide, and a statement as to your company’s attitude toward your employees and customers. A well-written mission statement could be as short as one paragraph but should not be longer than two.
I. EXECUTIVE SUMMARY
The executive summary should be about one to two pages in length and should actually be written last, as it is a summary of all the information you would have included in the plan. It should address what your market is, the purpose of the business, where will it be located, and how it will be managed. It is a good idea to discuss the various elements of your business plan in the order you address them in the rest of the document.
II. DESCRIPTION OF PROPOSED BUSINESS
Describe in detail the purpose for which the business plan is being written. State what you intend to accomplish. Describe your goods, services, and the role your business will play in the overall global market. Explain what makes your business different from all the rest in the same arena. Clearly identify the goals and objectives of your business.
III. MANAGEMENT AND STAFFING
State whom the owners of the business are, as well as other key employees with backgrounds in the international trade industry. Identify the management talent you have on board (this may even include yourself), as well as any others you may need in the future to expand your business. For instance, it may just be yourself when starting up; however, in your plans for expansion, you might think about incorporating someone well-versed in the business of beekeeping and production of bee products. The management and staffing section of the plan could be as short as one paragraph, if you are the only employee, or it could be as long as a page or two, depending on how many people you have and anticipate having as part of your staff.
IV. MARKET ANALYSIS
If you are new to the industry, do your research and include information that you have acquired through research and data collection. There are numerous sources of information available, both online and through printed media. This process will add validity to your presentation, and you will be better prepared to answer any questions that may be presented to you. Essential elements to include in this section a description of your products or services, identify your competition, and identify what your planned strategy and approaches are to the market.
Target Market
This is one of the largest sections of the business plan because you will be addressing key issues that will determine the volume of sales and, ultimately, the revenue that you will be able to generate for your business. Identify the characteristics of the principal market you intend to target, such as demographics, market trends, and geographic location of the market.
Discuss what resources you used to find the information you needed on your target market. Elaborate on the size of your primary target market — your potential customers — by indicating the possible number of prospective customers, what their purchasing tendencies are in relation to the product or services you anticipate providing, their geographical location, and the forecasted market growth for that particular market segment. Expand your discussion to include the avenues you will use to reach your market. Include whether you plan to use the Internet, printed media, trade shows, and such. Explain the reasons why you feel confident that your company will be able to effectively compete in such a vast industry.
Product Description
Do not just describe your product or service — describe it as it will benefit or fill the needs of potential customers, and center your attention on where you have a clear advantage. Elaborate on what your products or services are.
V. MARKETING STRATEGY
In order to operate a financially successful business, you must not only maintain a constant flow of income, but also boost your profits by increased sales. The marketing strategy element of the business plan identifies your current and potential customers, as well as the means you will use to advertise your business directly to them. For a large, well-established business, it would probably be more appropriate to prepare a separate marketing strategy plan; however, for the start-up company, it would be appropriate to include the marketing strategy plan as part of the business plan. Even as part of the business plan, the marketing strategy section should include the following elements: products and services, pricing strategy, sales/distribution plan, and advertising/promotions plan.
Products and Services
Describe in detail the services your business provides, how the services are provided, and what makes the services that you provide unique and different from other businesses in the industry that provide the same service or deal with the same goods. Address the benefits of using your services or buying your goods instead of those of the competitors.
Pricing Strategy
You will be better off making a reasonable profit rather than pricing yourself out of the market and losing money by pricing your goods or services too high. Therefore, you must take extreme care when pricing your goods and services. The most effective method of doing this is by gauging your costs, estimating the tangible benefits to your customers, and making a comparison of your goods, services, and prices to similar ones on the market. A good rule of thumb to follow is to set your price by taking into consideration how much the goods or services cost you, then add what you think would be a fair price for the benefits the goods or services will provide to the end customer.
Sales and Distribution
Now that you have determined how to price your goods and services, it is time to think about how you are going to sell and distribute your products and services. Describe the system you will use for processing orders, shipping the goods, and billing your customers. Also, address what methods of payment will be acceptable from your customers, including credit terms and discounts. In regard to the actual distribution of the goods, discuss the methods of distribution you anticipate using, as well as the anticipated costs associated with it. There are several methods of distribution to choose from, such as direct mail, telemarketing, wholesale outlets, retail stores, or via a Web site on the Internet.
Advertising and Promotion
Discuss how you plan to advertise your products and services through market-specific channels. One of your goals is to break down what percentage of your advertising budget will be spent in which media. For instance, the cost of advertising through normal channels and via the Internet differ significantly, and the return on your investment on each may not be worth what you spent.
VI. OPERATIONS
Concentrate your discussion on how to improve resources in operations and production, which will facilitate the success of the company. Discuss the business’s current and proposed location, describing in detail any existing facilities.
VII. FINANCIAL PROJECTIONS
When developing your financial projections, you must take into consideration every possible expense, expected and unexpected, yet be conservative in your revenues. It is not critical that your actual revenues exceed the estimated amount; however, it is not a good situation when expenses are more than expected. Your projections should be addressed for the next three to five years, breaking down each year with the following information: forecasted income statements, cash flow statements, balance sheets, and capital expenditure budgets.
VIII. CONCLUSION
The conclusion is the last written element of the business plan. Make use of this last opportunity to state your case wisely, highlighting key issues discussed in the plan. Then, wrap it up and close with a summary of your future plans for the expansion and progress of your business. Use language that will help the reader visualize what you will be able to accomplish and how successful your business will be, should you receive the support you are requesting.
IX. SUPPORTING DOCUMENTS
Attaching supporting documentation to your business plan will certainly strengthen it and make it more valuable. However, do not over-burden it with too many attachments; finding a balance is important. Before you start attaching documents, ask yourself if that particular piece of information will make a difference — if the answer is no, then leave it out. Documents that you should attach include:
- Copies of the business principals’ résumés
- Tax returns and personal financial statements of the principals for the last three years
- A copy of licenses, certifications, and other relevant legal documents
- A copy of the lease or purchase agreement, if you are leasing or buying space
- Copies of letters of intent from suppliers (if applicable)
Author’s Apiary
You bee the judge: Evaluating honey for competition
What if you were able to wear a terrific white smock and matching hat, have fun, and add that you are a Certified Welsh Honey Judge to your résumé? Universities and institutes, such as the University of Florida and the YHC/UGA Beekeeping Institute in Georgia, have partnered with the Welsh Beekeepers’ Association in England to offer training and certification to become a honey show judge. Contact your state beekeepers’ association to see if a certification program is offered in your area of the state. From start to finish, the certification process takes a minimum of one year — it takes longer depending on your ability to complete the documented experience required. The Welsh Honey Judge certification process involves:
(1) Attending an initial training class,
(2) Writing a documented experience as a judge’s assistant,
(3) Writing a documented experience as a honey show judge, and
(4) Completing an oral examination successfully.
The purchase of an official judge’s smock and hat is required prior to taking your exam, and when you are serving as a judge or steward, you are expected to wear your official outfit in respect of the high standards of professionalism the certification carries. What you will have in the end is not only an extensive knowledge of honey, but also the ability to be called upon to be a certified honey judge anywhere in the world.
Keeping Records
Record keeping for a beekeeping business is similar to keeping records for any other small business. Everything from expenses and profits to stock inventory and physical characteristics must be recorded. Some beekeepers prefer the latest bookkeeping computer software, while others may simply place stones strategically on top of the hives to distinguish which ones have been checked and which ones have honey. What is important is to choose a system that is easy to navigate and comprehend.
The most efficient way for new beekeepers to keep records is with a daily log. Each hive inspection should have an entry that includes the state of the hive, the date and time visited, general hive observations, and inspection notes.
Another important aspect of record keeping involves the honey harvest. Be sure to note the percent of capped cells and the physical characteristics of the honey, such as color and thickness. Note the number of frames replaced along with the date and location, and even the taste and flavor of the honey. Each season can bring a slightly different taste based on the flowering vegetation at the time.
As a general guide, try to answer these questions during each hive visit:
- Are there any signs of illness or disease?
- Are there more brood frames than there were at the last inspection?
- Is the queen present and healthy?
- Is there enough room for hive life to prosper until the next inspection?
- Are there any signs of impending swarming?
- Are there enough honey supers to suffice until the next inspection?
If there is more than one colony, compare notes for each. Comparisons can show if a colony is acting peculiar, and this also may alert you to the first signs of disease, pest infestation, or illness.
Create a bio sheet for each colony. This offers specifics for every colony, such as temperament, quality of cappings and comb, honey crop, brood pattern, and pollen storage. This kind of information is essential for selective breeding. Some beekeepers will breed for strong brood traits or large honey crops.
A separate record detailing just the queen’s information is necessary. A queen is usually replaced every two years. With up-to-date records and detailed notes on the queen’s behavior and accomplishments throughout the months, it will be easier to determine the replacement cycle.
If you are a member of a beekeepers’ association in your community, you may have the opportunity to purchase an insurance policy that can protect you against lost bees and destroyed hives. You can also get coverage for loss of equipment, bee food, and even your honey. You can get full coverage on your entire honey harvest against problems that can occur during transport, flood, fire, vandalism, and damages due to pesticides and herbicides.
Another perk is in accidental death and dismemberment policies that beekeepers, their families, and employees can take out in case of a tragedy while beekeeping. This can be include anything from fires to allergic reactions to stings. You can also apply for reimbursement for legal fees and opinions in the case you win. Make sure you know the full terms of any insurance policy you take out concerning your beekeeping business. Take the time to familiarize yourself with all your rights and responsibilities, as well as the benefits you will receive.
Taxes will also be an issue for you at some point. Beekeeping is considered an agricultural business, and you are therefore required to pay taxes on any and all monies received from the sale of bees, honey, wax, and other products. There are no tax credits available just for beekeepers, but there are many for farmers on the federal and local levels. You can take advantage of some of these as a beekeeper.
There are many avenues to pursue when it comes to taxes for beekeepers. However, it is a wide misconception that you do not have to incorporate your beekeeping business to receive the best tax credits. The U.S. Department of Agriculture considers bees as livestock, just the same as cattle or pigs. Most states do not charge a sales tax for items purchased for farming or, in our case, beekeeping.
Because many state laws differ, and each beekeeper’s case and situation is different, your best bet is to acquire the help of a certified public accountant (CPA) to help with taxes. Most CPAs will charge between $250 and $500 a year to help prepare your taxes for your beekeeping business. They will save you at least that much as well as immeasurable time and aggravation trying to fill out the paperwork.
Case Study: Beekeeping success — tips from a backyard beekeeper
Howland Blackiston
Beekeeper
Beekeepers must learn how to tend to their hives. Without proper hive maintenance, all kinds of problem (starvation, disease, pests, etc.) can arise, but when a beekeeper is educated and diligent, problems will be minimal.
One of the most basic and important skills that a beekeeper must learn is how to identify eggs. It is not an easy task because the eggs are translucent white and tiny — only about 1.7 millimeters long. But finding eggs is one of the surest ways to confirm that your queen is alive. It is a skill that every beekeeper will use just about every time they visit their hives. Eggs are often easier to spot on a sunny day. Hold the comb at a slight angle and, with the sun shining over your shoulder, illuminate the deep recesses of the cell.
“I recommend investing in an inexpensive pair of reading glasses,” Blackiston said. “The magnification can really help you spot the eggs, even if you do not normally need reading glasses. Once you discover your first egg, it will be easier to know what you are looking for during future inspections.
“The best time of year to begin beekeeping depends upon where you live. A good time to start is a few months before the ‘official’ launch of the season, when the flowers come into bloom.”
In the United States, the season officially starts in early spring when the bee breeders in the southern states have packaged their bees to sell. It is important not to wait until the last minute. Use the winter months to assemble your equipment, research bees and beekeeping, and order your bees for a spring delivery. First-time beekeepers should consider joining a bee club in their area. This is a great way to learn more about beekeeping and meet new friends. Many clubs have special programs for new beekeepers (called new bees) and hands-on workshops. New beekeepers might also consider asking an experienced beekeeper to become their mentor — someone who can answer questions and who can help them get started the right way.
The best time to install your bees is in early April or May. Spring varies from state to state, but try to time your start to coincide with the first early-season blossoms, and a few weeks prior to the fruit bloom. Do not wait until June or July; starting a hive in summer will not give your colony a chance to get strong for the winter.
In the northern states that experience winter, bees need 60 to 70 pounds of capped honey to survive. This is equal to 10 deep frames of capped honey. Always leave this much for your bees during winter; unless your winters are short. Anything above this can be harvested.
The brood cells are capped with tan or brown porous wax and the capping is slightly convex. Honey cells are capped with white, air-tight wax, and the capping is flat, not convex. Bees can survive on the sugar water for a short time, but they need both carbohydrates and protein. The sugar water (or honey) provides the carbohydrates, and the protein from pollen. Sugar water is typically only fed to the bees in the spring and fall — not all season.
The smoker is a beekeepers’ best friend. Smoke calms the bees and allows for safe inspection of the hives. The smoker is a fire chamber with bellows designed to produce a lot of smoke. Learn how to light it so that it stays lit, and never overdo the smoking process — a little goes a long way.
“Never inspecting a hive is probably the biggest no-no of beekeeping,” Blackiston said. “I have seen so many folks go the whole season without ever looking in on their hives. This is a surefire recipe for trouble. These lethargic people are ‘bee-havers,’ not ‘beekeepers.’”
Careful and diligent management and routine inspections are the best practices when it comes to keeping disease and pests away. Know what to look for, and learn the visual signs of trouble.
New beekeepers should always wear beekeeping safety equipment. Do not visit your hive without wearing a veil. Although your new bee colony is likely to be extremely gentle (especially during the first few weeks of the season), do not put yourself at risk.
“Many new beekeepers prefer to use gloves during installation and routine inspections,” Blackiston said. “I discourage this practice, especially with a new colony or early in the season, because gloves can inhibit a beekeeper’s sense of touch, which can result in inadvertent injury to the bees. That is counterproductive and only makes them more defensive when they see you coming.”
It is possible that a colony can exist without drones in the winter. Once the weather gets cooler and the mating season comes to a close, the worker bees will not tolerate having drones around. After all, those fellows have big appetites and would consume a tremendous amount of food during the winter. So, in cooler climates and at the end of the nectar-producing season, the worker bees systematically expel the drones from the hive; this is a signal that the beekeeping season is over for the year.
One of the biggest errors made in beekeeping is when a new queen is introduced to a colony when an old queen is still alive. As long as there is an old queen in the hive, a new queen will not be accepted.
I have seen many new beekeepers claim they have no queen when, in fact, they do. Then they wonder why the new queen they introduced was killed.
A backyard beekeeper since 1984, Howland Blackiston is the author of the best-selling book Beekeeping for Dummies (John Wiley & Sons). Blackiston has written dozens of articles about beekeeping and appeared on several television and radio programs, including The Discovery Channel, CNBC, CNN, NPR, Sirius Satellite Radio, and regional shows, and has been a keynote speaker at conferences in more than 40 countries. Blackiston is the founder of www.bee-commerce.com, an Internet-based store that sells beekeeping supplies and equipment for the backyard beekeeper. He is the past president of Connecticut’s Backyard Beekeepers Association, one of the nation’s largest (nearly 400 members) regional clubs for the hobbyist beekeeper. Blackiston and his wife, Joy, live in Weston, Connecticut.
