So you have been thinking about getting into beekeeping to make some money, or you have been keeping bees for a while and are thinking about moving up to an apiary size bee yard to increase your profits and wondering exactly what that move would look like.
After considerable research and much organization of the information gathered from my research, these are the final data and consensus that I used to build my business plan. I hope you find them helpful.
The prospective entrepreneurial beekeeper’s first question is:
Can I Make Money Keeping Honey Bees?
A beekeeper with a business plan can easily make money, even in the first year!
Potential profits within the 1st year far outpace the normal 5 years for a business to make a profit.
Tax benefits are immediate and can be substantial.
A “What If” spreadsheet will answer this question.
What Goes Into a Beekeeping Business Plan?
- Decide how much time can be devoted to beekeeping.
- Decide how many hives.
- Decide where hives will be located.
- Calculate start-up or expansion costs.
- Calculate projected income.
- Calculate Income Tax saving of a home-based business.
- Calculate break-even point.
- Calculate cash flow needs.
Most start-up home-based beekeeping businesses are initiated with just a couple of hives.
The beekeeper should not risk much money on establishing a beekeeping business until they have successfully over-wintered a small number of hives.
The startup costs for the new beekeeper will most likely be initiated with the beekeeper’s cash rather than a loan. Most lenders, even with a good business plan, will not loan a new beekeeper money unless the beekeeper has a successful track record of beekeeping.
But be cautious!
Lenders will lend the new beekeeper money if there is sufficient collateral obligated to cover the loan.
This often means putting up the beekeeper’s home as collateral.
Not an idea that I can endorse for a new beekeeper.
If the lender will not lend money using only the beekeeping business for collateral, take it to heart!
They are telling the beekeeper they expect the beekeeper to fail.
Listen to them and don’t put your home at risk.
The truth is, the new beekeeper can most likely structure a home-based business in such a way that the income tax savings from starting a home-based business can pay for ALL the equipment the new beekeeper will need to get the business started!
A good business plan “What If” spreadsheet will provide all this information. The better the information entered into the business plan spreadsheet, the more accurate the spreadsheet will be at predicting the initial set up costs and the break-even point in time.
This “what if” spreadsheet approach to evaluating the beekeeping profit potential can be used with data that is not specific, just guesses, to get a general idea if this is a direction the beekeeper would like to pursue.
The business plan components, as outlined above, and a good “what if” spreadsheet, will give the new beekeeper an informed base of financial costs before making the final decision to start a home-based business.
Once the prospective new beekeeper decides beekeeping for profit is the direction that is appealing, the first thing to do is to set up a separate bank account to be used only for the beekeeping business.
Also, open a credit card account that will be used exclusively for the beekeeping business.
Even a beekeeper not intending to establish a business should set up the bank account and credit card account just so they will know exactly how much their hobby is costing them.
Most hobbyist beekeepers claim beekeeping to be the least expensive hobby they have ever done.
An established beekeeper, wishing to expand into a full-blown commercial operation, should also use a “what if” spreadsheet to determine the expected expansion costs as well as the operational costs to bring the newly expanded business to a self-sustaining financial level, the so-called break-even point.
The expansion of a beekeeping business to the level of commercial operation will likely require borrowing money from somewhere. Be prepared to show lots of documentation of the success obtained prior to the expansion (this is where the separate bank accounts, credit cards, and good accounting records like Quickbooks will really pay off).
For the beginning beekeeper entrepreneur, without an employee payroll:
check out the purchase price of Quickbooks prices on Amazon…..
For beekeepers anticipating hiring employees, I recommend using a CPA and a Payroll service.
Payroll and payroll taxes are a bitch if you get it wrong or are untimely.
However, if you are up to the task:
check out the price of current Quickbooks Payroll Enhanced price on Amazon.
Also, the beekeeper borrowing money to expand should be prepared to give the lender a LOT of financial data, including 2 or 3 years of tax returns.
How Much Time Is Required To Be A Beekeeper?
An established hive will require about 20 hours per year to service, maintain, and harvest.
First time or expansion beekeepers will have additional time requirements to set up the hive(s).
A potential new beekeeper entrepreneur frequently already has a full-time job. So the worry may be that the new beekeeping business will take more time than the new beekeeper has to give.
If the prospective beekeeper has weekends free, there should not be a conflict for keeping a few hives.
Hive inspections should not take more than about 15 minutes per hive for a new beekeeper.
A seasoned beekeeper will complete a hive inspection in under 5 minutes.
Hives should be inspected, in general, about every 2 weeks but in the spring, during swarming season, the hives may need weekly inspections.
Learn more about swarming…..
Hive inspections are usually performed in mid-day while the bulk of bees are out of the hive foraging for nectar and pollen. So the downside to hive inspection is that it usually happens in mid-day on a weekend day for the home-based beekeeper.
For the larger, commercial beekeepers, beekeeping is their full-time job which not only requires all those hive inspections, but also the transporting of the beehives to orchards and crop for paid pollination of farmer’s vegetation.
Transportation usually occurs at night or very early morning while all the bees are still in the hive.
Number Of Hives
How Many Hives Should A Beekeeper Have To Make Money?
- One beehive can make a beekeeper profitable in the first year with a little luck.
- A seasoned beekeeper can handle up to a1,000 beehive by themselves.
- Commercial beekeepers status starts at about 1,000 hives.
- The largest beekeeping operation in the USA has 82,000 beehives.
A backyard beekeeper should start with at least two hives expecting that up to 50% of hives will not make it through the winter. The first year for a new hive to over-winter successfully has a significant chance of not making it through the winter for various reasons, including strength and age of the hive’s Queen bee.
Once the number of hives for an urban backyard beekeeper exceeds single digits, the beekeeper will likely need to move the business operation to an apiary, frequently rented land.
For the non-urban backyard beekeeper, there may be enough land with the personal residences to continue expanding the number of hives on their own property.
Check out purchase cost of different type hives on Amazon…..
Location Of Hives
Where Should My Beehives Be Located?
- Backyard beehives should be located in a partially shaded area, away from foot traffic, and 20 feet from the property line.
- Commercial beekeepers have non-residential apiaries.
- The number of hives per apiary is limited to the available surrounding nectar-producing plants.
This question is typically from a new beekeeper just getting started in the business.
Learn more about backyard beekeeping start-ups…..
How Can A Beekeeper Calculate the Start-Up/Expansion Costs?
Using a spreadsheet, list:
- All the equipment costs.
- All expected ongoing expenses.
- All the labor costs.
- All the projected income sources and amounts.
- All the projected tax saving (if a new backyard start-up).
- All the land rental cost (if beekeeper has apiary).
The new beekeeper will have a more difficult time doing this step than the beekeeper that is expanding. The new beekeeper does not really know what is needed and will greatly benefit from having access to a spreadsheet template with itemized components common to beekeeping.
The experienced beekeeper, with several hives already, knows a lot about what equipment needs are required to expand, but frequently makes decisions based on mental calculations and estimates rather than a systematic approach a “what if” spreadsheet.
Using a “what if” spreadsheet will provide more information for guidance.
How Can I Project Income From Beekeeping?
“Projected” income from beekeeping is calculated with both subjective and objective data being entered into a “what if” spreadsheet.
Actual income is a function of accounting that tells you how close the projections were to reality.
Past beekeeping experience provides better data.
Projections are just that, projections!
The best-laid plans can go ascue. If the beekeeper is projecting a specific honey harvest from a hive but that hive swarms and takes half of the honey and workforce with the swarm, the data in the “what if” spreadsheet needs to be updated to determine what effect these unpredicted circumstances will have on the projected income. It will most certainly be less than projected.
By the same token, should a hive(s) far outperform expectations, the actual income will far outpace the projected income. Happy serendipity for the beekeeper!
In any regard, continually updating the “what if” spreadsheet will keep the beekeeper up to date on what the expected income will be for this year.
Are There Income Tax Savings With A Home Based Beekeeping Business?
A home-based beekeeping business can produce enough income tax savings to allow the beekeeper to pay for all the setup costs in the first year of operation!
The IRS loves small businesses, and a home-based beekeeping business is a great small business.
A home-based beekeeping business is allowed to set up an office in their private home and deduct a portion of all that home’s expenses as a business expense.
That is HUGE!
Calculate the percent of square feet the home office occupies within the home.
If a beekeeper converts a 10 foot by 10 foot bedroom into a home office (100 square feet), and the home is 2,000 square feet of living space, the percent of space devoted to the home office would be 5% of the home used for the home office.
This 5% can now be applied to:
- HOA fees
- Gardening fees
- And many more cost of maintaining the entire home
This can quickly add up to hundreds or thousands of dollars in tax savings that would have been sent to the IRS if there was no beekeeping business or home office.
The IRS will even allow the beekeeping business owner to pay for their own family to help with the business. Paying your children is a great way to teach them about money and what having a job means. Plus, if they are paid less than the required IRS reporting limits, they earned that money tax-free! And their pay was issued with pre-tax dollars! I just love capitalism at its finest.
And once family are employees, the business owner can offer health insurance and other benefits to these employees which will be paid with pre-tax dollars!
Check out this information with your own accountant and follow their advice for you specifically.
- 69% of all entrepreneurs start their business with a home-based business.
- There are 38 Million home-based businesses in the United States.
How many people do you see coming on the popular TV show Shark Tank that are still in the home based business model?
There are a lot of home-based businesses, all of them probably using the income tax breaks proved by the IRS to home-based businesses.
And one great big plus:
All the money spent by a business is deductible from ordinary income from a full-time job as an employee, so even when there are no profits in a business, it can lower your tax burden from your regular job!
The IRS allows a business to spend money for expenses, even set up expenses, with pre-tax dollars!
This means that every $1.00 spent on the business, uncle sam is paying $0.28 to $0.40 of that expenditure (depending on which tax bracket you are in.
As I said, the IRS LOVES small businesses. They are the backbone of our economy and the IRS wants to protect them from failure as best they can.
Most beekeepers start their business as a Sole Proprietor which simply requires the filing of a Schedule C, Profit or Loss From Business along with the normal IRS 1040 form.
Just be sure to keep good records, receipts, and documentation. Simple and easy to do, but unfortunately even easier NOT to do.
Learn more about Home Based Business & Taxes with this book from Amazon…..
An LLC is treated by the IRS as if it were a Sole Proprietor business and files the same Schedule C, Profit or Loss From Business form, with the regular individual IRS 1040 form.
The LLC does offer some liability limitation over and above the sole proprietor.
S Corp & C Corp
The IRS recognizes a corporation as a distinctly separate entity and as such, the corporation must file a separate tax return, each requiring its own specialized IRS form.
Both of these corporation structures offer significant liability limitations for the business owner thereby offering protection of the business owner’s personal wealth.
By the time a beekeeper is ready to organize the business under an LLC or Corporation status, the beekeeper would be wise to engage both a CPA and an attorney for advice.
Calculate Break Even Point
How Can I Calculate Break-Even Point For A New Beekeeping Business?
A break-even point in time is calculated using a budgeting process.
On a timeline, graph how much and when money will be spend setting up maintaining the business.
On a timeline, predict when and how much income will be generated.
Where the two lines cross will disclose the break-even point in time.
This calculation is necessary to educate the new beekeeper about how much cash will be need before the new business can sustain itself.
Calculate Cash Flow
Calculating cash flow needs is a concept that becomes much more valuable as a business grows into a much bigger commercial operation. It helps the business owner see if there is enough cash on hand to complete the business plan, or will there be a need to borrow money to make it through the tight money times.
For the beginning beekeeping business a “what if” spreadsheet will give them the information needed to make informed decisions about their business.
Using a tool such as Quickbooks will collect all the necessary data to generate a cash flow report. And if the beekeeper is going to approach a lender for money, the lender will most certainly want to see a cash flow report to be sure the money lent can be repaid.
In my many years of owning an incorporated business with lawyers and accounts, I have never once had to pay attention to a cash flow report. But I must say, I have not found myself in a tight money situation in my business. I feel that is because of my use of a good “what if” spreadsheet scenarios on start-up and every phase of growth over the years.
Beekeeping is a noble and environmentally good business and one well worth thinking about initiating and growing.
But regardless if beekeeping is the business model chosen or not, EVERY USA CITIZEN SHOULD HAVE A BUSINESS, BIG OR SMALL!
The income tax savings and the ability to spend pre-tax dollars are just too good not to have a business, even if it is as small as a couple of hives!
To quote one famous philosopher:
Live long and prosper.
Paying It Forward