Moving from a hobby keeper to a business

[specialkayme]

I'm a hobby beekeeper, and have been since I started in 2004. This year I suffered a total loss, but I'm rebuilding (caught one swarm, have a nuc in the pipeline from Russell's, 6 Queens on order from Russell's, and trying to find some good nucs elsewhere [treatment free small cell, if possible, and if not just treatment free if possible, and if not just the best I can get ahold of, lol]). I have not sold one dime's worth of items, and have been doing it only for entertainment purposes. However, in the next five to ten years I would like to turn it into a business, by generating enough income to support itself and let it grow, then see where it goes. The difficulty is that I don't know what business direction I should be planning. The route I choose would obviously determine the equipment I would need, and as any business start's off cash is king. For example, if I buy all the equipment to process honey, but end up in the nuc production business, I wasted my start up cash on unused equipment and it would probably take twice as long to get my feet off the ground.



While I am aware of the potential markets, I don't know any of these markets. I wouldn't know how to get started in any of them. I know most of that will come in the next few years, as I build, but I was wondering what some people's take would be on how to turn a beekeeping hobby into a business, and what steps are helpful as opposed to detrimental. Which markets can easily be pushed into, which ones are difficult, which ones require little start up equipment, and which ones are massive.



So the way I see it, there are a number of different "areas" that I could get into:

1. Honey Production

I have an extractor, and I could get going on this. Downside: honey flows in my area are not constant, or predictable. We get one main flow a year, and sometimes it doesn't happen every year. As far as a business plan goes, I might have to move to get this one off the ground. At that point, my 9-5 job isn't paying my personal expenses and the whole thing crashes. Likewise, it would take a great deal of time to market and sell my honey at farmer market prices (or in grocery stores). Time which I don't have. Or I could sell it whole-sale, but at $1.60/lb I'm not sure economically how I would be able to break even.

2. Wax Production

As far as a business strategy goes, I don't know anything about this area.

3. Propolis and/or pollen sales

Like wax production, I don't know where I would begin here.

4. Queen breeding

I began breeding queens last year, in an attempt to get a ton of experience as soon as possible. I love doing it, but it has some very challenging moments. I was thinking the easiest way to get started would be here. I could start local and see where things go. My motto would be the local "Johnny on the spot" queen guy. An upside would be that I don't need that much new equipment, and I could churn out 50-100 queens in a season my first year (once I get set up). A downside would be making sure I am producing a stellar product, something that initial queen breeders can't always do.

5. Nuc production

I would assume that this area would go hand-in-hand with queen production. Queen orders not taken in year one could be turned into overwintered nucs for year two. Those can replace losses, and extras can be sold. I would like to be able to use queen production and nuc production at the same time, to see which one is more cost-effective, and which one has the better marketplace.

6. Package production

This area would obviously take me about 10 years to get into, as I would need hundreds of additional colonies. I don't think I will be stepping into this any time soon.

7. Venom production

As with a few others, I know nothing about this area.

8. Producing and/or re-sale of equipment

I am a simple woodworker, so I make all my own equipment (or almost all). Building it myself I save some money, but not much. Based on that reason, I don't think the profit margins would be enough to justify my time. Additionally, the market is just swamped with those people, and with Mann Lake offering free shipping, how could I possibly compete?

9. Pollination

This would require more hives than I could keep as a hobby beekeeper. Because of that, I find it difficult to conceptualize a "transition." If I kept 50 hives as a hobby beekeeper, the same number would not be enough to satisfy a contract. If it was (and I brokered a small amount out), the transportation costs would likely deminish whatever return I could get to next to nothing. Economies of scale works big here, and when you don't have alot to scale, it's difficult to start. Likewise, I don't know where to get one of those contracts, if I should be focusing local or out of state, ect.

10. Removals

I've seen several doing these on the forums. I have put my name and number out there for people to contact, and I've received very few inquiaries (both on swarm calls, and cut outs. In the past four years of being on "lists" posting on craigslist, and scouring the internet I have received one swarm call and one cut out call. The cut out call was pricing out the lowest guy, so I wasn't interested in performing it.). Based on what little taste I have had, I would guess there is not much of a market for this in my area.



So, any thoughts? Anything I didn't factor into it?

[AliciaH]

I think the key is what interests you the most and what aspect of all those things do you feel you have a knack for? 

[rbinhood]

I think the key is what interests you the most and what aspect of all those things do you feel you have a knack for? 

Ditto....I think AliciaH hit the nail on the head.

The one thing that is important is "word of mouth" when people learn about the quality of your product or service and how "good" or "bad" they are it can make or break you.  One bad experience by one individual can wipeout the good of three times as many happy customers.  In other words good customer service is the key to any successful business, you must believe in your product or service and stand behind it and do whatever it takes to make the customer happy.
 
And if you are not ready to put in countless hours of hard work and sleepless nights and have a fire burning in your gut for dealing with the ups and downs of the good years and the bad years then I will tell you this right now "FORGET ABOUT IT".  Commercial operations of any type are just like being a farmer, just when you think you are on the right path mother nature will always throw you a curve ball.....and most of the time it will be a bean ball right in your wallet.

Start small.....dream big......don't put all of your eggs in one basket, and strive to be the best at whatever you do and don't expect to be a millionair next week because in beekeeping it is not going to happen!  Why you ask....hobby is something you love....commercial hard work and few rewards other than growing to hate your once beloved hobby!

After 72 years I can say "OLD ENOUGH TO SAY BEEN THERE DONE THAT WITH OTHER THINGS"!

[specialkayme]

I think the key is what interests you the most and what aspect of all those things do you feel you have a knack for?  

I understand your point, but to some degree if there isn't a market for a particular area, then it doesn't really matter if it interests me.

At some point, probably close to 20 years from now, maybe longer, I would like for my hobby to be my business. I'm not expecting to grow rich, but I would like for it to be able to pay my bills. In the mean time, that means I have to treat the hobby like its a business in its infancy. I need to work a 9-5 job that pays the bills, and work the "hobby" in order to get it growing so that it can pay for itself initially, then eventually pay for me as well. In that interim period, I'm working two jobs. There will be some point where I'll get a diminishing return by doing both jobs. At that point, I'll need to start giving up time on one end or the other. If I'm giving up time on the 9-5 side, but there isn't a market that can support the income needed to pay my bills on the "hobby" side, it all comes crashing down. What I am trying to avoid is knowing about that crash before I get into that area. I don't want to wait 20 years, building a practice, only to find out I should have gone a different route.

Pollination is a good example. In order for me to really make pollination work as a business, I would have to go migratory. Travel to Maine, Florida, and California, following the blooms. It would be nearly impossible for me to maintain the same job I have now, while traveling all over the country six months out of the year. If the income from those pollination contracts will pay for the operations of the business and pay for me, I'm fine. If it doesn't, then pollination isn't an area I can afford to get into, whether I like it or not.

But, I do understand the point you are trying to make. I guess for me though, I don't know enough about the market to fully rule out certain areas, or throw in others that I haven't thought of.

[VolunteerK9]

Ive pondered the same thing over and over again. I think the best money on any return would be somewhere in the range of nuc and/or queen production. These two things are not totally dependent on hit and miss nectar flows like honey and wax production. (I know it takes a flow to produce bees in quantity-but it can be substituted with syrup feeding) The problem I have encountered is trying to get my personal hive count high enough and sustained through the winter in order to be in a position to sell some nucs or spare queens. I had a 50% loss in hives coming out of this winter, so my priority is to get back where I was. Ive learned that it takes a buttload of bees and nectar to produce any reasonable amount of surplus wax for very little profit gain whereas any queen will sell for a minimum of $20 and nucs for around a $100.


Ive got a new found respect for commercial beeks that are overwintering 1000's whereas I'm having difficulty with less than 20.

Edit: Personally, I would rule out the wooden ware sales too. Its just too hard to compete with places like Humble Abodes, etc that can knock out huge volumes for less plus it seems that everyone has a skil saw and tape measure to build their own anyways. Dont mean to be Johnny Raincloud, but I think the bigger market is still in queen or nuc production.

[AliciaH]

Special:  I get everything you said and I agree.  I'm actually in the same boat, though I don't have the years behind me that you do.  I just know from a business model that too much expansion too fast usually means disaster no matter what business you're in.

And I think VK9 hit it on the head.  If pollination isn't an option, then nuc or queen rearing.  But you don't have to do both, which requires a huge investment.

We have a guy on our end that has a real knack for building up colonies (if I can figure out how he's doing it, VK9, I'll let you know, 'cause you know I'm watchin'!).  He makes his money by selling nucs each year.  I talk to students all the time who have lost their queens and send them to this guy to get 2-frame mininucs.  But he doesn't rear most of his queens, he gets those from an awesome queen breeder south of us.  Yes, buying the queens cuts into his profit margin.  But he also has a 40-hour/week day job.  Removing the queen breeding from the nuc production saves him a lot of time.  From what I can tell, he's doing well.

My point being, you don't have to do it all.  At least, not at once.  Divide up what you can work around your schedule and go from there.

And always remember, that expansion is an animal all by itself.  Doing anything in bulk may require making a change in how you do it, which leads to a change in the plan, which leads to a new cup of coffee and a new list.  Or a new bottle of aspirin... 

[D Semple]

My sideline bee removal / honey production goals are too build my apiaries up to 3 - 400 or so hives over the next 10 years so I can retire from my regular job and just have some supplemental retirement income and something to do with my time.
 
Removals and swarm captures only brought in about 12k gross last year, which isn’t much, but it supplies all my bees for free and provided enough for me to make all the equipment for 45 new hives and 20 nucs for this upcoming year.
 
Once I get up to a couple of hundred hives I will start summering them up in South Dakota for honey production. Wife works as the health department manager at a grocery store so I have a readymade market for the honey we produce.

Only my second year beekeeping so we will see how well I do at planning and execution, so far the bees are thriving and I have more removal work than I can get to.

Don

[mattiaccio44]

I went from 10 hives to 125 hives this year. I was in for a surprise with the increased workload, but we sold over 200 Nucs and over 3000 pounds of honey retail. We started pollination this year and are getting $75.00 per hive. Also we purchased several breeder queens and are ramping up our queen production for 2013. Our model calls for increasing to 460 in the coming year as we have new pollination contracts coming on line in the fruit orchards, vine crops and others. We are currently looking for a place to put our hives in September in Florida hopefully near Brazilian Pepper than later in the citrus groves prior to bringing them north for pollination.

[BrentX]

Going from 10 to 125 is a huge leap.  Do you see getting to 460 as another leap, or more organic growth of the current business model?

[Joe D]

In my local bee club there are beeks from new bees with 1 or 2 hives to commerial beeks with hundreds ( I think the biggest has 800).  Some hobbist with 50 hives and some that buy a drum or 2 from the comm beek to bottle and sell.  There are some that sell nuc's and queens.   The commerial beek has hives scattered over several counties local.  He has built up with better equipment every few years, now he told me that in a good flow he can put up 20   55 gal drums a day.  150 drums this years spring and summer flow.  He has a contract for most at a set price.  Their is a hobbist that has 50t hives buys a drum and sell it at farmer markets, stores and etc.  I beek that used to just do honey but now does nuc's and queen sells mostly but still has close to 50 hives.  If I had more hives would check with a blue berry grower about 10 miles away.  Just find what you would rather do and talk to people that are doing it for the how to.  Good Luck

Joe

[greg755]

I would not branch off to other things until I had a least 20 hives going.  10 at your house and 10 in another location 4 to 5 miles away.

Start with a couple of hives from nucs or packages, learn how to split hives, rear queens and raise nucs. So that you dont have to buy anymore bees. When you get good enough to build your 20 colonies and sustain yourself then you can sell the extra queens, nucs or packages.

Learn how to catch swarms and do trap outs, which you can then also charge for.

If you have extracting equiptment you can charge others to extract their honey and bottle their honey.

Learn how to build your own supers, screened bottom boards, inside covers and tops.  You can then make 2 at a time and sell one to cover your expenses, every time you do this you get a free hive.

If your selling you own honey and the demand gets to great buy honey by the buckets/barrels to round out the sales.

In a couple of years or so before you know it you will have enough hives and colonies to branch out to things like Pollination service, selling pollen,venom,etc...  but in the meantime you have built up a solid base of honey sales, wooden ware sales and Queen/nuc/package sales.  In other words you are keeping your risk/exposure at a minimum...  just my 2 cents

[tefer2]

 

[weldingfreak6010]

Me too