Make Money from Bees - How To Make Money from Beekeeping - How Much Do Beekeepers Earn - Part 2

Hi, I'm Laurence Edwards from Black Mountain Honey. Welcome to another episode of No Nonsense Beekeeping. Today we're going to talk about how to make money from bees, part 2. So first thing I want to say today is that you need to treat your bees for disease. Now, a lot of beekeepers don't treat their bees for disease, or try and kind of minimize it as much as you possibly can. If you are doing beekeeping as a business with the aim to making money out of it, you need to make sure that you're kind of doing regular treatments, you're doing everything you possibly can in order to prevent the bees getting any diseases, be that kind of Nosema, foulbrood, American or European chalkbrood, any kind of disease that they could get, and you need to minimize the varroa load on them as well. So if you're looking to make money out of them, make sure you're on top of the treatment schedule and treat them as regularly as they require. Next one is you need to sit down and develop cash flow forecasts. So you need to understand kind of the money that's coming into the business, the money that's coming out of the business, and make sure that you've always got a healthy buffer in place in case that the worst happens. So I mean, you might get a really terrible season where you literally don't make any money at all, and you need to make sure that you've got sufficient reserves in the bank to cover that. There's no point kind of building up a business and trying to make money from it if you're not prepared for kind of the worst-case scenario. So you You need to develop this cash flow forecast, make sure that you've got enough money in the bank, understand when your money's coming out, when your money's likely to come in, because there's particular times of the year where more money comes in and there's particular times of the year where more money comes out. So you need to plan for those and make sure you've got sufficient reserves. Next one is a very, very big one, and this can be really rewarding for certain individuals. So that is, if you're in the UK and you're a higher rate taxpayer, and you're starting up a business as a sideline business to your normal job, which is what I do, you can offset your higher rate taxes against your losses in your beekeeping business. Now you need to speak to your accountant about this, and we'll speak about accountancy kind of services later on in this video, but it's kind of really beneficial. So not only do you get your VAT back on kind of capital expenditure, you can potentially offset some of your higher rate losses. So you might get 40% back on top of the VAT against your losses within the business. You offset that against the tax that you're paying in your normal job. So bear in mind, if you're a higher rate taxpayer or even a regular rate taxpayer, you can offset some of your losses in your beekeeping business against the taxes that you pay in your regular job. So it's a very, very kind of worthwhile exercise. Keep that one in mind. So jumping around completely, next one now is attend local markets. There is a huge kind of movement in the UK at the moment for really, really good high-quality food products. So if you go to farmers markets, you're likely to demand a much, much higher price for your honey than if you were to sell it kind of by your door. And this comes back to having fully compliant labelling. Like, you won't get onto the markets without fully compliant labelling and food hygiene certificates and insurances. But once you get in there, you can demand a really, really good price for your honey, and you can kind of sell— you can sell a lot at farmers markets. And the benefit that you get from selling directly to the public at farmers markets is obviously that you're not charging a wholesale price for your honey, so you're getting whatever you charge to the end user, obviously minus the market fees. But the big one that I found is that you can actually talk to the public and kind of educate them about the provenance of the honey and where it comes from. And even more important than that is that you can give them kind of tasters so they can taste that honey and see how incredibly delicious the honey is and maybe compare it against like a kind of own-brand Chinese honey, and they can really kind of taste the difference and see where their extra money is going. So I find it's very rare that people will taste some of my honey and then not buy a jar. So having that kind of access to people at these farmers markets really helps helps boost sales. And that's particularly important around kind of times of the year like Christmas. Um, Christmas is great. Christmas markets, people love honey. And if you kind of package it up and do a nice gift box, you can kind of add value to your product so you can sell it for more than your normal price as well. So Christmas markets are great. They really kind of boost sales in that region of the year. So it's good to focus on them, include them on your cash flow forecasts, and just kind of try and attend as many as you possibly can. So the next one is you need to stay efficient. As we've discussed in part 1 and a little bit on part 2 of this video, there's a lot of expenditure that goes out into becoming kind of like a successful honey business, and if you're looking to expand and get to a kind of serious level, then you need to make sure that you capture all of these costs and you need to make sure that you limit the amount of money coming out. So you need to stay as efficient as you possibly can, and that's kind of across all areas of beekeeping. So that might be the inspections, making sure that you're not doing unnecessary inspections so you're minimizing your time. That comes from kind of the way that you move honey around your extraction room, making sure that the process is as efficient as it possibly can be, making sure that your kind of labeling process is efficient as it possibly can be, making sure that you've got sufficient minimum order quantities in place with stockists so you're not going down and dropping them off 10 jars at a time. You need to kind of review it from top to bottom, the whole beekeeping business, and understand if you are as efficient as you possibly can be. And then if you're not, you need to understand why you're not as efficient as you possibly can be and try and kind of put those efficiencies in place. And that really helps to drive profit all the way through your beekeeping business. So I mentioned it in the previous section, you need to limit the minimum order that suppliers can order from you. And it's difficult to kind of agree this with people straight up. and just say, right, the minimum order is 50 jars. But it will come back to bite you if you don't agree a minimum order with the suppliers. The suppliers will always try and push you down to the, the lowest number of jars that they can possibly buy. They feel it's better for their cash flow if they can only commit to kind of 10 jars at a time. Obviously, it's a lot better for your cash flow if they commit to more jars, but more importantly than that, you're not faffing around kind of doing regular deliveries to them. So I have a rule at the moment, my minimum order is only 25 jars. I'm moving that up kind of at the beginning of the season up to 50 jars, and it's probably going to stop a couple of the suppliers buying the honey from me, but I just can't keep up with all the deliveries with people ordering kind of 10 or 15 jars at a time. So we're going up to 50 jars, and to be honest, 50 jars as a minimum order is still pretty, pretty low. I know people who have way, way, way higher minimum orders than that, so you need to kind of pitch it at the level for you. I think 50 is about right for me. Um, we sell kind of our 8-ounce jars wholesale at £4 a jar, so it's kind of a £200 order. So it's, it's a reasonable size for someone of my scale. I mean, like I say, it's kind of hobby-plus scale. So, um, that, that kind of works for me. 50-jar minimum order. Being to sit down and kind of work out what's right for you, and by doing that, you're improving your cash flow, but you're also reducing the number of times that you have to go out and deliver, which means that your overheads are lower. So that should help boost your profit. So constantly scope new markets, and that's not kind of like physical markets like farmers markets, although it can include them, but you're just always kind of keeping in the back of your mind that you're looking for something new and you're looking to diversify the products that you offer. So be it kind of maybe consultancy services or hive adoption plans or gift boxes or different flavours of honey or lip balms or creams or going and talking to schools, or all of these things can be included. I have a rule that I never say no to anything as a one-off, as long as the expenses are paid, and then we see how it goes and how it develops. It's having that real diversity in your company where you're going to deliver the maximum profit, and you might come across something that you hadn't thought would be as profitable as it is, just by being open and scoping these new markets. Keep an eye out for all the new markets and take the opportunities as and when they arise. Back to the bees now. So use good quality genes and genetics, and this is really important. This is something that I just didn't do for a good few years. I kind of just had bees, had kind of local mongrels, and just expected the bees to kind of give me the honey without me really adding anything into that gene pool. And there's a whole argument about whether you should have imported bees, whether you should have kind of Buckfast bees, or whether you should try and have local native bees, and it's a minefield, that kind of argument. So we'll save that for another video because I think that'd be quite a good video. But for me, for someone who's interested in producing as much honey and hive products as possible, I use imported genetics. So I use kind of Buckfast queens, and I bring in the queens at F0. I bring in proven breeder queens from real kind of top-quality breeders on the continent, from Germany, from Denmark, and I use them to kind of boost the honey production as best I can. So unless you've got amazing kind of local mongrels that are producing an incredible amount of honey for you, you do need to take a look at what you can do to kind of improve the genetics. And there's a bit of trial and error in there, but you just need to kind of maybe commit to buying some F0 queens, doing some of the breeding yourself, or if you're happy just to kind of buy F1 queens from a very, very reputable supplier. If they're providing you with what you need, then you can do that as well. It's not to kind of tell you what way to go with it, it's just to say that genetics play a huge part in the amount of honey crop that you get. On top of that though, the colonies that tend to produce absolutely tons of honey do get through a lot of stores over winter as well, so the feed costs do go up, but the cost of feed versus the cost of honey is is pretty much negligible in terms of the cost that you'll be paying for the additional feed. But you do just need to be aware of that, that they can— if they produce a lot of honey, they tend to eat a lot of honey over winter as well. So just bear that in mind. Track your time and assess what your hourly rate is. Now, this isn't to say you need to do it like kind of to the nth degree, but it is really, really good to have an idea of kind of what the amount of time that you're putting into your business and whether it's worthwhile to continue If your labour costs are getting extortionately high, because if you're looking to expand your business and employ people, it will come down to kind of how much you're paying those people versus how much profit that you're bringing in or how much your turnover is. So you need to kind of, when you're a one-man band, you need to assess the time that you're putting into it and kind of work out roughly how much you're earning per hour. I think that's a really good metric to have and to kind of, it gives you a good rough indication on how well you're doing as a beekeeper. And it gives, like I say, it gives you a metric to look to improve on a year-by-year basis. So if you have your kind of gross turnover and your annual profit for the year versus the amount of hours that you've put into the business, they're consistent. I mean, they're very, very easy kind of performance indicators to track. And then hopefully year on year, the annual rate, the hourly rate that you're getting paid should increase as you become more and more efficient as a company and as you kind of have collected and spent more of that capital expenditure kind of increasing your equipment. So I just think it's a very healthy thing to do. Keep on track of it and just try and improve that year on year. Keep good records. Now, this is really important and this goes across kind of beekeeping. So keeping good hive records, keeping good kind of process records in terms of the honey that you're extracting, keeping good accounting records is really, really important. Don't be one of those people that kind of just stuff them down the front of the van and then hand them all to the accountant at the end of the year. It's never the most efficient way of kind of your bookkeeping. You want to stay on top of it and kind of keep good records across the board. So just expanding on that, I mean, track your expenses. Don't ever think that something isn't a legitimate expense. Leave that to your accountant to do that. So what I do is I track absolutely every single expense that I incur over the year, and I track every single mile that I drive, 'cause every single mile I drive for the business is a legitimate expense. I collate that all into the accountancy software, and then I let my accountant decide whether it's a legitimate expense that can be written off against the business, and the strategy in which he wants to write that off. So I just always say err on the side of caution. If you're not sure whether it's an expense or not, treat it as an expense, and then kind of maybe flag it up and let your accountant make the final decision on it. But you need to capture every single possible expense that you can capture, because the majority of them will be kind of legitimate beekeeping and company expenses that can reduce your tax burden. So this is something that I don't do, and I'm not doing anymore, but some people do. People who've got more time than me, they're really, really keen on this, and that is go and trap as many swarms as you possibly can. But not only go and trap the swarms, charge people to go out and trap the swarms. It's a service that you're providing to them and you should charge them for it. So you don't need to charge them a crazy amount of money, maybe like £20 or £30, but just make sure that you're not going out and doing it for free because it is a service. You've got mileage, you've got kind of like depreciation of your vehicle and your equipment and all of those things, and you've got to feed the swarm and you've got to treat the swarm. It might not have the best genetics, so you just need to make sure that your kind of costs are covered. But if you've got time, then going out and catching swarms can kind of be really profitable. I know some people, they'll go out, they'll trap a swarm, they'll build it up, and then they'll split it into 5 or 6 nucs and then overwinter those nucs. And they've turned a swarm that's cost them pretty much nothing into £1,200 worth of nucs. So as you can see, if you go out and do 10 of those a year, it can really, really be kind of a very profitable pastime going out and catching these swarms. And I don't think there's anything kind of unethical about doing that. If they've split the colony down sufficiently, treated it, fed it, and made sure that it's overwintered successfully and it's proven to overwinter, it's an overwintered nuc. So there's nothing wrong with selling it kind of for the going rate. They're not ripping anyone off. So if you've got the time, go out, chase those swarms, and charge for your services. So another little tag-along part of beekeeping which I think is a really good kind of thing to be getting into if you've got all of the equipment anyway, is wasp removal. Wasp removal companies earn loads of money. They go out, it's a really, really quick 2-minute job in a lot of instances, and they'll go out and they'll kind of like remove the wasp's nest. Do you know what I mean? They've got all of the gear in order to do it. You've got the protective equipment, you've got the gloves, you've got the kind of vehicles to go out and do that. You've probably got websites, you can promote that online. So kind of all of the hard work's done. Again, it's just if you've got the time to be going and doing that. But you see companies, all they do is wasp removal. It's very, very big in the summer. I know a lot of tree surgeons kind of branch out into that as well, excuse the pun. But it's just another thing, another kind of string to your bow. And if you're looking at kind of diversifying as far as possible, it's worth looking into kind of pest extermination because you've got all the gear to do it. You don't need a license to go out and kind of remove a wasp from someone's house, and you can charge a really, really good amount of money to do it, probably £50-60 a time, and there's hardly any equipment to buy. You might need some wasp exterminator for certain instances, but yeah, just have a look at it and add it to your business offerings. Again, this one comes down to time. If you've got the time and inclination to do it, but managing bees on behalf of corporate clients or other organizations A lot of these companies and organizations, they want to have bees on their land, but they don't want their employees or they don't have the time to be kind of managing them themselves, but they still want the honey. So they pretty much want all the benefits from beekeeping without any of the hassle. They don't want to get their hands dirty, but they actually pay really, really well for that. So I've got one company that I do that with at the moment, and if I had time, I'd do a lot more of these, but they'll charge you kind of like a management fee. So you'll just agree a rate with them upfront, to kind of like as a, maybe you can do it per inspection or you can do it per year, or there's 101 ways to kind of carve this one up. And then what they want is that I take all the honey away, I jar it all up, and then I give that back to them. And then we agree a fee for kind of like my services for extraction. And it's quite lucrative. Like, I mean, I never lose out doing it that way around. My business model is built around me owning the bees and putting them on people's land. And then selling the honey. But it also works the other way around where other people own the bees, I manage them, I extract the honey for them, and then they pay me for the services. So it works both ways, and you just need to kind of explore what's the best avenue for kind of your success. Now, this is more of a mantra as opposed to kind of like a specific point, but I think it's a really important thing to note is that you need to educate people to what you're doing. and how difficult it is to get honey into the jars. And that's not just to say, like, use a jarring machine, but I mean the whole process and what goes into beekeeping, from the treatments to the amount of colony losses that you get, to the amount of feeding that you need, to kind of the complexities of getting the honey out of the frame and into the jar, the food hygiene ratings, the insurances, the overheads. Like, it's a really, really expensive, um, business to run. Um, and by educating people into that, you're kind of giving them that insight into why the, the price of the honey is so high, uh, and why that kind of end product is worth them paying the money for. So it's all well and good kind of giving them a taste of it and saying, yeah, yeah, this is worth £6. But if you kind of educate people— and I do this all the way through— if you educate them, then they're much more likely to kind of talk to other people about that and kind of pass that education onto them. So if more people can do that, then it helps kind of boost the price of honey across the board. Encourage other beekeepers to sell at a higher price. So here's me doing this in the flesh now. So please don't sell your honey for a really, really low price. If you're selling it for anything less than kind of £5 a pound, you're doing yourself a massive disservice. Like, you could probably double that price and people— and you would sell out every year. I think a number of people only sell at that price because it's the kind of what, what has always been done. £5 for a pound jar tends to be the going rate in a lot of places, but that's a huge amount of honey. And if you worked it out, kind of the profit that you were making on that honey versus the cost of all of your equipment and the cost of your time, you'd almost certainly be running at a loss. So what I do is I sell, I sell my 8-ounce jars. The RRP of them is £6. So that's a half-pound jar I sell for £6. I don't sell any other size jars whatsoever. And the reason that I don't do that, that's just my business model. I want to keep the kind of extraction slick. I only want to buy one type of jar. I want to be able to kind of bulk buy labels, bulk buy jars, keeps the price down on everything. And that's just my way of doing it. But that's the price that I'm achieving, and I can't keep up with demand at all for that. So it's just, you need to kind of Speak to other beekeepers and let them know what they've got is a really precious commodity and they shouldn't undersell themselves. So have a look at how much you think you're going to sell it for, um, and you're much better off starting off at a higher price and then having to reduce it down a little bit because you can't shift it than starting off at a lower price and then having to put it up because you realize you're making a loss. So said it previously, evaluate the market, see what the rough price is, and then probably add add 50p or a pound on per jar and start at that. Mentioned it before, but we'll say it again, accountancy software. This really, really helps. I mean, when you're not running a business and you're having bees for a hobby, the last thing you want to do is be using accountancy software and kind of tracking your mileage and tracking your expenses and working out your cash flows and your balance sheets and your profit and loss. For some people, that's really not very fun, but when you're running a business, that is critical. That comes before everything else. You need to make sure that you're running a proper business and you're giving kind of like due attention to all of the critical stuff that comes with running a business, such as kind of profit and loss and expenses and data sheets and all that kind of stuff. So having a good accountancy software really helps you do that. So I use QuickBooks. It means that I can issue invoices and sales receipts to people, so be it kind of stockists or people who come to the door or kind of anyone who is paying me money. I can track all of my expenses in there. There's really good features on there now where you just take a picture of a receipt and it extracts all of that information out of the receipt and files it under an expense. And then you can add notes into it and add all kind of other detail as to where that should be allocated within your business. You can track all of your mileage within there and put the rates against your vehicle so it gives you the correct kind of offset on your taxes. It just really, really helps out and it's not that expensive. It's probably like £15-20 a month to get set up for it, and then you'll probably save that money back when you come to your accountant reviewing your books for the year because they're kept in such a kind of nice neat order that they don't charge you anywhere near as much in order to actually submit your kind of accounts and your tax return on your behalf, depending on whether you're kind of sole trader or a limited company. So it pays off just to kind of have really, really good accountancy software, use it to its potential, just make sure you're including absolutely everything on it. So the final one is get a good accountant. Now you need to make sure that you've got a good working relationship with your accountant because there's so much stuff that they can do for you to limit your tax liability, and that depends on whether you want to set yourself up as a sole trader or a limited company and what your strategy is for paying tax. So if it's your only job or if you've got another job or if you want to offset your losses against your pay as you earn, earn, um, role, then all of that stuff comes into play. And you need to sit down and make sure you've got a good accountant, not someone who's just going to kind of send in a tax return for you without really checking it or challenging it. Um, there's, there's a lot of stuff that can be kind of moved around, and you can play with the finances a fair bit within a beekeeping business. So it really pays to kind of have a good accountant and make sure that they're, they're challenging what you're putting in your accountancy software And that's the best way of kind of making an overall profit. So that's it. I know I've gone through absolutely loads there. I think I had 40 items on my list to start off with. Just kind of close it out by saying it's a bit of a long old slog setting up a beekeeping business. There is a huge amount of capital expenditure that needs to go in at the beginning. My advice would be just don't get too far ahead of yourself though. Slow organic growth where you're making a profit year in, year out is a lot better than trying to kind of go too quickly, take on a lot of debt, um, with the promise that you're going to make returns back in future years that can pay back that debt. That is really, really bad business advice. When you start looking at kind of what you're going to earn within beekeeping, you, you look at it, you think, well, I'm going to earn loads of money here. And it never quite works like that. The forecasts are always overly exaggerated, and you kind of get to know that after a few years, that you need to tone down your forecasts a little bit because they're never accurate and they're always over-exaggerated. They're never underestimated, they're always overestimated. So slow organic growth is definitely the way forward. I would always suggest if you've got another job and you want to become a full-time beekeeper, run the two in tandem for kind of a good few years. It gives you a feel of kind of how much money that you can earn through beekeeping, and it gives you a chance to kind of spread that capital expenditure over a few years as opposed to taking out loans with the promise of kind of really good results next year. It also gives you the opportunity to learn the trade. So I think being a kind of commercial bee farming business is very, very different from having 2 or 3 hives at the end of the garden when you're just even just doing like simple things like feeding or treating. Like, when you've got hundreds of hives— I've got about 100— the time to actually go and treat the hives, or the time to go and feed the hives, it really, really racks up quite quickly. And before you know it, you just don't have enough time to do anything. Um, so you need to, you need to factor all of that in. Um, and by kind of doing it slowly and building it up, you get to understand how long things take and where to kind of focus your attention and effort. So that's it. I really hope all of that was useful. I understand, I mean, some of it's not necessarily about how to make a profit, but it's more kind of like guidance onto how to run a successful business. My business has been around for kind of 5 years now. We're moving away from making losses, and we've made a good few losses, into making kind of good profit. We've got everything set up now, so we don't have any further kind of capital expenditure on major items of machinery. There will always be kind of something that breaks or something that needs to be replaced or kind of modernized, but hopefully like we can kind of minimize that amount and, and then we can offset that against profits in future years as opposed to kind of reporting losses in any years. So that's it for the video. It's— I appreciate it's a bit of a long one. We've split it over 2 videos, so we've got the How to Make Money from Beekeeping Part 1, How to Make Money from Beekeeping Part 2. Completely different topics in each, so have a look at both of them and see what you think. If you've got any questions or you think I've missed anything out, which I almost certainly have, let's hear them in the comments and we'll kind of try and include absolutely everything in the comments as to items that I've missed out. As you know, I'll always respond and we can have a bit of a conversation about it and see where we go from there. So thanks for watching, really hope you're enjoying the videos. Please hit the subscribe button, please hit the bell so you get a notification of every video, and I'll see you next time.