There are not many beekeepers who want to put in strenuous efforts to plan, track and manage their bee farm accounts and finances. Let’s face it, we’d much rather be out in the fields tending to our bees and harvesting our honey and as either a hobbyist or start-up, we tend to give it little concern. I’m with you.
But for any business to be successful, including our little bee farm, we need to understand what’s happening week on week and month and month to know whether the business is heading in the right direction and that we’re achieving what we’re setting out to do. With even the most basic of financial management, this is more than possible and allows us to plan for sudden change, adjust our strategy if needed, whilst planning effectively for the future.
Many people get hung up on calculating start-up costs in bee farming. But the fact of the matter is, most have already been beekeeping for a while and you’re probably in the post-start-up phase without even realising it. It’s a rare thing to wake up one day and decide that you’ll be starting a bee business without ever having touched a bee, the hobby and learning process over what has likely to have been years, is in a way, your start-up costs and processes covered.
The amount of additional money you need to invest early in your bee farm will vary depending on a number of factors, including whether you want to jump the size of your operation quickly or perhaps relocate or buy/lease land, there may be some specific business cases to consider that validate your need for a more detailed and costed start-up plan.
In the majority of cases, you can operate in some capacity based on past experience, the purchases already made, and simply hit the ground running. Don’t get hung up on the complexity of start-up costs, building a business can be a gradual thing and not all of us have considerable money to invest at day one. That’s ok.
Just like any other business, a bee farm has numerous outgoings that must be taken into account in order to keep the operation running smoothly. Even if you’re not 100% sure about this bee farm business idea, developing an understanding of your outgoings, even as a hobbyist, is an eye-opening experience.
Taking the time to document and manage my outgoings the first time was tough to come to terms with as I lay hunched over a spreadsheet with my management accountant (my wife) helping me pick out everything I’d barely considered. Not surprisingly, it all adds up.
The cost of supplies, equipment, hives, tools, honey processing equipment and everything in between the end-to-end process is surprisingly extensive but very few of us, without taking some time, can fully appreciate what that has meant for our bank accounts over the last couple of years. Understanding the picture now is the only viable way to move a business forward.
In beekeeping there is undoubtedly a lot of stuff, things you can purchase, hold and store away until you need them, the real tangible things you can see and touch. Until you’re running a larger operation these tangibles are rarely the biggest costs for a starting bee farm business but that’s where we tend to overly focus. We need to stretch our brains a little and ensure we incorporate all aspects of the business.
These intangibles may include, but are certainly not limited to:
The number of accountancy services and applications out there is truly staggering. Once you start looking, the number of options alone will have you wondering which way to turn. There are great online apps and great people who are willing to take on some of the pain of managing your money, but again this is an area in which we needn’t get too carried away. Most people with a computer will have come across a spreadsheet at one time or another which is cheap and will more than suffice in getting started, Excel is by far the simplest and most accessible.
I use a simple spreadsheet for each year of business, tallying both my income and expenses and continuously tracking my position so that I understand my bee farm better. Over the coming weeks I’ll look to make some of my spreadsheets available because often the challenge of accounts is the getting started. Having access to a template that relates to what you do already is so much easier, so if you’re interested in getting your hands on some of our templates, drop your email here and we’ll notify you when it’s available.
The biggest cost to your bee farm are time and labour. Beekeepers need to be paid for their time and expertise, and this is often the most expensive item on the bee farm budget sheet. In a lot of start-up cases, that beekeeper will be you and you’re not likely to be hiring off the bat so this means you’ll be spending a significant amount of your own time on getting this business off the ground. This is time you’ll give freely and happily but we rarely attach a value to our own time, in fact, I’ve never met a bee farmer who’s giving it a moments consideration. I’d argue it’s the most important thing you should be doing.
There’s an incredibly well written article by James Clear who gets quickly to the point on helping you calculate and understand your own value by attaching a monetary figure to one hour of your time, you should take ten minutes and read it here https://jamesclear.com/value-of-time.
Be sure to give some thought to recording the time you spend on your business, today I’ve worked an hour on this blog post so lets say I value one hour of my time at £50 then I’ve spent £50 today working on my business and I record that in my expenses spreadsheet on another tab away from any actual real money. I tag it as writing so I know what I’ve been doing with the time spent on the business and each month and year I can track all my time and understand where most of it is being spent. Hands down, the most eye opening piece of accounting you’ll be doing.
How does this help? Firstly it helps you value yourself better, business runners need to give more consideration of their own time so that they can evaluate in the moment whether it’s worth doing this job or that one. Send a colleague to the shop or get a neighbour to clean your car in order to free up your time to finish up with a client might be the better option, it provides a financial perspective.
It also assists with your strategic business planning, for example you might identify that this month you spent £500 of your own time writing but found that it brought in little over £50 but over at the apiary you spent £1500 of your own time but brought in £5000. You’re immediately starting to identify your own time value and seeing where you should be concentrating efforts.
Eliminating unnecessary costs is a success metric of any business, provided that the saving doesn’t impact on your core products and services. Removing wasteful spending (or time spending) is a sure-fire way to strengthen your position and is just good business sense so is certainly worth taking the time to review your outgoings regularly to identify wasteful areas. It’s also important to consider areas where spending differently may result in long term cost savings.
But caution should always be applied. Changing your jar supplier to someone cheaper to find that delivery is unreliable may not be a good cost saving as it may ultimately impact your customers if you take a JIT (just in time) approach with your suppliers. The law of common sense applies. Finding a cheap mobile contract to find that no one can contact you when you’re out in your apiaries due to terrible signal coverage isn’t a smart move and that £5 a month you’re saving may feel meaningless.
There’s absolutely no doubt that you can make savings right now, businesses always experience some level of leakage and it’s why management accountants exist to help identify these problems and introduce fixes. It’s not always about physical spend savings either, consideration should be given to your processes, in bee farming there are a lot of these. Your approach to harvesting, to queen rearing, inspections will have particularly processes that take up time. Huge savings can be made by being more efficient in how your approach and complete these things and saving 30% of your time on a process for example could provide you with a huge cost saving that you hadn’t initially considered.
Mistakes will be made as you run through this step and what looks like an incredible saving may just end up costing you, but that is business, it happens. Just remember you always correct these mistakes and recover quickly.
Accounting is not most peoples idea of fun and bee farmers are not known for their financial prowess. Perhaps a factor of why most small businesses fail or just never get off the ground. But once you give a little thought and time to the above it does genuinely start to get addictive, particularly when you start seeing positive numbers gradually appearing in your bank account. It’s at that point that you start seeing a business building which spurs you on further, giving you the desire to achieve more!
Getting your accounts started is the biggest step. It’s genuinely a little scary to begin with, your current outgoings may concern you, but knowing the reality is the only way to get your money under control and run a successful business. Want to know about those spreadsheets?