Bee Business with Jim Hartman (337)

337 - Bee Business with Jim Hartman

Nikki McGee: All right. This is Nikki McGee from East Texas here at the North American Honeybee Expo, and today you are listening to the Beekeeping Today podcast.

Jeff Ott: Welcome to Beekeeping Today podcast presented by Betterbee, your source for beekeeping news, information, and entertainment. I'm Jeff Ott.

Becky Masterman: I'm Becky Masterman.

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Jeff: Hey, a quick shout out to Betterbee and all of our sponsors whose support allows us to bring you this podcast each week without resorting to a fee-based subscription. We don't want that, and we know you don't either. Be sure to check out all of our content on the website. There, you can read up on all of our guests, read our blog on the various aspects and observations about beekeeping, search for, download, and listen to over 300 past episodes, read episode transcripts, leave comments and feedback on each episode, and check on podcast specials from our sponsors. You can find it all at www.beekeepingtoday.com.

Thanks, Nikki McGee from Texas. What a great opening from the North American Honeybee Expo. So much fun meeting everybody there.

Becky: Really? I think I would have to agree with you, and nice that Texas was represented at NAHBE, so that's fantastic.

Jeff: So many people there. How many are there, 3000 people on the floor walking around?

Becky: Technically, everybody was represented. I love that people made a journey, and then I love that they stopped at our booth. That was so much fun.

Jeff: Yes, it was really fun. I'm looking forward to next year as well. Speaking of looking forward to things, Becky, it seems to me you have received some packages recently from FedEx that make a noise.

Becky: Literally shipped yesterday afternoon and arrived at my doorstep just not even an hour ago. I got four queens from Betterbee that I purchased actually. Super excited one, that you can literally get queens shipped overnight. I had actually ordered them very early in the spring, but it's really cool that you can get something overnight, and they all look really good. As soon as we wrap up this podcast, I set up my hives yesterday, set up colonies to receive new queens, and so I'm going to go do some actually dividing and reclaiming. Pretty excited.

Jeff: What kind of queens did you get?

Becky: They're called Kutik queens, and they have actually two different kinds of queens, I think at least two. They do have northern queens that I'm interested in, but I decided to go with these Kutik queens, and I just liked the description that they had when I was doing queen shopping. I don't know if you remember, but earlier this spring, I said that last year, I don't think I purchased one queen. I did all walkaways, but at the end of the season, I paid for it. I had to do a lot of recombining because some of my walkaways just didn't mate well. I decided that this was going to be the year of the queens. I think I called it Kutik, but it's Kutik.

The Kutik queens, I decided they looked really interesting. They're darker queens, and they're good honey producers. I was just really excited since they worked in the Betterbee apiary, I thought they would work well in my apiaries.

Jeff: In Minnesota, very cool.

Becky: I've got queens coming from a lot of different sources. I've already got some Randy Oliver Golden West Queens, and I've got other Oliver's queens and some other kinds too, so super excited. I have to keep track now. I've got this whole naming system using these metal engrave. I write a pen into these metal tabs so I'm keeping really good track of who I'm putting in and what data I'm putting in and then I'm marking them to make sure I can actually track them because I literally used to not care and so now that I'm investing in it, I care. [laughs]

Jeff: Are they marked when you get them, or are you marking them? Do you mark them with numbers, or how are you marking?

Becky: No, just with paint. I'll mark them with paint. It's interesting, I never paid attention to the year mark. I've always just grabbed the closest paint pen and so I think I'm actually going to pay attention this year. It's just a lot of changes for me regarding queens. When you're doing research, you set it up and you know who your queens are, you're raising your queens, you're making sure you know the stock they are often related for experiments. With my beekeeping operation, it's the opposite, where I'm just like, "Let's see what they'll do."

Good queens are so important to an operation, and so far, the queens that I've introduced have just taken off, and the colonies look great for my divide. Looking forward to seeing what these two-- it's Kutik, K-U-T-I-K, Kutik Queens. I'll wait for the update to hear that I'm mispronouncing it.

[laughter]

Jeff: It'll be fun to receive occasional updates on your queens. I did three splits this year just using Carniolians so I just gone tried and true. I t's been a fantastic spring here. I'm really enjoying it.

Becky: I've got some Caucasians coming in the mail, too. I've never used Caucasian bees.

Jeff: Man, I think I know what doorstep I'm going to sit on in the next couple of weeks and say, "Yes, that's me, I can take those."

Becky: Can you imagine stealing a package off my doorstep? Either it's going to be really heavy because it's more beekeeping equipment, or it's going to be alive with bees.

[laughter]

Jeff: We'll have to get Rowdy back in to talk about bee theft from the front stoop.

Becky: Right.

[laughter]

Becky: I don't think it's going to take off. Not here. [laughs]

Jeff: On today's episode, I'm looking forward to this. Earlier this spring, we did the episode on how to expand your operation and the business of bees. We touched on the business of bees and the back end, the back office, beyond number of supers, number of bees, number of yards, blah blah blah, and we only lightly touched on the actual business. Today's guest, Jim Hartman, we talked to at Navi, speaking of Navi, and he is very much into the importance of running your bee operation as a business and taking advantage of all those opportunities.

Becky: I think that his perspective, it's really interesting for this new age of beekeeping that we're in, where people are building their businesses knowing that varroa is a threat, but then also knowing that it's really expensive. In order to watch your bottom line, treating it as a business, even if you're not running hundreds of colonies, is a really good way to approach it, and it's a responsible approach. We can't tell him everything that I do. Okay?

[laughter]

Jeff: Yes, true. Do as we say, not as we do.

Becky: Let's keep some things on the down low. [chuckles]

Jeff: I will tell you, when I originally got started in bees as a hobby and actually trying to make some money at it, I was very particular about keeping track of all my records and understanding the business, and I even took night courses on running a business and that type of thing. It got to the point it was the only "hobby" I had that actually paid for itself and made money. If you run it like that and keep track, you can--

Becky: Nice.

Jeff: Yes, which is a novel thing for me because I'm usually just-- [chuckles] money and hobbies are--

Becky: Right. I've seen the guitars hanging in your office behind you.

Jeff: Shush.

Becky: I know, sorry about that.

[laughter]

Becky: That's where I've been guilty, where I'm like having so much fun, but I've just been expanding without looking at what exactly is this cost? I figure if I'm investing around the same amount my husband's investing in softball bats, then we're good. He has so many softball bats and trips to use them. Anyway, I like the idea of making the hobby pay for itself.

Jeff: The spousal hobby comparison model is fraught with challenges, I think. [laughs]

Becky: It works really well in our relationship because yesterday I got noticed that the queens were coming, and so I was like, "I have to prep for the queens". I said, "Hey, care if I run out and go take care of my bees?" He's like, "Yes, no problem," but then he knows that if he says, "Hey, some guys are getting together and hitting, is that okay?" He knows that I'm going to give him the okay because-

Jeff: [laughs] It works.

Becky: -we both want to get away and do our hobbies.

[laughter]

Jeff: On that note, let's invite Jim into the studio, and we'll be right back after this short message from our sponsors.

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Jeff: Hey, everybody, welcome back. Sitting around this great big virtual Beekeeping Today podcast table stretching all the way from North Carolina to Olympia, Washington, and making a stop in St. Paul, Minnesota, in between is Jim Hartman in North Carolina, and Becky, of course, in St. Paul, and I'm here. Jim, welcome to Beekeeping Today podcast.

Jim Hartman: Thanks, it's a real pleasure to join you all day. I'm looking forward to it.

Jeff: Yes, it's been a while since we last talked. In January at North American Honeybee Expo?

Jim: Yes, and we were in a little bit of a hurry to get out of there before the snowstorm.

Jeff: Some people made it out, others stayed there for three days or so.

[laughter]

Becky: Oh, Jeff, let's not go there again

Jeff: Yes, I know, I had finally forgotten that.

Becky: Those are bad memories for you. [laughs] Jim, it's nice to see you again.

Jeff: Becky was telling me earlier that you were the 2024 North Carolina small farmer. What is that award you received? It sounds pretty cool.

Jim: The 2024 North Carolina Small Farmer of the Year.

Jeff: Wow, and that was for beekeeping?

Jim: Overall, yes for farming, but yes, beekeeping is what-- I'm a honey farmer, so yes.

Jeff: That's the topic of today's discussion, and we touched on it briefly back in our Navi episode, one of our quick interviews there, and we'll have a link for that on the show notes. For our listeners who did not hear that talk with you in January, can you give us a little bit about yourself and how you got started in bees?

Jim: Yes, I did 10 years in the military, 1998 to 2008, with a couple of tours in Iraq. I was bomb disposal. That last tour in Iraq during the surge over there, it just sucked the soul out of me and so we decided it was time to get out, my wife and I. After that, I went into the corporate world as a project and program manager and did very, very well at that. Ended up was a program manager running just nationwide, large quarter-billion-dollar contracts. 2020, late late 2019, my PTSD caught up with me. I found myself struggling with some anxiety and some other things that just were really affecting my ability to do my job and make the decisions at the scale I needed to make them at.

I went and got some help from the VA, and I didn't like the medicine the VA was giving me. It numbed me, which was not helpful for continuing to work. One of my other veteran beekeeper friends up in West Virginia, he said, "Hey, Jim, you need to try some bees." He said, "This is why I started it, and it's good for me." Turns out the VA has actually done studies on this, and I read those studies and I said, "You know what, I've got nothing to lose. Why don't I grab a couple of hives? I'll order a couple and give it a go." Of course, that was 2020, so I had my hives ordered, I had my bees ordered, I was planning to take a class, and then COVID hit.

I had bees and no class, but I had a lot of YouTube and I had a lot of online calls where I didn't need to have my camera turned on, so I just put my headphones on, went out, and tended to some bees during the call.

[laughter]

Jim: What I figured out during that process was that that was really good for me, and I sold a little honey. You know how it is the first year, right? You only sell whatever, couple hundred dollars worth of honey but I saw the model in my head because I'm a program manager and it's what I did and I went, "Wait, there's a model here and there's a model here where this is better for me than being a corporate executive in terms of-- maybe not financially but for sure, from a mental standpoint and a family standpoint and a long-term health benefit standpoint."

I went to my wife and thank God for a God-given wife. I went to her and said, "Hey honey, here's what I want to do, I want to leave the corporate world and become a farmer and not just any kind of farmer, I want to be a honey farmer, this is a great plan."

Jeff: That went over really well, didn't it?

Jim: To her credit, she backed me 100%.

Jeff: Fantastic.

Jim: Over the 14 years I was in corporate world, she saw me build and run business. She knew that I wouldn't have come to her with this without solid plan, with numbers and the ability to actually make it work. Now, we did set some guideposts on it, some left and right guardrails. One of our big things is if we're going to do this, we're going to do it debt-free. Our whole farm operates completely 100% debt-free. If I can't pay for it, it doesn't happen, and that's worked out really well, especially from an anxiety standpoint, because debt is counterproductive to anxiety.

Becky: Right.

Jim: That's what we've done, and it's caused us to be very innovative on a number of things. We're making do with a lot of things we normally wouldn't do. It's caused me to go out and find a lot of programs to help the farm, it has caused me to think through a lot of tax credits, tax regulations, and other things that generate profit if done properly. We've grown it from just two hives now and a little stand on this side of the road, but we're now distributed to 28 states to 184 stores, and that's just since 2020, so it's worked.

Jeff: How many colonies are you running?

Jim: I personally only run 75. I decided early on, one of the things I did as a prime contractor was you use subcontractors. You can either expand your own operation or you can just bring in partners. What I did is I said, "You know what, I can buy more hives, I can hire people, I can put more honey out there, or I could just go to the five or six keepers that are around me that have 200 or 300 hives who are struggling to sell their product. I can either try and put them out of business, which didn't appeal to me at all, or I can just partner with them and bring them in." That's what we did. I brought them in, and now they supplement my honey supply as well.

It's a win all the way around. My business got to grow without me having to deal with more employees, and they have a guaranteed outlet at a very premium price, by the way. I pay them a lot better than they could sell wholesale anywhere else for their product. It's really just been really good. Their hives are literally like two miles from mine, so I'm not worried about where does the honey come from. I include their honey in part of my food safety plan. I go out and inspect their stuff with them. It's truly a partnership that has allowed us all to grow.

Jeff: Were you able to tap into any of the VA programs to help you launch your business?

Jim: I sure tried to tap into the VA programs. Was pretty much unsuccessful because I was trying to figure it out as I went, and I didn't have anybody to show me. That was a little bit frustrating, plus it was COVID when I got started. COVID, post-COVID, so that was a challenge. I'll tell you a couple of things that really helped me early on. The biggest one, the absolute biggest one, and I would love to see if there are veteran beekeepers out there running their own business, listen to this, the biggest thing I've done is use the Veteran Small Business Enhancement Act.

That is a federal law that was passed in 2018 that allows certified veteran-owned small businesses to get government surplus before it goes to auction. I can take direct possession of government surplus equipment for a small administrative fee. When you start thinking about shipping containers, large and small, that I can get for $100, I need a processing room. You know what, a 20-foot shipping container will make that happen for you.

Storing all of your supers, all of your equipment, all this stuff that you need a barn or a place for-- get some large and small shipping containers. When we started buying bulk bottles, corks, all that, how do you get them off the truck? We need a forklift. If you can pick one of those up for a $300 or $400 service charge from the government, you're in business. My F350 farm truck came from that, from Colorado Power and Gas, they were getting rid of it. If you get that equipment like that at darn near next to nothing. I like to think of my equipment as how many farmers' markets do I have to go to to generate cash to buy something I want?

If you can do that and just keep growing debt-free, you can quickly rapidly expand the operation. That's been huge, and I'd love to see more veterans using it. It is the most underutilized veteran benefit in the entire United States. 36 veterans in the entire state of North Carolina have signed up for. That's how crazy it is. Less than 1,000 in the country are signed up to use this program. It's a big deal. We are a place that hires veterans and trains veterans as well. I'm trying to give others an opportunity that I didn't get.

What I figured out was there are actually quite a lot of benefits out there, both for an employer and for the veteran, to start something like this and learn. There's nothing that says, "Hey, here's some money, go buy some bees." There is a program called the-- if you want to learn, and you got your time, and you're a guy that just got out of the army, or by the way, if you're somebody who just got laid off from your normal job, from any job, by the way, just lay off, you might qualify for a thing called the Workforce Innovation Opportunity Act, called WIOA. That's how it's pronounced. Again, federal Law for Workforce Development.

One of the things it'll do is, if you qualify, it will pay your salary for 12 weeks to go work for someone and learn. I get veterans who come out here all the time. I get them qualified for the program, they want to learn. I get them out here and I'm like, "Great." They get qualified for the program. They come out here and work for 12 weeks with this program paying them, I help train them. Again, everybody gets to be a winner. They walk away with skills, they learn how I do things. They've learned about all these programs. Even if they don't end up doing beekeeping, maybe they become row crop farmers, or ranchers, or whatever.

They've picked up some really invaluable skills and gotten paid while they were doing it. That's been super good for me. By the way, same program has a whole component for youth. I get high schoolers, FFA students who come out here every summer and work, and they get paid through this program to come work on the farm and learn. Which really super programs that just aren't being well used by agriculture.

I'll tell you, in North Carolina, I'm one of maybe a dozen people that are using it. I'm on the North Carolina Governor's Workforce Development Commission for the next four years. I'm the only agricultural producer on the 10-person commission. I'm trying to get more agricultural producers to use it, but it's just not well-known in the agricultural community.

I'd love to see more folks doing it that way.

Jeff: This is all with bee farming, as you call it. You're not producing soybean or corn or something on the side, this is all based on the honey production. I assume you're doing some wax.

Jim: Yes, a little bit of wax. It's hard to make money on wax. It's more of a value-added products aside. Truthfully, my 17-year-old daughter is making candles. I'd say a way to invest her in the farm as the next generation. That's a good investment for me. I may not make much [inaudible 00:22:57] candles, but it's a great deal.

[laughter]

Becky: Since Jeff opened the door, are there any other income streams? It does sound like primarily you're doing honey, but are you selling bees, doing any pollination? Are you doing anything else with the operation as far as generating an income stream?

Jim: I'm a honey farmer and a bee rancher, depending on who you need to talk to. I think that's important because if you're a honey farmer, you're producing a commodity that is insured by FSA and USDA, and it qualifies you for farming things. If you're a bee rancher, which the Emergency Livestock Assistance Program defines bees as livestock, you also qualify for a lot of those things. I say all that. The other income streams we're doing here, so we've got muscadine grapes and pears growing on the farm. They were already here. I didn't plant them. They're old growth that was here, and they were just rotting.

One day, we said, "You know what, we should do something with that." We started making some jelly. I got a government surplus shower trailer that I converted into a jelly kitchen. Ripped out the showers and threw some cabinets and [unintelligible 00:24:10] kitchen. We make a little bit of revenue off of that every year. We also do agritourism here on the farm, that's turned out to be far more lucrative than I ever thought it was going to be. Mostly through a program called Harvest Hosts. That's been just phenomenal.

That's a program where RVRs pay to get access to an app, and farmers sign up their farm for free, and they get to come park their RV for the night, and they get to walk around the farm on their own and see what's going on. We put out little guided tour QR codes and in return, they buy product while they're here. I had a little chunk of ground I wasn't using, or an old trailer home used to be. I just cleaned it up, and they park their RVs there. The bonus side is there's an old septic tank there, so they can dump and they're happy.

Jeff: That's quite a service, isn't it? Is that free to the RVR?

Jim: The RVR pays for the app. It's free to the farmer, though. We'll turn 15,000, 20,000 out of that this year.

Becky: Jim, did you buy the farm after you decided to make it a business, or were you already there?

Jim: We were already here. I'm in Fayetteville, North Carolina, outside beautiful Fort Bragg. We came here in 2006 for just a two-year tour with the army. Then I got out in 2008, got a job here, and in 2014, we said, "We got to get out of the city limits. I can't deal with this half-acre lot anymore. It's driving me nuts." We said, "We just want some land." My wife and I are from rural Missouri. Two stoplights in the county today. That's an upgrade from the one when I grew up. They put a Walmart in, so they had to have another stoplight.

We needed some space, so we bought this 23 acres back in 2014 and we're just enjoying having no neighbors, but it lend itself to a farm. It was a farm. It's an 1850 farm home, so it's been a farm for a bit, but the infrastructure was somewhat neglected, shall we say. That's just been slowly converted back into what it was. That's how we got here from there.

Jeff: Let's take a quick break and hear from our sponsors. We'll be right back with Jim Hartman.

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Becky: Welcome back, everybody. Jim, I've got to take us back to something you mentioned about when you were visiting your partner's apiaries. You said you have a food safety plan. Could you tell us a little bit about that?

Jim: Yes. If you are going to do business with large institutions, part of the requirement is a food safety plan and some sort of third-party certification. In my case, we're super blessed here in Carolina. We've got an organization called the Carolina Farm Stewards Association, and they help farmers create a food safety plan in preparation for what would normally be GAP certification or Good Agricultural Practices certification through the USDA. That's just table stakes. When you start dealing with large organizations, most of them will want your food safety plan.

All of them will want a third-party certification. Fun fact, honey is not covered under a GAP certification under Good Agricultural Practices. Up until two years ago, USDA had no certification at all for honey. Now, all they have is a good manufacturing processes certification where they inspect your facility. You got to have a food safety plan that's a formalized, USDA-compliant food safety plan regardless otherwise, you're setting yourself up for failure.

That includes everything from tracking the lot numbers to all of that pieces. You want the lowest level acceptable food safety plan and certification that you can get, because if you have to try and go get the FDA facility certification, you're in for a lot of pain.

Becky: When you say large organization, are you talking like a Target or a Walmart or something like that?

Jim: Yes, any grocery store. I've sat down across from buyers with Kroger, Harris Teeter, The Fresh Market, Whole Foods, that sort of thing. It's the first question to ask, and if you can slide your third-party safety certification across the table and your certificate of insurance at the levels that they're going to be asking for, they're just more likely to do business with you, because they know you're a real business.

Jeff: What's your label that you use?

Jim: We are Secret Garden Bees, and we are selling to the higher-end stores. You heard me say Whole Foods, the Fresh Market, that sort of thing. That's where the highest profit is, to be honest. We have to put it in just a really cute, high-end corked Muth bottle, because that's what the clientele looks for. Honestly, that's part of the sales presentation.

Becky: Did you get the name from the book-

Jim: No. I got the name-

Becky: -or somebody to read the book.

Jim: -because my wife didn't want to look at the bees. She was scared of them, and we put them on the very back of the property. I was like, [crosstalk]

Becky: Oh, no.

Jim: My daughter was like, "It's a little secret Garden of bees back here," and we're like, "Yes, Secret Garden Bees, that works."

Becky: It was like, "I totally support you as long as I don't have to see them."

Jim: Exactly. She was scared. She was like, "All these bees," but now five years later, she's like, "Hey, there's a swarm outside the kitchen. You go take care of that."

[laughter]

Becky: That's great. I have another question. You started talking about your relationship with veterans right away, being a veteran. Have you had a relationship with any of the veteran beekeeping organizations, because there are so many of them, which is a great thing out there right now?

Jim: Yes. Hives For Heroes, I'm a mentor for them. Then Farmer Veteran Coalition, who takes care of a lot of beekeepers out there. I was a speaker at their national conference last year. Then, just from a beekeeping perspective, I'm on the North Carolina Farm Bureau Apiary and Honeybee committee to help them set policy, and looks like I might be a speaker at their veterans breakout at the National Convention in 2026.

Becky: I can see you getting a lot of speaking gigs just about how to make your beekeeping journey into a business, or how to treat it like a business. Is that something you talk about?

Jim: Most of the time, what I'm really talking about is how to treat your farm as a business. That's one of the things I tell all the veteran farmers that I'm trying to train. The common flaw, the common fatality, or mistake I see, by the way, small businesses in general. I work with hundreds and hundreds of them as a prime contractor. The flaw is, they get their head down in making a product. They forget that they got to run a small business. You've probably heard this with beekeepers or any farmer, by the way, "If I only had 10 more acres, if I only had another 100 cattle, if I only had another 50 hives, I could make money," but are we really running a profit and loss statement?

Do we understand our cost of goods sold? Are we thinking about tax offsets that can make things more efficient? Do we know our numbers? Do we understand how, perhaps, investing some time in paperwork will make us more money per hour than adding another 10 hives? Thinking through those things is so critical for a farmer, and especially small farmers, it can be a real flaw of chasing the ring without thinking through the numbers. That's really what I end up talking about most of the time, because beekeeping, ranching, soybeans, whatever, it's just the model. It could be so many different things.

In North Carolina, agriculture is the largest economic producer in the state. Over $100 billion last year produced from I forget how many hundreds and hundreds of different types of agricultural products that come out of North Carolina. There's a great opportunity here to show folks how to think this one through.

Jeff: We've run a special series of episodes talking about how to expand your beekeeping and operation from hobbyist to sideliner. Much of what you're talking about now is something we touched on in those series of actually looking at the numbers, looking at what it takes to actually produce a pound of honey, not number of bees. Really, it's what is everything that goes into it to set a fair price to understand your cost. What would you say is the number one-- I shouldn't say the number one, because there are so many. Top three things that someone who's wanting to go down this path, what do you recommend to them?

Jim: I tell everyone the very first thing to do before you do anything, if you're going to run any business, by the way, is you got to set up the backend bookkeeping and back office operations. You have to learn the accounting software. You, the owner of the business, must learn this stuff. You need to do this. You can't just have a CPA that does it all, because you won't understand the fidelity to do it in the startup phase. Nor will you be able and capable of producing a proper invoice to your customers, which is what you're going to need to grow and tracking your expenses to be able to fill out your Schedule F in your tax time.

Jeff, I would say the number two thing is, and this is really important for beekeepers, and I think we talked about this a little bit. I think we're doing a disservice to ourselves by using the labels of hobbyist beekeeper or hobbyist sideliner and commercial. You heard me say I'm a honey farmer. I say that because what is a sideliner beekeeper? Is there a definition for this? Is it a number of hives? Is it the amount of money you make? Is it that you have to work a second job in addition to your beekeeping?

Farm Bureau just released a report that says 79% of farmers in America work a second job to make ends meet. Are they all sideliners? I guarantee you, you could tell a hog farmer who's running 200 hogs that he's a sideliner hog farmer, he'll kill you and feed you to his hogs-

[laughter]

Jim: -because that's a lot of work. That ain't a sideline. We need to be thinking of ourselves, I recommend. I think we can be better served by you're either a hobbyist or you are a farmer, and that has a legal definition under the IRS code, and it basically boils down to, are you filing a Schedule F on your taxes? If you're filing a Schedule F, you're a farmer. End of discussion. It's a matter of scale at that point and revenue, and we need to think about those.

That's important because if we take that center piece there and we say, "Hey, I'm only a sideliner here," that can take your focus away from maximizing your revenue and minimizing your costs and setting the things in place to really grow your enterprise into the scale that you want to get to. If you are running your operation with an intent to make a profit, and running it as a business should be run, meaning you have a record-keeping system that could be checked, and you're running with an intent to make a profit, yes, you should file Schedule F every time. You should have that record-keeping, that book system in place.

I mentioned get that in place in the beginning, the record-keeping system, because I don't know a single business owner that goes into business and says, "Hey, five, six years from now I'm still going to be making nothing." No one. Why would you do that? In the beginning, you're not going to make anything. You're going to take a loss. You're probably going to work that second job to feed that business to grow it. If you set up your books properly in the beginning, one, file with Schedule F, you can count that loss. Maybe it offsets your tax burden against your second job you're working, which allows you to free up money to invest back into your farm.

Two, and so important for a beginning person who's running a business, when you're investing into that business, you just heard me say it, you're the owner. You are investing into that business. That is a loan from owner and should be recorded on your books as a liability, a zero-interest loan sitting out there. Six years from now, seven years when you're making money, instead of paying yourself salary, you can just repay the loan from owner, which avoids self-employment taxes. That's a 30% savings on your revenue. Who doesn't want to save 30%? All of that, super important.

File a Schedule F if you intend to run your business, if you are running your business with the intent to make a profit, and you have your tracking systems in place to be able to provide the information for it. It'll pay off in the long run. By the way, in most states, a Schedule F is key to opening up a lot of state access benefits. In North Carolina, if you file a Schedule F and you made $1,000 in revenue, you can be exempt from sales tax when you buy things.

That's a 10% savings here in North Carolina on every purchase that you go buy stuff for the farm. In North Carolina, if you file a Schedule F, you qualify as a bona fide farm under state law, and you're exempt from zoning and codes for building your new barns and all that stuff. That's huge.

Becky: That'd be fun in St. Paul, Minnesota.

[laughter]

Jim: If you can meet those criteria, you should. The IRS has a definition of a business on the farming thing. Read it. If you meet them, file a Schedule F unless you just want to be a hobbyist, and that's okay, too.

Becky: I have the longest list of websites that we're going to include.

[laughter]

Becky: I just keep adding to them so that the listeners can have actually most of this in one place. I think I might have interrupted you because you said three things, right?

Jim: Becky, I will go back to Schedule F. By the way, University of Iowa Agricultural Tax Law Center has the best Schedule F resource ever. It's an interactive Schedule F. You can click on every single thing, and it will provide you the definition in agricultural terms. Puts the cookies down on a shelf where you can reach them, understanding your Schedule F.

Jeff: Who was that?

Jim: The University of Iowa Agricultural Tax Law Center.

Becky: Did you say there were three things? The bookkeeping, the Schedule F, and then was there another one?

Jim: Yes. Bookkeeping, running the business like a business in terms of, you're either a hobbyist or you're a farmer. Those are the big things. Then, the other thing I tell every single new farmer that I talk to here, and this is not just based on me running a farm here. This is based on me running a lot of business over a lot of years. Start with the end in mind. What is the goal in terms of revenue and profit, or just profit is a good goal, and then backwards plan for how much revenue you have to generate to make that profit. If you don't start with that in mind, you'll chase the gold ring until it all falls apart. It's always more if you don't set a target like that.

If you set a target, you can backwards plan from that and make it achievable and doable. It takes a lot of the stress out of it. Becky, I'll give you four by the way, four. This is one hardly anybody does that I've met in agricultural sides. Do a risk assessment matrix. All large organizations do this for any new job we take on. A risk assessment matrix is super easy to do. You literally write down the things that could go wrong, and then beside it, you say, "What is the effect on my farm if that happens?" Then beside it, you say, "How am I going to mitigate this?" That could be everything from the farmer having a health problem, falls off a ladder and breaks his legs. How does he operate the farm?

Maybe it's insurance, maybe it's an employee. It could be retained earnings to mitigate a risk. If you do the insurance on your crops, how do we do this? If you'll list these things that you think could go wrong, the effect and mitigate them, when these things happen, it's not crisis. You had a plan, you had a way to deal with it. Do the thing you said you were going to do, move on, and you can get through the event so much faster and easier.

Jeff: I think the number one, of course, is the bookkeeping. Running as a business is a mindset. That is a game changer in terms of how we as beekeepers view our purchases. Do I really need this? Is this really going to serve me to meet my goals, my three-year plan, my five-year plan, or is this really taking away from that? If you have that plan and working backwards from it, what you need to achieve to step forward to reach that goal is really helpful.

Then doing everything else that you talked about, the bookkeeping, establishing yourself both legally and with the IRS and even mentally as a farmer, as a bee farmer, as a honey farmer, as you say, and a bee rancher really does get the mindset that it is a business and you're going to make money and prosper at it ultimately. That's good advice. Thanks, Jim.

Becky: I would just add that I think if more beekeepers took that approach to beekeeping, it would maybe help unify the industry a little bit, because I think everybody thinks that we're all so different depending upon how many hives we manage. The truth is that the bottom line, the bee health issues, and the access to nutrition, all of that, it's something that we all have in common, and so unification around that would be really wonderful.

Jim: I would love to see us unify around these things. Think about the soybean farmers out there. The National Soybean Association doesn't speak in like beekeepers do. Whether you're running 20 acres of soybeans or 20,000, it's just soybeans, and it all applies.

Jeff: That'd be interesting research, maybe to go back to see where that classification of beekeepers, hobbyists, sideliner, commercial, where does that originate, should we perpetuate it? That's an interesting concept, especially if you're looking to treat it as a business and move forward. The commercial, the big beekeepers who are running many, many hives and employing people, they're treating their business as a business.

Jim: It's just a matter of scale. I come from western Missouri, where it's corn as far as you can see, 14,000 acres, but now I live in North Carolina, that's been subdivided since 1650 among families. The fields aren't that large. It's just a matter of scale, and beekeeping's the same way.

Jeff: Jim, it's been a pleasure having you on the show today. I would like to get your commitment that you'll come back and talk to us again, and we can explore a little bit further of the business of bees and anything that you may have thought between now and then.

Becky: Say yes, please say yes. [laughs]

Jim: Yes, I'm happy to talk. It's a journey I'm learning, and boy, I've made some mistakes along the way. That is for sure.

Jeff: Oh, maybe we could have an episode about the mistakes we've made.

[laughter]

[music]

Jeff: Jim, thank you so much for joining us, and we look forward to having you back.

Jim: All right, thanks.

Becky: Absolutely.

Jeff: Jim is a wealth of information, and I just love his approach to keeping bees and the bees as a business. That's been my philosophy from the end of the '80s, I think.

Becky: You mentioned you've been a successful beekeeper, as far as that's concerned, for the most part. Okay.

Jeff: [laughs] Success is a state of mind and my mind of state or state of mind is not so well. Yes, it's important. I think he has the tools and insights to actually draw on all of those programs that are so cool that are available.

Becky: Right. No, I think it's just really exciting when somebody who's very successful jumps into beekeeping, and then brings us their worldview and experience, and then shares it with everybody. That's the neat thing is that he's been extremely successful, but he also wants to talk about it because he wants to help beekeepers and the industry. I think that generosity is something we need to really get excited about and appreciate.

Jeff: We'll just leave it at this. We were talking to Jim after we stopped recording, and he restated the importance of forgetting the label of-- the current labels that we have today was hobbyist, sideliner, and commercial. If our listeners. You're sitting out there and saying, "I'm treating my bees as a business, but I only have 10 colonies." Go forth as a businessman, businessperson. Treat it as a business, and don't call yourself a hobbyist. You're a commercial beekeeper. That's Jim's approach.

Becky: I like it.

Jeff: That about wraps it up for this episode. Before we go, I want to encourage our listeners to follow us and rate us five stars on Apple Podcasts or wherever you download and stream the show. Even better, write a review and let other beekeepers looking for a new podcast know what you like. You can get there directly from our website by clicking on the reviews tab along the top of any webpage. We want to thank Betterbee and our regular, longtime sponsors, Global Patties, Strong Microbials, and Northern Bee Books, for their generous support.

Finally, and most importantly, we want to thank you, the Beekeeping Today podcast listener, for joining us on this show. Feel free to leave us questions and comments on our website. We'd love to hear from you. Thanks a lot, everybody.

[music]

[00:48:37] [END OF AUDIO]