Our Business Plan

I am posting this for interested investors.

A Honey & Lavender Farm in Sierra Highlands Ranch

St. Johns, Arizona

Jonathan & Rachel Nelson

October 21, 2018

Table of Contents

Executive Summary                                2

Management Plan                                   3

Land Management                                  3

SWOT Analysis                                      4

Risk Assessment                                     4

Production and Products                         5

Capital Investments                                5

Description of Markets                           6

Marketing Plan                                       6

My Target Customer                              7

Second Year Plan                                   8

Long Term Goals                                   8

       Calendar of Important Activities            8 & 9

Budget                                                   10

Executive Summary

The following business plan will serve as an operating guide for 2 Bees Farm.  It contains a description of the farm, its operating goals, management and marketing strategies and a risk management assessment.  It also contains financial data for the 2018 growing year.

2 Bees Farm is a partnership owned and operated by Jonathan & Rachel Nelson.  They will supply local farmer's markets, grocery markets and online communities with raw honey, lavender, and some fruits & vegetables from their private garden.  The marketing strategy will also incorporate lavender products such as baked goods, teas, spice mixes and bath & beauty products.  This farm will be successful due to the demand for local honey, home grown fruits and vegetables, as well as national demand for value added lavender products.

The goals for 2 Bees Farm's first year are to:

• Buy 38+acres of land;
• Build well for irrigation;
• Clean up fallen trees and sage brush;
• Build a greenhouse to start lavender plants and other vegetable, fruits, and herbs;
• Establish 2-acre plot for lavender;
• Establish .3-acre plot for self-sustaining farm;
• Add 2 bee hives to fields;
• Add wind and solar power;
• Build a storage building for drying and storing herbal products;
• Buy a shipping container for storing tools.
• Establish an online store to sell homemade products;
• Sell surplus herbs & vegetables at local farmer's markets and fairs, as well as homemade products locally and online.
• Gross over $16,740 with profits being reinvested back into the farm.

These goals will be implemented over the course of the first year, using gained information and knowledge to work towards long-term goals of increased production and a sustainable farm both environmentally and financially.  Jonathan and Rachel through research and classes have determined that they will grow Lavandula Angustifolia and Buckfast bees as the main focus for the farm  The rest of the fruits and vegetables will be determined which varieties are best adapted to our climate and produce reliably will take several years of trail and thorough record keeping.  Rachel has over six years experience working on her family's 200+acre commercial potato farm in central Idaho and has spent the last year working in a spice processing plant to gain an insight on creating spice blends and proper packaging methods.

2 Bees Farm will gross $16,740 in its first year, the majority from selling mini doughnuts, surplus plants and vegetables, and handmade goods.  The major capital investment required in the first year is the cost of the land($33,900), Well and Irrigation($18,500), Used Truck($10,000), Wood Chipper($1,000) the Buckfast bees($1850), bee hives($650), beekeeping suits and tools($1000), wind/solar power($1100), two storage shed/container($15,000), 7' deer fencing and growing supplies($1,000), oil distiller($300), small greenhouse($200).  Miscellaneous expenses($600).  Jonathan and Rachel have already put 10% down on a 38+acre plot of land in September, 2018 and are paying about 1% per month with a 15 year mortgage.  They have already bought enough lavender seeds for 5 acres, since it has a 50-60% germination rate.  Bought Asparagus(Mary Washington), Beets(Bull's Blood & Detroit Red), Broccoli(Waltham 29), Brussels sprouts(long Island), Bush Beans(Blue Lake & Contender), Butternut Squash(Winter Squash), Cabbage(Golden Acre, Chinese, Red Rock Mammoth), Calendula, Cantaloupe(Hales Best Jumbo), Carrots(Danvers & Scarlet Nantes), Cauliflower(Snowball), Celery(Utah), Chamomile(German), Corn(Golden Bantam & Yellow Dent), Cucumber(Marketmore, Pickling Boston, Straight Eight), Echinacea Purpurea, Eggplant(Black Beauty) Garlic Chives, Kale(Blue Curled Scotch & Dwarf Siberian), Lettuce(Black Seed Simpson, Iceburg, Ruby Red), Lima Beans(Henderson), Okra(Spineless Clemson), Onion(Red Burgandy & Yellow Utah Sweet), Parsnip(Harris Model), Peas(Green Arrow), Peppermint, Pinto Beans(Shell), Pumpkin(Small Sugar), Radish(Cherry Belle & French Breakfast), Rosemary and Sage(Common), Scallions(Green Bunching), Snap Peas(Sugar Snap), Spaghetti Squash(Winter Squash), Spinach(Bloomsdale & Giant Noble), Squash(Table Queen Acorn), Swiss Chard(Fordhook), Tomatos(Beefsteak, Romas, Rutgers), Turnip(Seven tops & White Globe Purple), Watermelon(Crimson Sweet & Sugar Baby), Zucchini(Black Beauty) seeds.  A pound of dried culinary lavender for spice blends and teas to use till they get their first harvest.  They have already put in an access road and paid fees for a physical address and a registered the business trade name.They have set aside another $4000 for startup costs.  Jonathan is also planning on working at his self-employed business that he has owned and operated successfully since July of 2000($80,000).

Management Plan

Rachel grew up working on her grandparent's 200+acre potato farm in Winchester, Idaho.  She feels that experience has taught her basic skills necessary to operate a small-scale farm.  After her grandparents retired and sold their farm, she worked two years in landscaping and fell in love with growing flowers.  For the next eight years she owned and operated a successful Jewelry and homemade product business in Pasco, Washington along with an online store.

Both Jonathan and Rachel have taken several classes from the Bexar County Bee Keeper's Association.  They have also spoken to other beekeepers, several of whom have implemented successful value-added plans.  These keepers are a great resource, and they plan on consulting with them regularly.  They plan to continue taking classes from local bee keeper's association and traveling to conferences to further their knowledge and increase their network of support. 

There are several Lavender farms in the St. Johns area, such as Red Rock Farm which holds the state lavender festival.  Rachel has spoken to them and other local lavender farms about growing lavender in the general area, and has received a lot of helpful advice.  They plan on continuing researching and exploring the area, as well as state for further interest in lavender and vending opportunities.   

Rachel will be doing the majority of the labor herself.  She will be responsible for all of the marketing, vending and processing.  She will also be responsible for all of the field work.  Jonathan will be responsible for the financial matters and aiding in planting and harvesting.  Rachel will require help at various times during the planting and harvesting process.  She will receive volunteer help from several family members for these activities.

During the 2019 operating year Rachel will receive very little income from Two Bees Farm.  Though she plans to sell baked goods and surplus produce at festivals and farmer's markets to help with expenses on the farm.  Jonathan will maintain his full-time position at Will's Paintless Dent Repair in order to support themselves and the farm.  A portion of their savings will cover some of the start up expenses.  They are exploring other funding options.  Aside from the land which they have already budgeted for.  The largest expense will be the installing a well/irrigation, bees/beekeeping supplies, installing power, and the storage sheds.  Rachel plans on propagating lavender and other plants through cuttings and saving heirloom seeds to eliminate the need for future seed purchases.  With thoughtful management, Two Bees Farm will grow to a full 7 acres within 5 years and be ready to consider further expansion on the 38+acre plot.  Rachel's long term plan is to eventually add dairy goats, expand their retail product lines and manage a large farmer's market targeted farm in the northeast Arizona with Honey and Lavender at it's center.

Land Management Plan

Rachel will focus on building and maintaining healthy soils.  In the first year, two acres of lavender will be planted, along with starting the first 2 bee hives.  .3-acreas will be started with fruits and vegetables for the first phase of the self sustaining/farmer's market garden.  The remaining land set aside for honey and lavender production will stay in native grasses/wildflowers to prevent erosion of the soil, but will be mowed regularly, which will help with weed/pest control.

SWOT Analysis

Strengths:

• Everyone loves honey and lavender!
• Everyone love spices!
• Lavender is in high demand year round for both culinary, crafts and for it's essential oils used in perfumes and beauty products.
• Local honey is in demand year round and at several markets.
• Both honey and lavender have very high profit margins, with some products having as high as a 500-800% mark up.
• Lavender is naturally deer-resistant, usually avoided by most animals due to it's strong smell.
• Lavender is easy to dry and process.
• Our garden herbs are easy to dry and process.
• We already own a trained hunting dog to deter pests from vegetable garden.
• Large harvests of garden herbs our first year.

Weakness:

• It is possible to get lavender blooms the first year, but the first real harvest will be in late spring of the second year.
• Honey can be a labor intensive process in the fall.
• Honey is attractive to all wildlife, though keeping the hives in the lavender field helps mask their attractive smell.
• Until the lavender is established the bees will need to be fed from local wildflowers and sugar water.
• Because of the nature of both lavender and honey the farm will not see income from those two crops until the fall of 2019 for the honey and late spring of 2020 for the lavender.

Opportunities:

• There is a definite need for more local honey and lavender.
• There are several online sources looking for both dried lavender buds, lavender seeds and lavender products.
• There is a local and online need for products made from both honey and lavender.
• There is a need for more spices and teas.

Threats:

• Other farmers that grow lavender and honey.
• Other farms growing vegetables and herbs.
• Pests destroying either lavender or bees.
• Wildlife eating our fruits and vegetables.

Risk Management Assessment

The biggest risk for 2 Bees Farm will be pest.  Between bugs and molds affecting lavender production.  Parasites, insects, and diseases affecting bees.  Two Bees Farm plans on using bee safe predatory bugs and pesticides for the lavender.  We will be setting up a 7' deer fence around the vegetable, herb, and fruit garden.  We will be planting medicinal plants for bees as well as keeping different supplements on hand to keep our bees disease and pest free.

Production and Products

In year 1, 2 Bees Farm will have 2 acres in lavender cultivation and will utilize the greenhouse to grow and sell small lavender plants at local farmer's markets, nurseries or to florists for $10 each.  The .3 acre of spices, fruits and vegetables will also be sold at the farmer's market.  Spices, teas & cocoas being sold on average $16 lb., fruits and vegetables averaging $2.50 per lb.  2 Bees Farm will also baked goods averaging $3 each, teas averaging $16 lb., soaps $4 each, extracts & oils averaging $7 oz., flavored salts and sugars averaging $20 per lb., jewelry(stock from Nelson Gemstones & Jewelry) and other small gift items.  Wildflower honey averages $7 per pound with each hive averaging  60 lbs. for the first year, as much as 100 lbs. for an established hive.  Once we establish the lavender and have lavender honey that will average $14 lb.  In year 2 the lavender will average $18,000 per acre retail or $13,600 per acre wholesale.  In year two we also plan on cultivating 2 more acres of lavender, adding two more hives and cultivating another .3 acres for spices, fruits and vegetables.

We estimate that we will need $40 for butcher's paper, $20 for plastic produce bags, $100 in paper grocery shopping bags, $20 in ribbon, $20 in labels, $10 in twine, $5 resealable bags.  $100 in honey/extract bottles.  $100 in wooden crates to display fruits and vegetables.  $25 for a logo table runner. $10 on Business Cards.  Rachel developed the logo for the business which is located on the cover page free of charge.  The business already owns a 10' x 10' merchant tent, two 3' x 6' tables with table covers, money box and a laptop computer.

Products will be packaged in a French provincial old world look.   The logo design having a vintage French country feel to it.  Each of these items above should last through the 2019 year, able to be restocked with the profits from the business.

Capital Investments

The following capital investments will be made through a combination of cash invests from the owner, loans and cash flow in season.  Each of these items should last several years with minimal expenses for upkeep.  Please see budget for the year 2 upkeep projections.

Land                                                  $4407    (Y1)      $4068  (Y2)

Well & Irrigation                             $18,500 (Y1)      $500    (Y2)

Wood Chipper                                  $1,000   (Y1)

Beehives & Equipment                    $1,325   (Y1)      $325    (Y2)

Solar/Wind Power                            $1,100   (Y1)

Storage Shed/Container                   $15,000 (Y1)

Deer Fencing & Garden Supplies   $1,000   (Y1)      $500    (Y2)

Oil Distiller                                                                   $300    (Y2)

Greenhouse                                        $200      (Y1)     $200    (Y2)

Total Anticipated Investment          $42,532 (Y1)      $5,893 (Y2)

Marketing Plan

The purpose of 2 Bees Farm is to provide locally grown lavender and honey to local consumers and to increase productivity each year in order to provide lavender and products made from lavender, as well as honey to local restaurants, festivals and farmer's markets at quantities that make the farm financially sustainable.  Rachel, the principle operator, hopes to develop a farm that is beneficial to the consumers, the environment and the local economy and is financially successful.   The farm's year 1 target is to gross $16,740; $840 will come from the sale of wildflower honey.  $11,240 in sales of juices/teas/cocoa, spices, and homemade marshmallows sold from roadside stand and farmer's market. $5,000 in sales of herbs, fruits and vegetables from farmer's markets.  $500 handmade goods sold online and at farmer's markets.  The farm will attend farmer's markets on Friday and Saturday.  Though we are looking at doing roadside stands on Monday-Wednesday.   The baked goods stand can operate 5 days a week all year round which would provide an income when the lavender/honey/produce is not in production.

The Benefits

2 Bees Farm will provide lavender, honey, teas/spices  to customers in Apache County.

The benefits will be:

• More local honey for consumers.
• Increased product diversity in the area to include a value-added business that sells honey and lavender based products.
• Less honey shipped from outside sources.
• Area restaurants and grocers promoting "eat local" ideals will have a source for larger amounts of fresh honey and culinary lavender.

My Target Customer

• Local shoppers at area grocery stores.
• Local restaurants.
• Local shoppers at area farmer's markets.
• Local gift shops.
• Etsy, Ebay & Amazon Shoppers.

My Positioning

2 Bees Farm will be one of a few farms in the area growing lavender, produce and raising bees.  What will separate this farm is that it will be bringing the lavender to the consumer, rather than being a "you pick" farm.  We will also separate ourselves from other honey producers by producing lavender honey.  Rachel will also create teas, spice blends and bath & beauty products.  Though there are other food venders at the markets we will attend, there is no one currently focused on lavender based products.

Pricing

2 Bees Farm plans on setting their price off of national averages to start with some flexibility allowed.  Lavender and honey have steadily increase in price over the past several years.  With global shortages, it is expected to continue to rise in years to come.  Rachel has based the revenue figures on an average of $5 per dried 2 1/2" bundle of lavender.  Which averages $18,000 per acre retail or $13,600 per acre wholesale.  We plan on selling honey for $4 for a 5 oz. jar(1/2 lb.) or $7 for a 10oz jar(1 lb.).  Wildflower honey averages $7 per pound with each hive averaging  60 lbs. for the first year, as much as 100 lbs. for an established hive.  Spices being sold on average $16 lb., fruits and vegetables averaging $2.50 per lb..  2 Bees Farm will also sell spice blends at $20 a lb, teas averaging $16 lb., soaps $4 each, extracts & oils averaging $7 oz.

Examples:

For Lavender Marshmallows

Bag : $.023

Marshmallows: $.58

Sales Tax: $.24

=BASELINE $.82 - PRICED AT $3.00

For Lavender Lemonade

Cup & Lid: $.11

Lemonade: $.29

Sales Tax:  $.16

=BASELINE $.52 - PRICED AT $2.00

For Hot Cocoa

Cup, Lid & Sleeve: $.23

Cocoa: $.08

Sales Tax: $.16

BASELINE $.47 - PRICED AT $2.00

For Lavender Salt

Jar & Lid: $.12

Salt: $.01

Lavender: $.08

Sales Tax: $.16

=BASELINE $.37 - PRICED AT $2.00

For Lavender Sugar

Jar & Lid: $.12

Sugar: $.04

Lavender: $.08

Sales Tax: $.16

=BASELINE: $.40 - PRICED AT $2.00

Second Year Plans

2 Bees Farm will be very active in its second year of operation.  In addition to the roadside

 stand, farmer's market presence and the online store.  We will get our first harvest of lavender.  Add another two acres of lavender.  The two hives should be well established and we plan on adding two more hives.  We also plan on expanding the sustainability garden another .3 acres.

Long Term Goals

Rachel Nelson, 2 Bees Farm's principle operator, has developed a long-term business strategy to avoid under-capitalization in the short term and allow Jonathan Nelson to spend less time away from the farm and in 3 to 4 years help her farm full-time.  The farm plans to continue expanding and will possibly hire part-time helpers for harvests.  If we run out of room for expansion, we plan on looking into other vacant land in the area that is for sale.

Calendar of Important Activities

Included is this general timeline to assist the farm manager during the implantation of this business plan and help assess progress in the first year.

February & March

Dig well

Have shipping container delivered

Start installing Wind/Solar power

Break ground on processing house

Build the greenhouse

Start the lavender seeds

Purchase irrigation supplies

Talk to farmers' market managers and finalize merchant schedule

Purchase Liability Insurance

Obtain food handler's cards.

April & May

Complete soil testing & enact amendment strategy as necessary

Complete first, second, third planting

Begin Harvest of early varieties

Continue planting schedule

Attend farmers' markets

June, July & August

Begin Harvest of early varieties

Continue planting schedule

Attend farmers' markets

September & October

Begin Harvest of early varieties

Continue planting schedule

Attend farmers' markets

Complete final planting

November, December & January

Conduct Research into expanding farm

Sell off wholesale stock

Talk to accountant

File taxes

Create balance sheet

Take vacation

2 Bees Farm - Two Year Budget
Cash at Beginning of Year	$4,000.00	$10,681.00
	Year 1	Year 2
Revenue
Lavender	$0	$27,200.00
Teas, Cocoa, Marshmallows & Spice Blends	$10,000.00	$11,000.00
Fruits, Vegetable & Herbs	$5,000.00	$5,500.00
Crafts	$500.00	$550.00
Honey	$840.00	$1,680.00
Loan	$48,832.00	$0
Total	$65,572.00	$45,930.00
Expenses
Land Costs	$4,407.00	$4,068.00
Well & Irrigation	$18,500.00	$500.00
Wood Chipper	$1,000.00	$0
Beehives & Equipment	$1,325.00	$325.00
Solar/Wind Power	$1,100.00	$0
Storage Shed/Container	$15,000.00	$0
Deer Fencing & Garden Supplies	$1,000.00	$500.00
Oil Distiller	$0.00	$300.00
Greenhouse	$200.00	$200.00
Loan payment	$2,058.80	$2,058.80
Total non-farmer expenses	$44,590.80	$7,951.80
Net farmer wages	$0	$8,500.00
Total expenses	$54,890.80	$14,393.00
Net cash end of year	$10,981.00	$42,218.20