A honey hobby becomes a buzzing business

A disabled son's obsession spawns a thriving family business.

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(FORTUNE Small Business) Lawrence, Kan. -- When Tony and Terri Schwager learned that their first child, Anthony, was developmentally delayed and had epilepsy, they worried themselves sick.

"We couldn't help but think, 'What is going to happen to Anthony when we move on?' " says Terri. "He is very sweet, gentle, and quiet. We were afraid that someone might take advantage of him."

By the time Anthony's parents learned of his condition, a result of low oxygen during birth, he was 1. When they discovered it, they looked for resources. They enrolled Anthony in a special-education program and hired caretakers to supplement their efforts.

Tony, then a manager at Home Depot (HD, Fortune 500), went back to school to further his career. The couple eventually had three more children and settled into their routines, grateful for their close-knit family. Tony landed a job as a teacher at a local high school; Terri earned a nursing degree and also started working.

"A kid with a disability ... when it happens, you realize it is not the end of the world," says Tony. Still, they worried about the future. How would they take care of Anthony after they retired?

But then, to their surprise, Anthony himself found the answer.

Excited by a video he saw in third grade, Anthony begged his parents to add bees to the small farm they kept on the side for fun. After a year they relented and eventually set up clear plastic tubes to house the hives in his bedroom. He was obsessed, not only with bees but with the honey. He harvested so much of the stuff that three years later he and his parents decided to try selling it at the farmers' market downtown.

They started small, displaying seven plastic squeeze bottles on a foot-square table. "Everything fit into my two-door Honda Civic," says Aaron KimLuellen, a caretaker. Nine years later they're still in business, and transporting their inventory - which includes beeswax lip balm, lotion, candles, and other honey products - now requires Tony's pickup truck and a tow trailer.

A big reason for their success is Anthony, now 21. He does math like a fourth-grader and reads at a high school level, but when he's manning the stall, marked with a cheerful ANTHONY'S BEEHIVE sign, customers respond. With a laid-back demeanor, he approaches passersby as if he were sharing news with friends.

"This honey is local, and there's no preservatives," he'll explain in his soft-spoken way, letting them sample all the merchandise.

He also offers free candlemaking lessons for children, who watch enthralled, eager to wrap their fingers around the warm beeswax and roll it into a cylinder, just as Anthony, squatting down to their height, is showing them. With Anthony, there's no hard sell; once drawn in, his customers become fans.

"Your raspberry lip balm is the best!" a woman at the market says to him one afternoon late last summer. Soon another customer walks away with four large bottles of honey-lime-coconut lotion.

"It's fun to see how the business has evolved," says Carol Hampton, who has been shopping at Anthony's Beehive since the early days. She uses the brand not because she has taught three of the Schwager children in school, but because she likes the diversity of the offerings. "They're always trying to make it fresh and interesting."

Anthony's Beehive's growth spurt started early. After just a couple of years of selling honey, the Schwagers began to see the business as an opportunity for Anthony to support himself with a little help from the family. But how could he grow the business and gain a presence beyond the farmers' market?

The answer emerged when the Schwagers discovered an entrepreneurship course - sponsored by the National Foundation for Teaching Entrepreneurship (NFTE) and the Youth Entrepreneurs of Kansas - at a local high school. Anthony's father signed him up, convinced the course would provide Anthony with the sales and marketing skills necessary to maintain the business when his parents can no longer work.

With his father's help and his own love for product development, Anthony held his own against his classmates. His business plan - which demonstrated how adding a honey-and-beeswax lip balm to the line would expand profits - won top prize for best display. (Unlike his competitors, he set up a working stall that offered the lip balms for sale.) He also made the list of NFTE's best entrepreneurs of 2005.

Today the $1.50 lip balms come in 20 flavors (thanks to Anthony's enthusiastic experimentation) and are among the company's most profitable items. They also earned Anthony's Beehive valuable shelf space at retailers, including the Walgreens (WAG, Fortune 500) in town, which showcases local products. Mike Matt, the district manager, who says he likes the flavors and the "uniqueness" of the brand, put the product near the front of the store.

The beauty line impressed other retailers as well. "I like the quality," says Diana Endicott, founder of the Good Natured Family Farms Alliance and a partner with the Hen House Markets in the Kansas City area. "They are always finding a new product and figuring out how to make it better. They are truly entrepreneurs."

The ideas for flavors, says Anthony, "just come to me." He's constantly trying ingredients in the honey straws and lip balms. Some don't work - cotton candy, chocolate, and fruit punch stayed on the shelf - but many do, including blueberry muffin and lemonade. He introduces about half a dozen new flavors a season, and they keep customers interested.

It's this array of choices at low prices, says Tony, that will help the family business compete with Burt's Bees, the most recognizable bee-inspired brand in the country.

These days Anthony's Beehive products fill a table eight feet long, as well as a tent, and have garnered an online following at anthonysbeehive.com. When a $3,500 honey-straw-filling machine proved too difficult to manipulate, Tony invented a simpler model - the Goldrush 500 - and sold 25 of the $600 machines online last year. The contraption caught the eye of a former government official in Malawi, who bought it to stimulate business in his locale. (The Schwagers have since developed a more efficient foot-operated version, which sells for $900.) Total sales of all of Anthony's Beehive products, from the market, online, and retail, have doubled, reaching $65,000 in 2007. It has been profitable since 2002.

Last year Tony quit his teaching job to focus on the company full-time. Anthony's sister, Mariah, 15, and brothers Brandon, 19, and Adam, 17, make $15 an hour helping out. Anthony earns 10% of the farmers' market profits and is eager to see the company grow.

"I want to be in more stores," he says.

In May he will graduate from C-Tran, a transition program that teaches disabled adults skills (such as cooking and cleaning) necessary to live independently. When that happens, the Schwagers hope to involve him in sales calls and give him more responsibility. They also hope that a sibling will eventually run the company, and that the business will be successful enough to secure their children's futures, especially Anthony's.

"It is a hobby that has gone out of control," explains Tony. And he thanks his lucky stars for that. To top of page

How can Anthony's Beehive compete with larger brands like Burt's Bees? Discuss it in our forum.

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