As the saying goes, " The best way to make a small fortune in the horse business is to start with a large one." But it doesn't have to be that way.
If you look at the wonderful Shark Tank TV show, you will see folks from all walks of life heading in for the opportunity to secure investment in their products or services, hoping to become the next Mark Cuban. Well O.K. not him exactly, but maybe enjoy a wealthy secure lifestyle.
When you have a horse business it is most likely you are investing heavily in yourself. So it is important to have strategic partners with more knowledge than you, often hard earned knowledge that they are prepared to share. It is important to make your business 'scalable' by starting with a great business model and finding your own niche. The special component in all this is you. Your training and management.
Most horse lovers realize that it is highly unlikely they will ever become wealthy in the dollars and cents way by which most of society rates success. As passionate horse people many of us get involved with horses for the love of them. We cannot imagine our lives without the horse being part of it. We miss them when we travel. We find ourselves seeking out any horse to pet, if our neighborhood is devoid of the company of our own equines for too long.
But while we may never become rich and wealthy working in the horse business and while we may find it very rewarding, there are always times when horse business owners fail. They suffer untold worries and sacrifice family time to keep their businesses going at all. Harassed at times by boarders (about everything from rates, care, bedding, barn hours), badmouthed by competitors they have never met, their hard won clients back solicited by so called 'friends.' But almost without question, one of the biggest impediments to their success, is the lack of proper understanding of how to cost their expenses and properly charge for their services.
Yep - you'll get on that unknown three year old and ride the bucks and risk your life. But you won't look at the numbers, stand your ground with respect with a screaming boarder. You are after all, more likely to stand your ground with a 1500 pound animal than a client of the human variety.
Your horse business, however small and starting out it might be, is
your business. Your bread and butter. You need to take insurance to protect your down times or downside/liabilities and to protect your assets. You have to pay lease/rent or taxes and depreciation on your property. You need to cost out your product use - hay, grain, bedding. Of course labor costs also. You need to cost out repairs/improvements. And then, as Robert Irvine succinctly points out in his show Restaurant Impossible, you have to x it by 3. That is what you charge as a gross profit margin in most industries. So why is the horse industry different?
I actually had a non-professional trainer ( who had never run a horse business but trained people on the side for cash in her down time for extra income) suggest that a 5% margin was a good margin. What?? Who for? The client perhaps. And yes, she boarded her horse somewhere or other all the time.
But as a business owner you have to follow the rules of business to succeed. You cannot worry about the homeowner down the road that will undercut you and let a horse run about on rough board in electric fencing. Sure, there is a market for that and good luck to them. But as someone who sincerely wants to make a proper living from a horse operation, you must look at your real day to day costs. Sure the barn down the road may charge less because you think their hay costs are less and they bale their own. But baling hay costs lots of money and time. That is time you spend training someone and earning money. That is a major capital cost in equipment they have to cover ( plus repairs) that you don't have to cover. At the end of the day - their barn may fill quicker than yours. But when it is full the overflow will come to you. If someone else if offering horse related services too cheap, believe me they are cutting corners and they won't last. They will burn through a bunch of ultimately unhappy clientele and then move to resource some more. Hang in there and resource the good clients. The ones that value your worth. The ones that don't bitch, complain, steal from you. Because they appreciate you and all your training and advice.
For costs especially fixed costs such as insurance, vehicle maintenance, electric, water, manure disposal, etc. keep them as low as you can by shopping three quotes on everything. For the rest use a good dose of common sense. Have a fee schedule from your vet and farrier. Charge a client when you have to stand for an hour or more holding their horse for supervision while others work on it. Laundry costs money. Hold fundraisers so you can offer laundry services by buying commercial machines. Barter services. The list of innovative ways to grow your services and business as a result, goes on.
Invisible costs are not so invisible. The boarder that helps themselves to extra hay or bedding or grain is truly stealing from you. The lights left on for hours in the indoor are real expenses. The broken gate/stall/boards, the crib damage, the dropped saddles. All these costs must be recovered. These are not OK running costs that you must absorb.
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| Don't forget your time to maintain horse pastures and fence are real costs too. | | Photo Courtesy WIllowview Hill Farm |
When staff mess up as Robert Irvine would say, " You are not their friend, you are their boss." Treat staff with respect and be sure to earn it back by being respectful, assertive when needs be and fair.
I am not going to give you a whole business plan here - that is a whole article on it's own. But I would say don't feel bad about putting your rates up to a to a realistic level - not just cover your expenses but to actually yes - make a profit and pay yourself a proper salary. Believe me you will have clients and when the 'folks down the road' figure out you are charging different rates they wll be the first ones to bring theirs up also. There is another saying, " A high tide floats all ships." This is something that everyone needs to understand. There is enough for all. There is a market or niche for all. And if you consistently undercharge you will help create a market in which your business is grounded and runs ashore.
Where you will not just 'win' the clients but 'keep the clients' will be in how well you train/board and do your job. The clientele that wants a cheap rate will get a cheap job. Often if they really looked at their costs, the vet bills would probably be much higher because the care or training is not as good as it should be on a day to day basis.
Your experience is unique. Your training unique. Your care and facility unique. Your expenses unique. Do the math. Seriously folks. This is one time when all thoughts you had as you looked out at the fresh green lawns from the math classroom window and yearned to be riding instead of doing math believing that math really wasn't so useful to a horse person were unfounded. Build a good foundation. Build it. And yes, THEY WILL COME.
Just as when you ride your horses. Be honest with your horse. Be honest with yourself. The hardest person to properly rate is yourself. So if you need it - get some outside input. Collaborate with other professionals. Just as one parent shares with another, good horse people help other good horse people.
