The Horse Business: Dream Come True’

Many horsemen dream of their own horse-related business. But a dream of white four-board fencing and oil-soaked bridles hanging beside blue ribbons in the tack room — with a waiting-list of potential clients — may need a reality check. In addition to literally working your way up from the bottom of the financial ladder, you’re also going to have to endure some pencil pushing to make your dream business profitable.

Getting Started
First, figure out why you want to go into business. Is it for financial independence’ Is it simply to be your own boss’ Decide what kind of business you want to operate. A show stable is a far cry from a lesson or a hack stable. And owning your own breeding farm takes quite an initial investment.

Evaluate your assets and goals — realistically. How can one fulfill the other’ Write it down. Honestly look at what you have to offer. Do you truly have the talent/background to teach or to manage a breeding farm’ What are your credentials — really’ Is there a market for your business’

If you have limited experience, consider working for someone else first. See how they manage their barn, hack stable, show stable, riding camp, breeding farm or sale barn. Take from the experience the methods you like and improve upon those you don’t — but be sure you understand why that business owner does some things you don’t “approve” of. You may find they have no choice or it’s truly the best way.

This first step is essential, as it can sometimes force you to face glaring stop signs. But if you feel you want to pursue your business, proceed.

The Business Plan
Although running a horse business may seem quite different from most businesses, they all start with a solid business plan. Before you create your business cards, purchase the telephone or lease a facility, you’ve got to develop a document that organizes your thoughts and goals.

You’re going to need to devote more time to it than you may have previously thought. It isn’t as simple as “Start business. Get clients. Make money.” It’s a 10- to 20-page realistic business plan detailing start-up to fruition and is essential if you plan to borrow money from a bank, friends or even (wise) relatives.

Creating the plan may expose things you forgot or didn’t know were important. It’s wise to answer these questions on paper without money invested, which is why a bank insists these questions be answered before handing over money.

Even if you don’t need a loan to get your business off the ground, you should be as careful with your money as the bank is with its. Take your time and be honest. Investigate the things that need to be researched, like marketability.

While every business plan is unique, there are seven basic elements — a skeleton plan to work from — that must be included in everyone’s strategy. As you create your business document, these questions will help build the plan.

1. Executive Summary: Explain your basic business idea and mission statement (2-3 pages).

2. Description of the business: Cover concept and purpose, growth potential, and favorable economic trends (1-2 pages). Include statistical information where you can.

3. Objectives: Where do you see the business in five years’ (1-2 pages).

4. Management and Organization: Will you have employees’ What will their job descriptions be’ Will you offer benefits’ (1-2 pages).

5. Products and Services: What are you “selling” and how does the customer benefit’ (1-2 pages).

6. Marketing Plan:
A. Market Analysis: Who are your customers and competition’ (2-3 pages).
B. Marketing Strategy: How will you price your product/service and what are your selling tactics’ (2-3 pages).

7. Financial Projections: Include the cash required for expenses and start-up. Don’t be vague and don’t underestimate. List out all of your start-up costs and future dollar needs. (2-3 pages).

The following is an example of some of the items included in a Start-up Budget:

a. Personnel (costs prior to opening)
b. Legal/professional fees
c. Mortgage or lease
d. Licenses/permits
e. Equipment
f. Insurance
g. Supplies
h. Advertising/promotions
i. Salaries/benefits
j. Accounting
k. Utilities.

Marketing Analysis is vital. It’s a competitive world, and the horse business is no exception. You’ve got to know your potential customers and be familiar with their likes, dislikes and expectations (friendly, successful tack-shop owners can be solid resources in discovering trends and needs). By identifying these factors, you can develop a marketing strategy that will allow you to fulfill those needs.

Marketing Strategy also covers how you will advertise and promote your business. Advertising is a great way to get your name out in the community, but when you choose your method make sure you’re hitting your target market. Trainers and farms regularly purchase ads in equine publications because it hits their target market and allows for greater saturation.

But remember that not all print ads offer equal exposure. For example, the local paper may have a circulation of 30,000, but if only 120 are possible clients it may not be doing you as much service as a regional equine publication that has a circulation of 12,000 and hits 6,000 in your target market. On the other hand, if you are looking to pull basic riding-lesson clients from a 20-mile radius around your farm, a multi-state regional publication isn’t going to reach your potential customers like a hometown paper would.

Keep in mind that many things, including age, experience and location, can drive your market. For example, your specialty may be teaching young children. That would be a different market than if your specialty were taking experienced riders to a higher level of riding. One is driven by age, and the other is driven by experience. A business that offers trail riding and pony parties would probably want to draw clients from a local audience.

Business Plan
Although the Business Plan may take some time and the amount of written material may seem overwhelming to produce, take it step-by-step. It’ll be worth it in the long run. There are books (see sidebar) and internet sites that give sample plans.

One good web site is that offers a number of sample plans for viewing as well as informative articles on starting your own business. The Business Planner & Bookkeeper For The Horse Enterprise we evaluated also offers an excellent worksheet that will hold your hand through the steps and follows with a sample plan.

Legal Aspects
Licenses, permits, zoning laws and other regulations vary from business to business and from state to state. Your local Small Business Administration office and/or chamber of commerce can provide you with general information, but you will need to consult your attorney for advice specific to your enterprise and area. You also must decide about your form of organization (corporation, partnership or sole proprietorship). This decision will affect all areas of your business, including your bookkeeping, taxes, insurance, and so on.

There are positives and negatives associated with each form of business. Be certain you are choosing the one that’s best for you. Simple explanations of three forms of business are as follows:

Sole proprietorship is when a single person owns the business. It is a simple, flexible form of business, and no one else has control except that one person.

A partnership is similar to a marriage. It is a legally binding agreement between two or more parties. There is no limit to the partners’ liabilities. Assets are not protected in a partnership. You risk not only what you put into the company, but all of your assets (car, house, etc.).

A corporation requires government approval and is owned by its shareholders and run by a board of directors. A corporation protects your assets and offers limited liability. The most shareholders can lose is what they put into the company.

Business or Hobby’
Probably the first question you will hear if audited by the Internal Revenue Service is whether or not your involvement with horses is a business or a hobby. If an activity shows two profit years within a seven-year period, the activity generally will be presumed to be a business venture.

In order to take tax deductions, you must prove a profit motive and, in order to do so, maintain accurate records. Records include receipts, mileage logs, bills of sale, and so on. We recommend you rely on a professional accountant to maintain your financial records showing income and expenses on a horse-to-horse basis or at least hire them to do a quarterly or annual checkup for you. Be sure to maintain a separate checking account and credit card for the horse operation. Remember the business plan you did before you started’ If the IRS ever questions you, your business plan will help establish credibility.

If you hire people, be sure to fill out the proper paperwork because penalties can range from $250 to $10,000. Find out what is required legally in your area. The effort to comply with the government is far more cost effective when you look at the fines imposed for violations.

A number of different types of insurance find their place in a horse business. At a minimum, you will need insurance for yourself and employees (health insurance), your horses (mortality/major medical, see June 1999), any vehicles (auto insurance) and your farm (liability insurance to be covered in a future issue). Be sure to become familiar with the policies available and don’t leave yourself open for a lawsuit. Protect yourself and your investment.

You’re Not Alone
Keep in mind that when you’re starting a business there is help available. Seek it out. Look for classes or lectures offered by a night school or college or you can contact the Small Business Administration (SBA). The SBA also funds in part the Small Business Development Centers (SBDCs) that work with local colleges and some other funding agencies. Every state has at least one SBDC, and most states have several offices in several cities.

In the past, researching the topic of starting your own business meant hitting the library or bookstore, but now with the internet you don’t have to leave your house. Check the SBA web site ( or utilize search engines to find enough information to fill your office.

Today’s technology makes it as easy as a click of a mouse to get your hands on tax laws, insurance plans, legal advice and loans. Keep in mind that the equine business is unique, and books written with the horse in mind can usually offer more insight.

Bottom Line
Don’t let the statistics scare you away from starting your own business. Instead, go in with your eyes open, then seek and consider advice. While there will be ups and downs, generally, if you follow a plan and implement the steps, over a few years you’ll create a healthy, thriving business.

Evaluate yourself honestly. You are your biggest asset. If you aren’t, you need to consider another business. Be prepared to work long, sometimes “payless” hours, and remember to budget funds appropriately to cover the ups and downs of business income. For instance, if you’re offering a lesson program, you may find your income lower in the winter months than in the summer months, but you must be able to cover expenses year-round.

Ultimately, word-of-mouth is the most consistent, reliable form of advertising and can make or break your business. If your current clients are happy and tell others, word will spread quickly. Remember that what you put into your business will be what you get out of it. Your hard work, determination and patience will pay off when clients are pulling in the driveway for a lesson or the first foal on your breeding farm wins its halter class.

Also With This Article
Click here to view ”Ads Reflect What You Offer.”
Click here to view ”Evaluating Business Books For Real Value.”
Click here to view ”Marketing Strategy.”
Click here to view ”Marketing Analysis.”

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