Have you ever wondered why large, successful businesses that own horses aren't in the business of serving equestrians? Companies like Budweiser, Mars Candy and Campbell Soup - all of these companies own large horse farms and have a history of horse ownership. Why aren't they owning and running equestrian centers as a business? Why?

Because there is no money in the equestrian facility business model.

There's an old joke in the equine industry that says "What's the best way to make a small fortune in horses?" The answer? - "Start out with a large fortune." It's long been an accepted idea that businesses in the horse industry are not run like other businesses - they are emotionally driven instead of economically driven. Many of the people running these enterprises have shunned the business world. They have, in fact, avoided dealing with people by working with animals instead. These factors have lead to a variety of problems in the industry. Many of these businesses are not financially sound, and the "isolation" of barn operators fosters an "old school" mentality which resists change.

The "old school" mentality of barn operation consistently overlooks or under appreciates four main components of running a successful equestrian business: (1) you must fully embrace the idea that this really is a business you are running and you must be realistic in your economic expectations (2) your success is integrally linked to customer service - this is a service based industry so you will have to learn how to serve clients (3) you must have a business plan - this will help you have a clearly defined vision of what your services are as well as a detailed look at your competition and (4) you will need a solid operational budget detailing your revenue projections as well as your overhead costs.

If you have accurate data, realistic economic expectations and plan properly, you won't end up with a mortgage or expenses you can't cover each month. Just because you could run a robust lesson program at 100% capacity doesn't mean that it will ever happen - especially during holidays and during cold winter months. Be conservative with your revenues, plan your budget based on 70% capacity during warmer seasons and as little as 40% capacity during the cold winter months. Also be liberal with your capital expenditure numbers. Often if you call a supplier and get a quote on an indoor arena, the price you are quoted may seem reasonable. However, you haven't budgeted for site work, pad preparation and the number that was given to you doesn't include anything - no kick wall, lights, garage-style doors, man doors, irrigation, base preparation, seating or footing costs. Once you really add up all the numbers, you may be shocked that the true costs is twice what you expected and budgeted for.

The devil is in the details......so make sure you really do your homework. Call other local facilities and ask if they can tell you what they are paying for water or electricity, or insurance - they may have data that can paint a realistic picture.

Success can be found in managing expectations... yours, your clients' and your bankers'.

Posted by jenniferd at 6:57 PM | Link | 0 comments