Horse business plans: A business plan can make the difference between profit and loss!

The idea behind business plans is pretty simple: What do you plan to do, how much demand is there for what you plan to do, how much income does your research indicate you will make, and how much will it cost you to run your business? Fleshing it out is a bit more complicated. Here (adapted from the Small Business Administration’s website) is what you need to do.

Your business plan should contain four sections: 1) Description of the business, 2) Marketing, 3) Management, 4) Finances

Here’s a sample plan that discusses each of these topics in turn.

1. BUSINESS DESCRIPTION: One example would be will be a moderately sized equestrian facility that provides horse boarding, horse training, and riding instruction services. In the horse stable, we plan to take in 15-20 boarded horses, 5-6 horses in training, and 4-5 lesson horses. Lessons will be provided in western riding (reining, barrel racing, and western pleasure) and English riding (dressage, jumping, eventing, and english pleasure).

Our horse business will be located at 1234 Country Lane. This property consists of 30 acres and a farmhouse. Twenty of these acres will be devoted to farmland. We plan to build a 30 stall horse barn, an indoor lighted arena, and an outdoor lighted arena. We will also fence the entire property, and cross fence to provide smaller turnout pastures for the horses. The property is a prime location, near public land (for trail riding), and only 20 minutes from the county fairgrounds.

2. MARKET: Our clientele will be equestrians who seek a quality, well-run horse stable boarding facility and/or quality instruction and horse training in these disciplines. According the county statistics, horse ownership and equestrian sports activities are projected to grow by 10% annually in the next decade, largely due to projected growth patterns for the county itself. Many new homeowners are attracted to this area due to its proximity to public land suitable for horseback riding, and the availability of county fairgrounds which frequently hold equestrian shows and competions. Currently, there are 10 boarding facilities in this area, but only 3 offer the kind of services that plans to offer. This indicates that a large segment of this market will be under-served in the next few years.

Our horse business plan is to offer our boarding services at a rate that is competitive with other training and boarding facilities in the area. Breakeven analysis from our 3 year income projections indicates that this section of our business will not be highly profitable. The main source of our income is projected to be from lessons and training with Mary and John Smith, who are successful competitors in eventing, and Frank Jones, who is a successful competitor in barrel racing and western pleasure. We also plan to work out an arrangement with a reining expert to give lessons and training as an independent contractor. This is a crucial part of our business plan.

We plan to advertise our horse business through the use of a website (including Google AdWords), yellow pages, and flyers at all local feed stores, tack stores, and other venues dealing with horses. Mary Smith has maintained a successful website for 5 years in which she gives tips on horse training along with updates on the competition successes for both John and herself.

3. MANAGEMENT: Mary and John Smith are Intermediate Level Eventers with solid training in dressage, jumping, and cross country riding. Mary is a three-time regional champion, and John is a two-time regional champion. Frank Jones is a champion barrel racer. These are definite assets to our horse business plan.

will be a privately owned corporation. The real assets of the business (land and structures) will be owned by , and the operations of the business will be owned by . The members of will be John and Mary Smith. John and Mary will each have 50% ownership in the LLC. will be structured as an S corporation with the following officers: Mary Smith, President; John Smith, Vice President and Treasurer; Frank Jones, Secretary and General Manager. Stock ownership will be divided as follows: Mary Smith (50%), John Smith (25%), Frank Jones (25%). Other experts who will be assisting in our start up efforts and will serve as consultants on an on-going basis include the following:

Jacqueline Johnson, attorney, will be handling the incorporation process and will advise us in legal matters pertaining to our horse business plans as their arise.

Steven Harrelson will be our insurance agent. Our insurance policies will include property insurance; care, custody and control liability insurance; mortality and major medical insurance for our lesson horses; crop insurance; general legal liability.

Susan Sondson, CPA, will be our accountant. Her office will handle payroll and tax preparation for our horse business.

Jerry Johansson, tenant farmer, will take care of farming the land. He plans to rotate grass, alfalfa, and soybean crops, to bale the grass and alfalfa hay for use in our facility, and to divide the proceeds from the sale of the soybean crops with us per an agreement drawn up by our attorney.

Sam Gordon, owner of Country Feed Store, will be advising us on feed concentrates and feed regimens for the horses.

Dr. Harry Bernson and Dr. Hilary Warner will be advising us on veterinary issues for horses in our horse business.

Cody Branson will be our barn farrier. He is the most respected farrier in this area.

4. FINANCES: Our requirements for start-up capital for our horse stable are detailed in the attached list. We plan to purchase the property at 1234 Country Road. Mary and John will provide the downpayment for the commercial mortgage through the sale of their current home. They will also provide a truck and horse trailer for business use, and sufficient funds to cover initial costs of hay, feed concentrate, and bedding. Frank Jones will provide funds for fencing and farm equipment (primarily a tractor with attachments for mowing the grounds and grooming the arenas, and an ATV for use on the property.)

We are seeking financing for construction of the horse stable, arenas, and hay barn, plus a business operating line of credit. The construction of the stable, arenas, and hay barns are one-time capital expenses (and these structures will be depreciated as a business expense). Repairs to these structures and the fencing are included in our monthly cash flow projection to indicate the ongoing requirements for cash. We plan to use the line of credit to cover the initial costs of these items, and to pay back the line as income accrues from business activities.

You should attach to this horse business plan the following items:

• Personal financial statements for the main parties (e.g., Mary and John Smith, Frank Jones)

• A balance sheet showing the projected assets and liabilities for the business

• Projected income(loss) statements for the first 3 years

• Licenses and approvals needed from state and county government agencies showing that you can in fact use the property you plan to purchase in the way you plan to use it. Zoning boards can be very sticky when it comes to horse facilities, so be sure to do your homework here and have an attorney on board. Avoid problems with your business plans by taking special care with this step.

As you write your horse business plans, you will get a clearer, more concrete idea of what is involved in creating and running a successful horse business, so take your time with part of your venture. If you skip this step, you are likely to regret it later. But as you work on it, you will see your dream begin to take shape, becoming more real and more realizable! That is a thrilling prospect!

Copyright Denise Cummins, PhD

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