Stable management expenses: Do you know all the expenses that crop up when running a horse business?Some stable management expenses may surprise you. Let's see how you did. Here are typical horse expenses for a horse boarding and training facility. Did you get all of them?
When calculating your estimated feed concentrate (not sweet feed) costs, assumed that each horse will receive about 4 lbs daily. Throw out your coffee cans and buy the scoops that show weight markings for the brand of feed you're buying, such as Purina feeds. They will have (for example) markings one side to show lbs of Strategy and markings on the other side show lbs of Senior. When you feed, all you have to do is fill the scoop to the mark for "2 lbs". You will have a much easier time staying on budget for your stable management expenses this way. When you calculate labor costs, your should take into consideration that you will be paying payroll taxes and other taxes. These can increase your payroll costs by 13% or more. You may be tempted to think you could cut back on labor costs, but if you are also doing the training, lessons, show preparation, hauling to shows etc, that will get "old" really fast. Always include extra labor help in your calculations. Working students and interns are also a great boon here. Working students can do stall cleaning and similar chores in exchange for lessons. Interns can be assigned chores such as feeding in exchange for learning equine nutritional needs, along with learning "the ropes" of running a successful horse boarding and training business. You can also assign chores to boarders, if they are willing to do them--but keep in mind that your insurance costs will be higher as a result. Labor costs can be very hefty stable management expenses. You may notice that your expenses divide into two categories: fixed and variable. Fixed expenses are those that remain the same regardless of how many horses you have in the barn, such as your mortgage and property taxes. Variable stable management expenses are those the depend on how many horses you have, such as hay, feed and bedding costs. After you've entered all of your estimated income and expenses into the grid, take a look at your "bottom line", that is the net difference between your income and expenses. This must be a reasonably sized positive number in order for your business to thrive. The profit from your business should be reinvested to make improvements in your property. Your income must come from this as well. If your bottom line is "thin" or negative, you need to think about how to increase income or decrease expenses to actually make your business viable. To put it another way, your total expenses is the "break even" point for your business--how much you need to make to just break even. Another crucial calculation to make is this: Save your work, and make another column. Multiply the total amount of boarding income by .75 and the total amount of horse-related variable expenses by .75. Then recalculate your total income, total expenses, and net income or loss. This new total expense figure is your break even point for 75% boarding capacity. In other words, this is how much income you would have to bring in just to break even on your business, assuming that 25% of your stalls may be empty at any given time. This is an important assumption. If you need to be at 100% capacity in order to cover your fixed and variable expenses, your business will probably be in trouble in short order. You need that 25% "cushion" in your stable management expenses to ensure your business' success. But more importantly, remember when we said earlier that it is almost impossible to run a successful horse business just on horse boarding income? When running these numbers, you will probably be very surprised to find that you can't break even just on boarding income alone. Those other possible sources of income are crucially important to your bottom line. So when you think about setting your business, keep in mind that you will need many lines of income to remain profitable.
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