Think Tough to Increase Profits
- Jul 1, 2002
For many of us, enjoying horses is a way of life, and we are willing to work hard in other areas to support this hobby. There are those, however, who have decided to make their involvement in the horse industry a paying supplement to their earnings. If you are a member of this group, then perhaps it is time to think tough in order to make any type of profit from your endeavors.
An in-depth analysis of your overall operation and market potential should be a priority. Like any other business, you must adjust your horse-oriented business from time to time if it is to remain viable. This adjustment must, of course, include cutting costs and increasing revenues.
Feed is a major factor--are there ways to slash that cost? If you are not already buying in bulk, then this is the first area to consider. Perhaps more savings can be achieved if several farms or several boarders at one farm get together to buy from one distributor.
Few people have the storage to handle huge quantities, but a drop-off center can be established where those with only one or two pleasure horses can pick up what they need. This buying method also helps the "hobbyist" with the feed bill. Remember, those owners are likely your future horse buyers, so when you help them, you could be helping yourself.
Buying hay in this manner also can help everyone save. For example, in my locale a hay supplier delivers to the racetrack, where buyers pick up their individual needs.
Bedding is another area where buying in bulk can reduce the cost. But there are other ways to save money on bedding--learn to economize without sacrificing your horse's comfort. If you have others cleaning stalls for you, no matter how conscientious they are, they might not know the most economical way to pick stalls. Take the time to teach them the most efficient technique for your stable's situation.
Hired help might be another place where it is possible to cut some costs. Consider a "working student" if you do not already have one. Don't overlook your local high school--there are many clubs whose members rent themselves out a few hours each week to earn money for field trips, or those teenagers who just love horses and want work experience. These students can easily be taught to clean stalls, paint fences, or do yard or field maintenance, leaving you more time to deal with your horses.
You also must decide your main focus in the horse industry. Do you classify primarily as a breeding farm, a training facility, or a service establishment? There is often a small overlap, but you might be more financially stable if you focus on one particular area.
Analyze your operation in relationship to the current economic conditions in your area. Can you produce quality service or a desirable product at a price your buyers can afford? You must know your market, make use of your resources, and adjust your costs to enable yourself to stay in business.
Are you raising horses just to please yourself, or as a serious commodity for sale? Most breeding farms must make a profit to survive. If you are in the "profit need" majority, some serious thought must go into your planning. If you are just breeding horses for your own pleasure, consider where those horses will end up.
Are you producing quality horses which will sell well? If so, then you are on the right track. You probably do not need to make major changes in your breeding stock, but you should always keep up with current public demands. Look ahead since making changes in breeding practices or stock cannot be done overnight.
If you are breeding horses which are not selling well, or are not selling at a fair price, be honest with yourself. Ask some serious questions.
- Am I raising a breed, or promoting certain bloodlines, that I happen to love, but is not selling well at the present time?
- Am I realistic about my product's value? Is quality in correct proportion to the price I am asking?
- Have I considered that many customers are better "horse educated" than in the past and have higher expectations for their spending dollars?
- Can I cut costs without cutting quality?
While you are studying current markets for your horses, do not rule out the export market. Many countries look to North America for breeds not well known or not well established in their areas.
Trading or Training Performance Horses
This branch of the horse industry is usually the most changeable. To survive, you must be willing to keep up with current trends. If the majority of new buyers are looking for tall jumpers, your wonderful little ponies will not bring top dollar. A quality horse with quality training will sell; a quality horse with quality training, of the size and type currently in demand, will sell more quickly---and likely at a higher price. This doesn't mean you should change your final product every year. On the other hand, stubbornly training a type of horse which is not selling year after year is a sure path to bankruptcy.
To sell performance horses successfully, you must be realistic. Training, conformation, size, breeding, health, condition, soundness, and disposition all play a part in the value of a horse. Analyze your product without emotion, then set a realistic price.
Remember that your reputation is also a large factor in sales. If you have always been honest in your dealings, customers are sure to return. Your contented clients will also tell others. Follow the businessman's Golden Rule: "Say what you mean, and mean what you say." Be honest about each horse's faults and virtues.
Know, or get to know, your buyer. Match your horse and the potential rider to the best of your ability--this will result in a happier buyer who will tell others of the good experience.
If you are in the performance branch of the industry, one of your main concerns is where to obtain good horses to train. Breeding your own is usually not a good idea, because by the time you have fed the mare, paid a stud fee, then raised the young one to training age, you will likely have too much invested in the horse. You could be very hard pressed to make any profit.
One good purchasing area to look into is breeding farms. When one of their horses does not fit a future breeding program, they will often sell the horse at a reasonable price. These horses usually make excellent performance mounts.
Another place to look is the racetrack. A sound horse which simply does not have the speed, or perhaps the desire, to run, can make a very good competitor in other disciplines.
Do not overlook "back yard" horses. They can, at times, be a good buy. Even consider a "problem" horse if your horsemanship skills are good enough to fix the problem. Be realistic.
Remember that "hobby" money is in shorter supply at present. Also, the cost of keeping a horse, whether boarding or at home, continues to escalate. Buyers are doing more looking before making purchases, as the new urban buyers of goods are thoughtful "shoppers" in other areas of their lives. Even if they are not yet knowledgeable horse people, they will bring their shopping expertise to your establishment.
Today's horse shoppers are also price-conscious. "Dickering" on price is the mode of the day. Think tough--decide on your bottom price but be willing to make some concessions to a bona fide buyer.
When you are a performance trainer, your time is worth money, and people who are just out for a free afternoon ride can waste a great deal of your valuable time. But what can you do to be sure who is a serious buyer and who is a "tire kicker?" Unfortunately, not a great deal, but there are a few things you can try. Be polite and gracious, but somewhat firm. Ask questions right at the start to find out exactly what the potential buyer is looking for, the age of the rider, and the rider's experience. If you do not have a suitable horse at the present time, explain that with apologies and friendliness. If you have a mount that you believe would be suitable, bring the horse out at halter. Show the movement of the horse, discuss all pertinent facts about him, then ask if they are interested enough to see him under saddle. Just "lookers" will often back off at this point, so you have saved yourself a lot of time and effort.
There is one other area of your business that you should scrutinize carefully. What is the condition of your establishment? One does not go to a "greasy spoon" restaurant for expensive steak, nor to Wal-Mart for top-quality woolens. That does not mean that you have to have a show place, but rather a place to show. A barn reeking of last week's manure, or fences weaving and falling down drunkenly, give the impression of a "bargain basement" mentality. Cleanliness and organization are the "buy words" of today's shoppers.
One of the main areas of service in the horse industry today is in the field of instruction. This field is expanding rapidly and is becoming more and more competitive. If you are seriously into this part of the business, then it behooves you to think tough. As with any business, you must improve revenues and cut costs to survive.
Reassess your whole program. Are you specializing in only one type of instruction or age group, or are you too diversified? Are you primarily working with beginning or novice riders, or is your main focus on experienced riders? Are most of your clients adults or young children?
"First and foremost," recommends Sharron Michael, certified through Equine Canada, and a long-time coach in Osoyoos, British Columbia, Canada, "Instruct only at the level at which you are qualified and fully knowledgeable."
Have the right horses. Streamlining or specializing could pay dividends. For example, if many of your clients are young children, perhaps it is time to cull out some of your big school horses in favor of smaller horses--or even ponies. On the other hand, if most of your instructing is in the adult jumping area, perhaps some of the small horses which are idle too much of the time should be sold in favor of larger horses. Although feeding larger horses can often be more expensive, having the correct type of horse for the instruction you offer can often bring more clients to your door.
Another thing to consider is your school horses' training level. Horses which are trained in third-level dressage are great fun after the clients go home, but are usually too expensive for a program that mostly serves beginning riders.
Put your best foot forward. New clients are a must in the field of riding instruction. Where will your new students come from? If they will come primarily from word of mouth, you must present your program and your facility in such a way that the client prefers to come to you rather than go elsewhere.
Many instructors find it an excellent idea to invite a new client to the premises before the first lesson for a short "get-acquainted" visit. The rider then has an opportunity to explain his or her aspirations and expectations. At this time, the rider could meet the horse he or she will be riding.
Business should be dealt with so there are no misunderstandings later. If the rider will be bringing a private horse for the lessons, this is a good time for you to get basic facts about the horse. Always remember that you are in business and selling a product; in this case the product is you. Present yourself as a knowledgeable, professional businessperson. Be proud of yourself and your establishment, but never be derogatory about other instructors or their facilities.
Care about your clients. Understand their dispositions, levels or riding abilities, and ultimate goals. Be positive--sarcasm and "put-downs" are not productive.
The bottom line is that you need to:
- Have the correct type of school horse for the level of the rider;
- Have the correct facility and equipment for the type of program;
- Be businesslike;
- Have your fee schedule and payment method clearly understood; and
- Always have release forms, etc., signed before any lessons commence.
If you run a boarding farm, you have many responsibilities and many expenses. Have a serious look at the books--you must know exactly what it is costing you to board each horse. Be sure you include all of the hidden costs such as electricity, water bills, facility upkeep, hired help, etc. Too many folks look only at the feed bill. In this day of high costs, all expenditures must be calculated if you are to stay afloat.
You should also consider what type of horses you will care for and what level of care you will provide. These facts are important in determining your boarding fees. Have you the time and energy for a full-care facility, or should you be targeting a clientele who likes to do part of their own caregiving? Will you specialize in one type of service, or cater to various needs? Should you use your farm as a nursery establishment, or would it be best to have only box stalls and paddocks to rent for people to give full care to their own horses?
There are many methods and arrangements to consider, and only you will know which one is right for you. However, you should be very aware of your reasons for choosing the clients suitable to your establishment and to yourself.
You also need to consider how to woo new clients to your barn and how to keep them once you have them. For most people, safety is a top priority. Your clients are not necessarily looking for gleaming white fences, manicured pastures, or a "picture-book" look. However, a facility that looks run-down gives the distinct impression that you will also give shoddy care to their horses.
Caring is very important to the owner. Apart from a financial investment, the average horse owner has an emotional attachment to his or her horse. Be indifferent to that horse, and down the road he--and his owner--will go to your competitor's barn.
The horse industry is one of the fastest- growing industries in North America, and to play a successful part you must be prepared to be a smart business person. Deal with your clients as the consumers they are. Have a well-written agreement stating exactly what services you are providing and at what cost.
Do your clients have the use of all establishment facilities, e.g., indoor arena, outdoor arena, paddocks, and barns? Are there areas of the farm that are off limits? Is there a common tack room with private lockers? Sit down and make a list of areas where there could be any misunderstandings and develop a way to handle them before they happen.
In the business world, regardless of service or product, good client relations is the first stepping stone to success. The client must be dealt with in a fair, honest, businesslike manner, but also receive your attention and interest. No amount of advertising will make you successful if you do not follow good business practices.
Much of your advertising will come without your control. People tell their family, their friends, and even minor acquaintances about their experiences. It is up to you whether you get good or bad word-of-mouth advertising.
Media advertising needs to be planned as carefully as your business. "When it comes to paid advertising, you need to decide which clients you are targeting," says Government Promotion Manager Cathi Howes in Victoria, British Columbia, Canada. "Do most of your advertising in publications read by that range of people."
Unfortunately, too many farm owners are impressed by seeing their ads in large layouts, so are easily swayed to purchase expensive ads. These excessively large ads very seldom bring in enough new clients to pay for the ad costs. False pride is not a way to survive in tough economic conditions.
There are ways to get "free advertising" if you make the effort. Town newspapers often welcome write-ups about local happenings. A new foal, with a photograph, a local rider garnishing trophies on a horse you trained, and a get-together of all owners boarding at a particular establishment can all be interesting news. "Limited area" horse magazines often welcome free write-ups, and never overlook riding club newsletters.
Regardless of the service or product you are offering, bear in mind at all times that you are in business--present yourself as a business person. Gone are the days of the "buyer beware" mentality. Consumers of today expect honest services at a price that is competitive. Give the educated consumer what he/she is looking for and even in the toughest times, your establishment will prosper above your competition's.
About the Author
Marj Piazza has been a free-lance writer for over 30 years, and her work has appeared in publications such as Western Horseman, Canadian Horseman, Chronicle of the Horse, and Sport Horse. A retired schoolteacher, she has also exercised racehorses, raised and trained Arabians and Thoroughbreds, and boarded horses. She currently lives in Osoyoos, British Columbia, Canada, with her husband.
POLL: Big Spender