So, You Want To Buy A Horse Farm! Part 3 (Finances)

That means you need to charge $1,000 per horse just to break even — it doesn't even include any money to pay yourself for your labor and management or to grow the business. Is this realistic? With this example, you'll likely need to charge $1,500 per horse when you include labor, repairs, miscellaneous expenses, etc.

Now you must ask yourself the tougher questions: Can the horse owners in the surrounding towns in which you're locating your business afford such board payments? Do your amenities and other "extras" you can provide support such a payment? If not, you need to consider another property that either costs less or is in a higher income district. Possibly adding more stalls will help (assuming you can), but that will take time and you need to pay all of your monthly fixed costs before those stalls are built and filled with paying customers. Plus, as you add stalls, there will be more work and you'll need more help. If you expand, can you realistically expect to attract and keep that many boarders?

Why You Need A Business Plan
Even if you don't have to write a business plan to secure financing, the process of writing one is often an enlightening experience. Consider a business plan to be the backbone of your company. It's a compilation of data that will serve you as a great resource even years after your business is up and running because it includes the details of your planning and you can compare your estimates with your real costs and revenues. You can also use it to "tweak" your plan and perform "what if" analysis, such as evaluating those extra ten stalls to see if you'd make or lose money.

For a horse farm venture, you may not have to write as extensive a business plan as someone starting a software firm. Yet, there are some basic points you want to cover, even if you're only writing it to help organize yourself.

Writing the Plan
First, you should write an Executive Summary. This is usually a two or three page document that outlines your business. You briefly describe the purpose, products, services, market segment, and goals. Sometimes it helps to draft the Executive Summary as an outline and not finish it until your entire business plan is written. You will find the summary itself will evolve as your plan develops and grows with information and ideas.

Next, you explain your products or services. Typically horse farms provide more services than products unless you're breeding and selling offspring. Outline in detail each service, how you'll provide it, and how it will benefit your customer. You don't need to go into detail here about what you'll charge, although you may allude to it if it is an uncommon product or service. Later, your marketing section may mention pricing as a market niche or your financials may explain it better. Don't get bogged down in numbers of your business until you're actually writing the financial part of the plan. It will be easier then when you've fully defined your plan and can focus directly on costs and revenues.

You will need to do some market research about competing farms and include this in your plan. This will better assure you understand the market you're entering and that you know who your competitors are and how you'll position your business to compete with them. You really need to know how you'll gain market share and your potential lender will want to know why you think you can get market share away from existing business already in your geographical area. Don't assume any of this is common sense just because you "know in your head" you can make it work. Lenders see many different types of business plans everyday and know very little about any of them. Write as though you're explaining this to a 12 year old and the more detail, the better. If you've gathered any actual data through surveys, add some charts to show trends and better explain your projections.