So, You Want To Buy A Horse Farm! Part 4 (Finances)

Financial Data – The Critical Stuff

You need to present 5 years of cash flow projections and income statements. You also will need to write some dialog about the numbers you present that explain them in detail to someone who knows nothing about your horse business.

To begin, gather the most up to date and concrete data you can get to support your financials. Document your sources as to where or who you received price quotes from. Justify quantities on your COGS (Cost Of Goods Sold). Explain the why's and why 'nots' of using certain value-added products to increase the price of your services and products. Propose in your plan how you will monitor and cut costs and how you will contract with your vendors for competitive pricing. List and total all of your expected start-up costs and then increase that number by at least 25%. This is realistic "padding" to account for things you've forgotten or could not have foreseen. And believe me, you WILL forget some things and some unplanned problems WILL occur that you haven't accounted for, such as repairing a burst water line, a leaky roof, rotten or insect-eaten fencing, etc. Buildings and facilities deteriorate over time and you need to have contingency room embedded in your funding, costs, and revenues to assure you can cover those repairs when they happen — repeat after me: THINGS WILL BREAK AND WEAR OUT! Keep in mind that this part of the business plan is the heart and soul of your plan and needs to be as thorough as possible.

If you make a good business plan and it passes the "reasonable man (or woman) test, you'll instill comfort not only in your investor(s) or loan officer, but much more importantly, in yourself that you've really done a thorough job of assessing your costs and risks. There's nothing like knowing you've been thorough, are on solid financial ground, and have a business model that's going to work. You'll sleep better at night knowing it and you'll work more confidently and happily pursuing it.

If you've never written a business plan before, or struggle with organizing your thoughts around starting one, there are many ways to proceed. First, there are many books available on how to prepare a business plan. If you prefer, you can contact a professional for help. There are many free and low-cost resources available through the Small Business Administration (SBA), local business schools, and financial institutions that are there to help. If you're currently utilizing your local unemployment office for tools and services, they'll likely have information to help you, too. There are also consulting companies out there who help people start a business and find investors to back them. Whether you look for outside help or attempt to create a business plan on your own, just remember you're giving your dream a real life on paper — make sure it doesn't read like fiction.

Live Your Dream
Obviously, living the dream of having your own horse farm takes business savvy in addition to your equine knowledge. You need to consider the farm, not just as your home, but also as your "office" and source of income — YOU MUST be able to make a return on your investment, or you won't survive. You need to do your homework and consider all of your cost and income expectations before moving forward.

Dreams can become reality, but not without hard work upfront and a brutally honest assessment. As the foregoing explains, gathering the information you need to make realistic financial assessments and decisions is readily available for those who seek it.

Article by: Jennifer Goddard has been training horses of various breeds for over 20 years using her natural horsemanship methods. She has also ridden and shown in multiple disciplines and is owner of Levaland Farm, a 30 stall horse farm in Massachusetts. Jennifer has a degree in Finance and Entrepreneurial Studies from Babson College, and is also President of Equine Business Solutions.