The Business of Making Money with Horses
Introduction
Horses can make you a lot of money.
You can make a good living with
horses, raise a family, get the kids advanced and specialized education, and even
provide a nice nest egg for retirement.
In fact, horses can make you rich,
financially, and in lifestyle.
That isn’t wishful thinking or a
crazy claim made just to get your attention.
It’s a fact.
And if the opportunities for making
money with horses were good last year, they are even better this year. It used to be the value of a horse was
determined by the “work” he could produce.
Then in the late 1970s and early 80s his value was determined by the
“pyramid schemes designed to avoid giving dollars to the tax man.” Both methods met their demise in the late
1980s, and the price of horses plummeted.
By the early 1990s, the horse’s value
was based on a new standard. Then and
now, the value of the horse is based on how much someone is willing to pay for
the “potential” a particular horse has to satisfy that someone’s desire. A horse is worth what the potential buyer is
willing to pay. There are no other
criteria.
There is no limit on the price of a
horse. What the market will pay today is
the price of the horse today. Increase
the horse’s real or perceived potential and the price of the horse will be
higher tomorrow.
If you like horses, or a particular
horse business, either can make money for you.
And if that is what you want, then this course is for you.
This course is all about the business
of horses and how they can make money, profits, income.
This course isn’t a long or
complicated one. Running a successful
business isn’t all that complicated and making money certainly isn’t
complicated. Lengthy explanations aren’t
necessary. What is necessary is a simple
understanding of the profit opportunities, a business idea, your commitment and
a willingness to make adjustments and changes as needed. These are the same factors required to make
money in any business.
There are a lot of statistics in this
course. While the statistics are facts,
they do get outdated. Don’t view the
statistics as absolute; view them as guides to profit opportunities. Use the guide which applies to your situation
and then apply some of the business principles presented. Realize statistics change daily and
principles must be applied to new circumstances. If you do some updating now and then, and
review the present business climate you’ll see new and better opportunities for
making money.
It doesn’t really matter what breed
of horse you fancy. You can make money
with any breed. It doesn’t matter the
age or the sex of the horses. There is a
way to make money with stallions, mares, weanlings, yearlings and older horses.
Are there risks? Of course.
There are risks to everything.
The only certainty is uncertainty.
But the risks become inconsequential if you choose to accept the
uncertainty and give up any desire for the impossible notion of security. You are an entrepreneur, a sole proprietor, a
business owner. The greatest failure is
in never trying.
As with every other investment
venture, making money with horses will take some work, knowledge, skill,
self-control and thought. Along the way
there will be some heartache and some disappointment, but there will be just as
many joys and big profits—30, 40, 50 or 100 per cent return on investments in
weeks, months, or less than a year.
That’s common. A 300, 400 or 500
per cent return is not uncommon!
It is simple. Horses can make you money this year, and even
more next year, because horse are an exciting, fast-moving, personal
involvement, open to anyone business.
But there are some business
principles and horse business rules which must be followed. Some are hard and some are not so hard. If you let emotion influence your decisions,
or you think you can ignore or violate any of the principles or rules, forget
about making money.
The first rule is: choose what you
like best and stick with it. As a
business principle it is known as “doing one thing and doing it very well.” Sounds easy enough, but it is very hard. The first big mistake most new business
people make is trying to sell everything and anything to everyone and anyone.
When you don’t concentrate on doing
well the one thing you have decided to do, you’ll know it. There will be a lot of red ink on your ledger
sheet. (You’ll learn about ledger sheets
in Lesson 10.)
If you love horses and you want to
make them your life’s work, that’s a richness you’ll have forever. If you love horses and want to make them your
business and you follow the rules and principles of this course, horses can
make you a lot of money.
The Business of Making Money with Horses
By
Don Blazer, taught by Eleanor Blazer
Lesson
one
What is the business of making money with
horses?
Business is one’s work; occupation or
profession.
Making money is turning a profit,
producing an income, creating a positive return on investment.
To be very successful, financially
and in lifestyle, one should be passionate about his or her business—which is
relatively easy if you are already passionate about horses and horses are going
to be your business.
This course is specifically about
making money with horses. The business
principles expressed apply equally well to businesses associated with horses,
as do many of the marketing concepts.
However, while this course will certainly assist the student with the
development of an associated business, it is not intended to be a general
business course. This course deals
directly with horses and horse businesses: ultimately the buying and selling of
horses.
There are only three ways for a horse
business to make money: provide a service, win prize money and then sell the
horse, or sell horses.
If you immediately recognized each
requires “selling” of some sort, you are well on your way to becoming a
successful business person. (Even if you
are standing a stallion, or training horses, which are “services for sale,” you
are involved in “selling”.)
The first step to establishing your
horse business is to change the way you think about horses. Since a business is one’s work, occupation,
profession, it is definitely not one’s hobby, and horses can no longer be
treated as such. The Internal Revenue
Service’s definition of business is a good guide for you to follow: business is activity directed by the intent
to make a profit.
If you can demonstrate that your
activity with horses is directed by the intent to make a profit, you are in
business. No matter what you choose to
do with horses, choose to do it with one purpose in mind—making money. Now you have a business. (You can still have a personal horse; that’s
one of the benefits of owning your own business; but all other horses must be
part of your business. Therefore, every
horse other than your personal horse is “for sale”.)
This course deals with the businesses
of pinhooking (buying at one sale or privately and selling at another sale or
privately), selling yearlings and two-year-olds, claiming and racing horses,
breeding and broodmares, standing a
stallion, and training horses for others.
Make a commitment to go into
business, and commit yourself to being successful. Most new business ventures fail within
months, not because they were a bad idea, were poorly planned, or were cash
poor. They fail in those early months
because the owner lacked commitment.
You may choose to do one of the things
covered in this course, or you may choose any of many other “horse
businesses.” In any case, the next few
steps are almost mandatory if your business is to be successful.
In choosing your business, the best
advice I can offer is: choose to do what you love doing most. The common horse-business choices are
“training and riding horses, raising baby horses, teaching others how to
ride.” Is one of those things actually
what you love most doing with horses, or is it your first “recreational” choice? Self examination is required here; to be in
business your activity must be directed by the intent to make a profit, and you
must be committed to making it successful.
Maybe this step will help to clarify
things for you.
Write a single sentence which defines
exactly what it is your business offers customers. For example, Success Is Easy is a business
which provides online horse courses, how-to horse training and health care
books, informational booklets on specific horse topics and a business-help
newsletter. That is an overview of
Success Is Easy. Now write a single
sentence which we’ll call the company’s “mission statement.” For example, Success is Easy provides
business and horse training information which results in money-making
successes.
Now it’s your turn. Write a sentence which defines exactly what
it is your business will offer your customers.
From that definition, write a mission statement for your company.
Now make a list of all the things you
would like to do in your business, or are doing in your business. Then start to eliminate some of the things
which are not your most favorite things to do, and start to prioritize the
things you like doing best. When your
prioritized list is complete, eliminate all except your favorite horse business
(not recreational) activity.
Write a single sentence which
expresses the benefits your company will provide potential customers? When you have written that sentence, you will
have a generalized marketing plan.
Write down your greatest personal
asset which will make achievement of your business purpose a reality.
Let’s use the following as an example
for a business.
What is the business going to offer
customers? The business is going to
offer the opportunity to purchase yearlings which have the potential to be good
show horses.
From that answer we must develop a
mission statement. Let’s try this: to provide yearlings with high potential for
showing success based on specific pedigrees.
Make a list of things you like to do
which relate to your business and refine the list until you arrive at your
favorite thing to do. Let’s say your favorite
thing to do is select young horses from farms based on what you think their
performance potential is.
With your favorite activity in mind,
and your mission statement as a guide, write the benefits your business will
offer potential customers.
For example: The opportunity to purchase pre-selected
yearlings with the potential for success.
And what is your greatest personal
asset which can help make your benefit offer a reality? It could be your ability to relate form to
function; in other words, you are very good at selecting the conformation which
produces the kind of movement needed to win a specific event.
With your expert selection of
conformation and your study and selection of pedigrees with potential, your
potential customers are going to enjoy the benefits of success.
You have now accomplished more than
most who start a business. You have
established an overview of your business which you have refined into your
business “mission statement.” In
addition you have identified your greatest personal asset—which is the strength
of your business, and you have defined your marketing program direction by
stating the “potential you will offer to satisfy customer desires.”
It’s now time to formalize your
business.
There are basically four types of
businesses. There is the sole
proprietorship, the partnership, the limited liability company and the
corporation.
The sole proprietorship allows you
the most freedom, but also places all the burdens on your shoulders. You can, of course, hire employees or
contract for services which will reduce your work load. But ultimately, in the sole proprietorship,
everything and anything becomes your responsibility.
Knowing that, I still recommend it as
the best choice for starting a small, home-based business.
Partnerships seem attractive since
you are not alone in the business world, and generally your partner or partners
bring certain expertise into the business.
Sometimes your partner or partners will also contribute start-up
capital.
If you feel you cannot handle all the
work required in your envisioned business, then finding a partner may be the
answer. For example, you may want to
start a training business, but you only ride western. You recognize there is also a big demand for
English training in your area. A partner
with English training expertise may be the needed ingredient for success.
Keep in mind, however, partners do
not always think the same way, do not always have the same work ethic, and do
not always have the same attitude toward finances. If you plan on a partnership, be prepared
for compromises.
As I mentioned earlier, most new
businesses fail for one simple reason: lack of commitment on the part of the
owner.
Owning a business is a 24/7
proposition. It is a 365-day per year
obligation. Its life, its vitality, its
success depends on you, and you alone. Partners
must be equally committed, or problems develop.
Limited liability companies are
allowed in a number of states. The idea
behind them is to offer smaller firms some of the tax and liability protection
afforded corporations, but without formal incorporation. If you are interested in a limited liability
company, check with your state corporation department.
Corporations enjoy tax advantages—if
they are producing enough income—and most notably protect the principles from
liability of debts or lawsuits. It is
called the corporate shield, and in the case of most small businesses it is
much more expensive than its value.
Once you have decided on the type of
business you want, have written your mission statement and have a pretty
specific idea as to how you will market your product or services, you are ready
to turn your attention to physical considerations.
What are you going to call your
business? It is a good idea to have a
name for your business even if you are a sole proprietorship. Having a business name is a way to remind
potential customers that your services are available. And having a name for your company makes it
easier to separate business and personal matters. If you decide on a business name, then you
will want to register it with your state government. Doing so is the establishment of a
“fictitious name” and must be accomplished if you want to have a business bank
account in that name.
It is a good idea to keep business
money and personal money separate, so you’ll need two checking accounts. Business bank accounts usually have a monthly
service fee. Be sure to pick a bank
which offers plenty of services for the monthly fees they charge. You may or may not want to have an additional
authorized signature on the business account.
In addition to a fictitious name, you
will most likely need a resale license, or state tax number. You can secure the number usually from the
state department of revenue. Having a
resale number allows you to buy products (includes horses in most states)
without paying sales tax. At the time
you resell the merchandise, you will have to collect tax and you will have to
file reports and make sales tax deposits with the state.
Learn the history of the business you
have chosen. This will help you decide
on a location for your business. You
want to be in an area where similar businesses have flourished. If you want to deal with jumpers, be sure you
locate in an area known for jumping horses.
Don’t go to an area where all they do is ride western cow horses. If you want to deal in racing Quarter Horses,
don’t locate in an area which has no Quarter Horse racing. When possible, always choose to locate in an
area where what you want to do is also the most popular horse activity.
Before making any purchases of
property or rental agreements be sure you have checked and rechecked all zoning
laws and ordinances which might limit your business activities. Most cities and counties have strict limits
on the number of horses allowed on specific land sizes. Be sure you can expand your business and
still remain in compliance with zoning regulations.
The next step is identifying
specifically your potential customers.
This may be easiest by refining you business to the point of
establishing a “niche” for yourself.
Let’s go back to our business
example. You want to offer pre-selected
yearlings with a high potential for success.
Establishing a niche requires that
you get much more specific. You will
want to select a breed. Select the breed
you like most and will enjoy studying the most.
(You can learn a lot about a lot of breeds, but to become an expert,
you’ll need to direct all your attention to a single breed.) For example, you select Quarter Horses. Now you want to be even more specific. You want to offer pre-selected “reining”
Quarter Horses. To be even more specific
you want to offer pre-selected “reining” Quarter Horses with pedigrees which
suggest they will be successful early.
Now refine it even more. You want
to offer pre-selected reining Quarter Horses with pedigrees which suggest early
(futurity) winners and at a price less than $25,000.
Once you establish yourself as the
person who offers that potential, you will be “recognizable” rather than just
visible, and people will seek you out when they want your product. That philosophy should be the foundation to
your overall marketing plan for it specifically identifies your potential clients. Knowing who your clients are makes it easy to
find them and tell them about the “potential” your business has to satisfy
their desires.
From the establishment of your
business niche, you can write a business plan.
Business plans are a guide—nothing
more. While it is nice to go through the
process of writing a business plan, their greatest value is usually in seeking
financing.
In my opinion, the positives for a
business plan are few since they are totally conjecture. They are based on what you would like to
happen, or hope will happen, or project, based on limited facts, you expect
will happen. Most of the time business
plans create problems by being too restrictive and discouraging change. In other words, too much effort is made
attempting to adhere to the plan.
Taking action is one of the most
important steps to assuring a successful business operation. When you take action, you will discover areas
of your business which need change, and need change immediately. With the need for change, the business plan
is no longer relevant. When things are
not working as planned, don’t be afraid to change; changing to meet market
needs is a necessary element for success.
The business plan can be helpful if
you use it to you assist in identifying potential customers, selecting methods
for communicating with those customers and in evaluating customer satisfaction.
The business plan is a virtual
requirement if you are going to seek financial assistance from individuals or
loans from banks or governmental programs.
Outside financial sources will have little knowledge of your business,
so they tend to rely on presentation projections—the business plan.
A business plan is usually presented
in the following format:
BUSINESS—NAME, ADDRESS, PHONE, WEBSITE,
E-MAIL
PRINCIPAL OR PARTNERS
TYPE OF BUSINESS
General Goals (Plan for Profitability)
MARKETING STRATEGIES
FINANCIAL REPORTS
START-UP COSTS
PROJECTED ANNUAL INCOME/EXPENSES
CURRENT BALANCE SHEET
PERSONAL BALANCE SHEET
Most good business advisors will
suggest you do not borrow money to start a business. (Borrowing money to expand an existing
successful business is always good business.
Borrowing money has tax advantages and can be a very good way to expand
and grow profitability. But there is
always a price to be paid when securing loans and you want to be quite
confident you can earn a greater return on the money than the cost of the
money.)
Remember: lack of commitment is the
number one reason for early business failures.
When you have plenty of “backup money” or “start-up” money, there is no
necessity for “making sales now, earning profits now”, and that removes any
urgency for success. Without the desire
to succeed now, commitment to the overall success of the company is reduced. Most home-based businesses fail because one
member of the family continues to bring in outside money to satisfy family
needs. With needs satisfied, the person
working on the new business simply doesn’t have a requirement to succeed. In a short period of time the commitment to
succeed is reduced and the new business simply slides by the wayside, or falls
into the “hobby” status.
If you think you need financial or
business development assistance you can contact:
The Small Business Administration
(SBA) at www.sba.gov. The SBA provides loans, counseling and the
latest news on laws and regulations affecting small business.
Small Business Tax Education Program
(STEP) is a partnership between the Internal Revenue Service and local organizations
to provide help with business start-up, record keeping and taxes.
The Internal Revenue Service (
A very simple bookkeeping system
makes up the last lesson of this course.
Using the bookkeeping system along with SBA and
A final consideration for your
business will be insurance.
Many states have equine-activity
liability laws which can be helpful in protecting you from losing a
law-suit. (No laws protect you from
being sued.) Regardless of the laws, if
you deal in horses you will always have some liability exposure.
Liability insurance will not keep you
from being sued, but can help you financially.
If you are sued, your insurance company will not want to pay the claim
and therefore will provide legal assistance.
Not having to hire an attorney gives you some immediate financial
protection.
The amount of protection your policy
affords is your second financial safeguard.
Evaluate your exposure—are you taking your horse into large crowds of
people who have no horse experience? If
so, your exposure is high. If you are
simply reselling your horses at sales, your exposure is much lower. Understanding your exposure will help you
decide the safe guards you need to put into place, and how much coverage in
dollars you need.
If you are doing business in a state
which has equine-activity liability laws, then premiums may be lower than in
other states. In any case, always get
quotes from at least three companies.
Keep in mind an insurance company is only as good at its service and
payoffs. Insurance companies are rated,
so go with one which has earned an “A”.
If you are buying at sales or
shipping horses long distances for any reason, always purchase a “travel” or
“mortality” policy. Horses get hurt and
sick traveling. The policy can be very
short-term—the length of the travel time or a couple of weeks beyond the end of
the trip. When moving horses, it is a
good idea to be prepared.
Long term mortality
insurance is generally much too expensive in relationship to the replacement
cost of the horse. However, if you are
syndicating mares or stallions, or you are dealing in very high priced horses,
consider mortality insurance.
Assignment:
1.
Create a new horse business (based on your interests), using all the steps
suggested in Lesson 1.
2.
Describe who will be the customers for your new horse business, and explain how
you will present your business to them.
Please
send the document to elblazer@horsecoursesonline.com Include your full name and email address on
the submission.