In this four-part series, learn to manage your finances so you can achieve your goals as a trainer and business owner.
By Katie Navarra
You work every day to advance a horse’s level of training to his highest potential. Schooling and maintenance are necessary to achieve such an outcome. A horse’s training progression is a good analogy for the long-term development of your business. Like a horse, a business cannot grow, let alone thrive, without regular work.
“It’s important to manage your personal and business finances so that you can achieve your short- and long-term goals,” says Bette Brand, chief sales officer/external affairs for Farm Credit of the Virginias.
A financial plan can drive your business and enable you to achieve your objectives. Financial planning can help you find the delicate balance of bringing in enough income to support your lifestyle (and family), while covering all expenses associated with running the business, and growing a savings account to carry you through unplanned events. But the nature of the horse business can make it difficult to execute such a plan. Income fluctuates as horses come and go, and costly expenses add up. Tight margins and the greater economy create a source of income that’s less predictable than a traditional 9-to-5 office job.
The process of developing a financial plan can be overwhelming, and that’s the No. 1 reason most people never create one. Here, Brand and NRHA non pro rider and attorney Sally Piskun offer simple steps for getting started. Once you take the first step to begin the process, you’ll find the momentum to keep it going flows more easily.
Here are the four parts we’ll cover in this series:
Part 1: Mapping Out a Plan
Part 2: Expect the Unexpected
Part 3: Start Saving
Part 4: Find a Financial Planner
Expect the Unexpected
In life, and especially in the horse industry, there are no guarantees. Changing economics, injury, even death can significantly impact a business and the family supported through the business. The unknowns and unpleasant possibilities deter people from talking about financial planning.
“It’s scary to think about the what-ifs,” Brand said. “You can’t prepare for everything, but you have to cover some basics to make it a little easier when something unexpected happens.”
In the long run, a difficult conversation is easier than the stress of an unknown in the midst of a hardship. Insurances help close the gap during an unplanned event. The list of insurances is long and likely includes ranch, liability, property, medical, life, vehicle, and disability, among others. While the premiums seem costly when it’s time to write out the check, in the event of a catastrophe, you’ll be thankful to have it cover the bills.
“Trainers simply need to budget for insurance expenses,” Piskun said, or you could find yourself in financial trouble.
Although it was mentioned before that there are no guarantees in life, there is one: taxes. The percentage of taxes you owe increases as your total income increases. If sponsorships, commissions, or other revenue streams begin coming into play, you may end up in a higher tax bracket.
“Chances are, if you aim for saving about 25% of your income for taxes, you’ll probably be safe,” Piskun said.
An accountant who’s familiar with your business and family situation can provide more specific guidance.
Read the rest of this article at the links at the beginning of this post.
