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
Mapping Out a Plan
A well-crafted financial plan allows you to define the income level needed to support the business and your family. It also considers expenses, which allows you to accurately set prices, and encourages saving for the future.
Before you can write a plan, you must understand your expenses and revenue streams. Operating costs cover an extensive—and pricey—range. Generate a list of all the expenses you have in the business, and include everything from feed and savings to electricity and insurances, mortgage payments, truck and trailer payments, fuel for trucks, equipment, wages for your help, and more.
Fluctuating expenses make this challenging. For example, in the dark winter months, lights are on longer and tank heaters are plugged in, resulting in higher electric bills. Build such variables into your budget.
If you don’t account for all these expenses up front, you can’t establish a price that covers your costs and pays you a wage. And if you set a price that’s too low, it’s not easy to go back to your customers and ask for more money.
“If you don’t build in a cushion for the times when you only have eight horses instead of 10, it’s going to be difficult to drastically increase your prices on your existing clients without losing some more,” Piskun said.
For example, Piskun explains that if you have 10 horses in training and it costs $100,000 a year in feed and equipment to maintain them, you may have to price those horses’ care at $1,100 to cover your expenses and have money to live on. For some trainers, income from training isn’t enough to achieve their desired lifestyle. Alternative sources of income can bring in additional revenue and generate the finances needed to achieve your goals. “Sponsorships, clinics, property investments, and even the income from a spouse or partner who works outside the business should be factored in,” Piskun said.
Read the rest of this article at the links at the beginning of this post.
