| Horses are expensive, whether you own an | | | | that you didn't foresee. |
| enormous equestrian facility or just a couple of | | | | Estimate Your Financial Risk Tolerance |
| "backyard ponies". When you decide to start a | | | | To finance a horse business, you will probably |
| horse business, however, finances should come to | | | | need to borrow at least a portion of the up-front |
| the top of your priorities because without the | | | | capital required to get the operation on its feet. |
| necessary capital, you won't be able to get very | | | | Very few people can manage to do this |
| far. To finance a horse business, you need to | | | | out-of-pocket, and even if you can, it's important |
| have a detailed money-management plan that | | | | to leave some liquid capital free for personal |
| allows for every contingency. | | | | emergencies. Don't drop every last dime of your |
| There are hundreds of different types of horse | | | | savings account into any fledgling business. |
| businesses, each of which is unique and requires | | | | Personally, I have a very low financial risk |
| different amenities. Therefore, your financial plans | | | | tolerance, and I subscribe to Dave Ramsey's |
| should be tailored to your individual idea, and you | | | | debt-free lifestyle, and I will not start another |
| should separate in your mind the items you will | | | | horse business unless I can cover it 100 percent |
| need versus those you will simply want. For | | | | with my own money. However, I work with other |
| example, a horse stable where the owner | | | | horse business owners every day who bolster |
| provides boarding and riding lessons could have an | | | | their own capital with 50 percent or even 75 |
| indoor arena, but it isn't a requirement. | | | | percent borrowed money. It's a personal decision |
| Examine Your Current Finances | | | | you will have to make. |
| Before you can finance a horse business, you'll | | | | However, it is important that you understand |
| need to know how much liquid capital is currently | | | | your personal financial risk tolerance before you |
| available to you. A $10 million retirement plan is | | | | determine how you will finance a horse business. |
| definitely a substantial asset, but it doesn't provide | | | | This gives you guidelines within which you will |
| you with the cash you need to start your | | | | have to work, and sets boundaries for future |
| equestrian business. Liquid capital is the money | | | | decisions. The last thing you want is to accept a |
| that you can convert to cash at the drop of a | | | | substantial loan from a bank, then decide that you |
| hat, money that can be used to buy things now. | | | | don't want to assume the risk. |
| Furthermore, your start-up capital doesn't include | | | | Borrow the Money |
| lines of credit and loans that might be available to | | | | If you've decided that you want to finance a |
| you should you decide to pursue them. It is never | | | | horse business by taking out loans or lines of |
| a good idea to finance a horse business | | | | credit, you will need to find the best rates you |
| exclusively on borrowed dough because you have | | | | possibly can and be smart about your financial |
| no guarantees of success. If the business takes | | | | decisions. Accepting a line of credit with a large |
| three years to move out of the red, you'll owe | | | | interest rate will mean that your expenses |
| that money much sooner. | | | | increase significantly once your equestrian business |
| Prepare a Business Plan | | | | is up and running. It will be that much longer |
| The biggest mistake that I've seen horse business | | | | before you generate a profit. |
| owners make is failing to understand that they | | | | Generally speaking, it is less expensive to take |
| are starting a business. It would be no different if | | | | out a loan rather than a line of credit, or (God |
| you wanted to open a retail shop or start a web | | | | forbid!) use credit cards that you already own. For |
| design service. A business requires significant | | | | one thing, the APR is usually lower on a loan, |
| planning and organization-two words with which | | | | which means you pay less interest, and it is |
| "horse people" aren't always familiar-so don't | | | | generally easier to negotiate the terms when |
| underestimate the value of a business plan. | | | | you're applying for a loan. |
| This document, which can be as long or as short | | | | Talk to at least three different banks or credit |
| as you would like, should at the minimum contain | | | | unions before you decide where to take out a |
| a list of the items you will need to start your | | | | loan. Ask about things like pre-payment penalties, |
| horse business. This might include property, | | | | APRs, grace periods and other factors that will |
| structures, horses, farm equipment, tack, utility | | | | determine how and when the loan is paid back. If |
| deposits, insurance and a host of other items. | | | | you have an excellent credit rating, it shouldn't be |
| Once you have this list, research the average | | | | difficult to obtain the terms you want. |
| prices for each and record them in your business | | | | Prepare for a Struggle |
| plan. | | | | It is never easy to finance a horse business, and |
| Realize, however, that to finance a horse | | | | sometimes it is downright frustrating. However, it |
| business, you will need to deal with unexpected | | | | helps if you keep your end-goal in mind, and focus |
| expenses that crop up along the way. It doesn't | | | | on what you will do with the money once you |
| matter how prepared you are-it is nearly | | | | have it in your hands. Make sure that you devise |
| impossible to plan for every possible scenario. This | | | | a logical and reasonable method of ensuring your |
| means that you should have sufficient capital to | | | | financial security so that you don't find yourself in |
| cover not only expected costs, but also those | | | | a jam down the road. |