For professional horsemen qualified to instruct riding, lessons are the quickest route to earning money in the horse business. Think about the business transaction for a moment. The student takes a lesson lasting from 30 minutes to one hour, private or group and pays you immediately or in advance for your time and use of your lesson horse.
The ideal world for instructors would have all students provide their own horses. And some instructors enjoy that situation, but, most often in the beginner to intermediate student rider universe, the lesson mount is from your stable of lesson horses. Good lesson horses usually have simple names like Skip, Charlie and Whitey.
They are outstanding examples of patience, have calm attitudes and are loved by all of the students who ride them. The truth is your best lesson horses get more Christmas cards than you can count.
Undoubtedly, you have some horses in your lesson program that aren't as popular as others, but have good merits. Often, these other horses aren't as adaptable to just any student rider and have a more limited group they can serve.
Since limited use means less lesson revenue, this subject often brings up the common question, " How much does a lesson horse cost per year?"
The short answer: More than you might think.
The long answer. Takes many more words, formulas and calculations (yawn) than you want to read right now.
As an alternative, give some thought to the process of calculating the cost of maintaining your lesson horses.
Initial Cost
As an example, Ben a great horse, needs a rider with intermediate skills. Ben cost $3500 and is expected to be a lesson horse for 5 years. Ignoring the possibility that Ben may have a resale value when he is retired from the lesson program, straight line depreciation over 5 years is $700 per year. ($3500 divided by 5 years)
Annual Maintenance
This includes trim and shoes, normal veterinary expense, grooming, blankets and halters, special feed supplements, applicable insurance, etc, plus hay, grain, bedding and labor for normal care.
Opportunity Cost
If Ben occupies a stall that could be occupied by a "paying" boarded horse, the profit that would have been generated after boarding expenses is also an expense of Ben the lesson horse.
The key to analyze the contribution to profit generated by each of your lesson horses is to track how many lessons each is used for each month and annually. A low-tech, low cost clipboard with a chart and a pencil will accomplish the task.
The goal is to know how many lessons old Ben gives for the year.
Let's Do The Math
Assume:
- "Ben" depreciates at $700 per year.
- Annual maintenance totals $3040 per year.
- Opportunity cost of stall is $1200 per year.
- Wow! $4940 per year or as much as $411 per month!
- OK, you sell him for $3500 at the end of 5 years for retirement only $353 per month
- Better yet, Ben lives in the 'Back Barn', no opportunity cost. Only $253 per month.
In simplistic terms, $ 253 per month means if Ben is only giving 3 lessons per week or 12 lessons per month his cost per lesson is $ 21.00 ($ 253 divided by 12) $ 21.00 doesn't leave much to pay you or your paid instructor and other operating expenses, does it? You can see the plot thickens with higher costs and lower school horse utilization rates.
Sammy Davis, Jr. said it best, " Ouch, Babe"
Love your lesson horses, but make sure they are pulling their own weight in lesson revenue. Remember, if they aren't pulling the farm freight, the new owner will love them as much or more than you do.
If you are experiencing Deja Vu, this article is a reprint from a previous edition of Profitable Horseman newsletter.
Business analysis was the theme of my mastermind group's first virtual meeting this week.
