I’ve seen and heard about some very thorough and detailed vettings that have taken place on horses before money changes hand on a sale. The savvy purchaser understands that no matter how experienced he is in evaluating horses, the professional opinion of a veterinarian is a good investment of time and money. What the skilled veterinarian easily sees from years of observation and testing can be the piece of information that makes the difference to the purchaser. What horseman can afford the risk of thousands of dollars of investment without a solid evaluation of the animal being purchased?
Isn’t it ironic that a professional horseman who understands the value of a thorough exam of a horse for investment often ignores the value of a thorough vetting of their horse business investment? I’m talking about a surface and x-ray analysis of the income sources for the horse business and the associated expenses. This usually occurs only once a year as the professional hurriedly glances over the income and expenses on the tax return, sighs at the number on the bottom line and scribbles a signature on the form before mailing just in time to beat the filing deadline.
If you vetted your business regularly with your partner, your management team or a knowledgeable outsider, you would be examining the following parts of your business:
- The net profit of the boarding operation on a per stall basis
- Review of current boarding, lesson and training fees and comparison with the rest of the market
- The profit generated from the training performed
- The average lesson income earned per hour
- Commissions earned on the sale of horses
- Net profit earned from sale of horses bred and raised by you
- Anticipated expenses for the next 18 months for capital expenses: trucks, trailers, tractors, farm equipment, buildings, school horses, breeding stock
Additionally, your vetting will include an inspection and evaluations of
- Your three year business vision
- Your customer service and relations program
- Your sales program
- Your marketing plan
- Your personal balance of life between work, rest and play
Your decision to be involved professionally, full or part time, in the horse business is a serious one. It’s as serious as investing $50,000 in a horse. The profitability of your horse business not only affects your financial health, it affects your physical and mental health every day along with the relationship with your family, your customers and your horses.
With calendar year businesses, the numbers are just about ready now for the tax preparer. Isn’t now the time to thoroughly vet your business for fiscal healthiness?