Horses are expensive, whether you have a huge equestrian facility or just a couple of “garden ponies.” However, when you decide to start a horse business, finances should be one of your top priorities because without the necessary capital, you won’t be able to get very far. To finance a horse business, you must have a detailed money management plan that takes all contingencies into account.
There are hundreds of different types of horse businesses, each of which is unique and requires different services. Therefore, your financial plans must be adapted to your individual idea and you must separate in your mind the elements that need against those who simply want. For example, a horse stable where the owner provides accommodation and riding lessons. could have a covered stadium, but it is not a requirement.
Review your current finances
Before you can finance a horse business, you’ll need to know how much liquid capital is currently available to you. A $10 million retirement plan is definitely a substantial asset, but it doesn’t provide you with the cash you need to start your equestrian business. Liquid capital is money that you can turn into cash in the blink of an eye, money that can be used to buy things now.
Also, your starting capital doesn’t include lines of credit and loans that might be available to you if you decide to pursue them. It is never a good idea to finance a horse business exclusively with borrowed money because you have no guarantee of success. If it takes three years for the business to get out of the red, you’ll owe that money much sooner.
Prepare for a business plan
The biggest mistake I have seen horse business owners make is not understanding that they are starting a business. business. It would be no different if you wanted to open a retail store or start a web design service. Running a business requires significant planning and organization, two words that “horses” aren’t always familiar with, so don’t underestimate the value of a business plan.
This document, which can be as long or as short as you like, should at a minimum contain a list of the items you will need to start your horse business. This can include property, structures, horses, farm equipment, implements, utility deposits, insurance, and many other items. Once you have this list, research the average prices of each and record them in your business plan.
Keep in mind, however, that in order to finance a horse business, you will have to deal with unexpected expenses that come along the way. No matter how prepared you are, it is nearly impossible to plan for every possible scenario. This means that you must have enough capital to cover not only the expected costs, but also those that you did not foresee.
Calculate your financial risk tolerance
To finance a horse business, you will probably need to borrow at least a portion of the initial capital required to get the operation off the ground. Very few people can manage to do this out of pocket, and even if you can, it’s important to leave some liquid capital free for personal emergencies. Don’t drop every penny in your savings account on none fledgling business.
Personally, I have a very low tolerance for financial risk, and subscribe to the Dave Ramsey Debt-Free Lifestyle, and will not start another horse business unless I can cover it 100 percent with my own money. However, I work every day with other horse business owners who bolster their own capital with 50 percent or even 75 percent borrowed money. It is a personal decision that you will have to make.
However, it is important that you understand your personal financial risk tolerance before determining how you will finance a horse business. This gives you guidelines within which you will have to work and sets boundaries for future decisions. The last thing you want is to take a substantial loan from a bank and then decide you don’t want to take the risk.
borrow the money
If you’ve decided you want to finance a horse business by taking out loans or lines of credit, you’ll need to find the best rates possible and be smart about your financial decisions. Accepting a line of credit with a great interest rate will mean that your expenses will increase significantly once your equestrian business is up and running. It will take a lot longer before it generates a profit.
Generally speaking, it’s less expensive to get a loan than a line of credit or (god forbid!) use credit cards you already own. For one thing, the APR is usually lower on a loan, which means you pay less in interest, and it’s usually easier to negotiate terms when you apply for a loan.
Talk to at least three different banks or credit unions before deciding where to get a loan. Ask about things like prepayment penalties, APRs, grace periods, and other factors that will determine how and when the loan is paid off. If you have an excellent credit rating, it shouldn’t be difficult to get the terms you want.
prepare for a fight
Financing a horse business is never easy, and sometimes downright frustrating. However, it helps if you keep your end goal in mind and focus on what you will do with the money once you get your hands on it. Be sure to devise a logical and reasonable method to ensure your financial security so that you don’t find yourself in a bind in the future.
