My Business, Your Space

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Horses are big animals that require a lot of space. Right there, anyone whose business involves training horses or riders can find themselves in a bind. Whether purchased or leased, space in which to operate a horse business costs money. And the closer that space is to a sizeable metropolitan area with enough potential clients to support that business, the more that space is likely to cost.

If trainers or riding instructors lack the capital to buy a farm of their own in a good location, they have two choices: become someone else’s employee or use someone else’s space. Typically, small business owners using someone else’s space find appropriate office or warehouse or retail or manufacturing property, install phones and go to work. They pay monthly rent for the right to do business in that space, and have a lease that stipulates how long they can call the space their own. After that period, both parties review the arrangement and agree to continue it, change it, or end it.

The horse industry, of course, does things a little differently. Often, farms in the boarding business, and trainers looking for places to do business, work out mutually beneficial arrangements that do not involve payment of rent. Instead, farm owners simply allow trainers to set up their business in the owners’ barns because the trainers attract paying boarders and help fill the farms’ stalls. The trainers agree to bring their clients to the barn as boarders (and to pay board for any horses they may own) in exchange for “free” use of facilities they could not afford to buy. When these arrangements work well, they can be pure serendipity. Both parties win.

No Standard Business Model

Unfortunately, there is no standard business model for trainers and stable owners to follow. While the most typical scenario is for horse owners to pay monthly board directly to the farm owner and pay trainers separately for their services, it’s not the only model. In some cases, one or more trainers may lease an entire facility from an owner for a set monthly fee. Similarly, a trainer may take over a block of stalls or a complete aisle in a larger barn. Trainers are then free to charge their clients whatever they deem appropriate for board, but they owe the farm owner that set monthly payment whether the stalls are filled or not.

On the one hand, this arrangement involves the financial risk that a client with several horses may walk out leaving the trainer with a lot of empty stalls to pay for. On the other hand, it gives a highly successful trainer the opportunity to charge a premium for boarding a horse in their care and earn money from renting space as well as selling services.

There are other gray areas as well.

Barns may charge trainers additional rent for office space, tack rooms, grooming areas, and feed storage areas. Or, the stable owner may offer these at low or no cost as perks to trainers who keep a certain number of stalls filled with boarder-clients.

At some facilities, the owner may handle the farm’s maintenance, arrange for stall cleaning, feed two or three times daily, and include hay and bedding in the boarding fee. At others, trainers buy and store their own feed, hay, and bedding and are responsible for stall cleaning and all other horse care.

Some farm owners require trainers to sign a contract detailing the arrangements between them and are hands-on managers when it comes to scheduling the use of arenas and turnout areas. Others prefer much looser business arrangements that allow either party to get out of the deal on 30 days notice. They leave the details of space sharing to the trainers under their roof.

Whether the arrangement between the trainer and a stable owner is formal or informal, there are always two common denominators. First, the business location belongs to the owner and, ultimately, that person’s preferences and interests will trump the trainers’ inclinations. Second, though trainers run their business in space owned by someone else, farm owners consider these trainers independent contractors, not employees.

As independent business owners, trainers sink or swim on their own. They do their own marketing, find their own clients, and manage the day-to-day details of both lessons and horse care. They are responsible for their own liability insurance, for their own health insurance, and for paying their own taxes. If they hire help, they are responsible for paying those people and doing all bookkeeping, including tax withholding and reporting.

With such wide variation in how deals are structured and the risks inherent in running any business, trainers who want to set up shop in someone else’s space need to explore all aspects of any arrangement before they start unloading horses (see Questions sidebar on page 40).

Deal Breakers and Makers

Figuring out how to share arenas and turnout areas amicably with other trainers can be the most stressful part of running a business in a barn with multiple trainers. Some barn owners hold regular trainer meetings and post schedules for the use of arenas and barns. When trainers agree to a schedule and people adhere to their allotted times, sharing is not necessarily a problem. At other farms, owners leave everything up to the trainers themselves. Arrangements are somewhat informal and based on common sense.

Prospective trainers should ask what the rules are before they move in. For example, instructors teaching compatible disciplines or riders at the same level may share arena time. Certain rings may be dedicated to jumping or dressage or trail obstacles.

Some trainers find it very difficult to work in an indoor arena when two or three other instructors are giving lessons at the same time. The quality of the lesson declines, says one, because she winds up being a traffic cop. Instructors sharing a ring may have to agree that everyone in the ring should change direction and make sure their students change direction across the diagonal to avoid traffic jams. Some barns handle the situation by limiting the number of horses that can be in the arena at any one time.

Susan Casper and her daughter moved their S & S Stables four times before settling in Rye, New Hampshire. She notes that when snow and ice lock New England into winter, indoor arenas can get very crowded, and safety becomes a real issue. If one trainer is schooling an advanced jumper while another is giving a beginner lesson on the flat, things can go very wrong very quickly.

Casper advises asking if there are arena times reserved exclusively for horse training versus riding lessons. Also, consider what disciplines and levels other trainers are teaching, and think about whether your students will be able to share arena time without putting themselves in jeopardy.

At High Prairie Farms Equestrian Center in Parker, Colorado, all boarders must be under the direction of one of the trainers whose business is housed at the facility. General manager Rob Janson holds weekly trainer meetings every Thursday morning to discuss maintenance and issues related to sharing space. “Constant communication is vital to the success of the business,” he says.

Flexibility also helps. Twice a year, Janson looks at how the volume of business done by each trainer at the facility (currently there are five) has changed, and reallocates the 103 stalls, 17 turnout paddocks, and time in the center’s two indoor and 10 outdoor arenas. During their allotted times, trainers have complete control of the arena. They may allow someone else to come in to hack around or even give a lesson as long as they do not interfere with the scheduled trainer’s lesson.

Dressage instructor Jane McCloud has headquartered at The Paddock Riding Center in Los Angeles, California, for 30 years, long enough to consider one of the six rings there “her own.” She feels that the 10 to 12 trainers who operate out of the center manage to share its rings quite amicably.

Organization is the key to that success. Two rings are dedicated to hunter-jumper activities, two to dressage, and one to Western riding. Small turnout paddocks are available on a first-come, first-served basis, but by staggering their turnout times, the trainers manage to share them without hassles. Stable management posts scheduled times for two larger turnout areas.

Overall, McCloud feels the trainers are basically compatible and manage to share space without problems. For example, if she is giving a dressage lesson, others know they are welcome to ride around the outside of the dressage arena but not ride into it and disturb her lesson.

Renee Baker has run Baker Performance Horses out of The Paddock Riding Center for 16 years. Like McCloud, Baker has an arena she considers her own where she maintains her own trail obstacles. She has installed a hot walker and round pen which she shares with other trainers. “We all work together,” she agrees.

Jumping horse trainers often have unique sharing issues, she says, but they have resolved that at The Paddock by agreeing on different times of the day to work their horses.

Trainers work out arena schedules at The Paddock on an informal basis. “We thought about doing a big board and posting times,” she says, “but schedules constantly change when people are showing. We just work it out among ourselves.”

Baker advises trainers looking for space to make sure the geographic location is a suitable distance from a reasonable client base. The Paddock Riding Club is situated on 12 acres in the middle of the city, with access to 55 miles of trails in adjacent Griffith Park. Professionals working in the city have only a 10-minute drive to see their horses. On their own, none of the trainers could afford such valuable real estate.

Pros and Cons of Not Owning

That’s important, but so are other considerations. “You also want the place to be nice looking,” Baker adds. “It should be up to the standards of the type of client you want to attract.”

One advantage of not owning her place of business, says Baker, is that when something breaks, she doesn’t have to fix it herself. If a water pipe springs a leak or an arena light fixture needs replacement, there is someone available to take care of things for her.

Casper points out that there’s a flip side to that equation, however. Casper advises trainers to talk to farm owners about maintenance issues and to be clear about who is responsible for tasks both large and small. If there’s an automatic spray system for flies, for example, who pays for supplies and repairs? What daily, seasonal, or annual measures are taken to keep arena footing in good condition?

Casper also recalls problems at some locations with enforcement of barn rules. For example, if there is a no-dogs rule, does the management enforce that rule consistently? Will rules about parking or trailers be a problem for you or your existing clients? If a trainer knows in advance that one or more of the barn’s rules will be a problem for her or her clients, she should not arrive on the scene expecting to change them.

Janson notes that a client moving from one trainer to another at the same facility can be one of the touchiest issues for everyone. Since the trainers are not employees, he points out, High Prairie has no say about who a trainer accepts or doesn’t accept as a client. If a trainer chooses to end a relationship with a client and the client asks another trainer at the same barn to take them on, it can cause friction all around. “You need to learn which hat—your babysitting hat or your diplomacy hat—to put on from time to time,” Janson says.

Baker notes that when another trainer’s client asks her for help or suggests they would like to work with her, she always asks them if they have talked to their trainer about the proposed switch first. That’s just common courtesy, she says. Then she’ll call the trainer and make sure that the client is paid up before she picks up their horse.

“Always be professional about what you do. Don’t sneak around behind someone’s back. Be up front with everybody,” Baker says.

When trainers share the same attitudes and ethics, sharing facilities works smoothly for everyone.

The Barn Owner's Perspective

David Schmutz and his wife Geri Devlin-Schmutz own and operate The Paddock Riding Club in Los Angeles, California. Most of the Paddock’s 200 stalls are rented to boarders, and 80 percent of those boarders work with one of the 11 trainers whose businesses are headquartered there.

Trainers were operating businesses at The Paddock when the Schmutzes took over 17 years ago, and they have continued the arrangement. Schmutz acknowledges that over those years he has had to send a few trainers on their way but, he says, stable owners can minimize problems if they pay attention to a few key points before they invite a trainer to hang out their shingle:

• Make sure the trainer is financially sound. Ask for references from places they have done business at in the past. Get their permission to run a credit check or to talk to a loan officer who can vouch for their ability to make regular payments on time.

• Make sure they carry their own business liability insurance and that the stable can be named as an insured party. Don’t rely on a verbal promise—ask for written proof from their carrier.

• Investigate their reputation as horsemen. Contact peers in their particular industry. How do they treat their clients? Do their ethics meet the standards you expect at your facility? Do they get along easily with other trainers? Can they negotiate and compromise, or do they behave like a prima donna? You may have to word questions judiciously so that those you talk to feel comfortable answering your questions if their observations are less than positive.

Trainers at The Paddock do not control blocks of stalls as may be the case at other stables, Schmutz notes. Boarders sign contracts with The Paddock and pay him directly. Trainers are paid directly by their clients for any services provided. Other than the boarding contracts they sign for any horses of their own, Schmutz prefers not to have any other contractual agreement in place with the trainers. That way, he says, either party can end the relationship with 30 days notice if it does not prove satisfactory.

Stable owners using contracts with trainers at their facilities should be aware of the criteria the IRS uses to distinguish employees from independent contractors (go to www.irs.gov and enter “independent contractor” in the search box to find relevant articles and publications). If stable owners exert too much control over their relationships with trainers, they might cross the line between landlord and employer and become liable for Federal income tax withholding, Social Security withholding and payments, and unemployment taxes.—BK

Questions for Trainers to Consider

  • Is the barn’s geographic location suitable for your client base?
  • Will the facility’s appearance, atmosphere and amenities appeal to your clients?
  • Can the discipline you teach easily co-exist with those of other trainers at the barn?
  • Does the personality of the farm owner or manager seem compatible with your own?
  • How many trainers already do business at this barn?
  • Do their businesses complement or compete with your own?
  • Are there any “queen bees” among the existing trainers?
  • Are you comfortable with the other trainers, or is there potential for personality clashes?
  • Are shared arenas and paddocks already crowded at prime times or in bad weather?
  • What communication system is in place to organize the use of shared facilities?
  • Does the barn use contracts? Require insurance? How will this affect your business?
  • Will both you and your clients be comfortable with existing barn rules?
  • Does the owner enforce rules consistently and follow through on promises?
  • Will you be responsible for any aspects of maintenance?
  • Does the owner/manager have a reputation for quick response to maintenance requests?
  • Who is responsible for ordering and storing hay and bedding?
  • Who is responsible for feeding, stall cleaning, and other daily horse care?
  • Is someone on the premises 24/7 for horse emergencies?
  • What security measures are in place for tack, vehicles and horses?
  • What fire protection measures are in place?
  • Can you use any vet or farrier you prefer?

—BK

Contracts: Taking the Devil Out of the Details

The horse industry is notorious for verbal deals sealed with no more than a handshake.

Equine legal expert Julie Fershtman of Zausmer, Kaufman, August and Caldwell, P.C., in Farmington Hills, Michigan, says that can be penny wise and pound foolish. The cost of having a good contract drawn up is minimal (for example, Fershtman charges a flat fee for a customized owner-trainer agreement of $500 in Michigan or $600 out of state) compared to the $30,000 to $40,000 it might cost to litigate a dispute.

Barn owners typically require that trainers carry their own liability insurance and that they name the farm owner as an insured party. This should always be the farm owner’s first line of defense, Fershtman says. However, a well-worded contract should be the second.

Take that insurance, for instance. If the stable is named along with the trainer in a personal injury lawsuit, will the trainer’s insurance cover the stable’s legal defense? Worse yet, Fershtman says, what if the judge believes the stable belongs in the case based on the appearance of a principal-agent relationship between the stable and the trainer? A thoughtfully drafted contract can protect the farm owner in either case.

Contracts can protect trainers, too. Consider the problem faced by a trainer with, say, 22 horses under her care when the farm owner gives her 30 days notice to leave the premises. A contract describing the duration of the owner/trainer arrangement and how it can be terminated could protect the trainer from this business disaster.

Similarly, a contract can set limits on both sides that protect each person’s autonomy and privacy. For example, the trainer might agree that the owner is welcome to inspect the barn at any time, but the owner’s children or guests are not welcome unless invited by the trainer. A farm owner living on the premises might want to protect his or her privacy by stipulating things like hours of operation that the trainer must observe, or where trucks and trailers belonging to the trainer or her clients may park.

Fershtman covers issues such as independent contractor status and contracts between owners and trainers in her books, “Equine Law And Horse Sense” and “More Equine Law And Horse Sense” (both available from Horses & The Law Publishing at 1-866-5-EQUINE).

“These arrangements are mutually beneficial for both parties,” she says. “They are a way to keep stalls filled, and trainers get access to great real estate they cannot afford to buy themselves.” Everyone should take the arrangement seriously and professionally, she says, by going the extra distance beyond liability insurance to drawing up a suitable contract. —BK