Riding the Cash Coaster

The horse industry is notorious for its ups and downs when it comes to cash flow. Here are some tips for weathering the slow times.

“People go into the horse business because it’s their dream,” says Nina Judd of Horse Power in Pine Valley, Calif. “And then the dream turns into a nightmare.”

One of the reasons dreams of running one’s own horse farm frequently turn sour is the difficulty of managing cash flow in an industry with high, seasonally-sensitive operating expenses. The cash goes out almost as soon as it comes in—sometimes sooner. “When you see it all on a profit-and-loss statement,” says Joan Brierley, manager of Benchmark Farm in Brewster, N.Y., “the money-in and money-out is mind-boggling.”

When cash income or outlay fluctuates widely on a month-to-month basis, it can be hard to know exactly where your business stands. We asked equine business managers in different industry segments and in different parts of the country to tell us how they manage. Their advice reads like a syllabus for Business 101:

  • Have a plan and a budget
  • Watch your pricing
  • Watch your expenses
  • Save for a rainy day
  • Hone your billing practices
  • Diversify your business
  • Pay attention to trends and pay attention to clients

Have a Plan and a Budget

“I run my horse business like a regular business,” says Charles Wilhelm of C.W. Training in Castro Valley, Calif. “We started with a business plan and we have a budget for everything.”

From a cash standpoint, a business plan forces you to take a look at monthly income, monthly expenses and figure out in advance what months are going to give you the most trouble. “If you’re fluctuating up and down, figure out why you’re not being consistent, what’s causing it,” advises Wilhelm. “That’s the first thing you have to fix.” If you’re in the Midwest or Northeast, you may need to invest in an indoor arena to keep income flowing freely year-round. Or maybe you need to add more services. Michelle Stallings of Stallings Paint Horses in Aubrey, Texas, became an equine tax specialist to help fill some of the income dips the business experiences in Decem­ber.

Stallings notes that many people getting into the horse business suffer from what she calls Las Vegas Syndrome. They hope that the occasional killer horse sale will supplement normal revenues enough to keep their business afloat. If the basic services you offer don’t cover all your basic costs, she says, you’re eventually going to tank. A business plan not only shows that you intend to make a profit, but also provides the road map to get you there. From a legal perspective, Stallings adds, anyone in the horse industry had better have a business plan if the IRS comes calling.

Stallings and others use Quicken or Quickbooks and categorize both income and expenses to help them track how money is flowing in and out. If bookkeeping is Greek to you, get an accounting pro to help you initially and set the categories up so they will dump right into a Schedule C at tax time. Quickbooks also generates a variety of reports that can help owners check the cash health of their business. Do a profit-and-loss statement monthly, says Stallings, and take a hard look at everything at least quarterly. All of our business panelists find that categorizing income by source helps them see the strengths and weaknesses of the business more clearly.

Watch Your Pricing

Using and regularly reviewing your business plan is one of the best ways to make sure you are pricing your services fairly. This is an area in which many horse businesses notoriously fail. Stallings notes that many people start off in the horse business assuming that if they hang a shingle out and charge less than the guy up the road, customers will flock to them. The problem is, she says, they’re often deep in the hole before they realize that they aren’t making any money.

You need a minimum amount per horse per month just to break even. If that means adjusting your monthly training fee from $450 to $650, you have to do it. “If your area won’t support the price hike,” Stallings says, “there’s no sense to being in business.” Brierley occasionally canvasses other barns in her region to check prices so her rates stay both competitive and profitable. Nina Judd notes that when HorsePower rewrote its business plan, they decided to double the basic training board from $500 to $1,000 and quickly filled up the stalls. “The horse business is always a matter of reinventing yourself,” she says.

Because clients were grousing about monthly bills that fluctuated widely from month to month, Benchmark stopped charging separately for training at home, lessons at home, day fees for training at horses shows and board. Instead, they rolled all of these into a package of services, calculated the total annual tab and now bill clients 1/12 of this amount monthly. (Clients still pay their individual show costs including entry fees, stalls, shavings, braiding and the like.) The current monthly fee is $2,700. The parents are happy, Brierley says, because the basic monthly bill is never a surprise. As manager, she is happy because the new billing means the farm can manage its cash flow much more easily.

Watch Your Expenses

One rule of thumb for small businesses is to plan on earning two dollars for every one you want to spend. That’s another way of saying that tracking your expenses can be one of the best ways to boost your bottom line and earn more profits. In fact, all of our panelists advise becoming an expert bean counter.

Watching expenses means watching your profit-and-loss statements to see if they are meeting your monthly projections and pushing a pencil to understand where the break-even point is on capital investments. Stallings notes she dropped roping from the list of training services offered at her farm because the expenses for keeping cattle didn’t make it cost effective.

Stallings also ran the numbers to figure out if the cost of putting a roof on the shavings shed would be justified by the bedding savings (it did). She also calculated the break-even point of an oat bin large enough to hold a tractor trailer load and a crimper to increase oat digestion (five years). She is also careful not to make pets out of horses that are business assets. A broodmare, for example, gets two chances to produce a saleable foal before it’s sold off.

Since hay is one of his biggest expenses, Wilhelm weighs the hay fed to each horse. Not only has weighing hay reduced waste, he says, but he can also tell the vet exactly how much each horse is eating if a health crisis arises. Wilhelm is also careful to buy enough hay when prices are low in summer to get him through the winter and spring. When you’re feeding more than 60 head of horses, it makes a big difference whether the hay costs $95 a ton or $135 in the middle of winter.

Wilhelm also believes that it pays to invest in quality gear. He rides 20 horses a day and found that inexpensive saddle pads lasted only three or four months before he had to replace them. He ran the numbers and figured out that a $300 brand that lasts 2 to 2-1/2 years was actually the better buy in the long run.

Brierley is passionate about inventory control. She notes that when grooms and stable help have free access to supplies, it makes for liberal use;. when they have to ask for supplies or there’s a series of steps involved to get them, the supplies seem to last longer. At the same time, she cautions not to be penny-wise and pound-foolish. She always sends sufficient supplies to shows to avoid the much higher prices for supplies at the grounds. Benchmark carries hay and grain to shows, primarily to avoid dietary changes that might upset the horses, but Brierley has found it is not cost effective to take shavings. Again, you have to sit down and run the numbers.

Save For a Rainy Day

Our panelists were also unanimous in advising that every horse business should have a rainy-day fund large enough to cover two to four months of expenses in case income dips unexpectedly or a key person gets hurt or becomes ill. You can’t predict the training business, says Judd, and having a cushion is critical for smoothing out the dips in cash flow.

Horse sales are not a part of Benchmark’s ordinary business, so Brierley doesn’t automatically put any unexpected income from a sale into operations, but segregates into a savings account. That becomes the emergency fund she can depend on if a few clients leave and she needs to keep covering staff costs until the barn is full again.

Stallings, too, considers horse sales “bonus” income. She may put 10 to 20 percent of the revenue into the general fund but the rest gets swept into a certificate of deposit. Adding this money to a farm’s general fund gives you an unrealistic view of your average monthly income, she notes. If you use those numbers for budgeting the following year, you’ll get in to trouble.

Hone Your Billing Practices

Before you can turn the cash projections in your business plan into money in the bank, you have to bill your clients. Our horse pros liked using invoices generated by Quicken. The program immediately indicates whether clients are in arrears and automatically adds late fees.

All the pros were adamant that you should set and publish your prices so that clients clearly understand exactly what services they are paying for and what things (like blankets, braiding or whatever) are not included in their basic board or training fees. One thing they learned, says Judd, was not to allow people to negotiate.

That’s a key reason for never acting as a client’s banker, says Stallings. Don’t allow someone to get so far in arrears that their bill becomes daunting. When that happens, clients want to play “Let’s Make a Deal.” The Judds charge a flat $5 per day late fee. Stallings calculates a monthly late fee that works out to 18 percent per annum. Brierley gets on the phone as soon as a bill has gone unpaid for 30 days. Judd has taken some clients to small claims court and has always won her case. But, she notes, it’s better not to let the situation get to that point in the first place.

Everyone agreed that it is crucial to bill a month in advance for basic services such as board and training. Bill as quickly as possible for things like lessons and horse show day charges. Whenever possible, calculate and bill in advance for show entry and stall fees so that you are not paying for them up front out of your own pocket. Otherwise, you can wind up waiting 60 days before you are reimbursed.

Diversify Your Business

Multiple income streams can help even out the fluctuations in cash flow. While training, board and lessons commonly provide the biggest portion of total income for horse professionals, offering an array of other services can bring in extra income during flush times and fill in cash gaps when the economy sends recreational riders elsewhere.

“You can’t put all your eggs in one basket,” says Stallings. She and her husband depend mainly on training and showing income, but have also become certified equine appraisers, stand stallions, sell horses they have bred and offer tax services.

The Judd’s run a “horse motel” during the summer months. Besides training and lessons, husband Len offers several types of clinics and also shoes horses. Training horses is the core of Wilhelm’s business but he also trains people to train horses through apprenticeship and certification courses, does demonstrations and clinics, and has become a retail dealer for several products he believes in.

Pay Attention to Trends and Clients

The tax law revision in the 1980s changed the horse business, says Stallings. Most horse professionals no longer serve horsemen raising horses as a livestock commodity. They are serving riders who view their horses as a recreational outlet. Watching for similar trends is crucial, says Stallings, to keeping income flowing smoothly. You have to know who your customers are and what they want.

Watch trends in horse sports, breeds and bloodlines, she says. For example, popular bloodlines can change every four years. You have to be willing to swap mares and swap stallions.

The industry is also sensitive to the condition of the overall economy, so keep track of what is happening in politics and on Wall Street.

If you can predict what will have an impact on your business, you can reinvent yourself to take advantage of it. Stallings saw the potential of the Internet for horse

sales early on and was one of the first Paint breeders to develop an information-packed site that also listed horses for sale. She sold $180,000 worth of horses the first two years.

Also, take care of your clients, say our panelists. Good communication is key to keeping the ones you already have. Everyone cites clearly written contracts and policies as an essential part of that communication. “Customers have changed,” says Brierly, “and the new ones question more things.”

Nina Judd advises following up to make sure clients are satisfied and keeping a feeling of camaraderie going. “People work too hard,” says Len Judd. “The barn becomes their haven to relax, chill out, have fun.” Stallings notes that in her tax training they were told that if someone has had a positive experience with your business, they will tell two or three people. If they have had a bad experience, they will tell 15.

Wilhelm believes that the reason some barns have problems keeping their stalls full has to do with the way they treat their business and treat their clients. “You must do everything with honesty and integrity,” he says. “The horse business is a small world and word gets around. If you’re charging for a job, make sure the job is done.”

The Panelists

JOAN BRIERLEY has managed Kip Rosenthal’s Benchmark Farm for more than 10 years. Kip rents from 15 to 20 stalls for her riders’ horses and is currently showing out of Big Elm Farm in Brewster, New York. Benchmark is strictly a show barn and the majority of the farm’s clients are serious junior riders competing in equitation and jumping. Benchmark riders spend spring, summer and early fall in the Northeast and then head south for the Florida circuit when winter weather socks New England in during January, February and March. December is Joan’s least favorite month as the cash flows out by the bucketful for winter show deposits. May, June, July and August are other months when expenses are high and cash flow gets tight.

LEN and NINA JUDD call their Pine Valley, California, operation HorsePower ( The Judds have faced life-threatening health issues, a wildfire that destroyed their home and ranch buildings, and the loss of clients to a former student when they took a two-month sabbatical to Australia. They have bounced back each time with new knowledge of what it would take to make their business better. Len trains horses, gives lessons and does both horsemanship and cattle working clinics. Training fees provide about 50 percent of the ranch’s income. In the summer months, the Judds run a “horse motel” for weekend riders who want to take their horses into adjacent forest lands and desert horse owners looking for cooler weather for the hot months. Len also does shoeing and is a certified instructor for mounted patrols.

MICHELLE STALLINGS and her husband RONNY operate Stallings Paint Horses ( in Aubrey, Texas, where they do training, lessons, showing, breeding and horse sales. On average, the Stallings manage 45 horses and Ronny, who has been involved with Paints since 1967, spends most of his time on the road with show clients. In their show-oriented business, December and June are dead spots in their cash flow. Both Michelle and Ronny are certified equine appraisers and Michelle is an equine tax specialist. The Stallings also run a Paint breeding program and actively sell their horses on the Internet and elsewhere.

CHARLES WILHELM turned pro 10 years ago and started his business, C.W. Training (, in Castro Valley, California. Wilhelm began by leasing stalls in a boarding barn and credits a sound business plan for putting him in his own show barn in just four years. There are currently 63 horses at the facility with 50 in training, the others as boarders. Cash flows more readily in the busy winter months than in summer at this training-oriented barn. Wilhelm, a John Lyons-certified trainer, offers training, lessons, demonstrations, clinics, a full training certification program and a 1- to 3-week apprenticeship program. Wilhelm has his own line of training videos and is a sales agent for Sugar Creek custom saddles, Supracor saddle pads and Wild Horse Designs.






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