Tips From the Pros: Starting or Expanding a Boarding Operation

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You have years of knowledge and experience caring for, training and riding horses. Lately, you’ve noticed there are not enough stalls or training facilities available to serve the horse owners in your area. So you’ve decided it’s time to capitalize on the opportunity. Regardless of whether your goals are to establish a new stable or to expand your current facility to grow an existing customer base, there’s a lot to consider before advertising for clients.

The Groundwork

“Begin by creating a business plan,” said Jill Paxton, Director of Equestrian Studies and Equine Management at the University of Findlay in Ohio. A business plan allows you to identify short- and long-term goals and requires you to develop a strategy to achieve those goals.

A well-developed business plan will account for all of the costs associated with running a barn and ultimately its profitability. (See “Creating a Business Plan” on page 12 for more information.)

“A business plan is indicative of an operation having a profit motive, which is important to the IRS and it is essential for securing funding. Lenders will want to see one with any type of business loan application,” said Amy E. Sherrick-von Schiller, associate professor of Equine Business Management at Cazenovia College in New York.

During the process of developing a business plan, investigate which types of insurances are required for the services you plan to offer. “Typically some form of commercial general liability policy is required, as well as a Care, Custody and Control policy, since the facility will have other people’s horses in its care,” noted Sherrickvon Schiller.

If you already operate a stable, but you are planning to offer new services such as clinics or shows, additional insurance might be required in addition to the policy you already have. Inviting outside or instructors to use the facility might also require additional or different insurance coverage.

Policy rates vary by discipline and by the level of risk associated with the discipline. Depending on the insurance carrier, a perimeter fence to prevent a loose horse from exiting the property might also be required.

Insurance policies will protect to an extent, but further safeguard your investments with liability release forms. Require each client to sign liability release forms. “Arrange it so that clients sign a standard release form for riding their own or another’s horse on the property,” Paxton said. “A release should also address what happens if the horse is injured.”

Establish detailed contracts for all of your services and require that clients sign a contract prior to any services being provided. “Contracts may be needed for the boarding agreement, training agreement, shipping, sales or anything else the farm may offer,” Sherrick-von Schiller said. “Ask your attorney to write or review the contracts so they are effective and follow the applicable state laws.”

Numbers Game

The reality is that boarding facilities operate on slim profit margins.

“By the time costs are considered for hay, grain, bedding, labor for feeding, cleaning stalls, doing turnout, etc., the board fees typically do not leave a lot left over,” Sherrick-von Schiller said.

Maximize profits by calculating expected expenses. Feed, hay and bedding are substantial expenses; however, depending on the size of the facility, there can be opportunities to negotiate savings based on buying bulk bedding or grain, which can increase overall profit margins.

Labor costs are also significant. “A small barn with a couple of horses may not need extra labor,” Paxton said. When a facility reaches 10 or 20 boarders, the question becomes: How much labor will you need to hire to get the job done?

“There is a magic number (which varies, but often occurs around 10 horses) that a facility can handle—so many horses— at a minimum staffing level,” Paxton added. “Often people think adding two to three stalls will increase profits, when it actually increases the need for labor and may not pay for itself.”

Maintenance expenses are often overlooked. Consider the costs associated with mowing/plowing, arena maintenance, utilities and manure storage/removal.

In large part, your rates will depend on the amenities offered. A boarding stable that provides good care, but limited facilities, is unable to charge as much as neighboring barns with arenas, jumps, lights, trails, etc.

Facilities that offer conveniences such as heated wash stalls, bathrooms, heated viewing areas, indoor arenas, etc., are in a position to command higher rates. Not only do the higher rates cover the expenses associated with those luxuries, but the additional fees create an opportunity for increasing profit margins. Depending on your geographic location and target market, clients are willing to pay significantly more to have access to those comforts.

The number of horses your facility can support will largely depend on land for turnout and how you choose to utilize available paddocks. Are you planning on sustaining horses nutritionally on turnout, or will the paddocks primarily be used for exercise? Your answer to those questions will contribute to your expenses and the rate you define. Turnout might be an amenity that clients are willing to pay for, especially in areas where land prices are at a premium.

“All of these can be included or charged as additional fees,” Paxton said. “Do a market survey and see what the barns around you are charging so you’re not out of the ballpark.”

If “rough” board (24/7 turnout) is an option for clients, will there be times in extreme weather the horse will need to come in out of the elements? “Spell it all out ahead of time, so the owner is aware that the horse will be brought in for its own protection and that it will cost extra,” she emphasized.

Fees for Service

Look for opportunities to expand your facility through fees for additional services. Lessons, training, sales, trailering and/or hosting events offer opportunities for growth.

Before advertising new services, decide what you expect from your clients and what you will include in regular boarding services. Will you require all clients to follow the same deworming regiment? If so, the cost of medication and your time to administer the dewormer is calculated in the monthly board fee; however, if a regimented deworming program is not mandatory, offer to administer the medication for a nominal fee.

Fees for services add up. “Holding clients’ horses for the vet or farrier, medicating, grooming, etc. add up and do make a big difference,” Sherrick-von Schiller added.

Before jumping in and expanding your list of offerings, ask horse owners which services they would be willing to pay for if the services were offered at their facility. Depending on the approach you take, the cost of additional services can be included in monthly board or can be outlined on a separate fee schedule. Such services include, but are not limited to:

  • changing blankets
  • wrapping/unwrapping legs
  • poulticing
  • caring for injuries
  • soaking legs/hooves
  • videotaping a sales horse
  • administering medications
  • accommodating special turn-out requests ... and more.

Ask Questions

Although the services offered at your facility in large part are determined by your expertise and available staff, find out what services clients want, but can’t find.

Explore similar barns and find out what services are offered at those facilities. Decide which group of horse owners you can best serve. Recreational riders will likely demand fewer extras than upper-level competitors, but highly competitive riders and those who keep their horses in regular training are also willing to pay for more services.

Once you have determined which services you can offer, explore what the “going rate” is in your area. The “going rate” is only part of the equation. Clients are willing to pay for facilities with which they are satisfied, so don’t be afraid to charge a premium for premium facilities and services.

“Ask around and see why local boarders are happy where they are, or why they are not,” Sherrick-von Schiller suggested. Talk to tack shop owners, farriers and other people who regularly deal with horse owners to see what is needed in an area.

She went on to say that many times, “People (barn owners) do not do their homework to figure out what it will cost them to build/operate a boarding facility before diving in. Poor management can lead to unhappy horse owners who will leave, and a higher turnover rate with unhappy employees—neither of which are good for business.”

Time for Expansion

If your barn is full, you have a waiting list, or you simply have a desire to expand, it is possible. There can be significant costs associated with expansion, so first discuss your plans with your financial advisor or CPA.

Your motivation for expansion may include a desire for diversification to include other disciplines or as a response to clients’ requests for additional services. Maybe you’ve noticed the equestrian community in your area is growing due to external market conditions.

In any of those scenarios, don’t forget to consider the impact of each additional horse on the facility as a whole. “Will your feed and hay supplier be able to supply the increase?” Paxton questioned. A second supplier may be required to account for more horses.

Additionally, will you need more paddocks or arenas to accommodate more riders and horses? If plans do not include construction of new spaces, operating hours might need to be expanded and/or a schedule might be needed to ensure riders receive ample time in the arenas or covered pens.

Likely, you will need additional staff. Adding too many extra responsibilities to existing barn staff can lead to overworked employees and burnout as well as low morale, all of which are bad for business, Sherrick-von Schiller added.

Finally, don’t overlook how the addition of horses impacts insurance and maintenance costs.

Plans for expansion might look good on paper, but be sure your current clients are happy with the services provided and are an advocate for your business.

“Networking and word of mouth is the most effective means of getting the information out there in the horse industry,” Sherrick von- Schiller emphasized, “If current boarders are having a positive experience, they will share it. If current boarders are unhappy, they will most definitely share that, too. So before expansion begins, make sure your exiting boarders are happy.”

Good Business

Operating a successful boarding operation is a delicate balance between equine expertise and honed business skills. Cultivating an expertise in both areas can be challenging; however, it is necessary for long-term sustainability.

Clearly define the barn rules associated with ring use, turnout, maintenance and any service that might result in an additional fee. “The more specific you are ahead of time, the happier everyone will be because they know the expectations,” Paxton said. “When you are vague or the rules are undefined, people assume things from their own perspective and can become unhappy.”

Communicate clearly with your clients. “At the first of January each year, send a list of charges for the year—and that should remain consistent for 12 months,” she said. Include any mid-year increases in fuel or feed costs you anticipate to avoid raising prices part-way through the season.

“Clients will budget on those costs,” she added. Share your plans for expansion with existing boarders. Inform them about changes in turnout or the need to relocate their equipment. Allow them to be a part of the changes; don’t simply move their personal belongings and allow them to find out when they show up for their next ride.

Most importantly, “Be sure the existing boarders aren’t ‘losing’ anything they are paying for and are happy with the new boarders when they come in,” Sherrick-von Schiller concluded.

Take-Home Message

Starting or expanding a boarding operation can be a pleasurable, fulfilling and profitable undertaking. However, if not handled as a business, it can result in dissatisfaction for the boarders and employees, and possible financial ruin for the owner. Don’t take these steps lightly; seek out professional advice and include your CPA, insurance agent and attorney in all of your discussions to start or expand an equine boarding facility.