Horse Boarding as a Business
This article examines the following business aspects of boarding horses:
- Profitability. It is relatively easy to make money from boarding horses. The challenge is to make enough to justify the time and effort one invests. Unless one covers the financial basics, one can easily end up working for less than the minimum wage.
- Disputes. Disagreements with clients is both unpleasant and bad for business. We discuss how to prevent them.
- Liability. If a horse becomes ill or dies while on your premises, the owner may try to hold you legally and financially responsible, especially if the horse is valuable or if the owner has a stong emotional attachment to it. Below are some tips on how to protect yourself.
Types of Horse Boarding
The following table shows the main categories of horse boarding, along with some sample numbers showing monthly figures per horse. Please note that these numbers are merely for illustrative purposes and the actual numbers will depend on the location of the boarding facilities (see later in this document for more detailed discussion).
|Field and Unserviced Stall||100||15||85||1||55||4000|
|Serviced Stall and Field||250||80||170||15||11.33||4000|
|Premium Serviced Stall||300||80||220||25||8.8||4000|
|Training and Serviced Stall||500||80||420||20||21||7000|
Following are some bread definitions of these categories. It should be noted that there are a number of variations on each of these, so the definitions are merely approximate:
- Field. Normally, just a fenced in grass area. The investment is the up-front costs of fencing the land in (if you do not already have the land, the investment will be greater). A monthly cost of $10/horse and 1 hours/horse is to cover routine maintenance (e.g. fixing the fence and eventually replacing it, smoothing and replanting the field once every 5-10 years).
- Field and Unserviced Stall. In addition to the field, you provide a horse stall. However, the horse owner is responsable for mucking out the stall and all maintenance of the horse. Investment is higher than in the previous case as you need to build horse stalls and also storage facilities for bedding and food (e.g. hay). Although you will bulk purchase bedding and food, the individual horse owner reimburses you for the costs of whatever bedding and food they consume during the month. Consequently, while there is a higher level of investment, the monthly costs are almost identical, being $5 more than the case of a field to cover water and electricity.
- Serviced Stall and Field. In this case, in exchange for a higher monthly fee, you perform the daily mucking out and routine horse maintenance (e.g. cleaning hooves) rather than the owner. Costs are higher as you need to pay for bedding, food and assorted (e.g. salt and minerals) as these are normally included in the monthly fee rather than paid seperately. Although both revenue and profit are higher than in the two previous cases, the amount of labour is greatly increased so the per-hour profit is less.
- Premium Serviced Stall. The services associated with a 'serviced stall' are essentially the basics for keeping a horse reasonably healthy. In addition to this, there are many additional 'nice-to-have' services that one can also provide. For example, regular brushing down of the horse, periodic shower, exercising. Depending on your region, such additional services may secure a higher price for stabling. If you perform the additional services yourself, this will lead to additional profit as well, but many stall managers find that the increase in profit is small relative to the increase in time invested. If you have to pay someone to perform the additional services, there is a risk of paying out more in labour costs than you gain in additional revenue. In both cases, most stable owners find that the profit/hour is lower with such premium services and that financially it makes more sense to provide the basic set of services.
- Training and Serviced Stall. Offering a combined package of training and stabling can significantly increase revenue per horse. One needs to make an increased investment in training facilities and also be recognised as a capable trainer, so this is not an option open to all stables.
It should be noted that the numbers provided in the above table vary greatly from region to region. For example, in one region field boarding my be $50/month and a serviced stall $250/month, in another region each of these may be double or even triple the price. Likewise, cost of items such as hay and bedding can vary greatly from one location to another. The numbers are NOT intended to show actual values, they are intended to show the RELATIVE values between the different types of boarding.
Although revenue increases as one adds more services, so does the amount of work, so revenue/hour and profit/hour may actually decline. Depending on how much labour costs you, or how much you value your own time, it may be more sensible to provide a more basic service. In particular, if providing a more basic service means that one has time for a larger number of horses, this may mean that both total profit and profit/hour is higher.
Calculating Revenue, Cost, Profit and hourly return
The amount of revenue you can earn per horse is dependent of two factors. One factor is the type of service you are offering (e.g. field boarding, stall boarding, etc.). The other factor, which is equally important, is where you are located. In remote areas, a serviced stall may rent for under $200/month but in other areas it can be close to $1000/month. The best way to know what you could earn is simply to check out the other horse stables in the area to determine what types of services they provide and what their corresponding fees are. As you will not be able to charge much more than the competition and there is little point to charging much less, this is a fairly accurate indication of what your revenue per horse would be.
Once you know your revenue opportunity, the next factor is to calculate your costs in terms of:
- Regular expenditures associated with the horses, both the major costs (e.g. bedding, hay, supplemental feeds) and the minor costs (salt, minerals, electricity, water).
- General expenditures (e.g. maintenance of fencing, maintenance of fields, maintenance of stalls, insurance)
- Labour costs
- Capital costs (e.g. costs of building stables, fencing, paddocks)
You should work each of these items in terms of how much it costs per horse, per month. For capital costs, you can divide the cost by the number of years the item is good for and then by the number of horses you expect to have. For example, if fencing costs $12000 (including material and labour) and you expect it to last 10 years before the posts rot and need to be replaced, this works out to $1200 per year or $100 per month. For 5 horses, this is $20/horse/month just for fencing. It is wise to add 10% to the calculated cost, to allow for items overlooked or unforseen.
Now that you have your monthly revenue/horse and your monthly cost/horse, your profit per horse is the difference between the two (in other words, revenue minus cost).
The final step is to divide the profit per horse by the number of hours per month you spend on each horse, to determine what your profit per hour is. Note that this is probably the best case, since it is unlikely that your revenue will be higher than expected, but quite common for costs and labour to be higher than expected. For example, if you purchase a load of hay or straw and some of it has gone moldy, you may have to throw it away and bear the cost of repurchase.
Reviewing the Business
The above calculations will tell you how much profit/horse you will earn and how much profit/hour work you will earn. At this point, it is worth sitting back and reviewing if stabling horses still makes sense:
- Do not be surprised if the above calculation shows that you are earning $10/hour or less. Stable management is seldom a highly paid job and from a purely financial perspective you may have better options.
- Aside from the hourly wage, the next question is whether you can earn enough to live on. If you divide your required monthly income by the revenue per horse, this will tell you how many horses you have to stable. For example, if you need $2000 a month to live and each horse earns you $100/month, then you would need to stable 20 horses. Do you have the facilities (stalls, pasture), time and energy to take care of 20 horses? If you spend 45 minutes per day with each horse (mucking out, cleaning hooves, feeding, etc.) this works out to 15 hours per day and 105 hours per week.
- There is also the question of emotional rewards. If you love horses and working with horses, there are non-financial benefits. However, you need to make sure that you will still enjoy it if you are working with other people's horses (which is not as emotionally rewarding as your own) and when you are doing it full time rather than part time (mucking out is not unpleasant if you do it one hour per day, but can be a terrible chore if you do it for 5 hours every day). On the negative side, stabled horses need care every day of the year, and the resulting lack of weekends or days off can be difficult for many people.
- One also needs to consider what happens if you go on vacation, are sick, injured or simply want a day off. If you are providing field only this is not a big problem. However, if you have stalls, then you need to find someone reliable to take over while you are not available and factor their costs into the business costs and profitability.
Avoiding Disputes and Non-payment
The most common cause of disputes between stable managers and clients is over what is included in the monthly fee. When you take on a new horse and client, you will tell the client what is included in the monthly fees (e.g. stall, bedding, hay) and what is excluded (e.g. wormer, farrier). It is the natural tendency of stall owners to assume that anything not discussed is excluded, and many clients assume that items which are not specifically excluded are included in the monthly fee. To avoid disputes over who pays for what, one should:
- Have a contract. Even if you are just taking care of a friends horse, you should have a written contract. If you feel that your relationship doesn't permit this, then at least a written document which you will give them 'for clarification'.
- State includes and excludes. For every possible expense, state if it is included or excluded. Think of all expenses and extras, no matter how small. It is not unheard of for a relationship to break down over the cost of a $10 tube of worming paste which is given only once every three months.
- State the default is excludes.The contract should clearly state that any item which is not listed is excluded from the monthly fee and consequently the responsibility of the horse owner. A good format is to start by listing the items which are included, then stating that all other items are excluded 'including but not limited to the following list', then a list of the excluded items.
If possible, you should agree with the client that the contract specifies that each month is paid in advance. It is far from rare that clients do not pay their final bills, so arrangement for payment in advance will reduce your losses. If the client is reluctant to pay in advance, expain that you have to purchase all the bedding, food and so on in advance (often months in advance as bulk purchases are cheaper), so it is not unreasonable for you to have the monthly boarding paid by the begining of each month.
The contract should also clearly specify in writting what should be done should the horse become ill or require emergency medical treatment, including:
- Do you use your vet or does the client wish to specify his vet (in the latter case, what happens in a medical emergency if his vet is unavailable)?
- In the case of an emergency, what is the amount of money which the client authorises to spend on the horse?
- If the horse is beyond treatment, or if the cost exceeds the authorised amount, and the client is unreachable, are you authorised to have the horse put out of its suffering.
Finally, what is the minimum notice period should the clent wish to cancel the contract. A full month's notice is the minimum you should ask for. Remember that horses removed at short notice leave empty stalls until a replacement client can be found, which means lost money during the interim.
Legal Requirements, Insurance and Liability
There are a number of important legal requirements that need to be considered before starting a horse boarding business. These include:
- Building Permission. You will normally require building permission before construction (e.g. stalls, storage facilities, and so on). Even if you are merely converting existing buildings, converting an existing structure to a new use requires permission. Note that it may take some time to get permission and that your building application may in fact be rejected. Many areas require that you have special soiled bedding storage facilities, to prevent groundwater from being contaminated by runnoff.
- Horse Boarding. Check carefully with local authorities what permits you may require prior to boarding horses. In particular, what permits are required for boarding horses as part of a business, including the business permit itself.
- Bathrooms, Disabled Access, Parking. If you run a business, local and national regulations may require you to have suitable facilities for disabled access (e.g. ramps). In certain cases (e.g. if you provide food or drink on the premises) you may be required to have bathrooms as well. You may be required to have adequate off-street parking for clients.
If you have an insurance policy for your property, you should discuss with your insurance agent the impact of starting a horse business. In particular, insurance rates may go up if you are operating a business from your property. Likewise, if you are stocking large amounts of burnable items (e.g. straw, hay), this may be considered an additional fire risk and affect your insurance rates. Ensure that all such items are discussed with your insurance agent and documented in writting (otherwise, in the event of an insurance claim, you may find that the claim is disallowed).
You may wish to take out additional liability insurance, to protect yourself in the event of a horse being injured or dying while in your care. Such insurance should include both legal costs and liability costs. Note that a horse can become seriously ill through something minor (e.g. colic from bad hay or from drinking too much cold water after exercise), and even if you are not responsible the owner may take you to court, either out of a desire to recover the costs of the horse, or simply due to emotional distress causing the owner to lash out.