How this Section Works

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On This Page

Getting Started 

     Legal Business Entity

     Mission Statement

     Business Plan

     Internal Revenue Service 

     State Corporation Commission

     Agreements Contracts and Forms 

     Equine Lawyers Agriculture Lawyers Other Special Times for Lawyers

     General Horse Industry Resource Directory 

     Competition Information and Analysis

If Business Goes Badly

Taxes

   Your Horse Business Income Tax Return

   Stallion Syndicates, Mare Lease Programs, Pinhooking

Equine Business Insurance

     Liability Insurance Property & Casualty Insurance 

     Care Custody and Control Insurance  Summer Camp Insurance

     Workers Compensation, Critical Illness, Disability, or Key Man Insurance and Pet Trusts

Banking, Financing 

    The Farm Credit System 

    Rural Non-Farm Financing

    Other Land Lending, Equipment, or Capital Improvement Specialists 

    Rural Community Grants

    Small Business Administration Loans

    Other Capital Sources

Accounting and Business Management Tools 

   Reservation Management Software

   Membership Rosters and Billing

   Horse Record Keeping Tools

   Service Statistics Recordkeeping and Reports

   State and National Statistics and Reports  

   Close the Sale - Make Payment Easy

Safety, Emergency, and Disaster Planning

Board of Directors
    Size and Makeup of a  Board of Directors
    Board Meeting Frequency and Convenience
    Non-Profit Board Resources

Other Resources 

Other Pages in This Section

Equine Business Resources Main Page (Index)

Equine Business Insurance

Human Resources Staffing and Management

Horse Business Advertising and Marketing

NEWS FLASH-OUR 2008 Best Humane Business Innovation Award went to the National Black Farmers Association for Project Wanted Horse

How This Horse Business Resource Section Works   (Top of Page)

The focus of the site is to be rich in content, and easy to read onscreen.  A majority of small horse businesses are on slow dial-up connections (cannot afford cable or DSL, or it is not available in their rural area) and using older versions of operating systems and browsers on older computer platforms (usually acquired from people who upgraded to newer technology.)  Therefore, you won't see tons of frames, flash, page transitions, and multimedia effects here.  We avoid colored text on dark backgrounds, which can be nearly impossible to read on a monitor.  We even keep the pictures small and to a minimum to facilitate page loading. So if the visual effects are bland, you now know why!  We don't want our visitors to give up due to long page-loads and hard to read color combinations and time-consuming bells and whistles - they just don't have that kind of time.

Getting Started                              (Top of Page)

Whether you are starting from scratch, acquiring an existing horse operation, or going into partnership with another horse professional, you have many aspects to consider, and decisions to make.  How the business will be structured, what services it offers, how it will attract business, and how it will pay the bills.  For a business that will own and care for horses, this is especially critical.  If any other endeavor fails, as two out of three start-up businesses do, it is painful but not impossible for the entrepreneur to retrench to an apartment and beat the pavement for another job.  The horses who are "employees" of a business cannot do that. So begin with a clear vision of what you want to accomplish, make a plan, work the plan, and based on experience, revise the plan.  Business planning is a responsibility for horsepeople, not an option.  With practice, it gets easier and more useful every year.

Mission Statement

Start with a one paragraph description of what your business does and why that service is valuable and trustworthy. 

Business Plan                                                   (Top of Page)

Every business, even a non-profit, needs a business plan.  No matter how small and part-time your start-up enterprise, no matter how well established, you need a plan that is refreshed every year with new information.  If you look for help from a lender, a large donor, or a government body, your application begins with either the business plan or elements from it.  It helps you stay on track, and helps choose the right course when you must make adjustments.  Studies show that businesses with a business plan are 30% more likely to succeed than those without one.

CAUTION:  You must write your own unique business plan.  You cannot copy someone else's and just use it.  Examples give you ideas of how to phrase some sections, but your horse business is not exactly the same as another.  Just by virtue of a different physical location,  many changes would need to be made to a "boilerplate" plan.  Editing or tweaking someone else's plan when you do not know their basic situation is difficult, so it is easy to end up with a disjointed version that doesn't describe your business well, or contains contradictory material.

The very exercise of crafting your plan has great value.  As you write each section, based on your beginning research, mission statement, and budget, you memorize facts and descriptive phrases that you will use in important face-to-face discussions, in marketing materials, and so on.  You will need to be able to instantly recall how you arrived at a financial projection or marketing decision to answer questions.  You need to come up with your "elevator speech," a one minute snapshot of your business for different audiences.  You will not internalize the information if you just purchase someone else's words to satisfy a business requirement.  It is absolutely necessary for you to own your business plan as your own vision,  your own understanding of the financials and how you will be successful, and express it in your own voice.  There are tools and resources on this page, and throughout our website to help you.

Business Planmaker Professional 2007 above can step you through the process.  You can also contact us for guidelines, step-by-step mentoring, research, writing and editing assistance, and brainstorming for an initial or updated plan.  Our coaching service is flexible to meet your needs.  Here is one of the tools our coaching clients receive.

The Best What If Budgeting and Forecasting Tool for Boarding Stables

Legal Business Entity                            (Top of Page)

FindLaw http://www.findlaw.com/ is probably the most comprehensive legal resource for consumers and businesspeople on the internet, with plenty of links to professionals.  It is a good way to generally educate yourself on the issues before going to an attorney for specific help with a specific problem.  The more you have your background materials together first, the easier it is for both of you to drill down to the meat of what you need the lawyer to do.  Here's their good overview section on small businesses .

Depending on the structure you choose, here is a partial list of items, which can result in a “skeleton” corporation, if not completed properly. Small businesses are extremely prone to neglecting some of this "housekeeping" for their business, which can be expensive in direct and hidden costs.

 makes forming a legal business entity a step-by-step procedure for most firms for handling all the paperwork filing, posting notices, and so on.  It is primarily a document service, and there are many documents to create and file for a company, so this is a good deal.  That said, because of the relationships of the owners, or your backers or family, and your goals, you may still need the advice of a qualified expert to choose the right form of business.  There can be financing, insurance and tax and bookkeeping issues with different structures that affect your choices.  Here's a simple example: a husband and wife own a hobby farm where they give riding lessons and train horses.  To simplify inheritance, they own everything 100% equally with full rights of survivorship.  Many couples own their homes this way.  However, for the business entity that operates on the farm this means many loans, grants, and purchasing preferences they could have received if the wife, as a woman, owned a majority share, are lost to them.  Get the advice of an expert who understands what you want to accomplish now and in the future and your specific circumstances.

BizFilings  is a direct competitor of Legal Zoom for businesses.  Besides providing the forms and stepped procedures, and completing filing and posting notices, BizFilings offers web seminars, CD's and other helpful education for choosing the right legal form for your business.

Ezonlinefilings.com  competes with both of the other services, specializing in LLCs and corporations with a somewhat more personal approach.

Internal Revenue Service, U.S. Department of the Treasury.  Information, forms, and state links for Small Business and Self-Employed

The American Horse Council, the national trade association for the horse industry, publishes these books that are helpful for understanding tax issues specific to horse businesses, not including updates to the tax code for 2007, 2008 and 2009.

2006 Horse Owners and Breeders Tax Handbook This 1000 page book explains the Internal Revenue Code as it pertains to the U.S. horse industry for commercial enterprises. Handbook topics  include: Business versus hobby-including summaries of important court decisions; Forms of doing business; Sales, Exchanges and Involuntary conversions; Tax planning; Depreciation; Record keeping and accounting rules; and more. Free with certain levels of membership in the AHC, or available for $85.00 (plus $4.50 shipping and handling).

Tax Tips for Horse Owners - an 18-page booklet in outline form, covering the major tax issues affecting those involved with horses as a business. Free with certain levels of AHC membership or $10 per copy.
 

State Corporation Commission. 

The state in which you incorporate, and the state in which you conduct business, require you to periodically file information about your business to remain "in good standing."  If you don't do this, you can be subject to fines and penalties.  Also, you can lose your I.R.S. business classification.  This can not only affect taxes, but the "corporate veil" that protects your private assets from claims, financial or legal, against the business.  This can affect your liability insurance or workers' compensation insurance, with a higher premium than if these documents were up to date. 

If you ever decide to sell part or all of your business, these corporate records, or the absence of them, can affect how it is valued. That may sound like a pipe dream to the owner of a small horse training stable or boarding stable who is barely making a living.  But some day you may want to retire, or your waning health could force you to retire.  Perhaps there is no younger family member you have groomed to take over.  Two facts that could make you take this long-term goal more seriously:

1. If your business has survived the first five years, it is past the worst start up risk phase, and a candidate for sale.  Business brokers do a lively trade putting buyers and sellers together.  Almost 50% of established businesses are sold each year to new owners.  That includes art galleries, laundromats, warehouses, used tack consignment stores, tutoring businesses, pet sitting businesses, in short, anything you can think of with verifiable books, clean business documents, and an existing clientele.

2. Of all the ways to generate real wealth, developing and selling a business beats all other methods except inheritance:  it is better than working in a well-paid profession and/or working your way to the top of the corporate ladder, better than property development, other real estate investment, stock market or commodities market investing, or gambling.

Agreements Contracts and Forms                                    (Top of Page)          

More paperwork.  Yes, there are all kinds of written agreements that go with operating a horse business, from liability releases and boarding agreements, to bills of sale, to installment contract purchases, to employee non-compete agreements.  Don't just copy someone else's form, especially if it originated in another state!  Get expert assistance from an attorney with appropriate experience.  Most horse business insurance companies ask to see samples of the forms you use attached to your insurance application for their underwriter to review.  Most lenders want to see them in the appendix of your business plan. 

Here's a handy up-to-date program for general business forms, from Quicken, whose accounting software for small businesses and non-profits is well-established, and incorporates the expertise of Nolo Press, the legal self-help forms publishing house that has produced this kind of material commercially for decades.

Visit the website of a good equine attorney for breeding contracts, bills of sale, leases,  boarding contracts, consignment agreements and to arrange for specific advice.  Even if you choose to go the economy route and modify generic forms from a equine law book or website, since these contracts are for a business, not a one-off private party situation, be wise and at least have them all reviewed by a qualified expert before you use them.

Equine Lawyers

Equine Legal Solutions, Rachel K. McCart  Common forms, articles, links, blog, and an initial free 15 minute consultation via a toll-free telephone number.

HorseLawyers.com   Common forms, articles, links, and referrals.

L.B.Shawcross and Associates

Nelson and Tucker, PLC

Legal Equestrian. PLC

Julie I. Fershtman  frequently writes for horse publications.

Equine Law and Horsemanship Safety, Jan Dawson  Comprehensive statues and legal decisions in cases by state.

American Equine Services

Patrick J. Hurley and Associates, Yorba Linda, CA. This firm specializes in horse income tax issues.

Agriculture Lawyers

If you are going to operate your horse business on farm or ranch land, besides an expert in equine-specific matters, you may need a livestock or agriculture legal expert at some point.  Agriculture law attorneys represent farmers, landowners, and others in cases involving crop-growing, farming processes, dairy production, livestock, farmland use, government subsidization of farming, and more. Agriculture law attorneys may also handle cases involving seasonal and migrant farm workers.

State and federal laws govern a broad range of issues involving plants, animals, land use, food products, and environmental rules. Activities covered in agricultural law include everything from planting seeds and raising livestock, to harvesting and selling food products. As farming increasingly uses advanced technology, agricultural law has become more complex, covering areas affecting horses such as international trade, genetically modified organisms, pest management, farm waste, intellectual property, and real-estate agreements.

AgricultureLawyers

AgricultureLaw.com

Other Special Times for Lawyers

Other specialties include employment, copyright, trademark or patent, tax, environmental, insurance and bankruptcy situations.

We were fortunate to have a good firm in our town that included attorneys with expertise in all these areas.  By keeping a retainer on account with the firm, we had the peace of mind of knowing we had prompt access to someone who knew our company and the type of problem, with whom we could consult. 

General Horse Industry Resource Directory

2009 Horse Industry Directory    Sponsored by American Live Stock Insurance Company, this guide includes both national and international contacts covering every segment of the equine community. Updated annually, the 2009 Directory is the most definitive source of equine industry information available. The 2009 Horse Industry Directory includes breed registries; racing, rodeo, show, sport, and trails organizations; equine health and welfare organizations; interstate health requirements; statistical information on the horse industry; and an index of all the listings and telephone numbers are provided for easy access. The 2009 Horse Industry Directory is available for $25 per copy or free with certain levels of AHC membership.

Competition Information and Analysis                     (Top of Page)

You need to address your competition in your business plan and then your marketing plan. This is important not merely because any lender or investor expects to be informed of this critical factor, but also because it enables you to decide how to set your business apart, what to charge, where to locate, and many other issues of how you will do business and succeed.  Most successful companies keep tabs on their competition, and local and broader business trends, continuously.   By updating your competition information for your business plan at least annually, before writing your marketing plan for the new year,  you will be doing much better than the average small business. 

If Business Goes Badly                                                          (Top of Page)

First, let's recognize that accidents and circumstances beyond our control happen in life.  A spouse who is your working partner in the business falls ill, the plant that upheld half the economy in your county closes, etc.  If you are on the verge of financial trouble, look for help before you need it.  A good bankruptcy attorney can explain those options and how foreclosure works for normal mortgages.  Your banker can be resourceful if you have a good working relationship with him.  Many farm credit system banks and credit unions have more options to work with you than commercial retail banks and mortgage companies.

Also, make contingency plans for the horses.  See our Emergencies page for some ideas of what you can do and where you can turn for help.

Having a back-up plan doesn't mean you are being pessimistic and giving up.  It means you are being prudent and won't wait until a problem is a crisis and you have no options to start looking into your options!

Find experts and professionals from the beginning who know you and want to help you if hard times ever come.  Find experts who get paid for you to WIN, not paid for you to LOSE. 

TIP: Keep your books up-to-date so that you can see trends in income and expenses every month, not just quarterly or at year end tax time.  At bill paying times, watch for:

FindLaw's brief explanation, provided by the American Bar Association, of business Chapter 11 Bankruptcy  and the more desirable alternative, the workout plan .

Taxes                                                                                           (Top of Page)

One of the time-consuming hassles of any business enterprises is taxes and corporation commission reports, and this is true for an equine commercial business.  You will have to file federal and state income tax returns, annual corporate reports and board meeting minutes, federal and state payroll taxes, file social security annual reports and pay and report quarterly and annual unemployment insurance and workers compensation insurance reports if you pay even one person (yourself, for example!) and, if you sell items, sales taxes in many states.  If you do not keep good records of expenses, payroll, cash disbursements, and income, capital improvements and depreciation, and hold corporate governance meetings, you can lose your corporate status, and be subject to fines or penalties.  Welcome to the wonderful world of red tape! Most payroll taxes must be paid monthly.  Payroll tax reports are generally filed quarterly.  If you do not have a payroll service take care of this for your business, ensure your accounting software produces compliant reports, and file them on time.  For a micro business like a horse ranch, the fines and penalties for late filing are usually more than the taxes themselves!

Here's the link to the IRS .Information, forms, and state links for Small Business and Self-Employed

Your Horse Business Income Tax Return

Here is information specific to I.R.S. business deductions of horse businesses from Patrick J. Hurley of Patrick J. Hurley and Associates, Yorba Linda, CA. This firm specializes in horse income tax issues.  In this article DEDUCTIONS FOR HORSE EXPENSES ON FEDERAL INCOME TAX RETURNS Hurley cites an obstetrician-gynecologist who was able to show that his Arabian horse breeding operation was conducted with a profit intention and not for personal pleasure. Here's his 10 Tips for Horse Business Taxes for a recent issue of the Quarter Horse Journal.

Jennifer Foster, CMA, CFM, is President of Foster Results farm accounting and financial planning service.  In these tough economic times, she reports in an article in the Indiana Business News that the I.R.S. has stepped up auditing horse businesses, which are notorious for poor book-keeping and record-keeping.  

Stallion Syndicates, Mare Lease Programs, Pinhooking            (Top of Page)

There are legitimate speculative investments in horse breeding, showing, racing, and sales.  There are also scams that can get you into hot water with the I.R.S. and put innocent live animals at serious risk.  Be sure you understand thoroughly how the investment will make money, not just create losses for a tax shelter, and that your Equine lawyer and accountant are comfortable that the program will stand up to I.R.S. scrutiny.

Here is one scam, the ClassicStar LLC Mare Lease Program, that recently made many headlines in the Thoroughbred breeding industry as the principals were found to have defrauded the federal government of $200 million in tax revenues over several years:

TheHorse.com

Portland Business Journal

HarnessLink.com article with details and advice by Chris E. Wittstruck, an attorney and Standardbred owner, who is the founder and coordinator of the Racehorse Ownership Institute at Hofstra University, New York and a charter member of the Albany Law School Racing and Gaming Law Network.

Just in case you aren't aware of how over-saturated the Thoroughbred breeding industry is, and what is actually being done with these intelligent, sensitive live animals for the sake of tax avoidance, click here.  If ever there was an argument for the FLAT TAX, this is IT.

Business Insurance                                        (Top of Page)

Liability Insurance

Incorporation helps to protect your personal assets and credit from losses incurred by your equine program, up to a point.  This protection is called the corporate "veil."  However, it is possible for individuals and companies to take legal action against your business to seek, and possibly be awarded, monetary damages for mistakes made or harm done to horses, property, or people.  In America today, civil lawsuits are one of the major factors driving up the costs of just about everything, healthcare being one of the most publicized.  Sports and education are not much further down the list of lawsuit targets.  If you open your doors to the public, you are vulnerable, and if the officers or Board of Directors can be found to have mismanaged or failed to perform their duty, the "corporate veil" can be pierced.  That means they can be held personally liable sometimes.  Consequently, you owe it to your family and horses to obtain equine liability insurance for the type of operation you have, whether boarding, training, lessons, children's riding camp, trail rides, dude ranch, carriage rides or therapeutic riding lessons and hippotherapy.  Being wiped out financially by a lawsuit, no matter how frivolous, even if you finally are vindicated, can leave them stranded. 

If you offer trail rides or tourist carriage rides as a "concession" in a township or on public lands, the public agency that grants the concession will likely require you to provide proof of such insurance, with the public body named as an additional insured party.  If you visit other establishments with your horses, such as a school or a senior center, the management may wish to see a "certificate of insurance" as proof that you have coverage when booking your appearance.  Hotels and convention planners who schedule events at your location are also likely to ask for a "certificate of insurance" as part of their due diligence in booking your facility for an event.

Sometimes liability insurance is available at a reduced rate if you belong to a professional association.  For example, therapeutic riding centers that belong to NARHA are eligible for discounted insurance through the major equine underwriter, Markel Insurance, because they receive educational materials and standards as members that improves the likelihood they will operate in a manner that lowers the risk to the insurance company.  For some businesses, the reduced premiums of general liability insurance is one of the major benefits of their annual dues.  AQHA, USEF, USDF and other associations arrange discounts for their members from sponsor insurance companies in exchange for advertising and co-branding preferences.

Horsemen's United Association, Inc. general liability insurance for horse shows, clinics, rodeos, trail rides, events, etc. 

Markel Insurance Company Liability Insurance for Independent Trainer/Instructor, Farm Package & Liability Only, Excess/Umbrella Liability.

Property & Casualty Insurance                                             (Top of Page)

If your home, car, and other valuables are insured against loss or damage, so too must be the assets of your equine operation.  If you are using your personal property at home on your private farm or ranch to get started, check with your insurance agent or read your policy to see if any of the equipment or supplies of the business are covered.  There's a very good chance they are not, and you will need separate insurance for the business property, with an appropriate deductible.  While the recent Farm Bill that passed in Congress provides disaster relief grants and low-interest loans to horse breeders in addition to FEMA assistance available to homeowners and small businesses, horse businesses do not qualify for any of the extra special taxpayer funded help given to livestock producers and racetracks.  Not only would you stand in line for emergency assistance with other homeowners and small businesses after a disaster, but none of these government disaster relief programs help in the case of a single barn fire, or tack room theft.  Can you afford to be wiped out of the equipment and feed you have stored, or pay to board elsewhere while repairs are made?  

Once you have insurance in case of fire, theft, vandalism or storm (or in some areas, flood) you need to document your business property and keep these records in a secure off-site location.  Don't forget to update them at least annually.  Most businesses do this automatically as they prepare their taxes to account for capital improvements and depreciate assets over time.

Care Custody and Control Insurance                                  (Top of Page)

If you board or care for any horses other than your own, you may need care, custody and control insurance to protect you if something happens to the horse.  Check with your equine insurance agent, if you cannot tell from reading your general liability policy. 

Summer Camp Insurance                                                       (Top of Page)

If you have equine facility or event general liability insurance for board and care, training, or riding lessons or some other equine activity such as carriage rides, you do not necessarily have insurance for operating a summer camp for adults or children, whether a day camp or overnight one.  Check your policy and contact your agent.  Virtually every company requires you to answer a Camp Supplement Questionnaire to deal with such issues as food service, sanitation, risky side activities such as trampolines or swimming, and how you ensure children are not collected by unauthorized people at the end of the session.  Based on the number of days or weeks you offer the camp, the number of participants, the activities, the food or snacks, and the training and experience of the personnel conducting the camp, a "rider" to your regular policy can be issued for an extra premium to cover your camp operations.  It is extremely helpful if the counselors and instructors who conduct the camp also work with your horses at your facility the rest of the year, as opposed to hiring someone just for the season who must get up to speed.

Workers Compensation, Critical Illness, Disability, or Key Man Insurance and Pet Trusts

When you start a business that involves horsekeeping, you absolutely must have a funded plan for continuing daily operations for months if something happens to the key personnel.  Some of the worst horse neglect cases we have seen in recent years involving multiple horses were the result of a stable operator becoming sick, injured, or unable to work due to a disaster.  With no income, hay could not be purchased, hooves could not be trimmed, necessary veterinary care could not be given, utilities were cut off.  With no money to hire a stable hand to do chores, or a temporary trainer to work horses and give lessons, income further plummeted, the horse trailer was repossessed, and the mortgage was often foreclosed.  The result, abandoned horses without food and water.  Ninety-six percent (96%) of households in the U.S. would not survive 6 weeks financially if the primary wage earner was sick and unable to work.  Serious illnesses such as heart attack, stroke, and cancer strike people as young as 30, men and women alike.  These illnesses not only require medical bills to be paid, which most people buy health insurance to cover, but they normally require the person to be off the job for three to six months.  In other words, even if their medical bills are paid, their emergency fund or savings will not support their household budget for half their minimum recovery period.  If your business does not have three to six months worth of operating expenses available in liquid assets or a line of credit, you need some kind of catastrophic coverage.

Workers Compensation and Disability Insurance will cover up to 60% of the employee's after-tax earnings.  If the business operator is not paid a salary, or not paid a salary sufficient to cover his household budget (as is often the case with start-up small businesses) you may need Critical Illness or Key Man Insurance.  Workers Compensation and regular Disability Insurance do nothing to protect the necessary operational expenses for the horses, their purpose is to replace lost income for the worker.  Key Man Insurance compensates the business for the cost of replacing the key worker, or if a partner must buy out the interests of the family of another partner who cannot continue.

Investigate the costs of various types of coverage.  Budget for three to six months worth of expenses in the event all other sources of funding dry up or a natural disaster strikes, causing you to relocate and pay board for your horses elsewhere while you apply for assistance and rebuild.  Then include the cost of appropriate necessary coverage in your annual budget. 

NOTE:  If you are a livestock producer (breeder), or engaged in other farming or ranching, you can get disaster insurance through the USDA.  There are many other advantages to including another farming or ranching activity on your horse ranch as an additional profit center.  Contact us for more information.

Obtaining coverage will also demonstrate your prudence and good business practices and proper responsibility to the horses entrusted to your care, for any entity considering contracting with you for services, or providing grant monies. 

Critical Illness Insurance is one company offering this coverage option, explained in a simple article.

Pet Trusts Del Camino Quarterly Tip - Establishing a Pet Trust  can ensure that if something happens to you, your horses will be taken care of properly until a new manager can be obtained, or, if the business will be dissolved, until they can all be placed in new homes.

Banking, Financing                                             (Top of Page)

Money.  No matter where it comes from or goes to, running any kind of equine operation means cash flowing in and out of checking accounts, savings accounts, certificates of deposit, credit cards and lines of credit.  If you do your homework, you can establish a relationship with a bank that understands your needs.  That relationship can open the doors to many financial resources and advisors if you choose the right bank.

Are you willing to produce an agricultural product part-time on your horse operation?  If you have farm income of at least $500 per year or more, you are eligible for a wide range of home and farm related financing programs including loans for farm and land, operating expenses, loans and leases for farm equipment and vehicles, livestock and farm improvements, family expenses, equity lines of credit and more. Many farm programs apply to part time farmers.

Check out Farm Credit Services of Mid-America.

Will your horse business locate in a rural setting on current or former farm or ranch land?  Are you purchasing land from a retiring farmer or rancher?  Are you willing to produce an agricultural product on some of the land, and consider yourself a beginner farmer with ten or less years of farming or ranching experience?  If so, you may benefit most from establishing your accounts with a bank that specializes in serving the agricultural community.  There are special federally supported lending programs for small farmers ($500 to $250,000 in sales), beginning farmers, and retirement transition programs to keep rural land productive as farmers retire and their heirs choose not to remain on the land. 

To learn more about these federal subsidies, download this report:

Farm Credit System Report: Young and Beginning Farmers and Ranchers 2006.pdf

 You need Adobe Acrobat Reader to open it.   Or visit:

Northwest Farm Credit Services- Young and Beginning Producer Program

 Are you setting up shop in an urban or mixed urban/rural area that is being re-developed or is targeted for improvement?  Today, many community banks have business banking and loan officers who are right on top of programs for Empowerment Zones.  These are neighborhoods that are federally identified for special economic, home lending, or other assistance.  Surprisingly, many of the areas identified are not "poor" or "declining" but "under-developed."

A bank wants to see that you have a sound business plan, a reasonable budget, adequate skilled staff to manage the business and operational components of your business, and risk management plans should problems arise.  It does not matter whether you just want a checking account for receiving payments and paying bills, a mortgage for some land, or a small line of credit guaranteed by your personal assets to get started.  Your management and entrepreneurial skills can impress a bank and inspire it to go out of its way to save you money and succeed, or they can write you off as well-meaning but small fry.  Banks large and small invest in their communities and gain goodwill that translates into business by doing so.  Banks have relationships throughout those communities.  Choose a bank that is as likely to be a good networking and educational resource as it is a place to use the ATM.

The Farm Credit System                                                       (Top of Page)

The Farm Home Administration and 90 year old The Farm Credit System are federally mandated by act of Congress in 1916 to provide American agriculture, forestry, fishing and ranching with a dependable source of credit for land mortgages and crop financing, originally through 16 federal banks.  This was because federal and state chartered banks were not permitted to do so.  The system was vastly expanded in 1933 with the loss nationally of so many highly regulated retail banks serving both urban and rural America. (No banks closed in Canada during The Great Depression, due to the ability to open and close branches and make different kinds of loans.)  With additional infusions and tweaking by Congress via the USDA in 1971, the FCS experienced its lending heyday, with farm land prices doubling and inflation boosting crop prices until the land crash of 1986 when prices fell back to 1972 levels.  Congress stepped in due to public sentiment and rallies for "Farm Aid", and a system-wide bailout of $4 billion from the taxpayers in bonds consolidated the banks from 800 to 95, gave them time to get back to generally sound lending, and expanded its mandate into non-farm activities.  By the Farm Bill of 2006, billions of dollars have been made available through this system which is independent of regulation and transparency requirements affecting commercial and retail banks, credit unions, and savings and loan associations.  The annual taxpayer subsidy is approximately $1.2 billion. The primary funding source is the Federal Farm Credit Banks Funding Corporation. 

The associated Federal Agricultural Mortgage Corporation ( Farmer Mac ) is the agricultural equivalent of Fannie Mae or Freddie Mac, the other Government Sponsored Enterprises (GSEs) that make a secondary market for the debt issued by the FCS lenders.  Farmer Mac was created by the Agricultural Credit Act of 1987, as part of the Congressional FCS farmland bubble collapse bailout, which added a new Title VIII to the Farm Credit Act of 1971. It was expanded to include Farmer Mac II at the request of the USDA in 1990.  In 1991, the Farm Credit Administration's Office of Secondary Market Oversight was set up within the USDA to be the financial regular for Farmer Mac and set its minimum capital requirements.  To allow Farmer Mac to buy loans directly from lenders and issue guaranteed securities representing 100% of the principal of the purchased loans, and to relax capitalization requirements, Congress amended its operations in 1996.  Essentially, this enabled Farmer Mac to sell "derivatives" to speculators and thus have more money to lend to subprime agricultural borrowers or agri-businesses just like Fannie Mae and Freddie Mac, with whom it competed in the securities marketplace.

The system is represented to Congress and the USDA through its trade association, The Farm Credit Council.

The Farm Credit System is a nationwide network of lending institutions and specialized service organizations that are owned by their customers. Like a credit union or co-operative, FCS institutions may return annual profits to the member shareholder/customers in the form of rebates, which are tax-exempt.  It can also loan at super-competitive rates for land due to tax privileges over commercial banks, besides the government-backed sources of capital.  Today, through its banks and associations, the System provides about one-third of the total credit used by America's farmers, ranchers and cooperatives. One of the largest, CoBank (technically an Agricultural Credit Bank), has the exclusive right within the FCS to lend to agricultural cooperatives and to finance U.S. agricultural exports. The System also serves the credit needs of rural homeowners, electric and telephone cooperatives, and rural water systems.

The Farm Credit System even encourages purchasing or building country homes as vacation homes, hobby farms, or investments.  It will lend money to purchase bare lots that have little or no agricultural, forestry, mining or other land use potential. It will lend to borrowers who cannot qualify with adequate credit worthiness or ability to repay traditional bank loans, and do so at lower than bank interest rates and other terms.  The system is known, since the 1960's for lending up to 80% of the value of the collateral, whereas traditional banking considers over 40% debt-to-asset or debt-to-income risky, and over 70% likely to default within 16 months.

To find an FCS lender in your state, visit the Farm Credit Network and click on the map.  Here are some examples:

Northwest Farm Credit Services - serves Idaho, Washington, Montana, Oregon, and Alaska with 44 branch offices.

Farm Credit Services Southwest, ACA, PCA/FLCA - serves Arizona

Rural Non-Farm Financing                                                    (Top of Page)

The Farm Credit System encourages purchasing or building country homes as vacation homes, hobby farms, or investments.  It will lend money to purchase bare lots that have little or no agricultural, forestry, mining or other land use potential, because that helps keep the land "rural."

Northwest Farm Credit Country Home Loans

Other Land Lending, Equipment, or Capital Improvement Specialists

Janus Ag Finance

LandLoanSpecialists.com

Rural Community Grants

Rural Community Grant Programs provide funding of $500 to $5,000 to develop infrastructure for rural communities that improve their viability or social services.  Financing is available for building or improving facilities; purchasing necessary equipment to facilitate a program; and funding capital improvements. Other primary funding is required, and grants are not made to private individuals.  Most "rural communities" have been defined as towns and surrounding areas with populations of 2,500 or less.  However, the Federal Credit System has been trying to expand the scope to those with 50,000 residents to be able to lend in small cities and metropolitan suburbs.

Small Business Administration Loans                     (Top of Page)

The U.S. Small Business Administration guarantees loans to small businesses that are made by lenders (banks, savings and loans, and credit union) that the SBA has approved to handle the transactions.  The guarantee means the SBA will cover the bank's losses if the small business cannot repay the debt.  The lender has its own criteria for approving small business loans, which  can be somewhat different for those guaranteed by the SBA  (meaning more lenient) than not guaranteed.  This is not much different than federally guaranteed home mortgages, or, until recently, federally guaranteed student loans.  The advantages of the SBA loans are the low interest rates, partially possible due to federal subsidy, and partially due to the federal assumption of risk (guarantee) making it easy for the bank to "resell the paper."                      

The SBA, like the USDA, sets aside some of the loan guarantees for special types of businesses that are in industries the government wishes to encourage, for veterans, for women, for "empowerment zones" (parts of cities or counties the government wants to see developed or redeveloped, especially for the benefit of socially disadvantaged groups), and for small businesses that are majority owned by citizens belonging to ethnic or racial groups deemed by the government to be "socially disadvantaged."  In fact, since not enough entrepreneurs who are veterans, women, or minorities apply for these loans, and the credit requirements are not much more lenient than for normal bank loans, but the amount of paperwork is substantially greater, every year most of the millions of dollars Congress approves for small business loans goes unallocated.                                                                            

Every application for an SBA 7 (a) loan guaranty must be received from an SBA approved lender who has approved the transaction, including a credit check, subject to SBA approval.
In order to get a 7(a) loan, an applicant must:

So if you already have a good credit rating personally and for your business, can provide character references and proof of business management skills or courses taken, possess assets you can put up as collateral, and present a business plan budget that demonstrates to the government evaluator's satisfaction that you will be able to repay the loan from operating revenues after other expenses,  you may find the SBA Loan route advantageous. 
If you think an SBA Loan may be the way for you to go, check with your banker to find a lender who has expertise in writing SBA Loans and works with the SBA regularly.

Other Capital Sources                                                  (Top of Page)

Self-Funding:  The first place most entrepreneurs look for start-up funds is their own savings, real estate and other investments.  Typically, these are savings other than emergency or retirement funds accumulated while working another job, or the result of a windfall, such as an inheritance.

Family or Friend Investors or Lenders:  The next option for owners of start-up businesses is to seek either a loan or investment from family or friends who can afford to tie up the cash for at least five years, or lose it completely, in exchange for either interest on the loan, or a percentage of the business.  It is just as important to disclose a solid business plan to them as to a banker, and to follow normal business practices and agreements for the loan or the ownership investment.

 If you need to buy land or a farm for your horse business, it sometimes works for family members who are comfortable investing in real estate to purchase the facility, and lease it to your horse business.  The lease covers their costs of ownership, including debt service and taxes, and IF the land appreciates, they benefit from the increased equity.  You will need professional help to craft a lease agreement that specifies who is responsible for repairs and maintenance, who owns any capital improvements, and what recourse your business has if the owner decides to sell to a buyer who does not want your business to stay, or worse, defaults on the mortgage and the bank wants you off the foreclosed property. 

Angel Investors:  Angel investors are individuals, or clubs of accredited investors, who have the net worth and income to invest at high risk between $10,000 and $100,000 at a time in your business.  Typically they invest in new businesses in industries in which they have experience, usually they retired from businesses in the field.  They do expect to exit the business profitably in about five years,  and are looking for a 10-20% per annum return when they sell their shares.  That is a very high return rate, and they are not interested in a passive real estate appreciation return.   So if the doubling or quadrupling of the value of your business in 5 years would come only from appreciation of the farm's land value, and not the horse business or composting or organic farming business, Angel investors are unlikely to be interested in your proposal.  Typically,  they don't look at businesses that won't start with $1 million in capitalization, and the average initial investment per Angel is about $40,000.  Again, they expect to exit in about 5 years with the company worth around $5 million.  Usually they want to sell to venture capitalists, or the mergers and acquisitions arm of a large company to further grow the business.  As investors they are owners, and typically one of the Angels in a group of investors serves on your board.  Because they don't want to do much business travelling, they tend to invest in local start-ups close enough to drive to.  If you hope to buy out your early investors, to create a closely held family business, you are unlikely to attract any Angel investors.  Angel investors often expect to have to add cash to the business in a second round of financing along the line.  Everything you need to interest a banker or other financier you need to "pitch" an Angel investor.  That means after you write your business proposal, you need to write a two to five page Executive Summary.

Few traditional horse businesses can offer the rapid high return potential that fits the Angel investor model.  But if you are creating something unique that does have that potential, you need the advice and introductions afforded by an Angel Investment club.  Angels are out there, and horses intrigue most people.  However, Angels are not gamblers, and not breeders, and are not looking for a tax write off or a hobby, but wealthy retired business people who are not interested in a business built on your skills as a trainer, halter showman, jockey, or riding instructor.  Your business must be something that can be high growth, preferably a product that can be widely distributed.  Ideally, you have invented and can patent a product that revolutionizes the sport, that every discipline can use, and the industry leaders would want to buy you out if your product gains market share once it is in distribution.  If you think your novel horse-related business might fit the bill for Angel investing, pursue this option.

Venture Capitalists:  Generally this source of funding is looking for companies that have been operating for at least a couple of years, are sized about $5 million already, and can rapidly grow with another $7 to $10 million into something worth taking public (an Initial Public Offering) or selling to an even larger company (merger or acquisition) to make a very sizeable return.  Venture capitalists are unlikely sources of funds for start-up horse businesses, or even successful large horse farms, because the chances of making them REALLY big and selling them to ConAgra or Archer Daniels Midland, or Purina Mills, etc. are poor.

Accounting and Business Management Tools   (Top of Page)

Start with at least basic business book-keeping regardless of your accounting knowledge or skills.  It is important to keep business and personal finances separate, and to bill your very first client professionally. Your clients are your reputation, and your finances are mission critical to you and your horses. You need to track expenses clearly and promptly at all times to know how to manage your cash.  One of the easiest ways to get started is with QuickBooks Simple Start 2010 .  You can access lots of free tutorials for how to use QuickBooks, the program is not too complicated with features you don't want or need, and it is easy to upgrade to a more robust version later and transfer your data.

If you are starting your business with a fair to sizeable book of business, such as a half full barn of board and training clients, or a busy freelance lesson program, consider using a more complete accounting system from the beginning. You will also need a program that organizes payroll if you have employees.  That is because bank and other online payroll services are expensive, but you need to handle payroll reporting and taxes properly and promptly to avoid stiff penalties and fines.  When you are ready to upgrade, one advantage of using QuickBooks is a seamless path for growth and already being comfortable with its menus and data entry screens — its look and feel.  You can run professional reports on the health of your horse business and do payroll with QuickBooks Premier 2010 and customize it by adding extra features, like Customer Manager.  Because it has been on the market for a long time and has such a large customer base, many other business programs can receive information from QuickBooks, so you don't have to re-type it.

Ready to step up from QuickBooks and looking for a web-based solution you and your bookkeeper can access from anywhere?  Intacct offers full-featured accounting software for service-based industries, and a conversion path for current QuickBooks and Peachtree users, and full integration for Salesforce users.

Do you need help choosing the right accounting software, bookkeeping service, tax service, or evaluating the tax consequences of some equine business decisions?  Talk to a Certified Public Accountant who understands the horse industry if at all possible.  Here's one:

Carolyn Miller, CPA

The Best What If Budgeting and Forecasting Tool for Boarding Stables

Reservation Management Software                                   (Top of Page)

If your horse business includes a dude ranch, bed and breakfast, carriage service, campsites, wild horse watching tours, or trail rides, you know how important it is to ensure that reservations are managed so that you do not overbook but also do not turn down business holding reservations that "no show".  Manage your reservations professionally and effectively with software used by other hospitality businesses: hotels, motels, and resorts.

For information on one such reservations package Click Here!

Membership Rosters and Billing                                           (Top of Page)

If you participate in a horse supplies buying club, you may need to track member participation and bill their dues.  Don't know what this kind of cooperative that pools buying power to save money on hay, grain, bedding, and other regularly purchased supplies is all about?  Contact us.

If you put on horse shows for an association, you may also need to recruit and assign volunteers.

GiftWorks Volunteer Management Software  enables you to track Volunteer Rosters, Participation, Training completed, and Assignments and match volunteer availability with job and schedule requirements.  Horse businesses that put on schooling or association rated shows, gymkhanas, trail rides or trials, or community special events, do not need to stumble through spreadsheets or word processing documents to manage this complicated process and pile of changing information.

Even if your non-profit buying club, or horse show/competitive trail ride management firm is starting very small, with just a few horses and volunteers, the sooner you learn to take advantage of a database and scheduling package, the more time you will have to take care of other tasks that cannot be automated.

If you have the facilities to put on an in-barn "schooling" show, consider including this in your start-up business plan.  It is an excellent method for increasing revenue while marketing your fledgling enterprise.  Doing so does not have to be difficult. If you are located close to other stables, and do not compete with them directly for exactly the same business, you may be able to collaborate with them to offer a multi-barn event, building goodwill and gaining referrals.

Service Statistics Recordkeeping and Reports

As you apply for loans from banks or credit unions, or grants from foundations and government agencies, you need to give information about the need for your service and the market you are in.  You will immediately notice that being able to show a track record of service, and a demand for more service, as well as sales numbers in factual, statistical, measurable form is necessary. 

If you are overwhelmed with calls from people who want to take riding lessons, but cannot give a precise count of how many you turned away, you have missed the boat.  If you believe there is a huge demand for composted horse manure from local organic farmers and gardening clubs, but have only anecdotes but no data to back that up, you are going to lose credibility as well as have difficulty showing what the per dollar impact of a grant or loan might have.  The person or committee that reviews loan or grant requests needs to get "the most bang for the buck".  If they give or loan you money to start or expand a project, can you show there are more in your geographical area to be served that know about your service and want to take advantage of it?  Once the lender or donor gives you the money, can you show you served more, as expected, and met the goal of the loan or grant?  If the program is new, can you document pent up demand?

Presently, this is the area where horse businesses can learn a great deal from established micro businesses, and in so doing, help move the entire horse industry of small firms into the 21st century. 

If you want information on your local market and competition, but do not know how to get it, or do not have the time, please contact us.  We can do the research for you quickly and inexpensively.

State and National Statistics and Reports

At some point your figures from call logs and website visits and clients served get compared with similar horse businesses in your state, region, or nationally.  If you do not do it to show that a loan dollar invested in you is well-spent by comparison, the person or committee reviewing your grant or loan request probably will.  Loan officers at small banks and credit unions might access the corporate reports filed with your state's corporation commission for similar outfits, but large banks won't bother before turning you down.  Provide all the facts needed for their due diligence if you want your proposal to be taken seriously.  Especially do good homework if you ask for a business loan for a venture that is less than four years old or during a slowing economy.

You should make it your business to track whatever statistics are available in your field, so that you can use them in your marketing and grant writing materials.  Be sure to compare apples to apples - your weekly figures do not compare to an annual report unless you add up 52 weeks!  Don't leave it to your reader to do the math.  If your equine business does not have good state or national statistics collected by a good state or national professional association or government agency, such as the livestock board, or horse council or trail preservation consortium, write letters to urge the right people to take action so your tax dollars or association dues are being used to produce this valuable information.  Be a squeaky wheel. 

Scheduling Tools, Communication, and Software        (Top of Page)

Organization is a powerful tool.  Meeting with creative people and service providers can be time consuming, and difficult for horse trainers who are on the road to shows and clinics.

Google Apps is a Suite of Web-based applications that include Gmail (email & chat including mobile devices), Google Talk (text and voice), Google Calendar (including meetings and shared calendars), Google Docs (create, share, collaborate on documents real-time), Google Sites (team sharing of internal information, employee handbooks, marketing materials an artist or writer is designing for you, a report for the bookkeeper, etc.), Start Page to collect all of the applications together.

Microsoft Small Business on MSN has many tools for small businesses for free or nearly free.

Barn Management Tools

The American Veterinary Medical Association (AVMA) has established guidelines for the selection, care, client interaction with, appropriate activities of and well-being of animals that work in animal assisted activities and therapies.  If your horses work in the field of equine-assisted therapy or equine-assisted learning, you should review their recommendations and evaluate your program procedures and staff training to confirm that your valuable horses are managed in a way that optimizes their lives and contributions.

Horse Record Keeping Tools                                                   (Top of Page)

Most of the equine record software packages or print forms on the market are designed for single horse owners, breeding farms, or show training stables.  While most do a decent job of tracking vaccinations, worming, and shoeing, they usually include pedigree, breeding, showing, or billing features you don't need at a boarding stable, retirement or lay-up facility, carriage business, event management business, lesson academy, riding camp, equine studies program, or for-profit equine-assisted activities center.  If you purchase one, you are likely to be disappointed that you cannot track information you need about a school, therapy, or working horse, or a client's horse you are rehabilitating or a project horse you intend to rehome. 

If you purchase the software simply to track horse care and maintenance, most will do the job.  The majority are too rudimentary on the billing and collection side for accounting purposes.  Either they are not robust accounts receivable packages, or they do not interface smoothly with complete accounting packages like QuickBooks, or they do not offer PayPal or credit card or e-mail interfaces so that you must print paper invoices.  Some are deficient in all three areas.  These are actually better for pure animal care tracking, because they do not include extra incomplete features you will handle in good accounting software instead.

Here's an easy online calendar from Intervet for tracking health records.  It can be an excellent tool to collaborate with absentee owners, a good link to include in a packet for new horse owners, and is certainly a cost-free way to get started with good records on your horses from the beginning. Foal Care

Either way, if you intend to care for even a few horses, or have several clients, or plan to be in business more than a year, you need records.  Further, those records need to be accessible and easy to maintain.  For help setting up a simple but useful system that tracks your horses, and ensures you get paid for services rendered, contact us.

Meeting Coordination Tools                                             (Top of Page)

Scheduling a meeting of a planning committee, a board, part-time staff that work different shifts, or clients preparing for an out-of-barn show can soak up precious time.  Today, travel around town to attend a meeting is expensive in fuel as well as time.  People who would like to help you part-time or on an as-needed basis and have great skills to offer may live an impractical distance away or, due to a full time job, can only meet in the evening but can't drive to your farm at night.

Gain flexibility and participation by skilled advisors and part-time staff by holding meetings online, or a combination of online and at the farm.  Here are some tools to investigate, besides the traditional telephone conference call.  Can you do the part of your extra seasonal staff orientation and training that does not have to be hands on as an online seminar?  Can your board or officers meet this way some of the time?  How about standing committees of associations that you belong to?  Being on these committees can be valuable to your business, but can't take you away from the stable and revenue-producing activities.  That is probably true for the other members as well, so they may be quite receptive to learning to use online meeting tools. 

Can you offer online courses to supplement income?

Typically, the software offers access to both PC and Mac users, enables you to share your entire desktop, and transfer control to another user, as well as record the meeting.  Some offer video conferencing and/or audio conferencing, and current versions of most plans do not require downloading software to the attendees' computers.  Virtually all offer a free trial period and an unlimited number of sessions per month. Big variables among the industry leaders are:

1. the number of users per session ranging from 10 to 150,

2. the monthly fees ranging from $29 to $100,

3. whether or not they include onscreen live chat or integrated voice-over-internet (VOIP). 

Here are five major vendors for you to check out.

Safety, Emergency, and Disaster Planning                             (Top of Page)

September is National Emergency Preparedness Month each year.  The prestige and credibility of your equine business can be enhanced by providing community service as a partner with the Department of Homeland Security.  Using materials conveniently available through Ready.gov, you can distribute information and tools for large animal emergency planning, or coordinate local large stables, fairgrounds, racetracks, horse show venues, rodeo or roping arenas as temporary shelters in the event of an emergency. 

TIP: If your business works with the special needs population, consider a link on your website to: Disabilities/911, the disaster preparedness website for persons with disabilities.

As you develop your equine business' own safety, emergency, and disaster plans, don't forget to maintain good regular backups of your computer software and data, from email address books to online accounts to actual accounting data, contact databases, and horse records.  The first thing you may need to access following an evacuation may be your lists of clients and vendors.  No backups should be more than a week old, and if you need to subscribe to an automatic online service to get this peace of mind, you only need to use it once when a computer's hard disk crashes to realize it is worth every penny.

Community Needs and Your Impact                                         (Top of Page)

From the very beginning, collect and keep verifiable statistics on the equine community, and larger local community that you serve.  As your equine business grows, and you become eligible to apply for grants and participation on government and civic committees and boards that impact your mission, you need to clearly and briefly articulate the impact of your organization on the equine, and larger community. 

For example, let us say you have a therapeutic riding center that wants to assist wounded warriors who are amputees from Afghanistan and Iraq.  How many are there in your geographic area?  Nationally, as of mid-2007 there were 803.  What if you open your vision to include Vietnam veterans?  Nationally, there are 75,000 Vietnam veterans with disabilities.  Perhaps a reasonable client base live within a half hour drive of your center, and have conditions you are well equipped to serve.  This knowledge directs your grant requests toward a slightly different audience.

If you are writing a grant request for a horsemanship camp for at-risk youth, you must make the case that youth in your community are at risk, and that similar programs have had positive results for other communities.  What information can you cite from state, county, and local schools, churches, and government and non-profit youth programs concerning at-risk youth in your area?  What have been the historical experience trends?  Are there more or fewer documented cases over the last five years?  Are the cases specific to a time of year, or concentrated in particular zip codes?  What are the gender, age, literacy proficiency, and English skills of the at-risk youth?  You may find that no such statistics are available, once you make contact with and develop positive working relationships with local agencies.  Perhaps your first grant will actually be to set up a system for collecting and analyzing this data.  Perhaps you simply need to make telephone calls once monthly to complete a questionnaire you design to collect the data.  But make no mistake.  This data is valuable.

Close the Sale - Make Payment Easy                          (Top of Page)

PayPal.com   You must ask for the order!  When people visit your compelling website, they come from various searches.  The "landing page" may be the ad for a particular horse for lease.  Once someone navigates away from the one page where you have placed clickable reservation button or inquiry link, there is a 80% likelihood they will not return to it.  Put the links next to the topic. It may be your "home" page, or the story of a recent event you held.  There should be an appropriate PayPal button on that page. 

Do you have boarders? There should be a "Pay My Board Bill" button on that page.    PayPal enables people to immediately make a reservation while the spirit moves them.  It is safe, since they don't have to give you their credit card information.  The buttons are easy to build.  The money goes into your PayPal account, from which you can pay vendors directly, or transfer funds to checking or savings accounts.  If you are not using PayPal to its full potential, you are missing the boat!  Today's boarder would rather click an onscreen button and fill a few fields on a form, than write a check, address an envelope, and put a stamp on it, or drive 20 miles to hand deliver a check or have his credit or debit card swiped.  If you are not accepting online payments for board and training you are wasting both time and money. 

Board of Directors                                                       (Top of Page)

Having a Board of Directors is critical to the success of an organization.  For a start-up or a busy horse business, even a mom-and-pop, or family-run operation, it is imperative.  You must differentiate yourself from backyard horse trainer, breeder, or instructor wannabes or hobbyists.   

For all equine related businesses, profit and non-profit alike, that seek grants or loans from government agencies, or foundations,  having a board of directors speaks volumes about your ability to grow your business and step out of the statistics of overwhelming failure of entrepreneurial one-man-bands that have short lives and poor business practices because one horse trainer or one horse rescuer or one equine mental health therapist is trying to run a complex business single-handedly.

Speaking of being a one-man band, or mom-and-pop team, without a board of directors to provide support and a perspective one step emotionally removed from the day-to-day issues, sooner or later you will burn out.  If you are a riding instructor or retirement boarding stable operator who wants to do this until the day you can comfortably retire and just ride your own horses, or you are a horse trainer, or a travelling clinician, you need a group of supporters with whom you can share confidential business planning,  issues, and choices, including personnel management.  It is a big mistake to vent to clients or employees.  Many horse business operators are tempted to do so because with the long hours they work at the farm, the temptation is extreme.  Unlike other industries, there are few professional clubs with local chapters where they can talk business without customers present.  You are, however, in contact with employees and clients every day,  The urge to discuss farm affairs is strong, and in no time, concerned customers or well-meaning part-time employees who have differing goals are running your operation by ad hoc committee or developing conflicts among themselves that causes key employees or customers to pack up and take their skills, passions, or business elsewhere.

Board members not only have experience in areas you lack, and can thus help develop resources that would take you forever to "get up to speed on", but board members know people in your community.  Every person knows 250 people — whether it is a customer who can refer business, an employee who can refer more staff, or an investor who knows other people who might invest.  The same is true for your board of directors.  They know other people in their field, and they know other successful people generally, and key people, like suppliers, in your industry.  While a veterinarian on your horse lay-up and retirement facility board should not be expected to donate free veterinary care to paying retirees, he is probably called upon by manufacturers and wholesalers who have a marketing and sales budget.  The sales departments of these companies routinely give away samples, purchases raffle tickets, buy advertising in community events, etc. as normal ordinary sales expenses.  Your veterinary board member can funnel their largess to your outfit.  It is easy for him to ask the salesman during a regular quarterly delivery/sales call if XYZ company would like to buy a full page ad in ABC Sanctuary's upcoming Barn Sale promotional catalog going out to all the local horsepeople, or a sponsorship that underwrites their full page ad in the State Horse Monthly Magazine.   

But how to recruit a board, who to recruit for your board, and what their function should be, is what you need to master.  There are millions of businesses in the U.S.A. competing for the best, brightest, most capable board members to guide and enhance their organizations.  Some, as we have seen in 2008 repeatedly, are paying huge salaries to board members who are complete duds.  Before you begin recruiting, learn a little bit about how to identify the right people for your start-up or next-stage equine business, and how best to attract them and make the experience a win-win for both of you.

Size and Makeup of a  Board of Directors                      (Top of Page)
 

Boards of three to seven Directors are commonplace for start up companies. Smaller boards (3-5)
are usually most functional when you are starting a company, while larger boards (5-7) may be better when you are growing or your horse-related business is well established. An ideal five-Director Board might consist of two “insiders” or Directors representing the entrepreneur or founder(s), two investors (or major funders), and one Director with substantial experience in the business sector, agreed upon by both sides. Increasing the size of the Board is often done when added industry expertise would be valuable to grow the company. Equal numbers of investor representatives and entrepreneur representatives can then continue indefinitely, or until subsequent rounds of investment are required. Adding investors necessarily dilutes the entrepreneur's ownership in the company to less than fifty percent (50%) and that the Board, at that time, will add investors from the new group.  In the case of a non-profit, influence by the founders can diminish as funding by major donors or grantors requires oversight seats on the Board.

Board Meeting Frequency and Convenience                     (Top of Page)

Choose Directors who can readily attend your meetings because they live (and work) within a reasonable driving distance of the meeting place, preferably your stable.  Start-ups should hold monthly Board meetings until the company achieves positive cash flow, whether a for-profit business or a 501(c)3 non-profit.  After that stage, or so long as it is maintained, bimonthly or quarterly Board meetings may be sufficient. Some meetings can be conference calls or internet meetings, but most cannot, and should not.  It is important to the success of the venture that Directors get to know one another, and this can best be accomplished through face-to-face meetings. However, conference calls between regular Board meetings, especially to deal with crises, are commonplace.
 

These books offers some very practical advice.  Don't just buy one and skim it once.  Read it and keep it near your desk as a reminder, just as handy as a phone book.

Once you are ready to recruit a board, it is possible to reach out beyond your small circle of friends, acquaintances, vendors and business contacts to find experienced business board members interested in your field.  As important as it is to involve your local community influencers, it is also important to enlarge your horizons. 

Non-Profit Board Resources                                           (Top of Page)

Keep your non-profit board energized and effective with the quick newsletter from CompassPoint, called Board Cafe.   Here's an example of one containing a succinct discussion of how to handle contact between staff/volunteers and your board to prevent undermining you as CEO, but enable positive communication to flow for committees, programs, and, if they arise, complaints. CompassPoint Board Cafe Communication Article  Here's another on ways to improve board meetings, with links to other sites of value to board members:

Another excellent resource for board members is Board Source  with links to information and helpful articles specifically for those with oversight and mission responsibility.

Cost-Savings

 Visit our Quarterly Tips, Forums, Blog, or Products for Horse Businesses and Senior Horse Resources section for ways to save money.

Other Resources                                             (Top of Page)

The Del Camino Horse Owner Products and Services catalog offers some horse products of interest to owners of senior horses, and horses being retrained or rehabilitated.

The Del Camino Stable Manager's Product and Services catalog offers products and services of interest to those operating a horse facility.

The Del Camino forums provide a place to network with other horse non-profits, and the blog covers related timely topics.

Horse Welfare Statistics

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