Very good discussion! What would the appropriate amount of profit a barn should expect, and why? As in what percentage?
For example, the standard business plan for any business is to make 100% to 110% profit compared to the cost expended. For example, if you charge $200 to spray for weeds, $50 should be for the spray, then $50 to pay labor, and then $100 profit.
What is the fair percentage of profit for stall boarding?
For less than $7 per day, I can think of better ways to spend my time than caring for a horse.
We don’t even board and our insurance is 6K per year just to host clinics.
[QUOTE=HorseCzar;8282559]
Very good discussion! What would the appropriate amount of profit a barn should expect, and why?[/QUOTE]
IMHO, when you’re talking about pricing and profit as a small business owner, you need to be concerned not only with what you want to pay yourself, but with what you want to be able to continue to invest in your business. Those amounts are going to vary based on location, cost of living, and your business growth goals.
I think that many folks who own boarding barns do so to augment the cost of having their own horses and as such, are most interested in breaking even. And that’s where some folks get into trouble. Many have outside jobs if they’re not a trainer and are offering just straight boarding.
For someone who wants managing a facility to be their bread and butter, I think that they have to take a look at the market and determine what a reasonable salary is for such a job and then work that into their business plan as a cost of doing business rather than relying on “profit”.
I think that it would be difficult to make a boarding barn profitable unless you are in a high demand, high income area. NoVA/DC/Chicago/Minneapolis come to mind. But out in the country somewhere in IA, WI, IL, MI? I just don’t think there’s a significant population to support high end boarding facilities that would make a very good business model.
Your average recreational rider is unlikely to care about (or be willing to pay for) amenities that make a place “worth” paying the big bucks. And you need to fill your stalls with paying boarders to make a go.
There are certainly some pricey barns being run as businesses near me in W MI. Since I recently returned to the state, I’ve taken a look at quite a few in fact. But they aren’t “just” boarding. They are offering training, lessons, hosting shows, hosting clinics, etc. Many require that a horse be in training or lessons. The boarding only places are much less expensive, tend to not have staff and are typically a private farm trying to augment the cost of having their own horses as I mentioned above.
Sorry…that wasn’t very helpful!
[QUOTE=airhorse;8282610]
We don’t even board and our insurance is 6K per year just to host clinics.[/QUOTE] I don’t understand this. Farm insurance is 6k a year because you hold clinics? If your farm isn’t a business, then your insurance would just be a homeowners insurance wouldn’t it?
[QUOTE=ToN Farm;8282682]
I don’t understand this. Farm insurance is 6k a year because you hold clinics? If your farm isn’t a business, then your insurance would just be a homeowners insurance wouldn’t it?[/QUOTE]
My friend runs a horse show series and I thought it came out to a few hundred per show.
[QUOTE=ToN Farm;8282682]
I don’t understand this. Farm insurance is 6k a year because you hold clinics? If your farm isn’t a business, then your insurance would just be a homeowners insurance wouldn’t it?[/QUOTE]
Homeowners insurance would emphatically not cover someone offering clinics, whether or not her barn had any boarders.
A farm can be a business without boarders.
[QUOTE=HorseCzar;8282090]
This has been some absolutely great discussions. I wish I could reply to each one, but everyone has said some excellent replies.
I do have a proposal and would be curious as to what people thought.
A breakdown such as this: charge $350/month for the stall. Then charge per bag for shavings ($5) then a bale of hay ($7), then charge a fee of $25 a day for administering feed, cleaning stalls, and daily turnout and brining back in. Offer the opportunity for self service, (they would just pay $25 the days they couldn’t do self service). Perhaps have an annual maintenence fee of $250 for general maintenence, (similar to a gym membership).
Would that be so unreasonable?[/QUOTE]
It should be a lot of fun keeping track of each charge. :no:
[QUOTE=ToN Farm;8282682]
I don’t understand this. Farm insurance is 6k a year because you hold clinics? If your farm isn’t a business, then your insurance would just be a homeowners insurance wouldn’t it?[/QUOTE]
If you hold clinics, you increase your risk. More risk, more insurance $$$$.
[QUOTE=HorseCzar;8282559]
Very good discussion! What would the appropriate amount of profit a barn should expect, and why? As in what percentage?
For example, the standard business plan for any business is to make 100% to 110% profit compared to the cost expended. For example, if you charge $200 to spray for weeds, $50 should be for the spray, then $50 to pay labor, and then $100 profit.
What is the fair percentage of profit for stall boarding?[/QUOTE]
I’m not saying that is not fair for horse boarding, but for my industry a 2 percent margin is average. Margins vary based on the revenue and based on the competitiveness of the market.
Honestly it is a difficult issue. If the board at my boarding barn increased right now, I’d need to take fewer lessons (at the same barn).
As far as the 7 dollars a day, it adds up to 50 a week, 200 a month, and over 2000 a year, on too of other horse expenses. I think that what we will really see is people getting out of horses and fewer and fewer boarding barns. While people will pay huge sums for boarding dogs, especially big dogs, that is a temporary expense. Paying for labor to care for horses everyday may be a luxury that we can simply no longer afford.
[QUOTE=HorseCzar;8282559]
Very good discussion! What would the appropriate amount of profit a barn should expect, and why? As in what percentage?
For example, the standard business plan for any business is to make 100% to 110% profit compared to the cost expended. For example, if you charge $200 to spray for weeds, $50 should be for the spray, then $50 to pay labor, and then $100 profit.
What is the fair percentage of profit for stall boarding?[/QUOTE]
That’s too simplistic of a way to look at a business plan. Maybe that’s how you’d set up a bookstore, but a horse farm is far too complex.
One way to set up a successful horse farm is to set board rates up as a loss leader. Then, you obviously have to require that additional services are purchased, which are profitable enough to offset the low board (ex. a show barn where you’re part of “the program”).
[QUOTE=HorseCzar;8282559]
Very good discussion! What would the appropriate amount of profit a barn should expect, and why? As in what percentage?
For example, the standard business plan for any business is to make 100% to 110% profit compared to the cost expended. For example, if you charge $200 to spray for weeds, $50 should be for the spray, then $50 to pay labor, and then $100 profit.
What is the fair percentage of profit for stall boarding?[/QUOTE]
I’m a capitalist. I have no idea what percentage is “appropriate.” If we were in Cuba or North Korea we could call a bureaucrat and they would tell us. Of course if we were in either of those places we’d likely also be in jail shortly after making the call. 
The proper percentage is the highest the barn owner can get from their clientele.
G.
Where I live, board is all over the map as far as rates. You can likely find a stall for under $400 or for more than $1000. Similarly you can find pasture from $100.00 and up.
Does the availability of low cost board negatively impact the ability for other barns to charge more? No. No, it does not. The more expensive barns just have to offer the facilities and/or services to warrant the higher costs.
So if barns in your area are too low cost to allow a new barn to be built/run profitably, then the new barn just has to assess the demand to ascertain what they can offer to make it possible to get a higher rate.
To imply that ALL barns need to charge more to make the market more viable is hinting at collusion. Which is not in the interest of the free market.
To imply that barns need to charge more so that board will continue to be available, is to imply that the market will bear the higher rate without losing any of its customer base.
A healthier market will be like my area: where there are many options for board, with different service levels and price points, allowing for entry level board or high service level board. This maximizes the customer base, while barn owners can decide which end of the spectrum they want to cater to.
(and I don’t know of any full service barns that don’t use their boarding operation to subsidize their own horses…which SHOULD be included in their calculation of “profit”)
I am assuming you do not run a business (hahahah)
There are many factors to take in to account when calculating “profit”.
Before or after expenses ? (net or gross)
Including depreciation and amortization ?
[QUOTE=Equibrit;8283134]
I am assuming you do not run a business (hahahah)
There are many factors to take in to account when calculating “profit”.
Before or after expenses ? (net or gross)
Including depreciation and amortization ?[/QUOTE]
It was a generalization. So, what is an appropriate profit for for stall boarding after all of the costs?
The appropriate profit is where what the market will bear intersects with what “motivation” a person needs offer boarding. (imagine this as a graph).
There is no “rule” when you are talking about a market economy.
For people like me, acceptable “profit” for boarding is paying for my personal horses.
the problem around here is so many places don’t really need to make a profit. they are subsitized some way. I can’t spell that.
I can’t think of ONE competitor that needs to make a profit. Sucks to be me.
[QUOTE=HorseCzar;8283215]
It was a generalization. So, what is an appropriate profit for for stall boarding after all of the costs?[/QUOTE]
You would have to ask the person expecting to make the profit. I am not in that business. My bank manager once commented that most businesses were lucky to be making 20% after expenses.
Statistics can be found here for small businesses; http://www.irs.gov/uac/SOI-Tax-Stats-S-Corporation-Statistics
[QUOTE=Equibrit;8283334]
You would have to ask the person expecting to make the profit. I am not in that business. My bank manager once commented that most businesses were lucky to be making 20% after expenses.
Statistics can be found here for small businesses; http://www.irs.gov/uac/SOI-Tax-Stats-S-Corporation-Statistics[/QUOTE]
If we go with 20% profit margin we get these results :
$350 for stall, electricity, water, insurance, taxes, maintenence expenses, etc.
$210 a month for approximately 1 bale of hay a day. That is what my boarders demand.
$100 a month for bedding at the amount that is demanded.
$135 for paid labor per month for stall.
That comes to $695. With a 20% profit margin that comes to $834/month
So for about $140 a month I have to work all hours, and coordinate, and handle complaining, interrupted personal time and high maintenance people, for about $4.60 a day?
The above prices also allow for no new equipment purchased, maintained, repaired, or purchasing expansions for an indoor arena or outdoor arena.
Is that more reasonable?
Now I love horses and boarding, but if an extremely high rate causes people to need to move to pasture, or lot boarding, or leave horses altogether, that might need to sadly happen. It’s terrible but it’s true.
[QUOTE=onthebit;8282389]
Pasture board done well isn’t any cheaper than stall board, at least not the way we approach pasture board. [/QUOTE]
That’s a shockeroo, for sure. But your explanation does it justice. 6 Miles of wood fencing. You said it cost $7/foot to build. I read that “miles” word and thought about all the work involved in maintaining it! That’s not a job I’d want.
I suppose that it’s a sign of maturity to realize that “your get what you pay for” and become willing to pay it… as well as listen to suppliers explain the costs behind their business.
OP, it sounds like you want people to either pay the boarding costs that would allow you to live off the barns profit or for them to get out of horses.
I’ve only boarded at one place that was a true business. Show barn, full care, indoor and outdoor arena, training, etc. That board was the highest I’ve ever paid. But it was what I wanted at that time. Every other place has had barn owners that also had their own horses. So the boarding was a way to offset the costs of their lifestyle. Also at those barns there wasn’t actual staff. Several boarders cleaned all the stalls, fed, and did turn outs for reduced board. Only the training barn had paid employees.
I find your use of the term “boarders demanded” as in they tell you how much bedding their horse gets or how much hay. That is unusual in my experience. A barn charges x amount of dollars for a stall, turn out, up to five or six flakes of hay per day, stalls get one bag of bedding per day, etc. If you want more than what the barn offers for x dollars you will pay more. I’ve never been at a barn that I could demand the bo give me more than what the basic monthly board included without paying more.
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