This website is the one I've been searching for, for years; a compilation of knowledge on all things horsemanship, including practical advice on how to start an equestrian business.
No matter your experience level with horses or homesteading, I hope this is a place you can get lost in, and learn something along the way - we welcome everyone from vets, to lifelong ranchers, trainer, to nonprofits contributing.
Horses are big business. According to Alltech’s Steve Elliot, the annual economic impact of the equine industry accounts for 1.6 million full-time jobs and around $300 billion dollars, $102 billion of which is in the US.
With numerous equine businesses on the rise, investors are looking to cash in on the potential. Gambling on horse races isn’t the only revenue stream – sales, breeding, and professional stables all offer opportunities for considerable investments.
Whether you’re a rider, trainer, breeder, or owner of a horse-related business, you can attract investors to make connections and build your brand.
An investor is any person or entity who commits capital with the intent of receiving a return. Their goals, capabilities, motivations, and resources vary, however, and you may prefer one over another for your equine business.
If you’re not bootstrapping your business, investors are one of the main players in your company and their involvement can significantly influence your success – or failure.
It’s not uncommon for business owners to rely on close acquaintances, friends, or family to invest in their business, especially in the horse world. These are personal investors, and though they can assist with your startup capital, there’s usually a limit to how much they can invest.
Conversely, it’s often easier to convince a friend or family member to invest in you.
Angel investors, also known as seed investors, private investors, or angel funders, are investors who put money into new entrepreneurs and small startups in a variety of industries, including horse businesses.
Typically, angel investors are one-off funding to accelerate the business, though they may provide ongoing investment to support the business as it grows. Angel investors may have more favorable terms than other types of investors, since they’re backing the entrepreneur more than the viability of the company.
A venture capitalist (VC) is an investor who provides capital to startups with long-term growth potential. They’re usually comprised of a group of well-off investors pooling funds, financial institutions, or investment banks.
Usually, VCs put their resources into companies that they feel have an opportunity to grow and generate a return. They often expect equity in the business and a say in the decisions. In exchange, entrepreneurs get open funding and the advice of an experienced and knowledgeable business person.
While some investors may back passion projects, they’re still looking for a potential return. Horses are expensive, and they want to know they’ll be earning.
Your business model has to ensure you – and your investors – will make money. The model should include all the details, such as your startup costs and pricing plan, and the following elements:
The executive summary is a succinct description of the main points in your business plan. It will appear first in your plan, though you will write it after you’ve laid out all the other information. This is meant to be a skimmable part of the document that a busy investor can read quickly to make a decision.
Be sure to include your idea, what makes your business profitable, your startup costs, the business structure, and your management plan.
Describe the equine industry and opportunity in your geographic region and how your business satisfies a need. For example, if you live in an area with a strong equine presence but too few boarding facilities to satisfy all the horse owners in the area, that indicates a gap in the market.
Include a plan for market changes as well. There are several internal and external factors that can impact your business, such as the rising cost of hay and grain to an expansion of a boarding facility near you.
Finally, include information about your business structure, such as a corporation or sole proprietorship.
Describe your market research on the local equine industry, your plan to attract customers, and how you’ll position and differentiate your business. For example, if your competitors are all show facilities for English disciplines, but there’s a local western circuit, you may offer a facility that caters to western disciplines.
Maybe your area has a major show presence that brings riders from all over the region, but the only option they have for short-term board is the local grounds – which are always full. Offering seasonal short-term boarding options is a way to gain an edge on your competition.
This section should have details about your pricing strategy and projected sales as well.
Provide information about your competitors’ strengths and weaknesses, as well your own for comparison. Detail how you offer something different than your competitors or satisfy a need, such as hosting clinics or having an on-staff instructor with specialized training others don’t offer.
Your development plan outlines your business launch from start to finish, including any purchases you have to make, remodeling or construction you have to do, staff you must hire, the marketing materials you will need, your budget, and your proposed schedule.
In this section, outline the risks or barriers and your contingency plan to keep everything running according to schedule and on budget.
This is the nuts and bolts of your equine business. Detail the fixed, variable, and recurring costs of your business (overhead), and any investments you need to make for operations. For example, you may need to invest in farm equipment like a tractor or manure spreader before your can open your facility.
If you are starting a business but leaving the operations to hired staff, include that information. Be detailed about who will be responsible for which aspects of your business.
This is the part investors really want to know – your financials. You should have the following financial documents:
If you haven’t launched your business yet, these statements will be projections. Once your business is up and running, you should prepare income and cash flow statements each month and a balance sheet annually.
Investors want to know they’re backing a strong project, whether it’s a boarding facility, breeding operation, or professional rider. Make a list of reasons a company or individual investor would want to invest in you, such as your wealth of experience with horses, your unique facilities, or your track record showing young horses successfully.
For many people, selling their skills and experience is an uncomfortable experience. Think objectively about your skills and why you’re a good fit – and safe bet – for an investor.
While some investors are purely by the numbers, most are looking for investment opportunities with businesses and owners who reflect their values. Always research your potential investors to see what they value, what types of businesses they’ve invested in, and what they expect from their investments.
Having this information will help you tailor your business model and pitch to highlight why you’re a great fit.
Purchasing ownership in an organization has legal implications, and investors want to know that you understand and have researched these concerns. For example, if the investors are partners or shareholders, will they reserve a privilege to make business decisions?
Investors offer funding with debt investment, equity investment, or convertible debt.
With equity investment, an investor gets ownership stake in your business. For example, they may provide $100,000 cash in exchange for a 10% ownership stake – so they get 10% of your future profits.
With debt investment, the investor loans the business money in exchange for repayment of the loan plus interest. This is a less risky option for the investor, since they recoup their investment before equity investors if your business fails. But they have no ownership stake, so they don’t generate massive returns if your business is successful.
Convertible debt is a mix of debt and equity investments. The investors fund your business with the agreement that the loan will be repaid or turned into an ownership share at a later date.
In the horse industry, a syndicate – or horse syndication – is when a group of people purchase shares in a horse. They can be structured different ways, but the basic structure is that all the people involved become co-owners of fractional interests in a horse – typically a racehorse, competition horse, or breeding stallion or broodmare.
They share the cost of purchase and care for the horse, and in exchange, receive a share of the purse, competition winnings, or offspring sales. The risk involved in horse ownership, such as injury, illness, death, or simply failing to live up to expectations, are also spread across investors.
While you can certainly do it on your own, having investors to back your business can provide significant capital to move your venture forward.
Looking for guidance in creating a profitable horse business? Contact us for a consultation.
Still have questions? Here are answers to the most common questions.
Boarding and training facilities can provide a stable source of income, but like any business, it comes down to the strength of the business model and the owner’s acumen. Agile equestrian business owners are prepared for the rapid shifts in the market and create multiple income streams to ensure long-term success.
Though it has a reputation for being unstable, horse business has expanded in recent years and provided opportunity to build a profitable company in the equestrian space. But it’s not enough to have a passion for horses. It’s still a business, after all, and needs to be run like one.
There are numerous ways that horse businesses can make money, as well as a range of different business models. Aside from boarding and riding stables, horse businesses can include breeding operations, guest ranches, riding instruction, buying and selling horses, equine photography, equine merchandise, and much more. Often, these businesses combine multiple income streams to ensure success.
This website is solely intended for the purpose of attorney advertising, and for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, in no way establishes an attorney-client relationship. An attorney client relationship is only formed when you have hired me individually and signed an engagement agreement. No past results serve in any way as a guarantee of future results.
Leave a note