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Blue Ribbon Consulting

"Good Horsemanship is Built on Solid Basics...So is Good Business!"

Business & Association Development, Marketing, Professional Workshops forthe Horse Industry



Should I Buy Or Lease The Stable?
By Lisa Derby Oden

You just heard that the stable down the street is for sale. You've owned a
horse for years that you've boarded out and are thinking that it's time you
got into the "provider" end of the business. Or perhaps you've been teaching
or training at a facility that is now on the market. You call the current
stable owner to ask questions about the property and discover that the
property is for sale, but might also be available to lease. Now you're
wondering: Should I buy or lease the stable?
This is a long-term decision will have a major impact on your life, so
you'll want to do a lot of homework before you make a decision. Begin by
investigating into the business that operated at that facility previously.
What was the reputation? Will you have to overcome the bad impression that
poor management created, or are you walking into a well-run, well-thought of
establishment? A bad reputation can be turned around, but it takes time. And
time is money. So make your financial projections accordingly. If you're
changing the entire focus of market niche, the reputation will take less
time to turn around. If the stable has a good reputation, find out what
created that and be prepared to keep those qualities in place if you plan on
keeping current clients.
Will this be a business for you, a home, or both? Find a few people
that own stables and live there, and ask about the pro's and con's. There's
no commute to work, but getting a few minutes of time for yourself also
becomes more difficult. Horse care is 24 hours a day, 7 days a week.
Understanding this now, preparing yourself for long days, and building in
even a small amount of time off and away from the property can prevent
burn-out. If you choose to live off-property, how will you ensure that there
is adequate horse and property supervision?
Have you owned property before? Property comes with maintenance
requirements and property tax obligations. Have an evaluation done of the
current status of repair, and check with the town hall to see what the taxes
will be. This will assist in your financial and operational projections.
What's happening in the neighborhood? How is the property zoned? How
will the local neighborhood grow and change, and how will that effect you?
Are you located near open space that you plan on using for trail rides? If
so, is the status of that open space likely to change? What regulations
besides zoning will you be subject to?
Once you've given time to these issues, the next step is to do some
financial planning. Run the figures for operating costs, factor in financing
for the mortgage, include repair costs to get the property up to snuff
(unless you've found a "turnkey" situation), and consider areas of future
expansion. Plan for an emergency fund also. Unforeseen drastic hikes in
operating costs that have had a serious impact on horse businesses in the
past include hay, bedding and liability insurance. Make one year, three
year, and five year projections. How long will it take to break even? How
much business at what price do you need to do to make a profit? Is this
amount realistic? Find an accountant to determine short and long-term
differences between leasing and buying.
Buying or leasing is a major life decision. If your experience in the
horse industry has been as a recreational rider or hobbyist, leasing gives
you the option of trying it out for awhile first. If you're an instructor or
trainer, you have a good idea of what much of the work will be. Don't forget
that as a business manager/owner there are added responsibilities. Record
keeping, bookkeeping, marketing, scheduling, and personnel are a few that
may expand beyond what you've been used to depending on the size of
operation.
No matter whether you lease or buy, you'll want to hire an attorney.
Discuss from the beginning whether you want an option to buy and what those
terms might be. If you lease, build a great business, and decide to buy, it
would be unfortunate to discover that the owner had changed their mind or
thought the property was now worth more because of the business you built.
If you buy, this may be what you've always wanted. Life does throw curve
balls, however, and there may come a day when you decide to sell. Think a
little about potential future value of the property. Realtors will tell you
that this kind of property is "unique". One of the things this means is that
it will require a more specialized buyer so it may be on the market longer.
In any case, doing your homework ahead of time will help you determine
whether this opportunity is a dream come true or a nightmare.

(Lisa Derby Oden has been providing business development, marketing, and association consulting services to the horse industry since 1995. Oden is author of "Growing Your Horse Business" and "Bang For Your Buck: Making $ense of Marketing For Your Horse Business."  She is the 1999 AHC Van Ness Award recipient for outstanding service to the horse industry. She can be reached at: (603)878-1694; email at Lisa@horseconsulting.com; or visit her
website at www.horseconsulting.com)



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