Are There Thief Horses in Your Barn?
By Doug Emerson
At some point, all professional horsemen realize that they can’t keep forever every good horse that ever walked into the barn. Buying and later selling horses is an unavoidable part of the horse business. There is no doubt about it, becoming fond of your horses is a terrific benefit of being in business. However, your affection and familiarity can also be a financial tie down that will ruin your business. It’s not always easy to accept, but the profitable horseman understands that horses in his or her barn are assets; they aren’t pets.
From a business viewpoint, all horses are either appreciating in value or depreciating in value. The horses in your barn are either generating income as: lesson horses, brood mares, stallions, or are inventory for sale. With no revenue or potential revenue source attached, all other horses are ongoing operating expenses. With no revenue offset, the horse becomes a financial dependent on your business’s welfare roll.
Not only is it an operating expense, it is also an opportunity cost. Think about it, if a horse occupies a stall and generates no income or has little or no potential for future income, it is a thief horse. Unlike a horse thief, a thief horse steals your potential to earn profit from the space and resources it occupies. That stall could be used for:
Horse for training
A speculation horse “bought right”
An empty stall for attracting the next opportunity
In economic terms, there is an opportunity cost for every decision you make in your equine business. An opportunity cost is defined as the cost of something in terms of an opportunity foregone. Said a different way, unlike Yogi Berra’s classic line, “When you come to a fork in the road, take it”, every fork in the road you come upon requires a choice. The road you choose is the path you follow. The road not taken is your opportunity cost since you cannot travel two paths at the same time. Choosing the more profitable path that fits your business vision is the correct choice to make every time.
It’s the right time of year to consider whether or not you have any “thief horses” in your barn and if you do how to find a new home for them. Just like any business, the horse business requires that assets produce revenue. A manufacturer or retailer has the opportunity to mothball equipment and machinery in storage if a future need should arise. The cost of storage is relatively cheap and is a good option to have assets available for future use. Obviously, mothballing your horses in a warehouse is not a choice for the professional horseman. While the manufacturer’s machinery can be put back into service easily with a dusting and a few drops of oil, our equine friends require consistent feeding and care along with conditioning.
What are the solutions for finding a new home for your horses that no longer fill the job intended for them at your farm?
Find a buyer who doesn’t need the performance out of the horse that you are expecting. There are many buyers that don’t need a Ferrari; they’re looking for a Chevy.
Donate the horse to a good home as a companion horse. Even if performance or soundness is an issue, horses with good manners are always in demand as pasture buddies for other horses. Giving away a horse may at first seem to be a poor business practice, but as you analyze the costs of maintenance, instant relief from the expenses is worth the sacrifice of marginal sale proceeds.
Maintain ownership and lease to beginner riders who want to care for and love a horse of their own. The lessee gets the horse she has always wanted; you get some relief from your overhead expenses.
As a business owner, if your assets are non-producing, then it’s up to you to make changes. Undeniably, it’s easy to become emotionally attached to good horses. But, when horses can no longer fill the job description in your equine business plan, the right thing for you to do as a professional horseman is to find a new job for them where they will still be loved and appreciated.
About the Author: Doug Emerson trains, consults and coaches professional horsemen and horsewomen struggling with the business half of the horse business. You can reach him and receive free eblasts by visiting www.ProfitableHorseman.com or by calling (716) 434-5371.