Whether you’re sending invoices or collecting payment, most horse business owners don’t need a 10-member accounting team to balance their books. And that goes for a lot of one-man-show professionals.
If you don’t have a background in finance, however, crunching those numbers can have consequences far more dire than a math headache. Failing to keep your finances in order is a big no-no if you want to be successful in the horse business.
Why Finances Fail
Most equestrian professionals encounter problems in their finances when they don’t keep meticulous records. That means recording every penny that escapes your pocket, from the $3 latte at Starbucks this morning to the $15,000 horse you purchased at the futurity last month.
You must also record the money you receive, perhaps even with closer attention than you pay to the money you spend. Horse business owners receive payment via multiple methods—cash, check, money order—and sometimes the cash gets lost in your wallet. If you don’t record if before you spend it, your finances will be all out of whack.
We’ve all been there.
So how do you keep your finances in check while still leaving time to muck stalls?
Tip #1: Keep a Small Ledger
I say small because you’ll want to have a notebook or ledger that you can carry around with you. That way, it’s easy to record the fifty bucks a client gives you in cash for a single training ride.
In the ledger, write down the name of the client who has given you the money, the amount paid, the service or product for which the payment was tendered and any notes you might have. Make sure to note the method of payment as well.
For the money you spend, my advice is to keep an envelope in your wallet, purse or planner. Put all of your receipts into that envelope, then record them in your ledger, checkbook, computer program or wherever you keep track of expenses.
Tip #2: Maintain Paid/Unpaid Lists
From sending invoices to collecting on unpaid bills, the last thing you want is to forget that a client owes you money. I see this happen more often than you can imagine, and clients skate by for months without shelling out a dime.
I’ve suggested in previous articles that you will benefit from having clients pay for regular services on a monthly basis. This makes managing your finances much easier and you’ll have less confusion.
Each month, write up a list of your clients with check boxes next to each name. When you receive payment the client receives a check mark and you automatically know who still owes.
Tip #3: Wait To Buy
Horse people are the reigning kings and queens of impulse purchases. We head to the local tack store for a new pair of spurs and walk out with four new sets of polo wraps, three bits, six curry combs and a super expensive saddle pad that we just have to have.
You can battle these impulse purchases and save your finances from major hits by enforcing a waiting period upon yourself. If you see something you like, make a note of it and wait three days. If it still seems essential go ahead and purchase it (assuming you have room in the budget).
Tip #4: Reduce Your Expected Income by 30 Percent
I like the 30 percent rule because it keeps horse business owners from spending more than they earn. When making out a budget for yourself, pretend you will have 30 percent less income than what you expect to receive.
If you wind up earning what you expected—or even more than that—you can put that excess away for savings, business slumps or taxes. You’ll be amazed at how much you bank as a result.
Tip #5: Conduct Regular Evaluations
Your horse business prices need to be adjusted for inflation and increased expenses just like any other enterprise. I recommend that riding instructors and other equestrian professionals evaluate their pricing structures on a yearly basis. If you see a need for increases, go ahead and make them.
It is better to increase your prices by a few dollars every year than to raise them by 20 percent every five years. Your clients understand that you need to make money, but you aren’t doing as much damage to their pocketbooks all at the same time.
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About the Author: Laura Jane Thompson is the Chief Equestrian Officer of Riding Instructor University and the Feature writer for the horses section at Suite101. She believes that any horse business can succeed provided its owner practices smart strategy.
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This is simple, sound, spot on advice for anyone starting and running a horse business.