How to finance a horse business

Horses are expensive, whether you have a huge equestrian facility or just a couple of “garden ponies.” However, when you decide to start a horse business, finances should be one of your top priorities because without the necessary capital, you won’t be able to get very far. In order to finance a horse business, you must have a detailed money management plan that accounts for all contingencies.

There are hundreds of different types of horse businesses, each of which is unique and requires different services. Therefore, your financial plans must be tailored to your individual vision and you must separate in your mind the elements that need against those who simply want. For example, a horse stable where the owner provides boarding and riding lessons. could have a covered stadium, but it is not a requirement.

Review your current finances

Before you can finance a horse business, you’ll need to know how much liquid capital is currently available to you. A $10 million retirement plan is definitely a substantial asset, but it doesn’t give you the cash you need to start your equestrian business. Liquid capital is money that you can turn into cash in the blink of an eye, money that can be used to buy things now.

Also, your seed money does not include lines of credit and loans that might be available to you if you choose to pursue them. It is never a good idea to finance a horse business solely with borrowed money because you have no guarantee of success. If it takes three years for the business to get out of the red, you’ll owe that money much sooner.

Prepare for a business plan

The biggest mistake I have seen horse business owners make is not understanding that they are starting a business. It would be no different if you wanted to open a retail store or start a web design service. Running a business requires significant planning and organization, two words “horses” aren’t always familiar with, so don’t underestimate the value of a business plan.

This document, which can be as long or as short as you like, should contain at a minimum a list of the items you will need to start your horse business. This can include property, structures, horses, farm equipment, implements, utility depots, insurance, and many other items. Once you have this list, research the average prices for each and record them in your business plan.

Keep in mind, however, that in order to finance a horse business, you will have to deal with unexpected expenses that come along the way. No matter how prepared you are, it’s nearly impossible to plan for every possible scenario. This means that you must have enough capital to cover not only expected costs, but also those you did not anticipate.

Calculate your financial risk tolerance

To finance a horse business, you will probably need to borrow at least a portion of the initial capital required to get the operation up and running. Very few people can manage to do this out of their own pocket, and even if you can, it’s important to leave some liquid capital free for personal emergencies. Don’t drop every penny in your savings account on any fledgling business.

Personally, I have a very low tolerance for financial risk, and I subscribe to Dave Ramsey’s debt-free lifestyle, and I won’t start another horse business unless I can cover it 100 percent with my own money. However, I work every day with other horse business owners who bolster their own capital with 50 percent or even 75 percent borrowed money. It is a personal decision that you will have to make.

However, it is important that you understand your personal financial risk tolerance before determining how you will finance a horse business. This gives you guidelines within which you will have to work and sets boundaries for future decisions. The last thing you want is to accept a substantial loan from a bank, and then decide you don’t want to take the risk.

borrow the money

If you’ve decided you want to finance a horse business by taking out loans or lines of credit, you’ll need to find the best possible rates and be smart with your financial decisions. Accepting a line of credit with a great interest rate will mean that your expenses will increase significantly once your equestrian business is up and running. It will take much longer before it turns a profit.

Generally speaking, it’s less expensive to get a loan instead of a line of credit or (God forbid!) to use credit cards you already own. For one thing, the APR is usually lower on a loan, which means you pay less interest, and it’s usually easier to negotiate the terms when you apply for a loan.

Talk to at least three different banks or credit unions before deciding where to borrow. Ask about things like prepayment penalties, APRs, grace periods, and other factors that will determine how and when the loan is paid off. If you have excellent credit, it shouldn’t be hard to get the terms you want.

Prepare for a fight

It’s never easy to finance a horse business, and sometimes it’s downright frustrating. However, it helps if you keep your end goal in mind and focus on what you will do with the money once you get your hands on it. Be sure to come up with a logical and reasonable method to ensure your financial security so that you don’t find yourself in a bind in the future.