|
Good Horsemanship is Built on Solid Basics...So is Good Business!" DEMYSTIFYING BUSINESS PLANNING: CONCEPT, CUSTOMER, CASH By Lisa Derby Oden
|
||
|
Research
As you work on your horse business plan, you will be doing lots of
research. You will learn more about the horse industry and how it
fits into the economy than you know now. You will learn about past
trends and keep a sharp eye for developing trends, not only in the
horse industry, but also with the American public in general.
You'll take a look at any regulations, licenses, and other
business-shaping aspects that will affect your horse business. As
an industry grows and develops, it is prone to more regulation.
The horse industry is no exception. Environmental, safety, and animal health and welfare issues are key areas to investigate. You will study your competitors in depth. You may get to know them better than even they perhaps know themselves. Many horse business start-ups make the mistake of only eyeing the full-page glossy ads of prospective competitors, and then making the leap to thinking "Well these ads are EXPENSIVE! Look at how SUCCESSFUL these folks are." Dig deeper and you may find that this business owes many others lots of money. Or you may discover
that it is a hobby business. In any case, you want to know
more about your competitor than just how they compare to you for
services and prices.
You will develop a profile of your prospective customer, one that gives you a deeper understanding of how to provide satisfaction for them and therefore success for you. Is your primary audience the youth market with a zest for competition, or perhaps the professional woman who longed to ride as a child, or perhaps families who live the equestrian lifestyle? Each of these audiences will have some similar and some different needs. Identifying these is the start to keep them coming down the bridle path to your horse business door.
You will construct budgets to project how the money will move in
your business, as well as what financial needs you may have as you
grow and expand. Better to take a hard look at the numbers ahead
of time than have them sneak up on you and bite you in the back.
You will also examine where you will get the supplies and services
that your horse business requires
to operate. Hay, grain, shavings, farriers, and vets all
come into play here, as well as contingency plans if needed.
As you conduct this information gathering you will make new
acquaintances and discover new resources that will serve you well
as your business grows. You will also discover a lot about the
character of those you network with. Some are very open and
sharing, with a belief that the marketplace expands with all new
entrants. Others are closed, some are suspicious, and some fear
that they may lose some business when you open yours. This is all
more background for you about the culture and environment you will
be operating in.
Peer and Professional Review
Once you have written your plan, test the waters. Ask at least one
other person in a similar horse business to review it for a
reality check. Choose someone that you trust, respect, and that is
successful. Having it reviewed by more than one provides even more
critical, and perhaps
crucial, input. If horses are your strength, and the business
aspects are secondary to that, having a business-oriented peer
outside the industry review your plan may provide additional
benefits. Since this is your baby and can be a subjective process,
it is this review stage that can interject much needed
objectivity. Consider what your reviewers have offered you and
whether you need to re-think and reshape your plans in any way.
Try not to be in a rush when you are preparing your plan. This
process can take several months to accomplish unless you can
devote yourself to it entirely. For a simple straightforward
business plan you will need to allocate 20-40 hours of time. The
time commitment increases for more complicated concepts. Do not be
discouraged or overwhelmed because of the time element. It is all
well worth it. Business planning provides you valuable added depth
to your decision making process.
Concept, Customer, Cash
As a horse business entrepreneur taking the first steps of developing a business plan, you will need to consider three core areas: I) Concept, II) Customer, and III) Cash.
I) Concept: This is your "dream" and why you will
succeed. It covers the nuts and bolts of how your dream will be
achieved.
A) Vision - This is the fun part. Be creative, think boldly,
be idealistic. Where do you see your dream 10-20 years from
now? At the Olympics? Breeding top winning stock? Coaching
the nations best equestrians? Providing therapeutic benefits to
riders and/or horses? These are but a few dreams.
B) Mission statement - Your purpose for existing simply stated and easily related
C) History - Where your business has been if expanding to the next
level; how the dream originated if you are a start-up
D) Legal structure - Sole proprietorship, LLC, partnership,
incorporation
E) Organization structure and management - Key people and tasks,
chain of command, and qualifications that show why you will be
successful with this horse business.
F) Competition - Analysis that shows who the competition is and
where you fit into the herd
G) Product, service or program overview - What you are offering to
the market place
II) Customer: This is who will join you in your dream, and
how they will hear about your dream. It covers your market
research and plan. It is here that you'll become a super sleuth,
learning as much as you can from research, surveys, interviews,
market tests and more.
A) Location - Where you will locate and why
B) Product features and benefits - A more intimate description of what and why; what your market advantages may be
C) Target markets - Needs and sensitivities
D) Customer demographics - Can you paint a picture of what your customer looks like, lives like, and buys like? E) Distribution - Channels that you will utilize to get your products, services, programs to market.
F) Promotion - Business image, advertising, public relations
G) Pricing - Cost basis, competitor basis, market share basis
III) Cash: Sharpen your pencils and take off the rose-colored
glasses that you put on to develop your vision and concept. This
aspect is how your dream will become a reality. It covers what
will be needed to get started and what will be needed as the
business grows. It's important to realize that it is not unusual
for a business to lose money during its start-up phase, and that
for some horse businesses the start-up phase is very long and can
be from 6 to 10 years. In this day and age of instant
gratification, horse business plans are often written showing the
business breaking even and/or making hefty profits in year one. Do
no write your plan this way merely to convince, or perhaps fool,
yourself. The horse businesses that do make a profit right away
may have been developing their client base at another stable or
horse business prior to going on their own. Or they may have a
business advantage, like they just inherited the farm
mortgage-free. It is crucial to have realistic financial
projections. In preparing them talk to lots of people already in
the same horse business.
The other thing to realize is that just because your horse
business may lose money initially, it doesn't mean that it always
will. Your financial projections will also show when your horse
business will become profitable, because you utilize proper
planning and business management.
A) Initial investment or start-up funds - Shows how much you need
to spend before you even open the doors; will include facilities
and equipment needed to start business
B) Income statement - Shows profit or loss for a specified period
of time
C) Cash flow -Shows how the money will come in and go out monthly
over a years time
D) Balance sheet - Shows what is owed compared to what is owned
E) Sensitivity analysis - Shows what may result if the best of all
possible worlds don't happen
F) Break-even analysis - Shows how much business is needed to
start to turn a profit
G) Ratio analysis as appropriate - Shows your financial aspects as
% which can be more meaningful than raw numbers
These are the key components of the process. Once these aspects
have been given due attention, be sure to examine the fourth
"C" - Controls.
IV) Controls:
Monitoring your business for performance and legal and regulatory adherence. Be sure to put this into your schedule. If you don't pause to see what is working and what isn't working, you can't make the necessary improvements. With honest evaluation you could turn your losing business into a winner, or better yet, keep your winner in the champion circle.
A) Marketing review - Ensure that you are making the most
effective use of your marketing budget.
B) Legal services - Be prepared for legal situations by
searching out counsel you trust.
C) Accounting services - Work with someone that understands the
horse industry.
D) Record keeping - Horse health, equipment purchase and
repair, employee, and other -tedious work perhaps, but these
are crucial.
E) Computerization - A wonderful tool to keep track of all the
above.
|
||
|
***** Arabian
Horses of the Great Pyramids - Arabians
International These pages are
designed and managed by |
