Questions: Possibly Buying Into Farm

[sobriquet]

Possibly looking into buying into an existing business and just looking at the financial info, wondering how everyone else ensures profitability in a business when costs for feed, bedding, labour, all are rising so steadily. Does everyone who owns do their own barn labour? Do you make your profits from offering more lesson options on top of board? What would be considered a normal profit margin for this type of business (generally, not expecting anyone to tell me what their barn profits).

[Bluey]

Around here, when someone sells a thriving business, be it a barn, restaurant, marina, or rental units, they show the prospective buyers "the books" that show what the place is making.
That is so you can see how you can eventually pay it off.

There are two local barns for sale right now and those that are really interested, once they start talking seriously, they sign a confidentiality agreement and they are shown the business from the inside.

Maybe you can ask for that and see if it is something you can manage, maybe even improve on and if it will pay for you?

[sobriquet]

Thanks for the suggestion. We actually already have access to all the financial details. I see the current situation perfectly but just wanted to compare to other generally acknowledged 'industry standards' to get an idea of where they may be doing things differently than the norm if that makes sense?

[fourmares]

Profits??? We're supposed to make a profit? Hmmm....

[suz]

profit?? what is this? and do i need one too?

[LAZ]

I budget 10% over the previous years cost--though my bedding just went up 50% again. *sigh*

If you are looking at a boarding barn as a money making endeavour I'd look elsewhere.

If you are looking at it as a place to keep your horses and taking in boarders to help offset the increased cost of owning the property with the eventual idea of owning the ground outright, that's a better thought.

[baysngreys]

If you want to make a small fortune in horses - start with a large fortune!


Profits? Oh, that's funny

[dmalbone]

... woops, totally responded to the wrong post. Ignore me...

[sobriquet]

Haha, yes I realize this type of business is not set up to make huge profits but this particular one does make a profit, mostly because it runs a successful beginner lesson barn as well. I was just looking for the usual set ups for the boarding part. I guess my question should have been more specific - how much of the work do you do yourself vs. how much do you pay wages for? And how else do you keep expenses low since you don't have control over feed, bedding, hay costs?

[Trees4U]

If you buy into the existing business make certain everything is in writing. I mean, right down to who does what, how much time each partner is expected to put in, weekends/days off, will you draw a paycheck, # of horses each will have, etc. I moved to a barn a while ago, she had taken on a partner who was very enthusiastic about fixing, upgrading... but soon found out that he was putting alot more time and effort in than she was. Got bitter, she kicked him out and he sued and won.

She had been in the boarding business for 25+ yrs,was getting tired and thought it would help relieve some of the responsibility. He started making all of the decisions.
It was a bit of a battleground for a while.
Ask alot of questions.