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View Full Version : What are the major expenses of boarding barn owner?



whiskerkittens
Dec. 18, 2009, 09:28 AM
We are very interested in a 10 stall boarding barn for sale near us that is in PRISTINE condition and already has boarders in place(don't know anything about them yet).

Just a quick overview-
indoor arena with rubber/sand footing and sprinkler system,
outdoor arena with lights and jumps,
smallish 3 bedroom house
22 acres of fenced pastures
boarding is about $450-550 mo now
no BM or trainer


What MAJOR monthly/yearly expenses should I ask the real estate agent/ present owner to see?
electricity
water, sewage
landscaping
hay
barn manager salary(??)
bedding
feed
insurance

The place has been reduced twice and is now approaching us realistically being able to initially purchase it . However, my biggest worries (based on reading COTH!) are the monthly surprise expenses. Please let me know what direct questions I should be asking way up front before making any major decisions. Thanks!

Mary in Area 1
Dec. 18, 2009, 10:16 AM
How many people are currently employed at the stable? Are they full or part-time? What is the current payroll? What is the cost of Worker's Compensation in your state?

After payroll, Worker's Comp is our Biggest expense. It is 18% in Vermont!

Tamara in TN
Dec. 18, 2009, 10:28 AM
land taxes
staff salary
insurance
hay purchases
equipment rental/loan payments
feed bills
farrier services

another thing is if you are buying the "staff" as well, find out how much vacation/sick time they are due and have the old owner pay that...

whiskerkittens
Dec. 18, 2009, 10:43 AM
Apparently there is no permanant staff as of now. I will need to hire my own BM and staff.

Thomas_1
Dec. 18, 2009, 10:50 AM
I'd be a heck of a lot more interested in the turnover and profit than I would in the expenditure.

SaddleFitterVA
Dec. 18, 2009, 11:06 AM
You do not give a region or location so some things that are costly here, may be non-existent in other areas...like mowing.

maintenance items, fence painting and repairs, tractor (repairs or purchase/payments), pasture maintenance implements..all are quite pricey. Mowing, fuel for implements.

As others said, taxes. Depending on where the property is located and how long the current owners have owned it, the taxes might be artificially low because the tax basis might still be way lower than the current market price.

Salaries
Hay/feed
bedding
The mortgage, or if no mortgage, the value of using your investment money to provide a pristine facility, that is not free. Calculate a fair interest rate, and what the cost is. I've figured that with principle and interest The dry-stall cost TO ME, is somewhere close to $300/month. Figure out that real cost, and then do not drain your accounts running at a financial loss.

Do NOT confuse cash flow with profit.

If you want to subsidize people who board horses, then go in with your eyes open that you are subsidizing someone else's hobby if you keep the prices artificially low to get cash flow.

MunchkinsMom
Dec. 18, 2009, 11:12 AM
The BO of the last farm I boarded at said their biggest expense was the employees (pay, insurance, workers comp).

Tamara in TN
Dec. 18, 2009, 11:16 AM
Apparently there is no permanant staff as of now. I will need to hire my own BM and staff.


when we were interested in buying a tractor dealership this summer (my sisters do not call Calvin "The Mogul" for no reason;)) our CPA (who rules with an iron fist) was VERY interested in the:

accounts receivable
accounts payable
profit and loss
customer base

we declined the kind offer,as the sales were so dismal and the customer base so small (mostly to poor service for the last decade) that it was decided that it would be cheaper to start fresh than to convince people to return even under "new management"...

if you are buying a turnkey business and perhaps keeping all things "in place" for now look closely at these records and not just think about "buying the farm"

bird4416
Dec. 18, 2009, 11:24 AM
Taxes and insurance. Followed by labor, pasture maintence, hay, feed, bedding yada, yada, yada.

tle
Dec. 18, 2009, 11:33 AM
Yep, while individual expenses like electricity, water, etc. are of interest, i'd be more concerned with the overall health of the business in terms of profit/loss, cash flow (accounts payable/accounts receivable) and customer base IF the stable has a good reputation (ie if they're known for skimping on hay the numbers are going to skew from what they should be).

Individual expenses? Taxes, insurance (don't forget care/custody/control and liability - especially if you're teaching lessons and not just boarding!), feed, payments (loans, rentals, etc.), bedding, utilities (electric for lights, water for obvious reasons).

Cloverbarley
Dec. 18, 2009, 11:53 AM
Insurance is my single biggest one-off expense each year.

We have a hay farm so although we make plenty of our hay which some think inaccurately is "free" to us, is in actual fact a loss of revenue, hence not free, so hay would be the biggest cost to keep each horse on my property.

Electricity is fairly high in my area.

Taxes are generally high in my area however we get farm rates which is significantly lower than residential.

Labour costs can run to whatever level you want them to depending on how many people you employ and under what conditions.

Maintenance for machinery/vehicles etc. is hit and miss, but we budget a good amount of thousands each year for this, and we normally always go over budget!

Guilherme
Dec. 18, 2009, 11:54 AM
You have two broad categories of expenses: Fixed and Variable.

Fixed expenses include (but are not limited to):

Mortgage
Taxes
Fire and Extended loss insurance on structures
Basic maintenance on barns and related structures (painting, etc.)
Access maintenance (driveways, gates, etc.)
Etc.

Some Variable expenses:

Liability Insurance (varies with activities conducted)
Bedding
Forrage and Fodder
Fencing
Pasture upkeep
Etc.

There are some "mixed" expenses like depreciation, daily maintenance and repair of structures, etc.

Each of these items can also have a number of sub-items.

G.

TrotTrotPumpkn
Dec. 18, 2009, 12:32 PM
I have no idea where you are, but is heating going to be a big expense for you?

I played with the numbers (several years ago) and in order to hire the full time staff I would want I recall needing something like 20+ stalls for break even, but we are probably no where near each other in location.

I decided not to do it at that point. Would have been different if I was a trainer--but I am not.

My impression from talking to many BO's is that BO's make their money from the lessons they teach, not the horse's they board (unless it is a training barn in upscale area). Now I do know of one 35+ stall barn (plus pasture boarders) where the BO makes a living, but he doesn't hire labor (boarders clean stalls/turnout for board) and the feed/bedding/hay situation is *shrug*. Perfect location drives the market in that barn's case.

Vandy
Dec. 18, 2009, 12:36 PM
Here's mine, in order of price highest to lowest:
1. Mortgage
2. Hay
3. Salaries
4. Grain
5. Shavings
6. Water bill
7. Insurance
8. Electric Bill
9. Property Tax (it's low here)

Property maintenance is also a biggie - depends on the month/year, which is why I didn't include it in the monthly expense list, but I'd say this year it's been #2. I am full and have a waiting list, but I am NOT pulling a profit on the boarding end :uhoh:

Cloverbarley
Dec. 18, 2009, 01:01 PM
I am full and have a waiting list, but I am NOT pulling a profit on the boarding end :uhoh:

I hope you don't mind me asking, but why do you run a boarding stable which is not profitable? No judgement or anything like that :), I'm just curious as to why there seems to be so many BOs on this BB who do not make a profit and yet continue trading. If my farm did not make the decent profits that it does then the doors would close. The income in my household comes exclusively from the farm and all its related businesses BTW so I'm confused about how so many survive when permanently running at a loss? Do you all work in other jobs away from the barn/farm?

shawneeAcres
Dec. 18, 2009, 01:49 PM
I hope you don't mind me asking, but why do you run a boarding stable which is not profitable? No judgement or anything like that :), I'm just curious as to why there seems to be so many BOs on this BB who do not make a profit and yet continue trading. If my farm did not make the decent profits that it does then the doors would close. The income in my household comes exclusively from the farm and all its related businesses BTW so I'm confused about how so many survive when permanently running at a loss? Do you all work in other jobs away from the barn/farm?

Boarding simply inst a "profit earning" activity. I would have to charge SO MUCH to make a profit noone would board! However, the only real way to "make money" is lesson and sales. That is where I keep from just going under, not that I have made a "profit" yet! My husband holds down THREE jobs, one full time and two part time, or we would never survive! It is reality in this day and age.

SMF11
Dec. 18, 2009, 03:05 PM
Re: cloverbarley's question -- I think people often confuse "profit" with "getting paid". Profit is what is left over after all expenses are paid. I do not make a profit, but I do pay myself (I am the only employee). I am able to maintain our 200 acre farm really well -- trails are mowed and cleared, the ring is harrowed and stones picked, the pastures are mowed/harrowed and I improve the barns over time (adding an overhang right now). So, if I ever wanted to sell, my facility is a lot nicer than if I didn't have these improvements.

But improvements/maintenance are not "profit". I have a nice farm, and I pay myself a little for my time and that -- if all goes well -- is a break-even proposition.

atr
Dec. 18, 2009, 03:52 PM
alcohol and bail money...

whiskerkittens
Dec. 18, 2009, 03:54 PM
So does ANYONE make a profit of ANY KIND in this business? Is it just for the "love of horses" that people do this? :eek:

AKB
Dec. 18, 2009, 04:06 PM
Make sure you will not have to immediately sink thousands of dollars into repairs. Is the well good (good flow rates, no history of going dry in dry weather)? When was the well pump last replaced? What is the condition of the roof? What is the local zoning? Will you have any problem continuing the horse business because of zoning? What is the county master plan for the neighborhood? If a quarry is going in next door, you won't be able to run a horse business because of the noise. Is a new superhighway scheduled to go next to your property? Is the property in a flood plain?

Check all of the county property and zoning records for the neighborhood. Look at the master plan. Talk with the neighbors.

JohnDeere
Dec. 18, 2009, 04:35 PM
alcohol and bail money...

:lol::lol::lol:

In that order?

Whatever you can do for yourself saves a BUNCH in $ going out. Im not saying work 24-7 but IME if you have to pay everyone fore everything your not going to make alot. Maybe pay a trainer but do feed/stalls youreslf or something.

Local barn around here, Nice place, owner is loaded, they board less than 30 horses + keep there own there. They pay + min wage to a PT feeder/cleaner and more to a PT manager who turn out horses/watch over the place/do lessons. They lose $ every month (I know this for shure) but they lose less than boarding there horses somewhere else.

If you want your horses at home & need this to do it, then losing $ is ok. Dont lose millions, tho. Not worth it! :yes:

SMF11
Dec. 18, 2009, 05:20 PM
Another thing to think of is that 10 horses is a very small operation. I would think the margins would be even thinner on something that size.

Agree -- whatever you can do helps cash flow. With 10 horses I would think you would only need one employee, not a "barn manager and staff". And as I said, there might be money to pay one person, the question is, is that person going to be you, or an employee? You can make enough in boarding to pay yourself -- again, that is not profit.

Vandy
Dec. 18, 2009, 05:53 PM
Boarding simply inst a "profit earning" activity. I would have to charge SO MUCH to make a profit noone would board! However, the only real way to "make money" is lesson and sales. That is where I keep from just going under, not that I have made a "profit" yet! My husband holds down THREE jobs, one full time and two part time, or we would never survive! It is reality in this day and age.Exactly. Some months, I end up a little behind, some months a little ahead. This depends on how much money went into something like fixing a plumbing emergency or replacing or repairing a farm vehicle. What little extra happens is from lessons/training/sales. Also, I remind myself that I am getting mortgage equity. I would definitely have more money at the end of the month, though, if I got rid of this place and worked at McDonald's few hours per week and lived in an apartment, which actually sounds pretty appealing right about now :lol:

I'd say that my SO and I do about 75% of the work here, and the rest is split by 4 other part-timers (stall cleaning and some beginner lessons). We have 25 horses.

*JumpIt*
Dec. 18, 2009, 07:31 PM
Agree -- whatever you can do helps cash flow. With 10 horses I would think you would only need one employee, not a "barn manager and staff". And as I said, there might be money to pay one person, the question is, is that person going to be you, or an employee? You can make enough in boarding to pay yourself -- again, that is not profit.

You may be able to find someone like my BM, she works in exchange for board. She owns an easy keeper who only needs 2 flakes of a hay per day and turnout on good grass.

Then find a teenager/young adult (this is me) and have them pay 1/2 board for working weekends.

This is what our barn does so we have 5 1/2 paying boarders. In the end their is no gain for the 1 1/2 board but I think it comes out cheaper then paying us. Both the BM and I are both happy since neither one of us could afford board and both are so OCD that we'd be their everyday anyways. It helps that both of us live within 5 minutes of the farm too.

dmacaramel
Dec. 18, 2009, 08:12 PM
I'm not sure where you live, but do not forget manure removal. Check and see how the current owners handle this.

Where I am you have to pay to have it hauled away and that is not cheap.

Cloverbarley
Dec. 18, 2009, 08:49 PM
So does ANYONE make a profit of ANY KIND in this business? Is it just for the "love of horses" that people do this? :eek:
Yes. I wouldn't have kept doing it for the past 20 years if it hadn't been worthwhile. However we have significantly more horses on our farm than the 10 you will have. The boarding part of our farm does actually keep us ticking over. The hay part means that we don't actually have to pay out for the hay we use even though it lowers our hay sales income. The fence contracting and distributing part of our farm helps cover the cost of any new fencing we install on our farm. Horse training brings in okay money. The horse sales part of our farm makes good returns. I believe having a number of fingers in a number of pies is what keeps our farm financially healthy.

You really need to look at the books for the farm you are interested in and see what the outgoings are versus the incomings to see whether it is viable or not.

oharabear
Dec. 19, 2009, 04:01 AM
My trainer is always telling me that the only real way to make a profit in horses is to NOT own any of your own.

Yet she currently has 3. LOL

Kareen
Dec. 19, 2009, 08:15 AM
Everybody has them. There is a lot of truth in what your trainer says *lol*. Same saying here. The way to make a small fortune with horses is to start out with a huge fortune hehe.

That being said I think there are ways to run a boarding barn in a profitable way (and I don't understand why having a salary/paying yourself should not be regarded as a profit. It doesn't matter if you think it's not worth the work but if there is value added to the estate and a salary for yourself being paid out of the corporate account I would surely call that a profit.

SMF11
Dec. 19, 2009, 03:51 PM
(and I don't understand why having a salary/paying yourself should not be regarded as a profit. It doesn't matter if you think it's not worth the work but if there is value added to the estate and a salary for yourself being paid out of the corporate account I would surely call that a profit.

Not to split hairs -- profit is what is left over after expenses. Salary(ies) are expenses. If you pay someone else to do the work, and you have money left over that is profit. If you pay someone else and you do not have any money left over, then that is break-even (or lose money).

So, in my case, I can board horses and I can get paid something for my work. If I had to pay someone else to feed/hay/do maintenance I would end up losing money.

I think the reason people do it is because if they do it right they can pay themselves something, and their property appreciates.

A second question is, can you pay yourself enough to live on. In my case, the answer is no. My husband is the primary breadwinner, and the boarding is a way to get some money coming in from our farm, which we would own anyway. Plus, I get to do what I love. I should say we have five boarders and two of our own horses.

Finally a third aspect to the financial side of things is that since we are not paying for our horses (their expenses are covered by the farm income) I suppose I shoud include that as "pay" too.

All this is mostly semantics, but it is good to make sure we are all discussing the same thing.

LAZ
Dec. 19, 2009, 04:06 PM
You've asked for major expenses so I'll give you a run down of everything but the mortgage.

My boarding operation has a capacity of 23 horses inside (I have a ton of stalls, but 23 head is as many as I care to be responsible for), 2 indoors, all weather outdoor, indoor bull pen, cross country courses from GAG-Training, enough show jumps to make a full course, indoor full bath, etc. Daily turnout on good grass, gravel pads at gates & under round bales, 1/3 mile galloping track.

Hay
--small squares (70 lb bales) $10,000/year
--large rounds (1000 lb bales)
$2800/year

Grain
--$1200/month or $14,400/year

Liability & CCC insurance
--$3600/year

Electric (barns only)
--$2700/year

Bedding (bulk sawdust by semi)
--$8000/year (this has tripled in the last year)

Manure removal
--$5000/year

Labor (stall cleaning 6 X week)
--$14,352

Other barn labor (buckets/cobweb,cleaning/etc)
--$4500/year

Repair and Maintentance, upgrades
--$15,000/year

Equipment (averaged over 5 years)
--$4000/year

Misc.
--$5000/year

I do all but two feedings and routine daily work and no salary for myself is included.

My board is $425/month.

You can do the math.....

My profit comes from lessons and shows.

Edited to add: I do not typically have a full barn of 23 horses year round--I'm a long way out from town--I base my business on keeping 18 boarders in the barn--if I have more the feed, bedding, stall labor costs are greater then I've listed, but all other expenses are similar.