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Really weird idea: letter of intent for potential boarders?

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  • Really weird idea: letter of intent for potential boarders?

    i have a dilemma. I am building a barn due to popular demand in my area and to service my own needs. I am trying to decide between 15, 20 or 25 stalls. I was thinking 15 but then people started coming out of the woodwork saying "if you are building in that area, count me in! Definitely save me a stall!"
    well we all know how people are prone to flake. I want to get my barn started and I don't want additional co at ruction at a later date as this is also going to run as a very professional sales barn. Has anyone ever heard of asking boarders to sign some type of letter of intent? Is that crazy? Thanks for any advice.

  • #2
    I haven't heard of it, but if you are in high demand, you can do what my dog's breeder did (like you she had high demand-- for her puppies, but people flake ---and when one is breeding Mastiffs, that can leave the breeder with a really big puppy that grows into a really, really big dog --and very few people want to buy an adult Mastiff). Anyway, my breeder's way around the flake issue was people put 1/2 down on a puppy based on the order of choice. If I wanted pick-of-the-litter, I put down $2K, if I wanted second choice I put down $1.5K --after she had 8 people who had put $$$ down, she bred the dog. We had to wait 3 years for our puppy. But he was a great dog! After he passed, we put up another down payment and acquired a second puppy. Sadly, by the time that dog left us (old age) the breeder had stopped breeding dogs. I thought her idea was brilliant. Of course she had a Westminster dog --so demand was very, very high --but she never had a puppy that was unclaimed.

    So, what I would do is ask or advertise that those interested in a stall must give you three month's board NOW --get a contract drawn up ---make it 6 months board, or a year ---but the first 10 people who give you the amount you ask for get to board with you ---and the money they give you in advance, you apply toward their board. That will separate the serious from the flaky. If I really wanted to board some place, I'd have no problem giving the barn owner $$$ as a deposit to hold the next available stall. You can make it non-refundable (but use good judgment) --if old Dobbin dies before the stall is available, and you have a horse to put in there, give back the money, I think). Life is too short. But make sure you run it past a lawyer --always a good idea.

    Comment


    • #3
      I would crunch the numbers and build the size barn that makes sense.

      There might be a "sweet spot" where you maximize revenue but minimize paid barn help. I think that clever design of a barn can really help reduce footsteps and hence labor time, cost. burnout.

      Smart planning for turnout and how feed is distributed. Not that I have any specific suggestions, but I've seen barns where turnout and feeding were maximally complicated just because of how the facility had grown over the years without coherent planning.

      Also what is additional expense of adding stalls now? What does each additional stall add to your overall cost of construction, and what does leaving a stall empty do to your bottom line? How many stalls need to be filled by boarders versus your own horses and your sales horses? What price are they willing to pay and what amenities do you offer that will make them stay?

      People may really mean "I would love to board there if you give me rate just a bit lower than my existing barn."

      Really for a boarding barn 20 stalls is not alot. Our self-board club has 59 stalls in 3 barns, so basically 20 stall barns. I certainly wouldn't want to have to do all the work for 20 horses, but it isn't really that many.



      Comment


      • #4
        Originally posted by APirateLooksAtForty View Post
        i have a dilemma. I am building a barn due to popular demand in my area and to service my own needs. I am trying to decide between 15, 20 or 25 stalls. I was thinking 15 but then people started coming out of the woodwork saying "if you are building in that area, count me in! Definitely save me a stall!"
        well we all know how people are prone to flake. I want to get my barn started and I don't want additional co at ruction at a later date as this is also going to run as a very professional sales barn. Has anyone ever heard of asking boarders to sign some type of letter of intent? Is that crazy? Thanks for any advice.
        Yes, weird idea. The best idea would be to write up a business plan and do a market survey to see what kind of demand your area would support. You can build a structure large enough for the max number of horses you feel you and the market can handle, and just leave part of it without stalls, to be used as storage. I'm not sure of your construction timeline, but you can take deposits when you feel like the timing is right. If you get a blizzard of deposits, add more stalls. If not, you can fill it with round bales, park the tractor there, store tack trunks, etc. Not many people complain about having too much storage.
        "When a true genius appears in the world, you may know him by this sign, that the dunces are all in a confederacy against him."

        Comment


        • #5
          What would a letter of intent accomplish that market surveys/research or a solid business plan wouldn't do better? Anyone who signed a letter, or even put down a deposit, could leave at any time, and then you still have to be able to fill that stall with someone else. The demand in your area either supports a number of stalls or it doesn't, independent of how excited people are to hear of a new option.

          I personally wouldn't want to be on the hook for holding several month's worth of deposits, and possibly having to adjudicate refund situations. I definitely wouldn't decide on the size of a barn based on number of people who give you a letter or deposit.

          Comment


          • #6
            If barns are in popular demand then doesn't seem like you have anything to worry about. I doubt you would get much of a response if you want a letter of intent from a potential boarder, especially if you are asking for a deposit upfront.

            Build what you think is going to make you the best profit and serve your needs.

            Comment


            • #7
              I would build the size of the barn I could handle with minimal staff. I personally could handle 15 stalls but couldn't do anymore than that. I also wouldn't sign a letter of intent to move to someone's place because sometimes situations change. For example, I want to board with you and have every intention of doing so. Marsey then gets a career ending injury or I lose my job or she needs a rehab situation or I end up horseless.

              Also, I think building 20-25 stalls but only advertising 15 would be a good starting point. (The other stalls could be for storage or something.) You'd have them there if people are sincere in their demand, but also you are starting small and manageable off the bat.

              Comment

              • Original Poster

                #8
                I think it would be hard to explain what my demographic is and why a letter of intent makes more sense than "market research" without giving out too many details, and in the interest of privacy I'm not in a position to do that. Suffice it to say I am not a first time barn owner and this is no mom and pop boarding facility. That being said, I appreciate everyone's advice. I have had at least 11 people approach me to say "If you brought x type of business with y trainer involved, I would be there in a heart beat." And I guess I am just trying to decide how to gauge if they are actually serious and I should build accordingly (we already have 10 based on my own equines and sale horses). Again, thanks for advice.

                Comment


                • #9
                  That may sound crazeeeee, however, I do know of a crazzzeeeee person who had her potential boarders sign **contracts** that they would board with her, at X dollars, if she purchased a property. Farm Credit said "OK", and she got the loan.

                  I haven't tried it, but apparently it does work.
                  When someone shows you who they are, BELIEVE them- Maya Angelou
                  www.americansaddlebredsporthorse.net
                  http://www.asbsporthorse.blogspot.com/

                  Comment


                  • #10
                    Originally posted by APirateLooksAtForty View Post
                    I think it would be hard to explain what my demographic is and why a letter of intent makes more sense than "market research" without giving out too many details, and in the interest of privacy I'm not in a position to do that. Suffice it to say I am not a first time barn owner and this is no mom and pop boarding facility. That being said, I appreciate everyone's advice. I have had at least 11 people approach me to say "If you brought x type of business with y trainer involved, I would be there in a heart beat." And I guess I am just trying to decide how to gauge if they are actually serious and I should build accordingly (we already have 10 based on my own equines and sale horses). Again, thanks for advice.
                    That's good that you are comfortable with your knowledge of the market. Maybe you're indeed best served by about 10 stalls for you and about 10 stalls for boarders. Do you have a sense of why your market is currently so underserved? As mentioned above, make sure that it's not because all of those potential boarders can't/won't pay enough for the services they want. When I mentioned markets, I was more trying to express that you shouldn't count on any particular individuals to make your decision on construction. For that matter, when you mention the trainer, do you mean a particular trainer, or a type of trainer? I also wouldn't count on any particular trainer when making your business or construction decisions. Trainers can and do leave barns all the time (and often take boarders with them).

                    How many stalls do you *want*? What kind of business model are you planning to have, given that it's rare to make money on boarding? You might be fine breaking even on board if it means that you can get a better trainer on site for yourself as well, for example.

                    Comment


                    • #11
                      I would have a master plan and then arrange things so you can build as you go towards that plan.

                      Start with one barn with 8/16 whatever stalls, but have plans for a second or more if the business really takes off.

                      In Europe, many successful riding centers had smaller individual barns and one groom per barn, if larger with an assistant/apprentice.
                      That made it much easier to keep workers and boarders happy and isolate if there was a problem with a health scare, etc.

                      Each barn just has to have the basics, then one main structure tackrooms, other supplies, etc.

                      Sure seemed to work very well and gives room to expand and if things get hard to cut back.

                      Comment


                      • #12
                        OP, you don't note your geographic area nor have you said much about your training facilities. Those are at least as important as a barn. Nor have we heard about the size of the site. And whether it's flat, rolling, or vertical!

                        A barn is often the focus of the effort as it's where basic economic support comes from. But most barns are break even at best and thus may not provide near as much potential income as the training facilities.

                        Where we live we get a lot of rain (50"/yr., on average; 72" last year, second highest ever; 42" in 2016, a low). This means a lot of lost training days unless you have an all-weather arena. And in the summer it can get quite hot, in the winter cold with wind. This argues strongly for a protected training area. Our climate is temperate enough for a covered arena, vice a full indoor. If I had it to do over again, instead of building a 16 stall barn with a nearby covered arena I would have built a 20m x 60m cover and then put stall areas on each end. Probably 12 on one end plus a feed, wash rack/tack up area, tack lockers; 10 on the other, plus feed room, tack room, and two heatable spaces, a farrier area and a wash rack/tack up area. I might also include an office and a sitting/viewing area. This allows you to put frequently worked/school horses at easy reach and the general boarding population (many of whom will be "weekend warriors") at the more remote end. But both have easy access to the protected riding area. If your pockets are deep enough you can add a covered round pen on one end and parking for arena/stall maintenance equipment on the other.

                        It's also good to have one or two outdoor work areas for more space intensive activities such as higher level jumping or driving.

                        The more you put under one roof the less time consuming walking you have to do.

                        This design might take more up front money than a strait 20 stall barn with office space, plus cover, plus round pen, plus equipment area. I'm pretty confident it would require less labor.

                        G.
                        Mangalarga Marchador: Uma Raa, Uma Paixo

                        Comment


                        • #13
                          You are right, OP, that people casually toss off such remarks, but often don't follow through.

                          I think a 'letter of intent' will be meaningless. Just saying so or even handing over a piece of paper with no obligation doesn't mean anything.

                          The early financial commitment is a good idea. You may find out more about their true expectations, and of course you'll find out if you don't really have the interest. If you can handle a board business, you can absolutely handle these financial commitments including any refunds that might come along later. Be very clear about the circumstances that do *not* get a refund so that you get only truly serious commitments.And, be clear about what circumstances will cause you to cancel the project and refund everyone. Don't spend the money until they are moved in as boarders in your new barn, because you may have to give it back, no knowing what crazy circumstance may come up. And put timeframes on everything - and honor those timeframes.

                          You mention Trainer X. Is the attraction your hypothetical new barn, or Trainer X? If X doesn't come, or does come but later leaves, then what?

                          Be very clear with your market what kind of boarding/training facility they really have in mind, and at what rate. If pre-build someone is all excited to come, but then after the build they don't like not having more convenient electrical outlets, or don't like the turnout area, or whatever, they could decide to stay where they are.

                          Cover the bases and this could work out well for you.

                          Comment


                          • #14
                            You should be making decisions by your business plans.

                            Without you providing much information, I agree you are probably over estimating your profit for a boarding barn.

                            The barn I'm at has 40 stalls. The owner has a high turnover rate, routinely tells people there is a waiting list, however has empty stalls. He is very selective, and not afraid to boot anyone. (Mommy & Daddy own and fully support him & his family).

                            Horse people will definitely say they are interested, and aren't, or their plans change. Exactly why I would not be signing any letters or prepaying based on a horse person sayingand they may be building a barn.

                            You can have the most beautiful barn, but if my horse isn't taken care of, or if the someone is nasty- I'd be out!!

                            Comment


                            • #15
                              Originally posted by APirateLooksAtForty View Post
                              I think it would be hard to explain what my demographic is and why a letter of intent makes more sense than "market research" without giving out too many details, and in the interest of privacy I'm not in a position to do that. Suffice it to say I am not a first time barn owner and this is no mom and pop boarding facility. That being said, I appreciate everyone's advice. I have had at least 11 people approach me to say "If you brought x type of business with y trainer involved, I would be there in a heart beat." And I guess I am just trying to decide how to gauge if they are actually serious and I should build accordingly (we already have 10 based on my own equines and sale horses). Again, thanks for advice.
                              No, you are clearly not in a position to do this unless you magically have a small fortune to spend. A letter of intent makes NO SENSE at all, and absolutely does NOT trump good market research. If you don't have a ton of money sitting there, you will need to borrow money to obtain the facility and rework it to be this type of facility that the intenders will flock to. If the intenders don't show up, what are you going to do? Take them to court???? So now you are spending more money trying to FORCE PEOPLE TO BOARD WITH YOU THAT DON'T WANT TO BE THERE. Or are you going to get a judgment against them and then try to collect??? What if you build exactly what they want, and then they can't afford your monthly price? How will you even set that price without market research?

                              Fail to plan, plan to fail.
                              "When a true genius appears in the world, you may know him by this sign, that the dunces are all in a confederacy against him."

                              Comment


                              • #16
                                OP, if you say there is pent up demand in your market and you mean beyond those 11 people who have told you they want a spot, I'd be a tad less scared to build a big facility, but only a tad.

                                I'm sure there are things you are not telling us, but I can't imagine why anyone would want to build a commercial boarding barn these days. If you need a tax write-off, if you are making a real estate investment and need a big business to justify getting a loan for the land you'd buy and hang onto, if you want to insure that you have a place to have your sales business and the trainer of your choice, I get it. But you need to be so well-funded in these scenarios that you can afford to throw a lot of money at a "business" that is known for breaking even. Again, if you have a losing business you need to throw money into for tax purposes, this is a different kettle of fish.

                                But if you do need this business to be solvent, I'd look at it a couple of different ways.

                                1. How many horses could I care for if I ran into the problem of finding enough labor? You can't swing a dead cat anywhere without BOs worrying about how they will get the work done on their farm. At 15 stalls, maybe you can do it. At 25? You need help on a daily basis.

                                If, on the other hand, having 25 stalls means that you get over that part-time/full-time threshold and have the business pay a legit salary to a legit full-time employee, that is a good reason to build bigger.

                                2. I can't speak to all markets, but my sense is that the big commercial barns are becoming harder and harder to sell because they don't allow one to create a profit center. And I think training operations at just about every level but the top are becoming small, sole-proprietorships. So if you build a 25 stall barn, will you find yourself with an asset that's hard to sell? If you spent what it costs to build it, will you be able to get out in the timeframe you'd like and break even? Do you think the pro you want can fill 25 stalls? If not, can you envision running a farm that had more than one pro there, or a pro's program and some boarders?

                                Bottom line: I'd build the smallest farm I could in order to get the job with the horses, the money project and/or getting the pro I wanted working on my place. Just don't over-build for anyone who says they want to board there.
                                The armchair saddler
                                Politically Pro-Cat

                                Comment

                                • Original Poster

                                  #17
                                  Originally posted by Guilherme View Post
                                  OP, you don't note your geographic area nor have you said much about your training facilities. Those are at least as important as a barn. Nor have we heard about the size of the site. And whether it's flat, rolling, or vertical!

                                  A barn is often the focus of the effort as it's where basic economic support comes from. But most barns are break even at best and thus may not provide near as much potential income as the training facilities.

                                  Where we live we get a lot of rain (50"/yr., on average; 72" last year, second highest ever; 42" in 2016, a low). This means a lot of lost training days unless you have an all-weather arena. And in the summer it can get quite hot, in the winter cold with wind. This argues strongly for a protected training area. Our climate is temperate enough for a covered arena, vice a full indoor. If I had it to do over again, instead of building a 16 stall barn with a nearby covered arena I would have built a 20m x 60m cover and then put stall areas on each end. Probably 12 on one end plus a feed, wash rack/tack up area, tack lockers; 10 on the other, plus feed room, tack room, and two heatable spaces, a farrier area and a wash rack/tack up area. I might also include an office and a sitting/viewing area. This allows you to put frequently worked/school horses at easy reach and the general boarding population (many of whom will be "weekend warriors") at the more remote end. But both have easy access to the protected riding area. If your pockets are deep enough you can add a covered round pen on one end and parking for arena/stall maintenance equipment on the other.

                                  It's also good to have one or two outdoor work areas for more space intensive activities such as higher level jumping or driving.

                                  The more you put under one roof the less time consuming walking you have to do.

                                  This design might take more up front money than a strait 20 stall barn with office space, plus cover, plus round pen, plus equipment area. I'm pretty confident it would require less labor.

                                  G.
                                  You must have missed the part where I said I intentionally left those details out in the interest of privacy.

                                  Comment

                                  • Original Poster

                                    #18
                                    Originally posted by Callista17 View Post
                                    You should be making decisions by your business plans.

                                    Without you providing much information, I agree you are probably over estimating your profit for a boarding barn.

                                    The barn I'm at has 40 stalls. The owner has a high turnover rate, routinely tells people there is a waiting list, however has empty stalls. He is very selective, and not afraid to boot anyone. (Mommy & Daddy own and fully support him & his family).

                                    Horse people will definitely say they are interested, and aren't, or their plans change. Exactly why I would not be signing any letters or prepaying based on a horse person sayingand they may be building a barn.

                                    You can have the most beautiful barn, but if my horse isn't taken care of, or if the someone is nasty- I'd be out!!
                                    Psst: not out for a profit on the boarding. Never said I was.

                                    Comment

                                    • Original Poster

                                      #19
                                      Originally posted by Palm Beach View Post

                                      No, you are clearly not in a position to do this unless you magically have a small fortune to spend. A letter of intent makes NO SENSE at all, and absolutely does NOT trump good market research. If you don't have a ton of money sitting there, you will need to borrow money to obtain the facility and rework it to be this type of facility that the intenders will flock to. If the intenders don't show up, what are you going to do? Take them to court???? So now you are spending more money trying to FORCE PEOPLE TO BOARD WITH YOU THAT DON'T WANT TO BE THERE. Or are you going to get a judgment against them and then try to collect??? What if you build exactly what they want, and then they can't afford your monthly price? How will you even set that price without market research?

                                      Fail to plan, plan to fail.
                                      You are hilarious. And I am not borrowing money, and DO have a small fortune to sink in. Just don't want to overbuild.

                                      Comment

                                      • Original Poster

                                        #20
                                        Originally posted by mvp View Post
                                        OP, if you say there is pent up demand in your market and you mean beyond those 11 people who have told you they want a spot, I'd be a tad less scared to build a big facility, but only a tad.

                                        I'm sure there are things you are not telling us, but I can't imagine why anyone would want to build a commercial boarding barn these days. If you need a tax write-off, if you are making a real estate investment and need a big business to justify getting a loan for the land you'd buy and hang onto, if you want to insure that you have a place to have your sales business and the trainer of your choice, I get it. But you need to be so well-funded in these scenarios that you can afford to throw a lot of money at a "business" that is known for breaking even. Again, if you have a losing business you need to throw money into for tax purposes, this is a different kettle of fish.

                                        But if you do need this business to be solvent, I'd look at it a couple of different ways.

                                        1. How many horses could I care for if I ran into the problem of finding enough labor? You can't swing a dead cat anywhere without BOs worrying about how they will get the work done on their farm. At 15 stalls, maybe you can do it. At 25? You need help on a daily basis.

                                        If, on the other hand, having 25 stalls means that you get over that part-time/full-time threshold and have the business pay a legit salary to a legit full-time employee, that is a good reason to build bigger.

                                        2. I can't speak to all markets, but my sense is that the big commercial barns are becoming harder and harder to sell because they don't allow one to create a profit center. And I think training operations at just about every level but the top are becoming small, sole-proprietorships. So if you build a 25 stall barn, will you find yourself with an asset that's hard to sell? If you spent what it costs to build it, will you be able to get out in the timeframe you'd like and break even? Do you think the pro you want can fill 25 stalls? If not, can you envision running a farm that had more than one pro there, or a pro's program and some boarders?

                                        Bottom line: I'd build the smallest farm I could in order to get the job with the horses, the money project and/or getting the pro I wanted working on my place. Just don't over-build for anyone who says they want to board there.
                                        Thank you, thank you, thank you. Only post (or maybe there was one other?) on this thread with genuine thought, reason, and helpful advice. Not sure why people on here get so emotional, reactive, and start assuming. I never said I was borrowing money, and I never said I was out to make a profit on the board. Thanks again for your sage advice. I'm done here and now remember why I stopped posting on this board in the first place.

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