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For those of you who take in boarders...

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  • For those of you who take in boarders...

    Is there a formula that you use to calculate what you charge for board?

    I.e. Restaurants use 3x the cost of the item.
    1/3 for food
    1/3 for labor
    1/3 for overhead

    Is there such a formula for a boarding stable?

    I've read it many times boarding alone is not profitable.

    Can you charge someone enough for board that you make a profit, and still keep them as a client? Or do you lower the price even though you'll lose money to get them to stay?
    Certified Guacophobe

  • #2
    I think a good basis is look at what the other barns that have similar facilities and services near you are charging. Barns that charge way more than the average but don't provide anything extra to what you can get from other places tend to struggle to be competitively better. The profit really comes from training and lessons though.

    Comment

    • Original Poster

      #3
      Thank you. That is what I've understood.

      I know enough about boarding to know I never want my own place or to try and own a boarding stable.

      I salute those who've been successful.


      Certified Guacophobe

      Comment


      • #4
        So many restaurants go belly up because of inexperience. No matter what you charge if you don't have the experience to back it up I think you are doomed to fail, unless you are one with unlimited funds to start with.

        My BO had an extensive horse background as well as a past career in finance. He did extremely well for decades in owning/ running the business. It was affordable for us boarders and the care was top notch.

        Comment


        • #5
          Restaurants (of all levels) have very thin profit margins.

          Boarding barns typically have no profit, but benefit from other services or tax breaks for unrelated activities (for farm owners).

          Comment


          • #6
            Originally posted by AnastasiaBeaverhousen View Post
            Is there a formula that you use to calculate what you charge for board?

            I.e. Restaurants use 3x the cost of the item.
            1/3 for food
            1/3 for labor
            1/3 for overhead

            Is there such a formula for a boarding stable?

            I've read it many times boarding alone is not profitable.

            Can you charge someone enough for board that you make a profit, and still keep them as a client? Or do you lower the price even though you'll lose money to get them to stay?
            You start by calculating your costs for the service level(s) you will offer. Then do a market survey to see what the market will bear in your area for the level(s) of service being considered. If the market will bear the costs plus a profit then you are good to go. If not then you have to do something to either reduce costs or make your service so desirable that people will pay above market for it or add additional services that are associated with the base product that can be provided at a profit.

            In the case of barns, most run at break even for boarding and make money with lessons, training, show support, hauling, etc. My tenant has a strong youth program including competitive equestrian teams and an array of both day and overnight summer camps.

            This has to be a very practical and brutally honest calculation for the potential provider as they will be gambling "real money" if they decide to do this. There's another tread by an inexperienced person thinking about using a family owned place set up as a horse facility but currently empty. There are some very good discussions of issue in that thread. There are also several others that have been had over the years on the realities of equine boarding.

            The reality in most area is that boarding is more a "labor of love" than a way to an early and comfortable retirement.

            G.
            Mangalarga Marchador: Uma Raa, Uma Paixo

            Comment


            • #7
              There really isn't a good formula. But, a good place to start is by making a thorough spreadsheet of all of expenses. It's important to be very thorough as to what you include. It's easy to figure out the monthly calculation per horse for feed, hay, and bedding. More difficult are yearly or seasonal things like maintaining facilities, fencing, pastures, and landscaping (gravel, fertilizer, herbicides, seed, decorative plants).

              Then you also have to figure out how to work in the enormous capital expenditures like fencing, barns, tractors, mowers, and all the other equipment that is required. As a rule of thumb, you can spread the cost of various big ticket items out over about 15 years. Obviously if there is rent or a mortgage on the land and barn, include that cost (or what the rate should be for usage of the land and facilities). Remember, investing $$ in a horse facility is a lot less lucrative than investing in just about anything else, so there is a cost in terms of lost opportunity to make money elsewhere with that investment.

              There's a lot of basic stuff like commercial insurance, care custody and control insurance, and insurance of any vehicles related to the farm, and probably an umbrella policy for yourself just to be cautious. The cost of bookkeeping, billing, etc. There are legal fees for the drawing up of contracts and releases, and legal fees related to tracking down money owed and arranging for the disposition of horses that are abandoned with you. There's electric, water, trash service, manure disposal, etc.

              Labor is trickier to calculate than what you would think. For each worker, you have consider the cost of payroll taxes, workmen's comp, and accounting fees (or something for your own time if you do your own payroll and accounting). But you also have to consider the cost of hiring new employees, training them, supervising them, and in some cases disciplining or firing them. There also is the cost of employee theft and the cost of damages incurred by careless employees. There's the cost of filling in for employees who don't show up, and extra pay for employees who work holidays or after hours.

              You also need to plan for accidents and disasters (aside from minor things like a careless employee smacking the tractor bucket against the side of the barn to the tune of a $1000 repair--I'm gonna tell you right now that I don't even get upset when crap like that happens because in the scheme of a farm, you are lucky when horses and people aren't injured.) Sometimes insurance pays, but if you turn to your insurance company for $500 here and there you will lose your coverage. A bad hay year can cost a boarding barn $10K in extra expense (ask me how I know). An extra rainy year can cost a barn $10K in terms of fixing drainage, fixing washed out or flooded areas, amending fields, and dealing with sinkholes or erosion.

              You need to plan how much you are going to pay yourself for all of your own labor--not just farm work, but all of the time consuming things that go into the 24/7 supervision and maintenance of a business involving livestock.

              Personally, I keep a running spreadsheet and add to it and adjust it constantly.

              If you do this, and add up all the numbers and come up with a number that is greater than what the going rate is for similar board in your area, it doesn't make sense to do boarding. Pretty much the only scenario where boarding is a money maker is when it is combined with expensive services like lessons, training, layups, broodmare boarding, etc. Boarding is not generally in and of itself a money maker, and it's a huge hassle to do, as well as a huge liability for anyone who has enough resources to own land or a facility.

              Comment

              • Original Poster

                #8
                What an informative post. BeeHoney.
                Quite eye opening.
                Believe me. I had never seriously considered running a boarding facility or owning one, but this definitely cements it.

                I just wanted to get an idea of what I should be paying.

                But this has made me very mindful of some things that had not occurred to me.

                Especially the legal aspects of it.

                Thanks to you too, Big G.



                Certified Guacophobe

                Comment


                • #9
                  BeeHoney's right in all that they wrote.

                  Actually, there is a formula: add up all (ALL) your expenses, and charge more than that.

                  As is so often written here, boarding is, at very best, a break-even business. Boarders know the price of a bale of hay or a bag of shavings, but they have no clue about all the rest of it. Things like 285 of wages as worker's comp just don't figure when boarders think I'm 'making a killing.'

                  Other services bring the profit: lessons, training, sales, shows etc. If you only own the property and try to break even just boarding, you will likely not be able to do it unless you have some unusual circumstances including no mortgage, low property taxes, and ample labor.

                  And when you add in the cost of facilities: land, barns, fencing, tractors, etc. boarding is generally a terrible financial idea.

                  I prove this to myself every year that I keep my barn open.



                  Comment


                  • #10
                    I only have one retired horse here on my wee farmette along with my own retired horse. What I charge offsets the cost of my own beastie. That's it. I know how much it costs to feed and house one, I charge that plus X for my labor and Y for materials (upkeep). I'm not a boarding facility, I'd live here with my retired horses regardless, so I never figure in my mortgage or tractor or major upgrades like new perimeter fencing. That's my two cents.
                    Proud member of the "Don't rush to kill wildlife" clique!

                    Comment


                    • #11
                      Originally posted by lovezehorses View Post
                      I think a good basis is look at what the other barns that have similar facilities and services near you are charging. Barns that charge way more than the average but don't provide anything extra to what you can get from other places tend to struggle to be competitively better. The profit really comes from training and lessons though.
                      I don't think that's a good way to do it. That might tell you what you can charge. It does not tell you whether or not you can make a profit.

                      I don't think you can extrapolate a formula from one industry to another. I think folks need to get out their yellow pad and actually do some costing.
                      The armchair saddler
                      Politically Pro-Cat

                      Comment


                      • #12
                        Problem with pricing to break even or even operate at a small loss on board and depend on lessons, training ,shows and buy sell activity is what happens in a downturn when clients reduce their non essential horse expenses or leave the barn completely.. Then what? Hay guy still wants the check.

                        Thats exactly the situation many barns will be dealing with, especially in hot spot states. Fear Florida is not far behind.
                        When opportunity knocks it's wearing overalls and looks like work.

                        The horse world. Two people. Three opinions.

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