Horse Business Strategy for The New Year - The 2011 Turnaround!
Saturday, January 22, 2011
As a horse business and marketing consultant and a past horse business owner myself, I've seen my share of "turnarounds" over the years. A business is considered a "turnaround" project when its debts surpass its income and current growth path or when its financial situation needs to improve drastically in order for the business to be sustainable over time. In other words, a "turnaround" from the consultants point of view, is a business that needs to make significant changes in order to be profitable enough to succeed. Nowadays, even the strongest, smartest and luckiest of horse business owners are either in "turnaround," or are concerned that if the economic climate doesn't improve, they soon will be.
The horse business is a tough business that is very fragile when it comes to profitability. And so, whether it's because of the economy, natural disasters: i.e. droughts, fires or floods, an injury to yourself or one of your horses, poor financial planning, an assistant who tries to run off with your clients, or simply persistent slim profit margins and high overhead that over time manages to bleed you dry - Truth be told, nearly every horse business owner ends up in a turnaround situation at least once and often multiple times during the life of their business.
So how do you turnaround a troubled horse business and how do you prevent it to begin with?
Clearly, there are many steps in the turnaround process. These steps include improving cash flow, implementing systems, attracting new clients, reducing expenses, reducing debt: i.e. negotiating with creditors and/or refinancing, adjusting pricing strategies, leveraging assets, diversifying, identifying new markets and opportunities, and the list goes on.
All these things are important in the success of your horse business and if we were working hand in hand together in a consultant/client relationship, we would probably work on each and every one of them. However, today I'm going to share with you the number one thing that makes the biggest difference for the majority of horse businesses. It is something every single one of you can do (with or without a business consultant) that will significantly improve your business.
Learn how to connect your marketing strategy with your profitability-
Far too often, horse professional's marketing and growth plans are disconnected from their profitability. It's hard enough to create a successful marketing campaign. However, if you don't understand what specific type of growth your horse business needs in order to be profitable, even the most successful marketing campaign won't create the tangible financial improvements your horse business truly needs.
Here are a couple of examples -
A barn that invests their entire marketing budget in attracting new lesson customers - never noticing that if each of their current clients simply attended one more horse show per year, their profitability would more than double what it would with the new lesson customers.
Sometimes you are far better off to focus your marketing on your current customers rather than new customers. A good question to ask yourself is - What path do you want your current customers to take and how can your marketing better support that path?
A stable that can handle 30 horses with its current staff and resources, that rather than growing their lesson program (which would not require an increase in horses boarded or staff,) markets and grows their boarding clientele by 5 new boarders. As a result, they have to hire more stable help. The barn then finds that the increase in expenses annihilated the increase in income causing a loss rather than a gain.
These losses can be substantial when you factor in the cost of the marketing that created the problem and the cost involved in remedying the situation..
While some of you may totally relate to the above examples, each horse businesses is unique and so it is essential that you find out what specifically works for your business and create your own "what if" scenarios.
Gather and analyze the information that enables you to make accurate, fact-based decisions about the growth of your business so that you can target your marketing efforts on the areas that deliver the highest return on your marketing investment!
Current and Future Members of Equestrian Professional.com-
This is a great time to make use of the Horse Business Calculators and Budgets available to you as a member. A few recommendations include -
Horse Business Budgets - We have several different types of budgets both online and downloadable pre-formatted excel sheets. Our budgeting tools will save you hours of time! And help you quickly enter the information you need to make facts based decisions for your business.
TIP: We recommend creating your 2011 budget first because then you'll have "your numbers" handy for measuring other areas of your business - i.e. forecasting, profit margins and breakeven etc... For more tips on creating a budget for 2011 click here.
Horse Business Breakeven Analysis - This calculator is super easy to use and is an excellent forecasting tool.
The Horse Show Budget and Profitability Calculator - use this calculator to check or adjust your pricing strategy, help you figure out which shows are the best financial fit for you and your customers, and to see how many clients and/or horses you need to bring in order for the show to be profitable for you.
Equine Business Operational Cash Flow Calculator - This online calculator will help you catch cash flow crunches before they happen. It will enable you to more accurately (and accuracy is important when it comes to cash) forecast the times you will have the most cash available so that you can maximize it!
TIP: Most of our calculators have how to videos associated with them. These videos contain lots of helpful examples.
If you would like help creating your forecasting documents i.e. budgets, cash flow and breakeven analysis for the 2011 business year or would like help developing a success driven strategy for your horse business i.e. marketing and profitability plans - we can help! Contact us for more information about our private consulting packages.
Not a member yet? Don't get left behind --
Our members have an incredible competitive advantage. They receive proven business tools and resources specifically designed for horse professionals. Plus, they have access to insider information. They see what is working (and what is not working) for other horse business owners around the globe.
Our members only discussion forum, interactive seminars and Horse Business Hotline™ enable our members to get invaluable feedback from each other and the Equestrian Professional staff. Not only are our members better equipped to succeed, they enjoy working on their businesses more because they have the support of their peers.
As a member, you'll get the tools and resources you need to accomplish your goals more quickly and you'll have a heck of a lot more fun in the process because you won't have to do it alone!
About the author-
Elisabeth McMillan is an equine business consultant and the founder of Equestrian Professional.com, a website that provides business and career support to horse professionals. She is also a sought after public speaker for equestrian organizations and speaks at equestrian events through out the U.S.. For more information please visit www.EquestrianProfessional.com or you may email her directly at firstname.lastname@example.org