A Note about Sugarbush Draft Horses

I see it over and over again, and no matter how many times it's said, it's still wrong. "Sugarbush Drafts are just an Appaloosa Draft Cross". Uh.... no. The Sugarbush Draft Horse was a breed created many years ago in Ohio. While the initial cross was made using Percherons to Appaloosas, in the many generations following, the breed has been solidified into a consistent type. Saying these horses are "just" a draft cross makes as much sense as saying that AQHA horses are "just" a Thoroughbred cross, American Cream Drafts are "just" a dilute Belgian, or that Morgans are "just" a grade.

Tuesday, July 31, 2012

The money game

The first thing I had to do when I started my business was to write a business plan.  What did I want to do?  How much would it cost to do it?  How much could I realistically expect to make doing it?

When I wrote my business plan, I was very conservative.  I increased my costs, and expected to make little money.  I mean, how many horses can I sell in a month?  Not as many as I will be feeding and caring for!  And so, I found my "needed" points for utility costs, hay, grain, shavings, mortgage, and such.  I worked backwards, looking at the average cost I would want to pay for boarding or training, or a horse, and making the property expenses fit that.

Many people know, and I'm not ashamed to admit, that we got a steal of a deal on our place.  We bought just a month before the economic meltdown.  The property was about to hit foreclosure, and mortgages were still easy to get.  We had one snag that almost lost us the place though.  My Agricultural loan wouldn't cover a property that is in the city limits.  Uh oh!  A few days of freaking out found us a local bank that would cover it, especially after evaluating the property value compared to the sales price.  We were paying about 1/3rd of the tax value.  That makes getting the mortgage MUCH easier.

And so, I have low over head, and plenty of acres of land.  This means I have a lot more freedom to implement my "Walmart" mentality, because losing one client doesn't mean I'm in dire financial straits.  I currently am producing about 4 foals a year, and expecting to sell those horses when they are about 4 years of age.  With my low bills, the cost of making one of these horses is about $500/year (plus $1008 while in utero).  I am able to reduce the cost per horse, by increasing the income of the herd.

So, lets talk about how much a horse costs to get all grown up.  For most people, they look at the expenses THAT horse cost them.  This is a mistake.  Sure, you might spend $20 on dewormer, and $150 on vaccines, and such, but what about the whole herd?  If you're in business, your goal is to make a PROFIT, not to pay off one horse.

So, for me, I currently have 8 brood mares.  I have 4 foals a year, so that each mare gets time off. In some years, I have less foals then that (market matters, if I have horses that aren't selling, then I make less new babies).  So, this means to make a profit, I have to pay for the mares, the stallions, the babies, all their vet needs, and consider the lesson horses and property costs too.  Each foal has to be able to bring in that value, other wise, I might as well buy people horses and give them away. If my babies can't pay for themselves, then I have no business making them.  If the public is not willing to pay for what it costs to make them, then there isn't enough of a market for them.

Now, horse buyers are wondering why they should pay for me to keep up with my other horses, right?  It's because good ethics say that I don't breed my mares back to back and make them nothing but baby factories!  These horses get time off, they get training, and they get love.  You can't expect me to keep my horses in the most desirable fashion, and then only support the cheap crappy pony mill breeders, and THEN wonder why no one is doing it "right".  People cut corners because buyers want to be cheap.

If you get a horse in need (rescue, rehab, or upgrade) then sure, go cheap.  You don't want to pay someone money for doing it WRONG.  But if you want a good solid horse, understand that you have to pay for the quality care those horses get.  If you don't, then we ethical breeders close our doors, and just have our "pets".

So, the cost of my foals is set by their age, and what they have to pay back to the farm.  It costs me $1008 dollars per foal to get a foal crop on the ground.  This means I can sell weanlings for $1500, if I have a crop of 4 babies.  If I keep the foals, then I pay their share, and do not pass that cost onto buyers.  That's what I did this year.  My other mares, who have done their time and no longer are useful to my program (Such as Dove here) are being offered for sale at lower prices, to get them into good homes.  Those lower prices then roll back into upgrades for the business.  These mares are already paid off, hence their value is that of a high quality home (and my profit from them pays off the baby costs).  It's complicated, but it keeps the prices low and fair.

So, by the time a horse is 3, and starting under saddle, it's worth about $2500 to me.  I charge $100/month of training (since care costs are taken out elsewhere) with an expected 6 months to get the horse ready for sale.  This means that for $3000 you can get a nice, solid, consistent, novice friendly young show prospect.  Not bad at all in this market, I'd think.

And I'm able to get those prices.  So far, I've been breaking even.  Some years are bad (we have savings for that) and some years are good (money goes into savings) but we end up writing a lot of low numbers on the IRS forms - but positive numbers.

The thing that many people don't understand though, is that if Iron Ridge Sport Horses makes no money (according to the IRS) then we've covered ALL of our bills.  This means care, mortgage, utilities, advertising, new tack, etc.  Most months we pay the bills just fine, but don't have the money to spontaneously go out to the movies.  Some months, we have enough to buy new computers (a business expense by the way).  So if you're thinking about getting into horses, don't expect to live the same way you did BEFORE you start a horse business.

Besides, you won't have the time for it.

I am NOT a morning person, but I'm awake by 6am, and in the saddle by 8am.  I have to be.  I spend 6 hours inside working with the SDHR and doing my Iron Ridge (IRSH) paper work.  I then head out again by 7pm, and am at the barn until about 9 or 10 pm.  That's a 14 hour day, and I do that 6 days each week.  On my "day off" I simply wake up at 8am, feed horses, and goof off until the next feeding time.  I still feed 4 times a day, I still have to water and clean stalls and move horses around.  I can't leave a pale skinned horse outside just because it's my "day off".  So when do I head to the pool?  When do I go out of town?  Uh... never.

For me, I like living like this.  I'm a home body.  I traveled when I was in my teens and twenties, and I've seen the world.  Now, I can be happy with sitting at home, making dinner with Jae (he cooks, I do dishes) and splurging on a $1 video.  For anyone else, well, a day away from the farm means you have to pay for help.  The cost of a pet sitter is about $25/day/horse.  I have 34 horses on the property.  You figure out what a day away from the farm costs me!

But now, I'm trying to fit in time with the SDHR as well as IRSH.  That's like working 2 full time jobs, during the same hours, all week long.  I've come to the decision that I need to slow down (I'm tired of not getting to see Jae, even though we work together!) and so I'm looking at ways to keep the property making money, while doing less.

Naturally, this means less horses.  The less animals I care for, the less money I spend.  If I have more outside horses and less of my own horses, then that means more profit.  Here's the kicker though, how can I do it all, with less horses?

I refuse to sell off my older horses.   I have some retired oldies but goodies that have places here.  Keeley and Ash are 23.  Both had hard lives, so it's a LONG 23 years for them.  Keeley has arthritis in her lower back, hips, hocks, and pasterns.  She's foundered on the fores.  That old lady can pack around a kid at the walk, but that's about it.  Besides that, she "earns her keep" by baby sitting the weanling fillies, and making the pasture look nice.  Ash is still riding a bit, but she's got cancer.  She has a tumor on her neck the size of a grape fruit (melanoma) and there's really nothing we can do about it.  Removing it will only result in another tumor growing to fill the space.  She's happy, but she's not as zippy as she once was.  I goof off with her on the weekends, and it helps to keep her old joints from creaking.

Then there's the boys.  Quagga here is in his late teens.  He's still looking good, but he has old injuries that limit what he can do.  Basically, due to a broken stifle in the past, Q can breed mares, and get love.  With the way my program is going, he'll be doing less breeding, but he's Jae's personal horse, so he gets pretty spoiled.

Spot is the same.  An old fetlock injury resulted in him not being show sound, but he's trail sound.  He has a hitch in his gait from a fused (but pain free) joint.  Because Spot is no longer what I need as a stallion, he will be gelded this fall, and retired to pasture and trail riding.  That's 4 horses who aren't making me money, but who I owe it to them to keep up their way of life.  I can not even imagine doing any less though, so they are just budgeted for.

But, with a planned brood mare herd of 10 mares, and 4 stallions (to keep genetic diversity because the SDHR is pretty line locked) That's still 14 horses who do nothing but make more horses.  My stallions can not be lesson horses.  Showing is a great way to advertise horses, but it does not make money.  The foals produced from those show horses is where the money comes from.  Stud fees are not the money maker that most people think.  I rarely sell outside breedings, but do sell a lot of foals.  I then need a group of horses for riding lessons.  Some of these horses do double duty.

Midnight is a good example of this.  She is a tentative brood mare for a future SDHR foal (she is older, so won't be having a ton of babies for me) but she is priceless as a lesson horse.  This mare can pack around the largest riders, and the youngest riders, and does all that is asked of her.

I have a few other horses coming up into my lesson program from the breeding string as well.  Shadow is a top quality Appaloosa, and has the sweetest personality of any of my horses.  She's always forgiving, and will do anything for love.  When she's done, she will be one of the best lesson horses I have.  And she'll be able to add some refinement into the SDHR lines if it's ever needed.

So all total, I keep about 25 - 30 head of horses here.  My brood mare herd is very young though (most under the age of 6) and so they just can't be ready for working in lessons.  I don't think a horse is ready for a novice rider until it has more then 3 years of regular riding.  This lets the horse see the crazy things that happen (like those evil plastic baggies that are always flying on the wind) and learn to ignore it.  As my breeding herd gets more experience, I will have less need of non breeding horses to work in the lesson program.

Now, some of these horses are "pets".  I have enough time, space, and money to keep a few just because I can't imagine life with out them.  Cayenne is one of those.  We've tried to sell her, and it didn't work so good.  She's back now, and came back with an injury to her back that took over a year to work out.  This little horse (she's 14.0 hands with her shoes on) will ride out lovely with just a lead around her neck. She's small enough I can climb on her out in the pasture, and she's sweet enough that I feel "ok" doing it.  She's also the first baby Jae and I raised.

We got Cayenne as an orphan, and we joke that she's our "first child".  She's spoiled rotten!  She's also a boring bay AQHA mare of moderate breeding (2 gens back is the first horse of any name) but she's great for anything.  Why sell her, when I'd have to pay 10 times what I'd get to have a kid's horse this predictable?  Since she costs me about $50 per month to keep, I figure it's an acceptable rare for a small lesson horse.  That's my story and I'm sticking to it!

But that just shows you how easy it is to get in over your head.  Cayenne will likely be listed for sale, but listed at the price it would cost me to get a horse this good.  If she doesn't sell, I won't cry.  If she does sell, then it will be into a home that is going to use her for what she's good at (uh, not breeding) and love her.  But I can make almost the same argument about most of my horses I have here.  I need to keep this one because.... I need to keep that one because....


And then I'd have a ton of horses, and no way to pay for them.  If I want to stay in business, and do this for a living, then I have to limit my pets.  I allow 2 pets per person.  Jae has Dee and Cayenne, and I have Ash and Oops.  Those horses are allowed to be "not for sale" if the person chooses, even if the horse is "useless".  I figure, most families have a horse or 2, and they don't expect to make money with them, so we get the same luxury.

And the more I type, the more I realize that slimming down my herd is just something that is going to take time.  I can't cull the lesson horses yet, because my girls aren't old enough to hold down that job.  I can't sell some of the mares yet, because they still have babies at their sides.  I currently have only 2 horses that are "for sale" right now, even though I own 29, because I'm in a weird transition phase.  By this winter, I will have a total of 8 horses for sale, but I can't move some until others are ready.

I think that for what I'm doing, a herd of about 20 horses is perfect.  That's 14 breeding horses, some doubling as lesson horses, and 6 to 8 young horses growing up to sell.  I don't want more then 8 horses in my riding string at any one time (including tune ups for lesson horses) because it's just me doing all the riding.

Yes, I know, I'm taking the long way to get around to making a decision, and pretty much vomiting on my blog about it, but it IS helping.  I feel a bit over horsed, or like I WILL be over horsed soon.  My goal is to be able to love what I do, be good at it (profit and ethics) and be able to keep the business running for many MANY years to come.  To do that, some times I have to think out loud a bit.

4 comments:

  1. Very interesting blog--as was your last one.  It would be a great read for anyone interested in starting a horse business because it is so realistic.

    ReplyDelete
  2. Very interesting, specially the part about how many you can keep to ride.  For a long time I had lots of young horses and one or 2 broke ones, but now I have 5 broke horses and have a hard time keeping them all rode.  I never thought that would happen.  Although I do love the whole picture of the business it sure puts it in perspective as to how feasable or not it is to have a horse business, always a plan is important.

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