When longtime friend of EN Margaret Rizzo McKelvy, president of equine marketing and management company Mythic Landing Enterprises, asked us about writing a business column, we agreed it’s a fantastic idea. Have a business question for the column? Email [email protected], and be sure to visit www.mythiclanding.com.
From Margaret Rizzo McKelvy:
Most business owners consider a business plan something the size of an old telephone book that sits on a shelf gathering dust. That’s no longer the case! A business plan is there to serve as a template to guide you in your decision making for your business. Whether you simply teach lessons on the weekends or have a full-scale boarding operation, if part of your regular income comes from your horse habit, you should have a business plan. And, just because you’ve been teaching for forever or have always worked at the family farm, it’s never too late to create a business plan.
Also, remember that your business plan isn’t something that is set in stone; rather, it can gradually change as your business develops and grows. For example, when I started my business, I named it Mythic Landing Events because I thought that I would be organizing shows and clinics every weekend. Fast forward six years, and my business is now named Mythic Landing Enterprises, and the bulk of our business is marketing equine businesses of all shapes and sizes, along with offering a wide array of business management services, including bookkeeping, financial advising and more. My business has grown to fit the needs of my clients, much like I’m sure your business has changed slightly over the years to fit the needs of your clients.
When you sit down to work on your business plan, keep in mind that a good business plan is structured for two avenues: goal setting and/or financial assistance. Let’s look at each:
Goal Setting: This is normally an internal document that you use for your own business purposes. It is used to give you the guidance on making business decisions. For example, let’s say your business plan states that your targeted market is “first-time riders from ages 8 to 13.” This would be used to steer your marketing efforts, your decisions on the purchase of specific animals to fit this need and who you would partner with (like schools, recreation centers, 4H, etc.). When you have it in writing, it makes it easier for you to refer back to when making decisions. Let’s say after three years you find that you are now catering to the local Interscholastic Equestrian Association. You can just adjust your target market even further and adjust your business plan to keep you on track.
Personally, I like to look at my business plan every quarter. While I keep an eye on my financials on a regular basis, I find that sitting down quarterly to look at my financial reports (mostly my Profit & Loss and Budget vs. Actual) alongside my business plan is quite useful. Because, let’s be honest, unless you’re independently wealthy, you’re going to need to shape your business around what is bringing in income. Say at your start you were trying to gear your lessons toward adult amateurs, but at the end of your quarter, you find that you’re making more money from teaching your local Pony Clubs. You can now keep an eye on this until the next quarter and see if the trend continues. If it does, you know that you can safely adjust your business plan.
So, did I lose you when I started talking about P&L and Budget vs. Actual? Don’t worry! This is where the financial assistance portion of your business plan comes in.
Financial Assistance: This is a bit more detailed because it is used by outside financial institutions in the process of getting loans for your business. It includes all the information from your goal setting business plan, plus detailed financial documents such as projections, tax returns and other supporting documents. Loan officers are looking to see if you can absorb additional loan payments and have the assets to cover the loan. Most financial institutions want to see two- to three-year projections of income and expenses on any new business. For example, if you wanted a lender to provide a loan for a new indoor arena, you would provide your estimation of the income you would receive with the new facility and a breakdown of how you would be able to pay back the loan payments. Obviously there is more to it, but this gives you a general idea of how it works.
I cannot stress to you enough how important it is to create a budget and to regularly check in on it! I’m a horse person just like you, and I know how tempting it is to buy one. more. pair. of breeches. And don’t even get me started on the fact that my horse has more coats than I do. But I can honestly tell you that if I didn’t have a budget and keep close watch on it, my business would not still be here. It’s so easy to buy that extra pair of breeches or cute new fleece cooler, and there’s no reason why you still can’t make those purchases — just budget for them! And budget-friendly purchases are guilt-free purchases.
A good business plan will help keep you on track to reach your goals. If you are an impulse buyer (ahem, Tack of the Day addict???), having this document in writing could keep you out of trouble. You can even create a document that can be shared with your staff so that they know what you are working toward and help your business achieve those goals.
So rethink your feelings about a business plan. You could be just a few short steps away from having your goals in writing!
Special thanks to Pam Saul, one of MLE’s star bookkeepers and the owner of Farm & Equine Business Services, for her help with this article.