University of Maryland Extension

Horse Boarding Enterprise

Special Edition Overview Provided by Pamela Nicholson Saul

Contents:

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Introduction

If you’re looking for something that is predictable and never varies from day to day, do not get involved with horses! When horses are involved, you will never have a “normal” day again.

For 36 years, my family has owned Rolling Acres Farm, Inc., in Brookeville, Maryland. In that time, I have seen horses get in trouble in ways you cannot imagine, and at the same time, they've given me something to smile about every single day. When we started, we relied on family knowledge and experts in the area to help us develop our program.

The number one piece of advice I would give is to do your homework before the first horse ever sets foot (or hoof) on your property. If you are unfamiliar with horses, research before you start. You must understand that you will be 100 percent responsible for another living creature that relies on you for their basic needs (food, water, and shelter) and survival. These creatures are totally dependent upon you for their care. This is not something to go into lightly. Your life will change dramatically when horses are part of your everyday life. For most of us, it is a rewarding experience and worth the risks and hard work.

In order to create a business designed for success, you will need to make basic decisions in evaluating the scope of your business.  I have outlined these decisions for you.

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Build a Business Team
Successful business management includes building a team of professionals to help you with the everyday needs of your business, assisting you with short and long-term financial goals and protect your interests against liabilities inherent to your business. There are many in the equine industry willing to help you be successful in your operation. Use their expertise and knowledge! Start early interviewing financial institutions, bookkeeping services, insurance companies, and attorneys to select your personalized team, as well as local and state agencies with specialized knowledge. You do not have to manage your business alone. And most importantly, do not rely on the old familiar handshake and a nod when building your business.

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Know Zoning Restrictions
Use local contacts within your county to find out zoning laws, which differ within the State. Each county in Maryland has a County Extension Agency, Soil Conservation District, and Farm Services Agency.  Check with your County Government’s Economic Development Agency to see if they have an Agricultural Services Division.  These are excellent places to begin to find valuable information. Use them as a resource for your business. This is the first step in finding out whether or not you can actually operate an equine facility at your location.

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Select Your Business Entity
You will need to decide what type of facility to operate. Whether you are only interested in covering the costs of owning your own horse, or are interested in a profitable new business venture, you need to carefully decide which type of business entity serves your goals. Depending on your circumstances and short and long-term goals, your business may be simply a sole proprietorship or a general partnership; or you may need to incorporate into a more formal business entity such as a corporation or limited liability company for added protection. Your legal counsel and tax expert together can help you determine which one is the best for you regarding tax and liability implications.

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Select Your Operation
You may simply wish to have a few horses boarded at your place (a hobby operation), or you may already have decided on a larger facility (a for-profit operation). Depending on the type and size of your facility, there may be licensing requirements by the Maryland Horse Industry Board. Your boarding facility may include lessons or training, leasing or selling of horses and tack, trail riding, shows, clinics, camps...the variations are endless! Be savvy in selecting the type of facility you want and are willing to operate in a professional and responsible manner.

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Consider Legal Responsibilities
If you are going to allow lessons or outside boarders on your facility, you will have liabilities that you've never before considered. We hired a lawyer who specialized in equine law to work with us to help us identify and address areas of concern. These services included agreements in writing to cover boarding, purchases, training, and leasing agreements; as well as release waivers for our boarders and clients; and employment agreements for our staff. While you may think it is expensive, I can tell you it is the best investment we made for our business. With these agreements in place, everything is spelled out in black and white so there are no misunderstandings in our business dealings. If this is a completely new business for you, you will need to work with a lawyer for business formation and organization as well. These documents should be in place before you even start your business. It is also a good idea, if you are currently operating a facility, to periodically have your business operations documents reviewed by an attorney. Keep current! Keep informed!

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Create a Business Plan
While working on your legal papers, you should also coordinate the financial side of your business. Even if your operation is a one-man (or woman) business, you still need to make sure it is economically viable. Your County Extension Office has a Farm Business Planning workbook that can help put your plan in writing. You may also opt for help from your personalized business team.  Having a business plan in your mind is not enough!  Taking time to formulate your thoughts, evaluate your business, devise a strategy, and anticipate possible problems will help your business be successful. A good business plan should be realistic, simple, specific, and complete. Additionally, the IRS and other agencies consider a business plan, among other business practices, as concrete evidence of a for-profit business.

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Setting Up the Books
Finances are at the heart of your businessDepending on the size of your business, you may also need to look into financing, financial software programs, bookkeeping services, and other financial needs. There are financial experts that can help steer you in the direction you need to make your business viable and sustainable. Whether you decide you can do this on your own, or you make the decision to include an expert as part of your business team, using an expert to get you started is a very smart decision and one that will save you a lot of grief in the long run!

And if the above information on bookkeeping has made your eyes glaze over -- you’re not alone!  This may be an area where you want to have outside help. If you cannot see yourself creating and consistently maintaining financial documentation such as filing monthly tax forms, and all the other paperwork that goes into running a business--get some help!  Accountants, bookkeepers, and financial consultants all can help you with the financial documentation of your operation. As I mentioned earlier, having a team of professionals assist you in your business management is not a bad idea; especially if you feel this may not be your strongest attribute! This just may be an area of expertise worth the expense of hiring. Hiring someone with accounting knowledge and experience will allow you to concentrate on your trade. Paperwork is not everyone’s forte.

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Employment Issues
If your business is large enough, you may, for the first time, require outside help and find yourself in the role of employer.  It is vital for you to learn about your responsibilities as a new employer. The State of Maryland has a website that can help you with a checklist of all the necessary requirements to hire help. From New Hire Registry forms to Combined Registration forms, it can help you through the array of obligations you have as an employer. Additionally, the IRS website can also assist you in determining if your helpers are truly independent contractors or employees. You do not want to make the mistake of classifying someone working at your facility as an independent contractor when, in reality and in law, that individual is an employee. This error can have grave financial and legal consequences.

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Insurance Needs
Another area to thoroughly investigate is insurance coverage. While you may have a policy to cover your farm (or home), if you take in boarders, you will need a care, custody, and control policy to cover your new business. It is best to use a company that is familiar with agriculture and equine liability issues.  A company that has experience in equine policies will be able to steer you in the right direction for coverage.  Since insurance can be expensive, it is important to know the costs.  You will need this information for your business plan when calculating your expenses and what you will charge for income. Again, I recommend you interview two or three different companies and be sure you compare “apples with apples” before choosing a company to provide your coverage.

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Safety Concerns
Another suggestion is to talk to your local fire department.  I was able to have the Fire Chief in Montgomery County come to our farm for a detailed safety inspection. Working with the fire department may vary from county to county, but it is well worth your time to ask for their assistance and evaluation. For example, our fire department was unaware we had a pond on the property.  We discovered this to be a very important asset should we ever have a fire. They also are now aware of where our combustibles are kept, which buildings house livestock, and which buildings hold equipment. This information is critical to both the fire department and yourself when dealing with a crisis situation.

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Conclusion
As you can tell by the information above, you have many decisions and options to consider.  It all boils down to doing your homework! Every new business is an exciting (and potentially nerve-racking) venture. With a reliable business team and utilizing best business practices, your venture can become a dream realized (and profitable, as well). An equine operation has the added responsibility of caring and safeguarding another living creature that is totally dependent on you. So it is your responsibility to make sure you have a plan in place to meet this obligation. And once you do, you’ll be hooked!  It’s the only place I can imagine myself.

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Resources

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