At some point, all professional horsemen realize that they can?t keep every good horse that walks into the barn. Buying and selling horses is part of the business. Becoming fond of your horses is a terrific benefit of being in the horse business. It is also a financial tie down that can ruin your business. The profitable horseman understands that horses in his or her barn are assets; they aren?t pets.
A horse is either appreciating in value or depreciating in value. It is either generating income as a lesson horse, brood mare, stallion or is inventory for sale or the horse is an ongoing operating expense. The horse becomes a financial dependent on your business?s welfare roll.
Not only is it an operating expense, it is also an opportunity cost. Think about it, if a horse occupies a stall and generates no income or has little or no potential for future income, it is a thief horse. Unlike a horse thief, a thief horse steals your potential to earn profit from the space and resources it occupies.
That stall could be used for: 1. Boarding 2. Horse for training 3. Lesson Horse 4. Brood Mare 5. A speculation horse "bought right" 6. An empty stall for attracting the next opportunity
In economic terms, there is an opportunity cost for every decision you make in your equine business. An opportunity cost is defined as the cost of something in terms of an opportunity foregone.
Said a different way, unlike Yogi Berra?s classic line, ?When you come to a fork in the road, take it?, every fork in the road you come upon requires a choice. The road you choose is the path you follow. The road not taken is your opportunity cost since you cannot travel two paths at the same time.
Choosing the more profitable path that fits your business vision is the choice to make every time. This week?s tip is to consider whether or not you have any ?thief horses? in your barn and if you do, how to find a new home for them. The horse business is just like any other business in that assets have to produce revenue. If your assets are non-producing, then it?s up to you to make changes.
Doug Emerson trains consults and coaches professional horsemen and horsewomen struggling with the business half of the horse business. He writes a free weekly electronic newsletter about making money in the horse business. Free subscription available at the homepage. www.ProfitableHorseman.com
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