Horse Business Plan vs Horse Business Model

Hello everyone and welcome to a Equestrian
Professional’s horse business webinar The Critical Differences Between Horse
Business Plans and Horse Business Models. My name is Elisabeth McMillan. I’m the
editor and founder of Equestrian Professional the Horse Business Site and
I will be your speaker tonight. I would love it right now if those of you
who are on the call to just type into the question box whether you can hear me
all right and also please feel free to submit your questions at any time. When
I’m done with the lecture portion which I’m hoping to keep to about 20 minutes I
will jump into the questions. First, I’m going to to quickly go over the difference between a business model versus a
business plan. Your business model is the proprietary method that is required
for you to obtain and retain customers. It’s the way your business is geared to
make money. It’s the physical process of how it makes money. It typically is a lot
more holistic than a business plan. A business plan tends to be a lot more
detail-oriented. A business plan is a formal statement. It’s a set of
business goals and then your plans, actions and dates of how you’re going to
achieve those goals. And so I kind of see your business model as the real
way and plan of how your business works and your business plan itself is really
just a test of that plan. So there are some very common horse business
models and they are in the horse business, things like boarding stables
and a boarding stable could have dry stalls or it could be full care. There’s
training barns where you might have a show barn or a training barn could be
really different than that. It could be colt starting or you could even be sort
of a traveling trainer. There’s also professional riders
and some of them have private clients some have sponsors. There’s riding
academies where you might have lessons and or you could have a Therapeutic
Riding Academy. You could run a sales barn. You could be a breeder.
greeter or you could have a clinician You could be a clinician or you could
have a combination of models. Let me show you quickly what is
involved in a business plan and then we’re going to contrast that to what is
in a horse business model. A business plan is going to have a vision statement
and a mission statement. It’s going to then go over your goals and objectives. It’ll
then have financial documents like projections, profit and loss reports and balance
sheets. It may have your break-even analysis. It typically is also going to
have the people that are involved. It’s also going to contain a
marketing plan and often a competitor analysis especially if it’s going to be
used for financing. Okay so that’s a business plan. Now, what you’re looking at
is a business model canvas and you can see that with a business model canvas
it’s really quite different. A business model canvas is very visual. This is
a sample business model canvas that covers a variety of horse
business models. I’m hoping that basically it will
give you a general idea of how this canvas works and then we’re going to go
into some different models. So, at the center of every business model canvas are the value propositions and each customer segment is going to have a
different value proposition. On the different business models that I’m going
to cover we’ll talk about those value propositions. In this one I’ve just left
it blank for the sake of time. Then what you’ll see is on the bottom lines of
this business model canvas is your cost structure and your revenue streams.
Then you’re going to see six other blocks with things like your
customer relationships how you’re maintaining those what
activities you do in your business. Like riding, showing, teaching and caring for
horses. Who your key partners are? Those would be the people that are important
in your business. What your key resources are? Which
would be the things that are important for your business. Channels are your
marketing channels. So, one of the things that’s really interesting about looking at your
business this way, is that changes to these other six blocks can affect both the areas of your
affect both the areas of your value proposition and also the areas of your
cost structure and revenue streams. And, when it’s laid out this way it can be a
really quick way for you to identify what’s coming up for your business and
kind of keep you ahead of the game a little bit faster really then a business
plan will. For example, let’s say you run a lesson barn and two of your best
school horses come up lame which would be in the Resources part or the private
school that you usually run your camps through closes or chooses a
different barn that would be Key Partners. So, if you’d saw changes in
other either of those areas it would affect your cost structure and revenue
streams. Or. let’s say your professional rider who gets hurt and can’t ride any
longer that would affect the Key Activity portion but it would also affect the
Revenue section. Similarly, if you ran a boarding stable and your Cost Structure
changed because maybe you went to city water or you got rezone from
agriculture to residential and that affected what you’re charged for your
electricity or something along those lines. Another area that can really be a good,
quick signal is if your Customer Segments changed. For example, let’s say
you run a show barn and your kids are aging out and about to go off to
college so that Customer Segment change would affect your business model as well.
So, let me go on to the next slide and again please feel free to type in any
questions. I can stop and answer them or I can answer them at the end.
So while each horse business model each one you’re going to have you know
it’s important you to have your own unique competitive advantage you’re also
going to see that there are some general necessities for certain horse business
models that you really have to have in place in order for those business models
to work. So as I go through the following examples I’m hoping you’ll get a good
idea of how both those things can be better understood by using a business
canvas and also how simple and visual it is to use this tool to find
out ways to improve your business model and also whether the business model if
you’re starting something new is a good fit for you. So right now we’re
going to look at a boarding stable. One of the things that I I don’t know if
I drew enough attention to earlier but in those common horse business models a
lot of horse businesses have combination models. So you might be a boarding stable
and a training stable or show barn. You might have all those things together and
that would be sort of an overlapping business model. Or, you might have
individual ones. What I’m going to try to do for the sake of time and
clarity is break those up into separate models so that you see what makes them
tick. So, as you see this boarding stable business model canvas. I know it looks
messy. They’re kind of supposed to because really what they are is just a
way for you to visualize what each section is about and typically they’re
covered with sticky notes or like this one with writing and highlighters and
things like that to help you really identify what’s going on in each place.
So, what we have on the far right is the Customer Segment which would be this
barn boards to people who want to retire their horses and the Value Proposition
that goes with that is also circled in pink. So the reason why that
works well is that there pastures are ideal for small groups of
elderly horses and I’m not going to read the whole proposition. I’m going to bump
to the next customer segment just and you get the idea of this. Another
Customer Segment are working adults and why that works for this particular
business, is that they have a lighted arena which makes it easy for that for
people who work to ride after work and also to ride with their friends at the
barn who also are in that same situation. The other customer segment is a trainer that
has clients but their clients are mostly children and the Value Proposition there
is that the trainer works mostly with kids who ride directly after school and
so it works really well for parents schedules and the trainer there would
add to the revenue streams because of leasing the barn for that and also
reduce some of the Cost Structure due to that. So, when we look over at the Key
Partners part of this, piece of this which is on the far left ,we see that
some of the people that are really important to this business working well
is that there’s a show barn that refers retirees they get also they get for the
working adults they get a lot of recommendations on Facebook from their
clients and then we have and you’ll see another Key Partner is Glen at the
Pencil Factory. Now this is actually kind of loosely based on a barn in my area. I live in a small farming town and you would not think since there’s so many
people who can keep their horses at home that a boarding stable would be
financially viable here because typically location is incredibly
important for boarding stable but the indoor arena that this stable has ends up
attracting a lot of people. And, he’s able to keep cost down because he buys
shavings from a pencil factory and so one of his Key Partners let’s say is
Glen at the Pencil Factory who reserves the pencil shavings for the operator of
this barn. He also has revenue streams and saves
money because he grows his own hay. Now, sometimes that’s a savings sometimes
it’s not but let’s say in his case it is. And, one of the key partners in doing
that is his neighbor who helps him hay. You’ll also see I circled trainer in
red because it helped keep the barn full. They are really key in keeping
that Cost Structure down and they are a big part of this barns competitive
advantage. The other thing that you should notice or be aware of in this
particular business model in terms of boarding is that typically boarding
businesses are much more reliant on Resources than they are Activities. The
activities are still important but without Key Resources boarding stables
typically don’t work. Some of the Key Resources to note here are the
indoor arena, the cheap savings and the hay field. Those are
things that are making this business, boarding stable work. All right let’s
jump over to the sales barn. So, sales barn really different business model
here what you’re going to see is that the Activities section is the key to this
horse business model success and so this business is a lot more expertise based
typically than resource based. Although, the resources are important. So let’s
look quickly at some of the Customer Segments. We have trainers that
are looking for their customer so they engage with this sales barn.
There’s clients who are looking on their own for horses. Then their other
customer segment would be other barns and breeders who want to consign horses
for sale or have them train and show their horses so that the horses can be
sold. These Customer Segments again, each
has different Value Propositions one of the things that’s key about that is that
when there’s different value propositions it typically means that
you’re going to use different marketing messages because you’re speaking to
different types of people. You might have marketing that resonates with the
trainers. You might have marketing that resonates with the clients or you might
market to the trainers through the clients. You would also have marketing
materials that would be quite different than those here that would be
specifically for the barns and breeders that you want to hopefully consign their
horses to you. So, that’s another really good way to identify who your Customer
Segments are. Is it a different value proposition? Is it a different marketing
message? The Customer Relationship side of this is it’s really pretty basic.
It’s in person. It’s also getting to know people at the shows. It’s social
media. Staying in touch through phone and text. The Channels are a little different. They use a group called Pro-Equest quest which is a website that advertises
horses for sale for trainers. They have their website, social media etc…
Their Revenue Streams as you can see, are horse sales, horse leases, commissions and these would be from horses they own and then they would have commissions from horses
that are consigned to them and sometimes training and show fees from that. But again,
I just want to draw your attention to that the Key Activities again are the
thing that makes this business tick. Which is riding, being able to be
successful at horse shows, being able to pick out quality horses, doing a good job
with preparing horses for clients to try. Some other Key Activities that
sometimes people in this industry are good at and sometimes a little weaker at
are follow up and phone calls. Then you want to
kind of grab your financial competitive advantages everywhere you
can you’ll see under Key Partners that the shipper gives them a break
on their shipping because they bring so many horses over from Europe, for example. I hope that kind of just shows you or contrasts the difference
between a sales barn for example versus a boarding stable and how resources are
sort of the key for the boarding and activities are more key for sales.
Therefore since Activities are more key, expertise is typically has to be higher and track
record in terms of show ring success things like that is very important. I’m going to quickly run through a lesson barn. So,
this is just a lesson program and let’s say that these people do camps. They do
lessons out of the home because it’s a small barn and then they also do travel
lessons. So again, you’ll see that each of these have different Value
Propositions for each type of customer. The other thing that hopefully you can
see is that their Key Partners are very important and their Activities are
you know pretty pretty standard i.e teaching, traveling, scheduling, horse care
and camp activities. One of the most important parts that makes this business
work would actually be the Customer Relationships end.
So one-on-one with the kids and then they’re staying in touch with parents
through social media and phone and then spending a lot of time with their
clients. So their Customer Relationships are going to be really, really important
in this. Some of the other things that are going to be important are seeing
their Key Partners in terms of how they affect the Cost Structure. We all know
that supporting a lot of horses is one of the things that can really deter us
from running a successful lesson program. So, at this particular lesson barn a couple of their
competitive advantages have to do with their Key Partners. They have some
local horse owners who let them use their horses during camp season and
their busy summer season so that they don’t have to buy extra
horses for that. They also have a friend Sarah, who lends a hand when the camps
are around and donates her time for that. So again, that reduces the Cost Structure.
Some of the things about looking at this, when you look down at the Cost Structure,
the insurance down in pretty big letters and then also in parentheses liability
for at home and away. So, they’re having to balance and this is an important part.
It’s important to look at your Revenue Streams. So, like are the travel lessons
worth the additional Cost Structure of having to kind of double down on your
insurance. If that’s if that’s the case. I’m just using it as if a “for example”. It
would depend certainly on your insurance company. Also, do the travel expenses
of traveling to lessons make sense in terms of being balanced against the
Revenue Stream. Some of their Marketing Channels are pretty important. They have
a website. They’re also listed on Google Maps. They use flyers and they use
Craigslist which probably wouldn’t work well for that sales barn and might not
really work very well for the boarding stable (could but might not) but seems to
work well for them. So again, it’s just looking at some of the key things that
work for each business and every one of you your business is going to be
different but what you’re going to find is that when you draw it out this way
you’re going to start hopefully identifying not only places where maybe
you can reduce your cost structure or balance your cost structure with revenue
streams but the places where you might be able to utilize other areas of the
six different squares here in terms of Key Partners or Key
Resources. Things like that. So again, the lesson program business model is much
more reliant on customer relationships and key partners than it is on than it
is like say on a quite on activities although the activities are important
the things that are making this tick the ability to have good relationships
with the customer so the parents really want to send their kids there. Now,
I’m going to jump over to the mistakes we tend to see too often.
The first picture you see a hopefully beautiful mountain view in the
left upper left corner with a horse standing out in the field and that would
be wonderful if you had a backpacking trail summer
program or something like that but if you’re too far outside
of the urban belt to have a certain type of boarding stable that your location
could or a certain type of business model your location and your business
model may not be a good match. So you want to be looking at – does your business
model work for your location? Next quadrant we see the horse trailer and
this is kind of just a reminder of investing either in the wrong area or
the wrong order. Let’s say that you are really wanting to buy your own piece
of property and in fact maybe you’ve identified a piece of property and
you’re working on getting the lending together for that and you also need a
horse trailer and you decide to go ahead and buy the horse trailer while you wait
to get the property. If you did something in that order. If you did that in that
order the chances are that that loan on the horse trailer
might make it impossible for you to get the loan on the property. At the same
time, if you got the property first and then the horse trailer (and you maybe
needed to borrow a little extra money to get the horse trailer), you could find
that having the property and the horse trailer increased your revenues quite a
bit more than just having the property. Does that make sense? I hope it does. The other
thing that can happen is let’s say we have this you know rider below coming up
a cross-country jump (a pretty stout one). If your business model requires you (in order to be successful)
requires you to do well in competition do well riding your clients’ horses and
have your clients do well, a lot of the time we hear people say that
horse professionals buy too many horses. That can be true but it’s very important
to buy the right horse. Sometimes it might be smarter for you even though
that horse trailer seems like well that’s the safer investment it might
actually be smarter a better business decision for you to buy that
career-making horse. Because if that’s the area of your business model that
might be if it’s if that’s a weak area in it like say you had a great
junior career but in your early adult amateur years you just haven’t been
mounted and you haven’t been able to find a client to set you up with a horse
it may be a smarter decision you won’t know that – you play with the numbers
and look at your business model and also probably and importantly do your
business plan as well but sometimes when we really look at what makes these
business model tick it really changes and prioritizes our thinking. So the
other thing that I think is a mistake we see kind
of often is that somebody’s strengths just you know aren’t really a good match for
the business model that they’ve chosen. For example, boarding stables typically
need really good managers. Those people, that just needs to be one of their
skills – management. Riding instructors need good people skills. So there’s
there’s certain skill sets there are certain personalities that are going to
work well for a business model and others that aren’t. Also, we sometimes see
people who have and this is the for the picture to the right who have a
tremendous amount of passion but they don’t have the skill set that’s
necessary for the business model that they’ve chosen. And, another one we see
sometimes is you know which I was talking about with purchasing the horses
is just or purchasing the trailer is just that not necessarily it’s not
leveraging your resources properly for your business model. That’s
probably a little bit of a repetition there but just so you kind of understand
what I mean and why drawing it out in a visual way can be really
helpful for making sort of bigger business decisions that go a little bit
beyond the scope of a business plan. Not that you want to not have a business
plan but they will change how you look at it I think. Okay, so what are some good
uses for using this business model canvas. Business model canvases are
really good for improving your current operation and profitability through
better understanding that your entire business process. We
certainly see when people use these that they will see areas where
revenues and cost structures can be improved kind of like what we were
talking about. The other thing, result we see when people use a business
model canvas on their business is that they become aware of new markets because
their value propositions become clearer. They also become aware of things that
they really don’t need to focus on because they’re just not relevant to
their business model or when they look at their cost structure versus their
revenues they’re like mmm this revenue just doesn’t justify this cost structure,
I don’t need to do this anymore. Also, you’ll see how you know
which I talked about earlier is a change in one segment affects other segments so
it makes them very good predictors about what’s going to happen next or what they
may want to implement next. It’s also a really good place to prototype new
business ideas and I also really like to see the entire barn and use it. One of the
things that’s great about using a business model canvas rather than opening up your books to people. ( Well most time we don’t really like to open
up our books and with good reason.) You know that’s pretty sensitive information
and we don’t always want to share it but we do want to share our vision and we do
want to share the way that it’s a really good way to help translate your business
plan into your business process and vice versa. When you do
that it really helps to communicate the big picture to your
team and what their roles are in it and the interdependence of each role.
When you do this it can really revitalize your team’s
motivation or create it to begin with. Because everybody starts thinking “oh this
affects that, that does that.” Then finally, to really stay on top
of your value proposition because again as you are looking at your value
propositions it can help you connect more deeply with your clients and their
needs and again that can sometimes help you shift your offerings a little bit to
where your both your clients and your business are receiving more value. One
final thing that it does is it can help you to you can do some use your your
business model canvas to do a little bit of comparing to your competitors to see
what areas particularly in some of those key areas that make a business certain
business models tick they may have the jump on you. I’m going to give you a
really quick example my barn was about five minutes up the street from another
barn but people really viewed it as being much further away because it was a
very windy road (this was a barn I had in California). So one of the things we learned is that “perception is reality” when it comes to
clients. One of the things that I really worked hard on was that our
barn culture was you know is very private and in that type of thing the
other thing I did was I did Google Maps and posted the time from every sort of
area around the area I lived in to get to the barn because I felt like it
helped and I actually it did help people understand that you know it’s five
minutes further or it’s three minutes further and look what we get to have and
So, it helped me to compete with a barn that actually had a little better
location than I did. When I looked at comparing my business to their business and saying
business to their business and saying where could I try a little harder? Where can I do a little better? It helps with that.
I promised I would talk to you about things that spike a business model
shift. Any change in your resources, changes in your expertise or success.
Let’s say you you know start winning a lot of classes or let’s say
you took a course in using horses in equine assisted learning or you’ve
gotten certified in that and you’re you know diversifying because of that.
Finances particularly like your purchasing power. For example: lmaybe your
business has been successful for a few years and you are able to qualify to buy
some property. Another thing that changes it is your health and your career stage.
As we get older in the horse business if we’re proactive about looking at our
business models, we can adjust them to better fit our career stage with
some good planning. Another thing that can make a business model shift is just
the marketplace changing which I think we’ve already seen quite a bit of people
just aren’t willing really to commit as much time to riding and so there’s some
changes and how people ride or engage with horses and also opportunity can
spike a business model shift and a quicker business model canvas up there
because remember a change in any one of those quadrants can can create a change
in the other ones and so it’s really important to be aware of how those
connect. That is all I have to say about that well for now I could talk
to all of you probably for hours about your individual business models so thank
you for listening!

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