Business/mortgage advice (horsey)

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Ahrena

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HI, I need some life advice as I have no clue how or if this would work. I am extremely lucky in that my mum and I want very similar things in life. Basically at one point I want to set up my own yard, it would definitely start out as a livery yard (mainly part with perhaps a limited number of full because I think part livery is essentially the most profitable [if any really are] due to the extra time full livery takes so would need more staff ect) and either just keep a couple of eventers for myself or hopefully to diversify it a bit and ride for people as well, or perhaps buy and sell some horses, but to begin with at least, the backbone of it would be livery.

My mum wants to live somewhere with land and space to keep our own horses at home, so after years of discussion we have come up with a plan. She has enough money if she sells her house to pay for 2/3 or 3/4 of the kind of property we would want/need and have some left over for any work that needs doing on the property.

Obviously, she's now paid off her own mortgage and doesn't want to be paying another (nor do I want her to as I'm an adult and don't expect her to basically buy me a house and land to have a business on) but I'm currently a working pupil and earn a very low wage. My longterm boyfriend doesn't earn a lot either so I don't think they would just hand us a mortgage (150,000-200,000)

My mum wants me to go to the bank and discuss it but I don't want to go in and have no clue what I'm talking about.

Would I possibly be able to request a business loan/mortgage to cover this? I have a fair amount of savings which would pay my outgoings for a good 6 months or so whilst it was starting out as obviously liveries won't flock as soon as I set up and I have a good
approximate idea of outgoings.


Any advice would be great, I'm clueless!
 
You need to go in with a business plan. Do your research, get quotes for livery in the area where you intend to set up, demonstrate how you can make it pay and what services you could provide. If you go in there stuttering and stammering, they'll dismiss you straight away! You have to be positive and let them know you're determined and know your stuff.

Look at how other yards bring in extra revenue, don't put all your eggs in one basket, have lots of ideas to put forward.
 
Making money from horses but having no track record is going to be difficult, if you have good qualifications and are teaching clients who already pay you cash it is more realistic.
What qualifications do you have for this job, anyone can take in horses and that is the downside. To have business insurance you may need horsey qualifications.
Bank managers, particularly business managers are tough as nails and will not give you money unless you can prove you can do it. I am sure your mother would love to live inthe country, but to be honest it might be better to live near a small town with access to paying customers. Look round for existing businesses for sale and go and see them, have a look at their profits and work from there.
Your own ambition is secondary, wanting a business in order to support a hobby is not what the bank manager is looking for. A business has to evolve to maximise profits, I can see you don't want full livery because you need to employ people, but you cannot run a business of any size without doing so., and neither can you run yourself in to the ground mucking out horses on your own. Do not try to get OH invloved in this, he should be looking for a better paid job, a whole working life time is a long time but you need to get going asap.
I know of a lady who has a small business, but she claims it is a private yard [thus avoiding planning permission, and other problems]. She has two working pupils who pay for their own horses at her livery yard, and I assume get no wages, She has three or four of her own horses and goes out teaching people to ride as a freelance instructor [£15 per half hour] She was offering me livery from £33 per week DIY, and £12 for haylage in winter. The yard is located adjacent to a park which encourages horse riders so she has a major resource which she is not [paying for. I think the park has an arena. To my mind she is running a business and will be in trouble if planning get holds of her, also tax to be paid! Her own arena is essential for her needs, and she has grazing, maybe twelve acres in all. I don't think she has a business mortgage, and her husband seems to be retired.
Sorry if that is all tough, but you have to start from somewhere, and the first thing is to get teaching qualifications so you can earn hard cash.
If you want to deal in horses you do not need a fancy set up, you can do it out of a field, the idea that you will buy a few horses, take them out a few times and have people giving you megamoney for them is unlikely. My BHSII instructor has all the facilites, experience, and so on, and she struggles, she has been doing it all her working life and still struggles. She need to re roof her indoor school and does not have any cash built up. She lives at her parents farm.
B&B is a good income, cash is what is needed, and diversification.
You may be able to rent something.
 
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MLT has a goodpoint about B&B - a property already set up as one or has an established holiday home on site may be a good place to start. Alternatively one that has potential for use as a few things eg: land with lake that could be used for fishing, land with canal frontage, land with multiple dwellings, room to over winter caravans etc... Anything that would provide extra income to boost your business plan. The other option of course would be to buy an established yard with all it's existing facilities and financial records which could help enormously but could be well out of reach mortgage wise

Leave mentions of your planned horses out of any conversations and go in with a hard business head on

There is talk that the Olympics has boosted demands for all things horsey so maybe that's something to strengthen your case

Good luck
 
Thank you. I'm not intending on going in right now to ask, I just need more of an idea of what to get together as genuinely don't know anythi about applying for a business loan or something.

It's not that I don't want to employ staff, it's I would need far more staff if I had full rather than part. For example, 20 part liveries I would need 2 members of staff max (with me covering days off and doing the business side) - it wouldn't be an enormous workload to muck out ten horses, turn them out, poo-pick, fill nets, make feeds, bit of maintenance then bring them in. But then to have 20 horses to groom and exercise I would need at least another two members of staff, I would possibly intend to offer it in the future but to begin with, from experience and speaking to yard managers, I think part livery is the way to start with.

I am currently taming bhs stages to work towards teaching qualifications as it's a pretty obvious step to take. I only mentioned OH because I don't know how mortgages work and whether it's relevant. He's in current job as when we moved to this area for my job he needed to find a job asap to pay the bills and when he got this one he decided not to look for a better one meanwhile as we knew I'm not staying at this job long term so rather than him having it on his c.v that he is changing jobs every couple of months, we thought it'd be better for him to keep one that is able to pay bills and save a fair amount. Also it's given him the experience to get a better paid job next time round - he's the store manager of a fairly new chain of shops hence low income, but it has given him the experience (plus previous assistant manager job of a multimillion company) to go on and get a job as the manager of a store in a far bigger company so bigger income.

So would it need to be a business loan or can I just get a mortgage? If mortgage, does it need to be a business mortgage as I would be running a business from it? And if business mortgage/loan, would my current income effect this or just my business plan and money I have to put into it? And if yes, what about my oh's income, or would he be discounted as we aren't married?

I was intending on going to a bank to get this kind of info, not apply for anything yet as I'm a bit clueless at the moment so they'll just tell me to bugger off :)
 
Ooh sorry to double post, my ipad can't handle editing.

Interesting thought about b&bs - we are mostly looking in wales (or would be) as can get a bit more for your money (don't get me wrong NOT rural Wales, fairly close to the Borders so still accesible and quite a lot of the properties I've seen have holiday lets as well so could be an interesting idea?

Mind you I have absolutely no knowledge about that so would require some research on my part.

If there was enough land I would love to set up a big xc field similar to boomerang - I know initial costs would be fairly big and I'm guessing a fair bit of insurance would come into play, but I think the profit mairgins would be quite big once it's built? (or am I totally naive about that?)
 
It will be a commercial mortgage, and you will struggle to get any sense out of the high street lenders. You need to make an appointment with a rural/agri business mortgage adviser from your chosen bank, or an independent one.
Commercial mortgages are a bit more expensive than residential, and you need a bit bigger deposit, but they are a bit easier to come by and the affordability of repayments is looked at differently.
 
Sorry if this sounds harsh, but from your post you sound as if you are still way off being ready to approach a bank about this. Are you looking to take out a business loan of £150,000 to £200,000 with no previous experience of either the business you want to run or of running any sort of business?
These are the sorts of things you need to have lined up bfore you approach the bank:
How will you convince the bank that you have the capability to run the business? What sort of experience do you have as a working pupil - is it riding, groomng or yard management? If it doesn't include the latter I'm afraid you will find it extremely tough to convince a bank manager that you have the knowledge to plan/run the business. If you have run any sort of business you would have a bit more credibility.
However you feel about a mortgage the bank will want to take a charge over the property so your mothers long term security will depend on your success. Can you live with that pressure? What happens if it goes wrong & your mother loses her home?
You talk about the funding to buy/do up the property but what about working capital? Will your savings pay for 6 months of your own outgoings or is it enough to cover business expenses as well? I was window shopping recently & was shocked at the diference between council tax on a local property if it was kept as a private yard & business rates if it was used as a livery yard. Just had a look & couldn't find the property I was looking at to check, but the difference was around £5000-£6000k p.a. & I think they had 10-12 acres ish. So that's at least £100 a week in livery income just to pay the extra rates! Was shocked at that I must admit.
What will it cost you to market the business? Is there a demand locally for the kind of yard you are planning or is the market aready saturated? A new yard will need to attract customers away from other yards or look for new to horses/area owners - what will you be offering to attract customer? Is it going to be facilities or price?
How much do you need to earn to make it worthwhile? Ignore the boyfriends income - this business needs to stand on it's own. The bank will ignore it.
Will you be able to cope financially if you are not constantly full or if you have a bad debtor?
How are you at dealing with people if they are demanding/awkward or if here are conflicts on the yard? A short search on here will reveal just how difficult life as a YO can be!
Will you need experience/qualifications to get insurance? Is the premium without them higher? Can you get any quals that will help through your current job?
Before you go to the bank you need to have the i's dotted & t's crossed for all of these questions and many more besides. Remember, even established businesses are finding it hard to get loans at the moment, you will have to work very hard to stand any chance at all - any vagueness or unanswered questions & you will be shown the door. You will also need to have a specific property in mind. I am guessing that as you are a working pupil you are still quite young. Look at how you can answer all those questions & build your career with a long term objective. Can you start teaching/running a part time business/take over aspects of the yard management or admin in your current job? Can you look at other jobs that would give you good experience? Can you get a better paid job that allows you to save more capital?
Are the areas you are looking at good for riding holidays - tie in with B&B idea. RE XC field - I'm sure there have been a few threads about hideous insurance costs & the costs of making jumps secure. You would need to make sure there is a good market for schooling hire/comps to make it worthwhile. Is there a local RC/PC you could chat to to to get an idea. But remember people will often say "yeah, great idea, I'll be there weekly" when in reality they don't want to pay more than £5, so make sure you talk charging levels too.
 
I don't think you will ever be able to get 20 full exercise liveries unless you live in Central London.
Locally the RS almost doubled its full livery charges to £400 pcm, and no exercise, this resulted in many more DIY, so they then put up the DIY charges!
Demand for DIY stabling tends to be local. You need up to 40 acres for 20 horses, so really this is getting to the realms of fantasy.
You may need to start small, maybe ten stables which should bring you in £250 per week, not a lot, in fact not profitable! For this reason you probably need to have part liveries who will pay for your labour to muck out and so on, but if you are earning £5 an hour doing this you could be earning £10 working somewhere else. Mucking out is never going to be a skilled job, and in order to make a decent income you have to get better qualified and then you can ask for more payment. You really need to work hard to build up clients, many girls leave the industry for many reasons, and they never go back, because it is the same thing they did when they left school, mucking out and poo picking is not career progrssion.
Other than that, if you have total DIY and you work somewhere else. Your mother deals with any emergency.
We all have dreams when we start out life, but unfortunately horses do not pay well, and bank managers are not interested in your personal ambitions, unless they are profit motivated.
 
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I would look at renting a yard first and offering part livery. This would give you the chance to get experience of running your own business and also seeing if you can make it work financially before exposing your mother to major financial risk. If she is the main shareholder in the business should it fail it is she will loose all her money.

If you are looking at part livery then you need to look at areas where there are a lot of commuters on decent salaries who are more likely to want this service.

If you are looking at producing eventers then you might want to be near an area where there are plenty of events for you to go to within a couple of hours of travel.

If you put in for a business mortgage then you need a detailed proposal including how you are going to market the business and what all the costs are including all the details such as how much you will spend on hay and feed. What local yards which are full charge, put in some contingency money as well to cover emergencies. You need to be aware of the risks too, any experienced business person will know there are risks with any business and the banks will expect you to know and be aware of these and be prepared to deal with them so don't pretend there are none as they will just presume you are inexperienced in business!

If you are really clueless about writting a business plan then I would wonder if you are ready to run your own business yet, there is a lot of paperwork involved with invoicing clients preparing accounts etc and managing people as well as the practical horsemanship skills.

Running a successful livery business is not just about the horses, whoever is in charge of the yard will need very good people management skills not just to manage the staff but also to keep your customers happy and to negociate the best deals with suppliers. It might be worth seeing if there are some evening courses or distance learning you can do on customer service or people management so you can show you have these skills as well.
 
There are local Business Enterprise comapnies which will offer support and help to generate a business plan, also there are books and so on. Writing a plan is easy compared to running a business, any entrepreneur will tell you that he had to work hard, but he also had a novel idea, or had some streak of luck when he started.
Unfortunately the horse business is not really open to novel ideas, yes it would be nice to have a X country course which peope would come and ride round, but it takes years to get that money back, and insurance is quite expensive, for this reason there are many small courses which have fallen in to disrepair.
Buying and selling, we had a thread on here previously and it was agreed that buying a few native / cobs and schooling them in summer would be the most profitable, at least low risk, you can start on that this year, see how you get on. Just ask ask your employer if you can use their facilities. So you would do an extra two hours work per day for ten weeks, by which time the cob should be ready for sale. You might not make a profit, but you have gained quite a bit of experience.... buying, schooling, selling, are all things you need to learn. You keep proper business records, all costs, all hours and this is at least getting you started. You need to learn about gross margins and profits, it is easier when you have a real example.
 
Oh please no one think I'm intending to go to a bank right now or next week or even next month, all my mum wanted me to do was find out more about how to go about it - not to go apply for anything, and I decided to post on here first rather than go to a bank and look like an idiot! this post is bringing up a lot of things for me to think about/research which is exactly what I wanted :)

The savings I currently have would cover the business outgoings (approximate from previous research and allowing £1500 for mortgage repayments although that is a complete guess as I dn't know how much that would be) and these will increase a lot by the time I would be seriously trying to put a plan into action as not ready to do so yet.

My job ATM does include normal grooming/riding and some a sects of day to day yard management (boss just rides and makes big decisions) although it is not officially meant to include the management, but since new staff have arrived I'm left in charge and make most of the day to day and emergency decisions but I doubt this would stand up in a bank as its not an official part of my job. When the season ends I hope to go to (and already looking for) a sole charge/head girl/rider job or possibly freelance.

Please don't think I'm under an illusion and think I will just pp along, get the money, set up a yard and I'll be rich and things will be fine and dandy - I know its not like this at all and I'll never be rich.
 
It doesn't matter that the yard management is not an official part of your job - if you can say I do this, I make these decisions, I organise this, negotiate that, it all helps increase your credibility. Sounds like you are going the right way about getting experience.
It's great you can get so many ideas/info on this forum. My OH set up his own business last year (a complete change of career direction) & there is so much to think of. Things like - I had to take out the loan for a van in my name as I had the regular income & his was unproven. Luckily that was all we needed to borrow, but marketing & getting a customer base has probably been the biggest task & we have had to apply a lot of imagination to that. Very easy to waste a lot of money on advertising.
 
hairycob said:
It doesn't matter that the yard management is not an official part of your job - if you can say I do this, I make these decisions, I organise this, negotiate that, it all helps increase your credibility. Sounds like you are going the right way about getting experience.
It's great you can get so many ideas/info on this forum. My OH set up his own business last year (a complete change of career direction) & there is so much to think of. Things like - I had to take out the loan for a van in my name as I had the regular income & his was unproven. Luckily that was all we needed to borrow, but marketing & getting a customer base has probably been the biggest task & we have had to apply a lot of imagination to that. Very easy to waste a lot of money on advertising.
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A small businees can't waste any money on advertising, particulalry something like a yard for horses, it is all word of mouth and fb page with all your friends is as good as it gets. A few magnetic stickers on your car will be enough. your customer are very local, Gumtree and preloved are good enuff, and free.
To OP, £1500 is a lot to save up, in business terms it is one moth's payments.!!!!!!!!
 
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