Question: I’m a dressage rider and trainer, and have been in business for several years now. I also have horses available for sale. During the spring, summer, and fall I train at my home barn, on my property. I live in the northeast. For a few winters, I traveled to Florida for two to three of the worst weather months. This allowed me to work year round, get in some additional coaching from some of the world’s best trainers, and compete throughout the winter. When I don’t travel to Florida, I move my operation to an indoor arena, where I lease a small block of stalls to keep my horses in training. My business has grown to the point that even in the summer, bad weather hampers my training schedule and what I’m able to accomplish. The question that keeps coming back to me is: Should I build an indoor arena on my property?

Response: There is no simple “yes” or “no” answer to this question. You’ll need to consider several aspects involved in depth: change in lifestyle; financing options; additional personnel requirements.

The first thing to do is talk to some of your peers that have indoor arenas and ask them about the pro’s and con’s. You’ll find that a portion of their time now goes to facility management. Are you prepared to take on this new management role, or are your interests still predominantly trainer/instructor? Being able to work the horses year round on your property will save you travel time in the winter to the stable that you lease the stalls at. But you’ll also have horses to care for on your property during the winter. This may mean frozen water buckets, changes in turn-out routines, and a variety of blanketing needs. The arena itself will require maintenance for dust control and proper footing. Snow removal and keeping adequate clearance for emergency vehicles can prove challenging depending on the amount of snow.

Unless you have a large pocketbook, or the lottery fairy visits your doorstep, building an arena requires a considerable chunk of change. That means a capital improvement loan, which will need to be paid off. This adds more expenses to your list. Will you be able to generate sufficient additional income to offset the expense? How are you planning on achieving that? Will you take in boarders? Or will you increase the number of horses in training? Either of these options will also require more general horse care hours than before. Will you allow others to truck in and pay an arena use fee to ride? This has scheduling considerations. Perhaps you’ll offer clinics with other top industry trainers. Running clinics also means that you’ll need to dedicate some time to marketing and advertising. Will you stay north every winter after the indoor is built? Or will there be training and competing opportunities that you’ll want to still take advantage of from time to time in the south? Will you close or leave an assistant in charge if this should happen?

Another income producing source is to lease out arena time to interests outside the horse industry. For example, a local dog trainer wants to run agility classes in the winter at a time you don’t use the arena. Or a group of neighborhood walkers and runners like the idea of being “indoors”, but not in a gym. No matter what the new uses may be, be sure to include your insurance agent in early discussions to know how any of these changes will impact your liability policy.

If you’re serious about wanting an indoor, construct several “what-if” scenarios on a spreadsheet. This allows you see all the financial repercussions. If you don’t know how to do this, find someone who does. Your accountant can provide this kind of help, as can consultants, and the Small Business Development Center. Do enough homework first so that you can provide realistic figures. Many plans have fallen apart in real life because the planner only considered the best case scenario. If you work with a SBDC consultant, you’ll need to provide the horse industry knowledge. These folks are usually good generalists, and a good place to start. I’ve assisted clients that have started with the SBDC, and then had me review the final plans. Some of the assumptions made by the SBDC didn’t fit the horse industry. If this client had proceeded forward without the additional horse industry information, they would have been quite upset when they weren’t demonstrating the phenomenal profits that were originally calculated.

Ask your accountant to explain how this affects your entire financial picture. The expense of going south for the winter or boarding the horses out is a business expense that’s taken in the year that it occurs. Adding an indoor arena to your property represents a whole different animal. The building will be depreciated over a number of years, the loan payments amortized. You will have made a significant investment into your property however, that increases the value of your property.

Be sure to check with your town government regarding zoning issues. Some areas consider an arena a commercial operation, while other areas see them as agricultural. It may not be possible to build in your current location at all. If that’s the case, then the question becomes “Do I stay where I am and keep operating the old way, or do I look for a new location?”

What are your financing options for this project? Will you re-mortgage, take an equity loan, or seek a business loan? Bankers are conservative, and horse businesses make them nervous. They are likely to want 25-30% down, and will want a business plan. If you have a solid reputation, good credit history, and can demonstrate a good business history, your chances are much better than if you’re just getting started.

Don’t forget to determine how many extra work hours will be needed for horse care, arena maintenance, and marketing. You may need to hire extra help, which of course adds other operating expenses.

As you can see, this is a question that requires a lot of research and thought. Take your time and get thorough answers.

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Biography:

Lisa Derby Oden, Blue Ribbon Consulting, LDO,LLC principal, combines a unique blend of experience and education. She has been involved with horses since 1962. Lisa has her BS in Animal Science with a specialty in Equine Studies from the University of New Hampshire, and her MS in Management from Antioch New England Graduate School. Earlier in her horse industry career she owned and operated a 25-horse stable, and was instrumental in founding a pony club, dressage association, and combined training association. In recent years she revitalized the New Hampshire Horse Council, and has been active in the American Horse Council and New Hampshire Farm Bureau. In 1999 Lisa was honored with the Van Ness Award from the American Horse Council for outstanding service to the horse industry. In 2004 she was honored with the first-ever President’s Award from the New Hampshire Farm Bureau Federation. Lisa has also been appointed by Governor Lynch to represent equine on the NH Farm Viability Task Force, and sits on the UNH Thompson School Applied Animal Science Advisory Committee.

Oden's consulting practice, Blue Ribbon Consulting, offers business and association development, marketing, leadership and professional development to the horse industry. Lisa's focus is on problem solving, planning and growth. She works with clients across the United States and abroad. Lisa is a internationally published author and national speaker on issues affecting horse business and association development. She produces a quarterly newsletter focused on horse business/horse association management topics and leadership issues. Additionally, Lisa wrote "Growing Your Horse Business" and “Bang For Your Buck: Making Sense of Marketing for Your Horse Business,” which are part of her Good Footing Workbook Series that offers more depth on these topics.

Lisa continues to teach riding and train in her business Transformational Riding. She offers traditional and creative approaches for the equestrian. She is currently an ICP candidate with US Eventing Association.

Lisa can be contacted at PO Box 435, New Ipswich, NH 03071, 603-878-1694, Lisa@horseconsulting.com; or visit her website at www.horseconsulting.com