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A BUSINESS PLAN AND STRATEGY FOR BIG SKY SHIRES & EQUINE SERVICES

LEANNE K. HOAGLAND

B.S., Montana State University, 2001

A THESIS

Submitted in partial fulfillment of the requirements

for the degree

MASTER OF AGRIBUSINESS

Department of Agricultural Economics

College of Agriculture

KANSAS STATE UNIVERSITY

Manhattan, Kansas

2007

Approved by:

Major Professor Rodney D. Jones

ABSTRACT

This thesis is the vehicle that I have used to outline a thorough small business plan

for our personal business Big Sky Shires & Equine Services. While working toward my

MAB Degree, I realized there were a lot of things that I could implement from the program

into our business that would help us succeed in the equine industry. I was able to research

the industry that we were in to gain a better understanding of how to market and plan for

the future. In the back of my mind I started to ask a lot of questions and soon found that we

needed a business plan that would answer many questions about the future of our business.

The first part of the thesis is the history of the equine industry with a look at US

history, outlook for the future and strategic issues affecting the industry. The second part of

the thesis is a history of Big Sky Shires & Equine Services. This history tells where the

business has come. The third portion, of the thesis is the small business plan that is the

most thorough we could put together. A lot of thought and time went into the document

that we plan to implement and update quarterly as needed. The final portion of the thesis is

our conclusion followed by a detailed appendix of the corresponding documents for

operating our business.

iii

TABLE OF CONTENTS

List of Figures.......................................................................................................................... v

List of Tables ..........................................................................................................................vi

Acknowledgments .................................................................................................................vii

Dedication .............................................................................................................................viii

Chapter I: Introduction ......................................................................................................... 1

1.1 Purpose of the Thesis ................................................................................................... 1

1.2 Overview of the Equine Industry ................................................................................. 2

1.3 Pricing and Entry into the Equine Industry ............................................................... 14

1.4 Brief History of the Horse in the United States......................................................... 17

1.5 Strategic Issues Affecting the Equine Industry as a Whole ...................................... 18

Chapter II History of Big Sky Shires & Equine Services ................................................ 26

2.1 Introduction to the Business....................................................................................... 26

2.2 Initial Direction and Plans for the Business when Developed.................................. 28

Chapter III: Business Plan .................................................................................................. 30

3.1 Vision- Mission Statement ......................................................................................... 30

3.1.1 Mission Statement............................................................................................. 30 3.1.2 Vision Statement ............................................................................................... 30

3.2 Description of Goals and Objectives ......................................................................... 31

3.2.1 Business Objectives and Business Goals ......................................................... 31 3.3 Internal and External Factor Analysis ....................................................................... 33

3.3.1 Business Strengths ............................................................................................ 33 3.3.2 Business Weaknesses........................................................................................ 34 3.3.3 Business Opportunities ..................................................................................... 35 3.3.4 Business Threats................................................................................................ 36

3.4 Production; Operations and Organization ................................................................. 37

3.4.1 Product and Services Defined........................................................................... 37 3.4.2 Regulations and Licensing Issues..................................................................... 39 3.4.3 Physical Resource Inventory-Plan.................................................................... 40 3.4.4 Resource Needs Assessment Plan .................................................................... 63 3.4.6 Environmental Stewardship Plan...................................................................... 68 3.4.7 Production Scheduling Plan.............................................................................. 82 3.4.8 Production Risk Management Plan .................................................................. 91

3.4.9 Organization and Legal Structure..................................................................... 95 3.4.10 Human Resource Inventory Plan and Human Resource Risk Management Plan ............................................................................................................................. 97

3.5 Sales and Marketing Plan......................................................................................... 104

3.5.1 Market Analysis .............................................................................................. 104 3.5.2 Market Strategy ............................................................................................... 112

3.6 Financial Plan ........................................................................................................... 121

3.6.1Current Financial Assessment and Financial Structure .................................. 121 3.6.2 Financial Projections and Strategic Analysis ................................................. 123

Chapter IV Conclusion ...................................................................................................... 125

4.1 Verbal Description of Competitive Advantage ....................................................... 125

4.2 Actions to be taken ................................................................................................... 126

4.3 Monitoring Plan........................................................................................................ 128

4.4 Outlook for the Business .......................................................................................... 129

References ............................................................................................................................ 130

Appendix A Stallion Promotion DVD Cover .................................................................. 131

Appendix B Business Informational Flyer ...................................................................... 132

Appendix C Business Cards .............................................................................................. 133

Appendix D Stallion Service Flyer.................................................................................... 134

Appendix E Invoice for Billing.......................................................................................... 135

Appendix F Big Shires Flyer- Page 1 ............................................................................... 136

Appendix G Big Shires Flyer- Page 2............................................................................... 137

Appendix H Equine Services Flyers- Page 1 ................................................................... 138

Appendix I Equine Services Flyers- Page 2..................................................................... 140

Appendix J Vellus Products Flyer- Page 1 ...................................................................... 142

Appendix K Vellus Products Flyer- Page 2 ..................................................................... 143

LIST OF FIGURES

Figure 1.1 Conceptual Map of the Equine Industry .......................................................... 4

Figure 1.2 Conceptual Map of the Upstream Categories of the supply Chain of the

Equine Industry. ..................................................................................................................... 8

Figure 1.3 Expenditure Flows within the Supply Chain of the Equine Industry. ........ 13

Figure 3.1 Map of Property Managed by Big Sky Shires & Equine Services .............. 42

Figure 3.2 Aerial Photo of Home Property........................................................................ 43

Figure 3.3 Topographical Map of Home Property........................................................... 43

Figure 3.4 Aerial Photo of State Lease ............................................................................... 44

Figure 3.5 Topographical Map of State Lease .................................................................. 45

Figure 3.6 Aerial Photo of Barrowed Pasture................................................................... 45

Figure 3.7 Reservoir and Water Storage for Irrigation in Spring ................................. 48

Figure 3.8 Picture of Range Condition of State Lease Spring 2005 ............................... 71

Figure 3.9 Picture of Range Condition Improvement of State Lease 2007 ................... 71

Figure 3.10 Picture of Range Condition/ Soil Damage of State Lease 2007 .................. 72

Figure 3.11 Picture of Range Condition of Large Pasture Home Place When

Purchased in 2003 ................................................................................................................. 74

Figure 3.12 Picture of Range Condition of Large Pasture Home Place Spring 2005 .. 74

Figure 3.13 Picture of Range Condition of Large Pasture Home Place Summer 200775

Figure 3.14 Picture of Range Condition of Large Pasture Home Place Spring 2005

and Water Resources of Seven Mile Creek. ...................................................................... 75

Figure 3.15 Picture of Range Condition of Large Pasture Home Place Summer 2007

and Water Resources of Seven Mile Creek. ...................................................................... 76

Figure 3.16 Picture of Manure Compost Pit ..................................................................... 78

Figure 3.17 Strategic Map of Competitors ...................................................................... 110

Figure 3.18 Promotional Booth Glendive Bridge Day Celebrations ............................ 118

Figure 3.19 Stall Decorations Montana Fair ................................................................... 120

Figure 3.20 Promotional Information and Complimentary Champagne for Miss

Montana Judges Carriage Rides....................................................................................... 120

LIST OF TABLES

Table 3.1 Physical Resources – Horses and Genetics....................................................... 51

Table 3.2 Physical Resources – Equine Tack and Equipment ........................................ 53

Table 3.3 Physical Resources – Farm and Ranch Equipment ........................................ 57

Table 3.4 Physical Resources- Office Equipment ............................................................. 62

Table 3.5 Production Scheduling Plan-Daily Routine ..................................................... 83

Table 3.6 Production Scheduling Plan-Weekly Routine.................................................. 84

Table 3.7 Production Scheduling Plan-Seasonal Tasks ................................................... 84

Table 3.8 Production Scheduling Plan-Horse Management ........................................... 87

Table 3.9 Current and Projected Volumes of Goods and Services Produced. ............. 90

Table 3.10 Human Resources and Business Needs........................................................... 98

vii

ACKNOWLEDGMENTS

I would like to thank Dr. Rodney Jones, my husband Brett and all those who have

had a helping hand in this thesis. With out their efforts this project would not be what it is

today. The future of our business is bright after completing what I believe to be the most

thorough small business plan for our business. I will now be able to track our business. All

decisions and changes to our business will now be made on sound business practices based

on sound planning and data.

viii

DEDICATION

I dedicate this work to my family. They have taught me to pull on my boots and

face life head on, with strength and determination. My husband and son: the ones who

make every day worth living for. My Father and Mother: my heroes; my life teachers. My

sisters: my strength and my friends.

CHAPTER I: INTRODUCTION

1.1 Purpose of the Thesis

The equine industry is consistently changing. There is a lot of entry and exit in this

industry as many dream of making a living in horses. However, it is not as easy as many

would like to think. A lot of planning and business skills must be implemented. Many

individuals enter with little business knowledge or no business plan. Capital requirements

are high and may not always be liquidated for the purchase price due to the fluctuating

nature of the industry. The fact that most of the money in this industry is from customers

who are spending their discretionary funds leads this industry to be very volatile. Success

in the equine world is dependent on one’s ability to manage business, livestock and people.

Not all people have all these skills and often find themselves hiring a breeding manager,

lesson instructor, and business office administrator. There is plenty of growth in the equine

world. The size and scope of this growth is dependent on the ability of the businesses to put

solid business skills to work.

It is critical for my business to look at getting a business and financial plan in

writing by next year. We have done a lot of things right, but have nothing in writing for a

time table with measurable goals or objectives backed with sound data. Once a business

plan is put in place and implemented for the business we will, be able to make educated

decisions based on sound, complete information. We will be able to base our marketing and

production on sound strategies that will bring the best return on our assets with a solid

business plan. Additionally, we need to do better market research on the demand for our

services and breeding. Changes then need to be made based on this research. The changes

being made and services offered are currently based on what we feel will work for the

business. They are not supported by data and research.

1.2 Overview of the Equine Industry

The diversity and nature of this industry makes it hard to identify and characterize.

Most people do not classify the industry as a professional business due to its leisure nature.

However, the economic value of the horse industry is great in size with a large impact on

the country and world. The impact is so dynamic that it has launched several economic

impact studies. The horse industry is often characterized as a “wild cat” industry. It is high

risk and subject to rapid fluctuation. This industry relies heavily on discretionary income

since it is a leisure time activity for participants. To not acknowledge this or lose touch with

this environment will soon have the business resting with the dinosaurs (Oden (2005)).

However, with this industry, risk will often return a large reward if all the pieces of the

business plan and logistics fall together.

The equine industry is often thought of as sub industries such as the breeding of

horses, the racing of horses, and the sale of horses and services with the intention of a

making a profit (Blazer(2003)). We can place the participation of customers in the horse

industry along a spectrum of engagement from professional to leisure. We divide these two

with the definition that those who derive most of their income from equine activities are at

the professional end to the other extreme those who engage in horses solely for leisure. In

between these two ends, we have the plethora of individuals that we categorize as semi-

professional. These individuals split their interests between the generating income and

leisure participation (The Henley Centre (2004)). It is not to be mistaken, that by labeling

the extremes, we are putting less value on the businesses that supply to the leisure sector of

the industry. This also does not say that the professional does not ride or partake in the

leisure activities, or the leisure rider does not partake in the professional avenues. We are

just dividing the industry into its sectors, thus making it easier to define and manage (The

Henley Centre (2004)). This division will also make it easier to see how supply chain

management and the logistics fall into play. By dividing the industry in this fashion, we are

better able to strategically plan and size the business all the while not loosing sight of the

overall size and scope of the industry.

If you look at figure 1.1 (The Henley Centre (2004)) you see a conceptual map of

the horse industry. The map shows the organizations which are closer to the final

consumption points of the industry and which consume intermediate products from the

upstream suppliers in order to provide goods and services. The center arrow shows the

spectrum of engagement with professional activities at one end and follows through to

leisure activities at the other end. The shaded area in the middle represents those semi-

professionals and their engagement in the industry (The Henley Centre (2004)). An

example of a person in this center area would be a semi-professional breeder or service

provider. They operate for the leisure of horses and sell a little on the side to cover some of

the costs associated with their hobby. The map shows several sub-sectors or activities of

the professional sector of the industry. These include professional horse ownership,

breeding for commercial interest, affiliated sports (including Olympic Disciplines), horse

and rider training activities, horse racing, horse shows, and the use of horses by the military

and police. The other extreme of the spectrum has the sub-sectors or activities that are

associated with participation in the horse industry as a leisure pursuit. The sub-sectors have

been identified as horse ownership for personal and leisure riding, breeding as a hobby,

unaffiliated sports (polo, hunting, etc.), casual riding lessons, trail riding, and saddle clubs,

and tourist attractions.

Figure 1.1 Conceptual Map of the Equine Industry

Any person in any portion of this engagement will consume goods and services

from any portion of the industry and its sub sectors. In a sense, all are consumers and

sellers in this industry.

The economic impact of the equine industry on the US Gross Domestic Product

(GDP) is $112.1 billion. This industry supplies 1.4 million full time jobs. Additionally, the

industry pays $1.9 billion in taxes. The three segments of the industry with the largest

economic impact on the US economy are racing, showing, and recreation. The three

together contribute more than 25% to the total value of goods and services produced in the

industry. The horse industry contributes more to the US GDP than that of motion pictures,

railroad transportation, furniture and fixtures manufacturing and tobacco product

manufacturing. It is only slightly smaller than the apparel and other textile products

manufacturing in US (American Horse Council (2005)).

In the U.S. alone there are 7.1 million Americans involved in the horse industry. Of

the 7.1 million involved in the industry, 1.9 million own horses of their own. It is estimated

that tens of millions of American’s are active in the industry as spectators (American Horse

Council (2005)).

The American Horse Council study found that racing supplies the economy with

about $34.03 billion in revenue and 472,800 full time jobs. Racing also supplies the

gambling, recreation, sport, breeding, and training industries plus any services needed by

the sector. There are over 941,000 participants with 725,000 horses present in the racing

sector. Forty-three states in the US allow wagering on horse races. In these states, there are

over 175 functional race tracks. The business of racing utilizes many businesses and

suppliers. It is a labor intense business that offers a need to many skilled and unskilled

services. In racing, there are needs for feed, medical supplies, veterinarians, tack and saddle

suppliers, stable care and management suppliers, farriers, stable hands, transport services,

training, riders and many more. The government and the states that have the racing sector

present often benefit from the taxes and fees associated with pari-mutual betting. The

states in 1995, generated over $421 billion in taxes, pari-mutual taxes, track licenses,

occupational licenses, admission taxes, and miscellaneous fees (American Horse Council

(2005)). The racetracks in America paid $511 billion total in federal and state taxes and

fees.

The recreation sector of the industry in the United States represents $23.8 billion on

the US economy with involvement in all of the 50 states of the union. Many individuals

enjoy the leisure side of the industry and ride horses with no concern of winning ribbons or

making a living with horses. While recreational use of horses is not usually done for

economic gain, there is a positive economic impact from recreational horseback riding.

Horse owners, breeders, stables, veterinarians, feed and tack stores as well as many other

businesses all rely on the economic impact and expenditures of the recreational segment of

the industry (American Horse Council (2005)). 4.3 Million Americans partake in

recreational activities. This sector employs 317,000 full time employees. It does not

employee the largest number of people as compared to other portions of the industry, but

this sector sports the largest number of participants and horses.

The third largest sector of the horse industry in the United States found in the

impact study of the American Horse Council is “showing.” The interest in horse showing

spans a variety of people, breeds and disciplines. Like racing, showing and breeding horses

is a major labor-intensive endeavor. Hundreds of thousand of people work full- or part-time

in the showing sector as owners, trainers, grooms, riders, veterinarians, transport

companies, show employees or in supporting industries that depend on it. In showing, there

are 3.6 million participants and 441,000 full-time jobs available. The economic impact of

horse showing is $34.8 billion, spanning all 50 states of the US.

The horse industry has several upstream categories of the supply chain. Figure 1.2

(The Henley Centre (2004)) illustrates the upstream end of the supply chain. The map

represents organizations which supply to and hence make possible the

activities/organizations within the industry core. Upstream production within the horse

industry encompasses a wide range of activity. Specific activities to the industry are horse

shoeing, saddlery, stable supplies, and veterinary services. There are also those services

that are needed in the industry that are more self-sufficient like event management

companies. It is important to note that these sub-sectors of the industry are not less

important because they are not part of the core (The Henley Centre (2004)).

The heart of the industry depends on its horses and the value of those horses. A lot

of value is given to these horses by the breeding and ability of those horses to be registered.

With the high diversity of breeds and disciplines in the industry, there is a need to track and

maintain associations. The Association category, in the upstream portion of the supply

chain will encompass the breed associations, training associations, lobbying associations

and groups like the Pony Club and 4-H. This category is one of the important categories as

they provide the structure, quality control, industry standards, and value needed to value the

products and supplies in the industry. Many of the associations set forth breed standards of

quality and performance expected of animals in those breeds.

Figure 1.2 Conceptual Map of the Upstream Categories of the supply Chain of the

Equine Industry.

The Infrastructure category makes up the trails and bridleways of the industry. In

the United States, this would include riding facilities, as well as, state and federal lands that

have maintained trails and riding areas. With the onset of urbanization, one concern the

leisure riding sector has is places to go ride with out having to go in circles in the arena

setting. Quality and safety of these trails and facilities is a must, to ensure optimal

enjoyment.

Event Organization is important to the livelihood of many fairs, shows, sales and

race tracks. These companies do everything from managing events, gathering event

sponsorship, to providing public relations and marketing for permanent facilities and

activities. Without this sub-sector many horse activities and fairs would be unable to reach

out to provide a quality activity to their audience. A lot of horse sales and shows on the

national and international level would not be able to be managed. Quality of work is

important to the survival of this category.

The Media category provides much of the needed information to the public

through telecasts, magazines, news articles, internet, video, radio and television. This sector

produces educational, recreational and news based materials to the participants in the

industry. The use of the media sub-sector helps many businesses to expand globally to meet

other customers that would not normally be in contact with the business. The onset of

internet has brought the horse person the ability to buy and sell online and advertise

internationally. With all the new global marketing methods, many breeders are now

importing and exporting embryos, semen and live horses. The trade portion of the industry

has moved to online shopping with shipping and purchasing from national to international

companies. With this a wider variety and qualities in products are now available to the

consumer.

Many businesses and suppliers to the horse industry are in the Professional/

Paraprofessional category. These people and their ability to supply goods and services are

critical to the survival and quality of animals and services provided by the rest of the

industry. Examples of businesses in this sub-sector are veterinarians, dental technicians,

research facilities, transportation services, farriers, and saddle makers.

The Trade category of the upstream side of the supply chain has become more

important in the past decade with the expansion of horse businesses and with more owners

that are becoming independent and owning their own facilities. This category includes the

businesses that provide transportation equipment (horse trailers), feed and bedding, rider

clothing, and retail businesses for supplies and equipment. Your local tack and feed store is

a good example of a business in this sector. This category also deals with shipping and

transportation of their products while meeting the quality and quantity needs of the

customers they serve.

Sale yards, race tracks, riding centers, and maintenance are all examples of the

Land- Based Business category. These facilities often host many horse activities from trade

shows, horse shows, events to races. They are often leased by the organization that is

putting on the event. This category gives many events and activities place value and

location that is important to the event success.

The largest component in the Financial Services category is that of equine

insurance. Many participants in the industry insure their horses or facilities against liability,

death or loss. Additionally, most new businesses in the industry need financial assistance in

the form of loans to become established. Many need the finances available to purchase

supplies and equipment from the other categories in the supply chain.

The work force needed in the industry is quite broad. Many of the jobs require

manual labor and pay at the lower end of the salary table. The other side of the job

spectrum requires training and skills. However, training for these people is difficult and

requires the participation of the Training and Education of Workforce category. This sub-

sector includes on the job training and formal education. Many colleges and certificate

programs are the main source of formal training through two and four year programs.

The downstream portion of the supply chain is represented by the expenditures in

the industry. However, there is little data to track this side of the supply chain. The Henley

Centre took what data they had available in their impact study to put together a third

conceptual map, figure 1.3 (The Henley Centre (2004)). This map illustrates the

expenditure flows within the horse industry supply chain. The arrows on this map show the

flow and direction of money in the horse industry. The left hand column of this map groups

consumers according to their interest in the industry: whether they own, ride/drive, or just

spend money on products without owning or riding. As a group many private leisure

owners will tend to spend money on horse related items, except the export areas of the

industry. These individuals often purchase items related to the care of horses and facilities,

and then take a lesson or attend a clinic. The leisure owner is more apt to take a vacation

with their horse(s) or to a destination that takes in horse activities. They will enter various

competitions, go to equine fairs and trade shows and read more magazines and self help

type literature (The Henley Centre (2004)). Many of the non-owning horse participants

spend money on all the categories except those that deal with horse care and health. The

domestic participants that are not focused in the industry spend very little money on the

care or riding of horses, but rather spend money on horse related activities that they take

part in as a spectator. This includes a guest ranch vacation, evening at the rodeo or a day at

the races.

The flow of money in this side of the supply chain is often difficult to follow as

many of the same items purchased by the consumer are often purchased by the businesses

and organizations. At this level, supplies that are purchased by the businesses are classified

as inputs in the production, and intermediate consumption as opposed to the final

consumption of the good or service. Therefore, these expenditures are not counted to

eliminate double counting (The Henley Centre (2004)).

The next column of figure 1.3 (The Henley Centre (2004)) gives the details of the

final consumption products of the horse industry (stage of production Z). At this point

these are the products through which money flows into the industry organizations. These

are the “final” products that do not re-enter the production cycle again.

The third column of figure 1.3 illustrates the organizations that are closest to the

consumer. This business may receive cash flows from many different product categories.

Businesses here are part of the intermediate consumption as they may purchase supplies

that are needed to operate. Expenditures on intermediate consumption at this stage will

consequently flow to the upstream businesses in stages X and Y (The Henley Centre

(2004)). Stage Y describes businesses that mainly supply to other businesses. They may

receive some of their cash flow from private horse owners but the majority of their cash

flow is from businesses such as riding stables and race horse owners. This stage is distinct

from stage X in the fact they too, like stage Z, will purchase supplies such as feed, bedding,

and veterinary services (The Henley Center (2004)).

Figure 1.3 Expenditure Flows within the Supply Chain of the Equine Industry.

The products that are listed in the Stage of Production X column are products and

services purchased by more downstream businesses as inputs to the production process.

From here there is no more upstream flow in the industry. Any further purchases at this

point are considered spent on raw materials (The Henley Centre (2004)).

The figures that have been discussed are important to the understanding of the

supply chain in the horse industry. This allows us to strategically understand the

relationships between the sectors and sub-sectors of the industry. There are many

complicated dynamics and overlaps in the equine industry. Expenditures from the end

consumer group feed into the industry through multiple final consumption product types.

Upon detailing the supply chain and strategic issues affecting the supply chain on an

industry level; a business in the horse industry will not only be able to identify their

consumer but will be able to see where the money and products are in the supply chain.

They will be able to find their competitive strategy, environment, market, supply chain

strategy, and strategic fit.

1.3 Pricing and Entry into the Equine Industry

Rivalry in the equine world is big, especially with all the competition in the

industry, reputations are built on the quality and performance of horses and students. Price

is often a determining factor in meeting the market. Too low and you are perceived as low

quality. Too high and you will price yourself out of business. The equine world is not

forgiving of pricing mistakes.

The next issue is how the horse industry sets prices for services or products that

they are selling. It is important to take the time to do your research of the industry and your

market. Prices the work on the West Coast may not work in the Great Plains.

Understanding of your market and region is the key to successful pricing strategy. As a

business, each manager itemizes and assigns a dollar value for all the resources and costs

that they have invested in what they are offering. They often talk to others offering similar

services or products to see if they are missing anything in their pricing. Surprise costs can

turn a real great idea into a money loser fast (Oden (2005)).

Many businesses use a form of price discrimination to get customers to purchase

products or services. For example, the most common one used in the equine industry is

third degree price discrimination. Some offer a coupon in the local paper or newsletter for a

discounted, free or buy one get one free offer. This is a way for the customer to see what

you have to offer at the same time they are saving money. Existing customers use the offer

to save a little on their next purchase. You may also get new customers that are looking at a

new trainer or service provider. The other form of price discrimination that is often used in

the equine industry is second degree price discrimination. These pricing situations make

use of volume discounts. Some breeders, for example, will offer a 10% multiple mare

discounts on a stud fee offered. Riding facilities will offer a buy ten lessons get the 11th

lesson free. This will encourage a number of lessons or breedings and will allow the barn to

manage the horses and resources better.

Many producers of horses are specializing in breeding programs and services to fill

a niche in their area or portion of the industry. This allows them to tap a market and get

better price/ profit potential from their products.

The general price of horses has seen a significant decline in the past few years due

to feed shortage, drought and the influx of a large number of average to poor quality

animals in the market. Additionally, the threat of the legislation to ban processing of horses

threatens to flood the market with many poor and unwanted horses. The businesses that are

doing well in this time of price uncertainty are those with the horses and businesses that are

fitting the niches of the higher returning market sectors.

The threat of entry into the equine industry is an ongoing concern. Initial entry is

relatively easy and the numbers are high. However, the problem is that this is not the

easiest segment in agriculture to make a living in. There are a lot of small businesses that

operate as a side income to other jobs and professional careers. They offer small groups of

services or breedings per year. The industry, with all its uncertainty, does not make

entering this industry all that attractive at times. Your success is often gauged on your

ability to train, show, and win with your horses and students. The bottom line is, if your

horses and students perform (i.e. win) then your stallion, foals, services and offerings stand

to be in high demand. If you are not proven or successful, you will have a difficult struggle

ahead.

The threat of substitutes is always out there in the horse world. A great example of

this is in the warm blood and sport horse industry. The fancy Warm Bloods, such as the

Hanoverian and the Trekaner, are expensive and sought after. The new substitute in the

industry is the Shire Sport Horse. They are a Shire draft crossed with a Thoroughbred. The

cross creates what is often called the poor man’s warm blood. They possess all the talent

and ability of the German counterparts without the price tag. In the Quarter Horse industry,

the bloodlines are ever changing. One sire will dominate for some time only to be

overtaken by another. People will buy and breed the hot lines only to change to the next set

of horses as the trends change. In the supplies segment, there are a lot of substitution in

feeds, shampoos, horse shoes, clippers and even clothing just to name a few.

Supplier bargaining power affects many segments of the equine industry. In the

feed, grooming supplies and areas such as that, there is a lot of bargaining power taking

place. Stores are given requirements in order to sell feeds, and certain tack from companies.

They must house so much or purchase minimums to keep the contracts with the wholesaler.

1.4 Brief History of the Horse in the United States

In the United States, the horse industry has seen many changes in the past 80 years.

These changes have changed the way the industry is envisioned and looked at as well as the

logistics. In the 1920’s the horse was an animal of work. His value was measured in how

well and how long he/she could function in the position it was working in. Horses were

simply not of any value if they could not produce an income or satisfy a need. At this stage

the horse was at his peak of usefulness and at the highest numbers in population (Blazer

(2003)).

By the 1950’s, the horse was out of a job. Tractors and industrialization sent the

horse out of work. The government was no longer interested in supporting equine research

through land grant colleges and stopped tracking the industry. Even though the government

failed to see the value of the horse industry at the time, the horse still continued to gallop

through the heart and soul of mankind. The industry began to change and the pleasure rider

soon emerged. This consumer saw the value in the horse beyond a useful work animal.

These individuals saw and still see beauty and grace, a faithful friend, a return to the

romance of days gone by and a challenge to the future. At this time, even though the

numbers of horses were declining, the demand for a new kind of horse was emerging

(Blazer (20003)). This new horse had to be of quality with appeal and style. This horse had

to be safe and provide enough longevity for the many years of enjoyment to the owner.

Horses started to see a turn toward refinement in conformation with movement and athletic

ability emphasized. Registration and papers were now an important part of the horse’s

worth. Customers sought and still demand quality in these areas.

During the 1960’s and 1970’s the United States was booming and all phases of the

horse industry were seeing a dramatic increase. As people had more expendable income,

they spent more on their hobbies (Blazer (2003)). One major hobby coming into play at this

time were horses. The leisure side of the industry was growing twice as fast as the

professional side.

When the horse went from a work animal to a pleasure animal, the leisure and

professional horse business exploded into a multi-billion dollar industry. Today, there is no

set standard to value a horse or the services in the industry (Blazer (2003)). A horse or a

service is worth whatever someone is willing to pay for the good or service. They are

willing to pay most anything if they have the expendable cash for the satisfaction of their

wants as represented by that horse or service (i.e. potential or utility). It has been found that

40 out of every 50 people in the United States are a potential customer and would buy

either a horse or service (Blazer (2003)).

1.5 Strategic Issues Affecting the Equine Industry as a Whole

Today the industry is driven by the expendable money of the consumers and their

ability to purchase goods and services in the industry. The industry is being affected by the

economics of the nation plus environmental issues such as drought. The horse industry is at

a point where it now needs to maximize and realize the potential that is available through

strategic planning. In order to realize the full potential of the horse industry, strategy must

do three things. One, you must identify and maximize the opportunities to increase the

level of engagement in the industry from the general public, which will in turn increase the

revenue coming into the industry. To do this, the industry needs to bring in new

participants as well as increase the participation of the current participants. Two, the

industry needs to identify key strategic issues that will unlock the potential, maximizing

positive externalities and minimizing the negative ones. Finally, the industry needs to

identify a means of strategic improvement (The Henley Centre (2004)).

When evaluating the key strategic issues affecting both businesses and the equine

industry, The Henley Centre came forth with some areas of concern. By taking these

strategic issues and implementing them, the industry will see more supply chain

coordination and growth, thus bringing more cash flow and economic impact.

The first strategic issue is the ability to promote the equine industry to a variety of

people. This will help increase the engagement nationally and will challenge the

perceptions amongst the public that the industry is more than just a hobby. Four broad

main revenue streams exist in the horse industry; expenditures on riding, expenditures from

owning, expenditures on spectator sports, and expenditures on trade products and horses

themselves. Expenditures taking place in one stream will affect the other revenue streams.

This shows how important it is for the sectors to communicate and work together. One sale

will have an impact on the whole industry and all other sectors involved. It is important to

identify ways to increase revenue and cash flows in the supply chain for this very reason.

By marketing the industry to more people and improving participation, the industry will

become stronger. Many businesses are doing this by implementing day camps and other

horse activities that target the nonhorse owning community. They are providing activities

and services to bring in those who might only be spectators in the industry. They offer

horses on shares where they are owned and shared by several families.

The second strategic issue is international competition. The industry needs to

concentrate on the promotion and exportation of domestic horses. To be successful, these

businesses need to participate on the national and global market place. This is often hard to

do. For example, the dressage industry makes use of a large variety of warm blood breeds.

These breeds (Trakehner, Hanoverian, Holsteiner, and Oldenburg) are from well

established breeding programs in other countries like Germany. Good marketing of our

continental warm bloods and saddle horses is necessary to promote and capitalize on good

breeding. The industry must promote a greater level of organization in the area of breeding

and promoting of local horses to gain a market reputation overseas and Canada. It is also

critical for the breeders to try and place the highest quality horses with the most qualified,

owners, breeders and trainers. This will ensure maximum advertisement. These horses will

be in the public eye, highly competitive, and matched at breeding with the highest quality

genetics (The Henley Centre (2004)). The American Quarter Horse is well on its way to

accomplish this with a total of 93,829 horses internationally (American Quarter Horse

Association (2003)). This market is often only tapped by a few who happen to get

connections. Export regulations that vary from country to country and the cost of

quarantine keep many from attempting to hit this market.

The US imported 40,525 horses from foreign countries in 2001, and that number

climbed to 52,428 horses in 2004 (USDA/ APHIS (2004)). This increase is attributed to

the need for high quality performance horses. Most are used as show animals, race horses,

or breeding stock.

The US still exports horses overseas. In 2001 107,041 horses were exported from

the US (USDA/ APHIS (2004)). Most of these horses came from the killer/ slaughter horse

market and were sent to Canada or Mexico for processing. With other alternatives for horse

meat, we have seen the exports diminish to 58,445 horses in 2004 (USDA/ APHIS (2004)).

Each of the 103 counties that the US has agricultural import/ export agreements

with has different requirements on the export for horses, semen and embryos. This is

contingent on the origin of the animal, diseases and issues affecting that country. These

conditions are often negotiated with the agencies in each country that control agriculture

commodities. APHIS is the major negotiator for the US at this time. They are currently

working with the European Commission on the US – EU Equine Trade issues.

The disease issues have made it tough for people to transport and export/ import

live horses. Therefore, there has been a large push for the marketing of semen and

embryos. In the effort to provide better breeding services, the industry is making use of

shipped cooled and frozen semen. Right now there are many breeds and breeders actively

experimenting with embryo transfer and artificial insemination. It will only be a matter of

time until this issue is addressed and implemented by all breeds in the industry. At this

time, the only breed registry that will not register foals by embryo transfer (ET) or artificial

insemination (AI) is the thoroughbreds with the Jockey Club. Many of the other breeds are

allowing ET and AI foals to be registered with the onset of DNA and parentage

verification. With AI and ET, the breeder only has to be concerned with the diseases that

affect reproduction.

In 2001, there were no equine embryos imported and 10 exported. Three years later

in 2004, the US imported 2 embryos and exported 43. Most of these were Quarter Horse

embryos. The semen side of the industry in 2001 imported 18,020 doses and exported

13,570 doses. Three years later, the US imports dropped to 11,617 and exports grew to 19,

860 (USDA/ APHIS (2004)). This is promising as it shows the US is truly starting to make

its mark on the global horse market. Furthermore, these horses will go to the people who

will own them, use them, and promote them. Therefore making it easier to market and

distribute the product, which is often the hardest part of exporting horses.

Embryos and semen are efficient, cost effective, and safe ways to move genetics

throughout the world. Embryos for example are processed at the top of the cutting edge of

technologies. Embryos are washed and handled to eliminate 99% of the chance of disease

transmission. This process eliminates the chance that a disease outbreak that might shut

down live horses and their import. In the process of ET disease free mares and stallions are

mated. The embryos are then flushed and prepared for shipping or transfer to the recipient

mare. Through this process the facilities and animals used are monitored to ensure no

disease is transferred or carried on in the embryo. The offspring from AI or ET mating are

more easily adapted to an environment that they are born and raised in and will have

immunity to local diseases. The buyers are able to purchase elite genetics without the

headaches of shipping live horses or risk of diseases that may eliminate their personal

breeding operation.

Getting into the global market for the horse businesses is very tough. The key is the

elite genetics that the market is looking for and the ability to provide a quality product.

Pedigree, show records, pictures and even video footage is a must. Most of the individuals,

who purchase, do so from the materials they get from the breeder and do not make the

expense to travel. The internet has given most horse businesses their first look at national

business let alone international. Reputation and word of mouth are still the best means we

have in this business.

Tourism is a major part of many of today’s economy. One strategy that needs to be

developed in the horse industry is the marketing and developing of the tourism side of the

industry. Work is already taking place in this area with many dude ranches and national

parks as they are marketing horse as their main source of business. By improving the

number of people involved in tourism, the industry will also bring in more individuals from

the urban side of society who do not partake in the industry in any other form.

Quality of horses, services and products are a key issue in the industry. The biggest

way to develop this idea in the mind of the consumer is to provide show records and

evidence that you are operating a quality operation. Unfortunately, if your horses and

students are not proven (winning and successful in the show ring) you will have a hard time

hitting the top dollar markets of the industry. The only way to have a proven record in the

horse industry is to show or perform where you have the opinion of another professional in

the industry.

The final strategic issue that needs improvement in the equine industry is the image

to the rest of the economic world (The Henley Centre (2004)). The industry is not well

understood and is looked at as a leisure industry with little impact. By changing the view of

the industry and emphasizing the importance of the supply chain in the industry, the status

and profitability of the industry will grow dramatically.

The horse industry as a whole is not very attractive to enter at this time. Drought,

feed costs, upkeep, management of horses, fuel and the lack of disposable income are

putting a pinch on businesses that are not using sound business plans or practices. Finding

your niche and utilizing resources available is the tell tale sign of survival. However, the

price of fuel and the current economic state of the US are affecting both the purchase of

horses that must be shipped for long distances and the breeding to stallions that only

service through live cover. Stallions that ship via cooled semen are seeing an increase in

breeding services. Additionally, the big questions and legislation of slaughter horses is

causing a drop in the price of horses. We are still seeing good prices offered on the high

end specialized horses.

In this type of industry, where the future is dependent on the ability of the

consumer’s discretionary income, there is a lot of risk and uncertainty. This does not

always make this type of business the best one to enter if you are not a strong business

person with the tools and resources to find your niche. Additionally, the industry like many

animal based industries is facing a lot of issues from the environmental side. There are

things to face such as use of public land and trails, liability and insurance rates, animal

rights, water quality in confinement use facilities, disposable of old unusable horses,

availability of feed, wood shavings for bedding and the forestry issues. Any legislation in

any of these matters can dramatically affect the livelihood and survival of the business.

CHAPTER II HISTORY OF BIG SKY SHIRES & EQUINE SERVICES

2.1 Introduction to the Business

Big Sky Shires & Equine Services is a family owned and operated business in

Glendive, Montana by Leanne and Brett Hoagland. Started in 2004, we ride, drive, and use

our horses to harrow and work our pastures. Being born and raised in Montana led to an

interest in good horses, cattle and dogs. Our first interest was Quarter Horses. Our family

started raising them in the 1970's until job moves made it hard to maintain a breeding

program. The focus of our Quarter Horse program was on a good all round using horse for

work and play.

In 2004, we diversified by adding Equine Services during the summer months. All

services are provided by myself. We have no other employees at this time. I work with my

clients to develop a program to fit the goals that they desire. Services offered include:

1) Lessons,

2) Clinics,

3) Judging,

4) Wagon Rides and Services,

5) Equine Publications and Design,

6) Vellus Equine Grooming Products,

7) Horses and stallion services for sale,

And 8) Equine Care and Boarding.

We became interested in Shire Horses in 2000, with the purchase of Big Sky Kellie,

a black and white mare broke to ride and drive. We were looking for a driving horse to use

for pleasure driving. We found an advertisement in the local classifieds-- went and looked

at the mare and purchased her. Since then we have enjoyed showing her locally and at the

Montana State Fair, Calgary Stampede and the Canadian National Shire Show where she

placed 3rd.

Shortly after the purchase of Kellie, we decided that we would like to pursue draft

horses (Shires) for a little more than pleasure and began our search for a stallion to breed to

our mare. In the process we found a stallion, Shakespeare William. He is a black and white

English, Canadian and American Registered stallion that we imported from Canada in

2003. Soon after his importation we purchased our first registered mare, Big Sky Melody.

The first shire foal to be born at Big Sky Shires was a bay filly, Big Sky Jacque Bee, in

2004. She was sold to Sullivan Shires of Florida after winning the reserve shire mare title at

the Montana State Fair.

Big Sky Shires & Equine Services’ goal is to be able to offer a broad and

diversified group of services to fit the desired needs and levels of the horsemen in the area.

Locally the image of the business is strong. Currently there are 6 clients all taking private

lessons, 3 Canadian clients using our equine publications service and on average we judge

10 to 12 events annually in Montana, Wyoming and North Dakota. We need to work on

promoting the breeding and equine sales to a broader market outside of Montana. Boarding

has been lucrative for us in the past. We have the ability to house 5 outside horses. This

space is used for breeding mares coming in and a few horses owned by college students.

Furthermore, the firm offers breeders with great bloodlines, conformation and disposition

that the Shire breed has to offer, as well as professional equine services. Quality horses and

services are offered at a fair price. The business hopes to reach the horse person who wants

horses that possess talent and quality at an affordable price.

2.2 Initial Direction and Plans for the Business when Developed

When we started this business our main outlook for the business was to provide

enough money to keep and maintain our horses, hobbies and a horse facility. We did not

have a business plan or action plan for our outcomes. Most of our aspirations were derived

from dreams of running our own business to fit our personal needs. We just knew what we

wanted. Through trial and error we started to market and develop our business as best we

could while working our full time jobs. After taking courses to get my masters I found that

we were missing a critical portion of the puzzle, in particular, a business plan. It is here

that the idea for this project was developed into action.

Both my husband and I have careers that are providing the household with cash

flow for bills and family expenses. Life insurance and health insurance are supplied by

these jobs too. Brett works as a law enforcement officer for Dawson County. This job

allows for full retirement after 20 years of service. I work as an instructor and director for

the agribusiness technology program at Dawson Community College. I have 7 years

completed on a 25 year retirement. With that in mind we are planning on building the

business so that it pays for itself and provides for a retirement opportunity with cash flow.

In twenty years Brett will retire and look into another job in law enforcement or in his

degree field of wild life management. I further discuss the specific goals and objects as they

relate to our mission and vision statements in the next chapter as we write out our business

plan. It is our hope that this business plan will help keep our business moving in the

direction of our vision and goals.

CHAPTER III: BUSINESS PLAN

3.1 Vision- Mission Statement

3.1.1 Mission Statement

The mission of Big Sky Shires & Equine Services is to operate an equine business

in breeding, raising and showing shire and shire sport horses with services provided in

lessons, clinics, judging, equine publications and promotional video and Vellus Grooming

Products. This endeavor will provide:

1) enough income to support the expenses of the business and the activities that

the business is involved in.

2) horses that are meeting the industry standard and performing at state, national

and world levels and services that provide support and benefit to the industry and its

participants.

3) enjoyment through showing, hunting, recreational riding and family activities.

4) a business that our son may take and work in the future as part of his way of life;

5) recognition of solid horses and services to fit the need of the industry.

3.1.2 Vision Statement

In ten years, our business will be providing high quality horses and services that

will be meeting the needs of the industry and horse community. We will provide the

highest quality equine services with the most knowledge and skill in instruction, judging,

wagon services, grooming products, equine boarding and care, and publications.

Furthermore; we will be recognized for our ability to produce top quality Shire and Shire

Sport Horses with size, disposition, movement and conformation that will place them

consistently in the show ring. These horses will be able to satisfy the customer. We are

pursuing these activities to ensure a high quality lifestyle and business in the area of horses

and services to make our love of horses pay for themselves and our equine activities. It is

our goal to build a solid enough business to help support our retirement.

3.2 Description of Goals and Objectives

3.2.1 Business Objectives and Business Goals

Through the business planning process Big Sky Shires & Equine Services has set

forth the following business objectives in which they hope to accomplish in the next 10

years supported by the following business goals in which they hope to accomplish in the

next year or 2:

1) Build the broodmare and breeding program on English Shires that are

registered with the Shire Horse Society of England.

1A) Purchase an SHS mare and breed her to another outside SHS stallion in

hopes of getting a filly to retain and breed back to our SHS stallion by 2010.

2) Build and upgrade facilities for the services and breeding business.

2A) Fix and improve pasture fences by 2010 to be more eye appealing and

workable.

2B) Finish runs and boarding facilities for incoming mares and lesson horses by

August 2007.

2C) Begin construction and planning of the arena for spring 2008.

2D) Improve facilities- add stalls and barn (2012), begin planning and finances for

machine shed (2010), Veterinary stocks/ wash area (2008), office/ tack room

(2015) and breeding barn (2010).

3) Business to support itself.

3A) Judge and work enough services to pay for all the hay and feed expenses in

2007 and 2008.

4) Purchase and repair wagons and equipment for the wagon services.

4A) Purchase our personal wagonette for wagon services by 2009.

4B) Repair hay wagon and running gear by fall 2008.

4C) Acquire a fore cart for training by 2009.

5) Develop, implement and modify a yearly business plan while documenting

changes and information.

5A) Finish business plan and implement it by January 2008.

5B) Update all contracts and letters for breeding.

5C) Draw up and put together the contracts for lessons, boarding and services by

January 2008.

5D) Get finances organized and reported by January 2008.

5E) Improve profits and losses by implementing the business plan by 2012 so that

the business will support itself.

6) Develop and implement a marketing strategy for the business.

6A) Get horses and services out in the public at least six times for advertisement

and exposure each year.

6B) Build publications, DVD and web site for promotion and advertisement of the

business and be using them by 2008.

6C) Certify with the American Riding Instructors in Reining and Recreational

Riding in spring 2008.

7) Keep service providers up to date on current knowledge and skills needed for

the services provided by the business.

7A) Meet with trainer two times in 2007 for personal lessons and development.

7B) Take 3-12 personal lessons per year with riding instructors and professionals

each year.

7C) Attend CSU for equine breeding school by November 2008.

7D) Go to and partake in one clinic per year.

8) Build a self sufficient breeding facility and acquire the training needed to

handle all breedings on farm and increase demand for stallion and horses for

sale.

8A) Begin to collect and ship semen on our stallion by spring 2009 to increase

salability of stallion.

8B) Settle the three mares for 2009 foals and market those foals for sale.

9) Sell and market 2-3 horses annually.

9A) Settle the three mares for 2009 foals and market those foals for sale

10) Add to farm acreage for more pasture and facilities.

10A) Look at purchasing the 60 acres near us for pasture and hay ground by 2012

11) Develop an on farm riding camp and school for summer.

3.3 Internal and External Factor Analysis

3.3.1 Business Strengths

Being a small business that is run solely by family, has given us strengths to sell in

our little niche area of Montana and Canada. Our diversity has been good for sales. When

sales of horses and breedings are poor we can cover costs and expenses by working the

services sector of the business harder.

The knowledge and skills offered by myself are a great help. I am able to provide

all the services with this skill set. The business is currently at a level in which I can provide

all the services and work all the orders. There may be a time in which I will need to hire an

employee to help with the lessons portion. I am certified with the American Riding

Instructor’s Association. Additionally, I have attended several college courses in Judging

and selection of horses, and shown in national, collegiate and international competition.

Another strength is that the business over the years of working horses as a personal hobby

has slowly acquired the land and basic assets needed in equipment and genetics. We

currently have our stallion and one registered Shire mare from solid bloodlines. These two

horses will build the foundation of our breeding program and take the business to the next

level. We have some of the best performance mares to breed for Shire Sport Horses. They

will allow us to build our reputation in the warm blood world.

3.3.2 Business Weaknesses

With a small family run business in Montana there are weaknesses that must be

addressed a worked through. First and foremost, we have great genetics in our stallion but

are currently lacking the facilities to ship and collect our stallion. We are locked solely into

live cover at this time. The addition of a breeding facility would allow us to ship and freeze

semen, plus perform on farm Artificial Insemination (AI). Secondly, we are lacking our

own arena to perform lessons and training. If we need the use of an arena, we have to lease

time from a local facility or use the fairgrounds when weather and schedules permit.

Until this project, the business had no business plan or direction mapped out. This

alone has made it difficult to see if the business is prosperous or making its way in a

positive direction. A formal office in the main barn away from the home, this would allow

for better marketing and work to take place. In addition, we would have separate phone and

correspondence for the business.

The business is lacking in its ability to produce a large number of foals per year. An

increase in land size and herd numbers would allow for this to take place. Furthermore, in

order to achieve our objectives on the breeding and sales side of the business, we need to

produce at least three shire foals per year and three sport horse foals per year. These

numbers will give at least six sales per season.

3.3.3 Business Opportunities

There are some opportunities looking favorable at this time, in the horse market.

The sport horse market is ever growing with the national interest in English riding taking

off. People want the heavy warm blood, but can not afford the warm blood prices. Good

synthetic draft crosses are being bred and trained to fill the need for amateur, youth and

lower level horses. Montana and the mid west are now seeing a great influx of English

riding and there is a demand for these horses. The draft cross makes a great horse for the

dude strings on many Montana guest ranches. Top dollar is paid for draft crosses that can

be worked in the trail horse string. This market is where horses not of show quality are

sold.

This increased interest in English riding has shown that there is a need for more

riding lessons. There is a bigger demand for riding lessons in my area for English riding.

There are very few instructors available, that are certified and have the credentials. These

credentials also allow us to offer judging services. There are not enough judges available to

fill all the shows around the area. This has allowed us to expand beyond the state and local

level to judging nationally.

The business also has opportunity to expand the breeding and sales to the national

and international levels through offering shipped semen. This expansion alone will allow

the business to command prime money for its horses and breeding.

3.3.4 Business Threats

At this time, the need for Shire horses is growing so fast that there are not enough

horses to fill the needs of the consumers. There are plenty of geldings on the market but not

near enough mares and quality stallions. The larger breeders with the larger amounts of

assets and resources are moving ahead quickly. Better finances, locations and resources are

making it easier for many of the breeders to bring in the English registered stock or

purchase the higher quality American horses. They are, therefore, producing a larger

number of registered horses in the US.

At this time the American Shire Horse Association is in a large lawsuit with a

breeder/lifetime member. Since the value of American Shire horses may go down and sales

may slow due to the uncertainty of the Association and the future of these horses. The

association is not able to pay the settlement or lawsuit fees assessed by the judge. The

membership is going to have to pay additional fees to keep the association going.

There are some additional horsemen and instructors in my area, many of which lack

the credentials and experience we offer. However, consumers here are not as informed

about the horse world and often are going to less structured and qualified individuals.

Another threat to our business is the additional number of Shire stallions that are

being promoted and stood for services. From the first year of our business to the current

time there are 50% more breeding stallions available today than in previous years. Most of

these horses’ breeding services are being offered for AI purposes, with the semen being

shipped and sold.

3.4 Production; Operations and Organization

3.4.1 Product and Services Defined

We have diversified with Equine Services during the summer months. All services

are provided by myself. We have no other employees. I work with my clients to develop

the program they need, that will fit the goals that they desire. Services offered include:

1) Lessons: I offer group or private lessons to students in western and English styles of

riding; an added touch for that person who wants that extra encouragement and

helping hand. I am a current ARIA Certified: Level II Western and Level I Hunt

Seat Instructor. Riders learn the importance of proper horsemanship and riding

techniques while meeting their own personal goals. Selection of tack, equipment,

and horses suitable to the rider and their goals are often discussed and covered.

With our riding program, a rider is given all the tools and resources needed to make

informed decisions and selections to better their horse experience.

2) Clinics: Clinics are available to fit the needs of the client as a group or 4-H Club. I

cover the areas desired and topics of interest. Each person gets equal attention and

help with enthusiasm and a smile. Riders as well as spectators are encouraged to

participate and bring questions to the instructor.

3) Judging: I pride myself on a judging style that is honest, fair and matching with the

industry standards. I keep the show moving yet maintain an open and relaxed

atmosphere. I am available for open/ schooling shows and judging contests. I

gained my experience in judging by participating in the Northwest College Equine

Judging Team. Here I completed several college credit hours in training as well as

competition.

4) Wagon Rides and Services: Wagons rides and services for your wedding, family get-

together, funeral, or business parties are available. You may choose from

draft teams and single horses to pull maintained vehicles of a time gone by. We

decorate to meet the occasion and provide great service with a smile and beauty.

5) Equine Publications and Design: We design and print flyers, pamphlets, business

cards and information for many local and Canadian equine businesses. All work

printed on top of the line equipment and paper. Proofs are sent before printing

begins. We offer DVD services for sale horses, farms and stallions. Through an

effort to design and save costs for our own business we have been able to extend

our services to others at an affordable quality rate. Word of mouth is how we have

started the sale of these services.

6) Vellus Equine Grooming Products: Big Sky Shires is the Exclusive dealer of Vellus

Equine Grooming Products. It is a salon style horse bath line that includes

shampoo, conditioner, tangle out, static stabilizer and a moisture cream. Products

are sold in quart or 16 oz sizes. Being a concentrated product allows for a longer

lasting product for a better clean. Proven and tested, this product is hyper-allergenic

and safe for use on horses and pets it has been proven to grow hair and condition

coats. Our orders are placed special for our products. A minimum of 400 pounds is

mixed for the business in Shampoo and Conditioner. All other products are not on

a special order and can be ordered as needed. The customer can get product from us

by ordering off our web site or by contacting us directly.

7) Stallion Services and Horses: Big Sky Shires & Equine Services is proud to offer

some of the finest English bloodlines and genetics to those interested in Shire

horses. Our horses are not only sound in conformation but sound in mind and

disposition.

8) Equine Boarding and Care: Big Sky Shires & Equine Services offers full care and

board on a monthly, daily and weekly basis. Mare care is also available to our

customers who are breeding to our stallion. Packages are built to fit the needs of our

customers and their horses.

3.4.2 Regulations and Licensing Issues

The business only has three organizations in which we are licensed to. The first

issue is with Vellus Wholesalers. They require a contract and initial purchase amount of

wholesale product. The contract can be seen in the appendix II. If any of the terms are

violated in the contract the dealership may be pulled from the business.

The American Riding Instructor’s Association (ARIA) is one of the premier

certifying agencies in the US. They have some of the toughest requirements and testing

procedures. ARIA has been certifying riding instructors and stable managers since 1984,

and offers certification at three different levels and in 15 disciplines (American Riding

Instructor’s Association (2007)). I am currently certified in two: Hunt Seat and Western. I

look foreword to expanding into Driving, Stable Management, and Recreational Riding.

Nationally recognized and meaningful, the ARIA Certification Program (ARIACP)

uses a carefully designed and thought-out system of checks and balances to determine the

earning of certification. A team of evaluators, located in various parts of the country, assess

all aspects of each candidate's demonstrated knowledge of the discipline he/she wishes to

teach, attention to professionalism and safety, and business and personal integrity. Even at

Level 1, ARIA certification is hard-earned, which makes it respected and important. Major

insurance companies recognize ARIA Certification, and offer those instructors a substantial

discount on their insurance needs (American Riding Instructor’s Association (2007)).

ARICP Certification is meant for the serious, above-average instructor who teaches

safely and in a professional, competent manner, with high standards of honesty and

integrity. Minimum age and experience requirements apply for each level of certification

(American Riding Instructor’s Association (2007)).

ARICP certification is an important aspect of an instructor's career and requires that

candidates make it a priority. The certification process is accomplished by evaluating the

instructor's qualifications and teaching ability through written and oral testing, and, at

Levels II and III, by a video submitted by the candidate. Instructors meeting the standards

for a particular level will earn certification at that level. ARICP offers certification to

instructors in three levels of experience and in 14 teaching specialties. To ensure that

ARICP-Certified Instructors' standards remain high, re-certification is required every 5

years. This also gives the instructor an opportunity to upgrade his/her level of certification

and to add new teaching specialties. ARICP Certified Instructors have nationally

recognized credentials. Their employment prospects are improved (American Riding

Instructor’s Association (2007)).

The third and final licensing, Montana law requires that all land owners must be

certified by the state in order to buy and apply controlled chemicals for pesticide control. I

am currently licensed with the state of Montana. I took my training through the Montana

State University Extension Service in spring 2007. The card allows us to purchase any

pesticide needed to maintain and control our pest problems.

3.4.3 Physical Resource Inventory-Plan

The property currently used by the business is owned by my husband and I

personally. Consisting of 26.3 acres in eastern Montana four miles west of Glendive,

Montana on Highway 200 S. The physical address of the property is 285 Hwy 200 S. The

land is currently cross fenced into five pastures of various sizes and one dry lot. A Schultz

double wide home serves as living facilities. Maps of this property can be viewed in figures

3.1, 3.2, and 3.3. One pasture is in need of reclamation from weeds and cheat grass and is

grazed for a month by the four Shire mares. It holds at this time about 6 animal unit months

(AUM’s). The pasture will soon be reclaimed to pubesant or crested wheat grass and

alfalfa for use in early summer and spring grazing. The corner pasture on the property is

grazed in early spring for about two weeks by the horses. The pasture that sets in the

northeast corner of the property is seeded to crested wheat grass and is grazed May to June.

It provides 8-10 AUM’s depending on the rain and how soon the summer heat hits in the

growing season. The main native pasture in the south west corner of the property is being

lightly grazed at this time to improve the over grazed condition that existed when the

property was bought in the summer of 2003. We currently get about one to one and a half

months of grazing. The pasture is used in late fall so that the grasses can go to seed. With

time, we are hoping to get 6-10 AUM’s on the native pasture plant population. There is

one small pasture off the south side of the corrals and runs. This pasture is used a turn out

for the stallion through out the summer. The stallion is often left penned and fed hay and

commercial feed products. One neighbor provides three to four weeks of pasture on his

eight acres of land at no cost to the business. An aerial photo of this property is in figure 3.6

and in figure 3.1. This pasture is used in mid June to July when the move from early

grazing is made.

If the business is to grow in livestock numbers and not have to feed large amounts

of purchased feed stuffs, the number of pasture acres needs to increase. The first step

toward increasing pasture was taken in 2004, with the lease of 5 animal unit months on 16

acres of Department of Natural Resources State Lands just a quarter of a mile from the

property as seen in figures 3.1, 3.4and 3.5. It too had been over grazed and needed a one

year rest in order to reclaim the range condition in a positive direction. We get a month to

six weeks of grazing on this property. It is utilized in late summer to early fall before the

move to the southwest pasture on the home place.

Figure 3.1 Map of Property Managed by Big Sky Shires & Equine Services

Figure 3.2 Aerial Photo of Home Property

Figure 3.3 Topographical Map of Home Property

Figure 3.4 Aerial Photo of State Lease

Figure 3.5 Topographical Map of State Lease

Figure 3.6 Aerial Photo of Barrowed Pasture

The home property was purchased with several outbuildings, cross fencing, one

corral, man made reservoir and a grain bin. A lot of clean up was needed to get the place in

a working order. This clean up is still taking place today and little by little the property is

taking shape. The first barn on the property was an open faced, three sided 36X21 feet. It

has two stalls accessible for horses large enough to foal mares in if needed. The third

division houses the dog kennel. At this time the center stall is used to store the tractor and

cart. Do to the need for storage; the center stall has been sacrificed at this time. According

to the county records, it was constructed in 1992, and is in average condition. The barn is

sided and roofed in brown tin. It is an excellent wind break for stalling from harsh weather

or for sick horses. A frost free hydrant is set in front. Both stalls are accessible with 12 foot

Powder River gates. Lights and outlets for electricity are available for use in all three

partitions. The barn makes up part of the west side of the corral, which is used at this time

to house the stallion until construction of the stallion barn, breeding barn and stallion

paddock can be completed. The corral is also set up with feed bunks for feeding cattle if

needed. The condition of the corral system is declining with some posts showing rot. Some

repairs have been made. The corral would be better utilized if it were divided into smaller

holding pens. The barn can be extended an additional 72 feet. This would give u six

12X21” stalls for horses in the winter and foaling, horses for boarding and lesson or camp

horses for weekend stays. The corral system has one automatic water tank, which is also

used to water the dry lot. We need to extend water lines and electricity to the new barn

addition (when constructed), corral divisions (when constructed) and the runs out back for

lights, plug-ins and automatic water tanks.

A 12 foot by 21 foot shed sided and roofed to match the main barn is used for tack

and equipment storage. It has two rooms. The larger is used for horse and livestock

equipment, and grain storage. The smaller is for farm and ranch equipment. The windows

are good. There are a few repairs needed in the floor and roof to completely make it mouse

proof. The roof itself does not leak and the building is insulated to keep out some of the

summer heat. The tax records show that it was built in 1960 and was originally a

homesteader’s cabin that was moved in on blocks and sided.

The newest livestock facilities on the place are five runs with a loafing shed. The

shed is 88 feet by 8 feet with 72 by 16 foot runs attached (divided into five pens). The roof

was added this year (2007). Initial construction was done in 2006. We use the facilities for

housing board horses, horses for breeding and our own horses when needed. No horses

boarded at the property are grazed. All horses are penned and fed hay and grain rations at

the owner’s expense.

The property makes use of many water sources for irrigation, household and stock

water. The main source of water is the well dug in 1983. The well supplies the two frost

free hydrants and automatic water tank at the barn and the house water needs. The well is

suitable for drinking and stock water as well as lawn and garden use. The water rights are

filed with the state of Montana for house hold and stock use. The property has a man made

reservoir in Figure 3.7 that will hold water and run off each spring. The water may be used

for irrigation and stock. A Brigs & Stratton pump is used to pump water to needed sources.

The final source of water on the property is Seven Mile Creek. The creek runs all year but

needs to be broke open for use in the winter months. Figures 3.14 and 3.15 in section 3.4.4

show the range condition improvement as well as the creek as it flows through the

property. Seven Mile Creek runs through the deeded property and the state lease. There are

no water rights for the use of irrigation. However, stock water rights are available for both

pieces of property. The only water source to dry up is the reservoir.

Figure 3.7 Reservoir and Water Storage for Irrigation in Spring

The steel grain hopper bin was dated 1962 and is in average condition. The

measurements are 14 feet in diameter by 10 feet in height. The bin is in need of a new door

but is not currently used for feed. It is now used as dry storage for the jumps, lumber and

odds and ends that are not able to be stored in the other buildings.

One large concern is the lack of appropriate storage. The business could make

better use of existing resources if we had a machine shed for storage and shop use. This

would free up the grain bin and barn areas that could be better used for horses and feed.

Furthermore, it would give us a place to make repairs and build things needed on the

property.

The 1200 square foot home dwelling possesses the office and central nerve center

for the business. All publications, web designs, financials, and correspondence take place

here. The office however, is shared with the spare bedroom. In the near future, we would

like to separate the office into its own room and preferably one in the main barn where

work can be separated from family life. We have just finished the covered patio, part of the

yard fence and put sod into part of the lawn. Two thirds of the lawn and fence is still in

need of being finished.

Labor resources are solely my responsibility at this time. We do not have a need to

bring in additional help and employees. If this were done, we would only hire for the lesson

portion of the business. All clinics and judging would still have to be handled by myself. I

make sure that I book only as many events as I am able to handle at one time. I keep an

organizer with all the information and locations of the events that we sign contracts with.

Work and repairs, on the property, are planned around the paid contracts and services. If we

have a conflict in the schedule, then that repair or work need is hired out.

We work Montana, North Dakota and Wyoming for our judging and clinics.

Lessons are scheduled in the order in which they are requested and when they fit the

schedule. Previous clients take priority in the list of scheduling. At this time we are

averaging 5-7 lesson clients and about 8-12 events a summer. Lesson students ride a

minimum of twice a month to four times a month. Evenings and mornings are scheduled so

that time is not taken from the other operations of the business during the day. Time is

donated to the local 4-H organization for mini clinics on Thursday for two hours. The

donation is used as a charitable contribution for tax purposes plus business marketing.

Each week I weigh personal and family time with the time for the business. I make sure

that conflicts are avoided and kept from hindering the business or the family time. This

may mean the some needs are hired out. An example of this is the farrier work. Although

my husband and I can perform these tasks, we have found it cost effective to hire the work

done.

The business has been working hard to maintain a quality group of genetics. The

limitations set forth by the small numbers in pasture acres and finances has caused the

business to be selective about our horses and breeding program. Table 3.1 inventories the

horses owned by the business, their condition, date of service and productivity and

usefulness.

The Business currently has a base to the breeding program in its Shire Horse

Society (SHS) registered stallion Shakespeare William (Billy). To help with marketing and

to open additional opportunities to our breeding program Billy’s crossbred and full shire

foals are eligible for registry in the Sport Horse and Shire registries of the US, Canada and

England. Many of the foals from our mares will be for sale as weanlings so that they do

not cost us a feed bill. These foals will be sold at a price that at least makes the break even

on the mare upkeep and the stallion service fee. In rare cases some of the best may be

retained for training and showing to command a higher price at a later time. We hope to

cross our best mares to outside stallions and retain the best fillies to breed to our stallion.

The cost of these foals will be stallion, vet fees and mare care; much cheaper than

purchasing the mares outright for 6 to 10 thousand dollars. The overall cost of these foals

will be about $1500 to $3000.

Table 3.1 Physical Resources – Horses and Genetics Description of

Asset

Date In

Service

Condition Productivity and Usefulness

Registered Sorrel

Quarter Horse

Filly

01/01/06 Yearling

Excellent

Not breeding or working at this time. Will

eventually be part of the shire sport horse

breeding program She will first be broke and

trained and used as a personal and lesson

horse.

Registered Black

English Shire

Stallion

01/01/04 Breeding

4 yr old

Excellent

Currently breeding and working. Started

under saddle and the main focus of the

breeding program. Ready to stand to outside

mares- settled one mare in the first breeding

season. He is shown extensively and used to

promote shire horses and the business. This

horse was imported out of Canada and has

some of the best genetics available to the

shire breed.

Registered Bay

Quarter Horse

Filly

12/01/06 Yearling

Excellent

Not breeding or working at this time. Will

eventually be part of the shire sport horse

breeding program She will first be broke and

trained and used as a personal and lesson

horse.

Registered Bay

Quarter Horse

Mare

01/01/04 21 year

old

Fair

Mare is the mother to the Sorrel quarter

horse filly. She is used in beginning walk trot

lessons and as a trail horse. Her reproductive

performance is declining do to age. She has

to be flushed and ultra sounded during the

breeding process. Therefore she has been

retired from the breeding program.

Grade Black

Shire Mare

01/01/04 15 yr

Excellent

This mare is not used in the breeding

program but is used as a lesson horse for

driving and as the horse for the wagon

services. She is also shown and used in our

breed demonstrations to promote the

business.

Registered Bay

American Shire

Mare

02/01/04

10/13/07

Sold

5 yr old

Excellent

SOLD

This mare is just entering production as a

brood mare. She is currently covered by our

stallion. She also is broke to ride and used in

parades, breed shows and performances.

Sold for $4500.00 Money to be used to offset

the loss of the English Mare and mare lost in

early spring.

Registered Bay

American Shire

Mare

02/01/04 4 yr old

Excellent

This mare is breeding and working. She is

started under saddle and will be used to

replace the grade mare for pleasure driving.

Currently in foal to our stallion for 2008.

Registered Bay

English Shire

Mare

10/01/05

09/05/07

10 yr old

Deceased

This mare is broke to drive. She is used as a

brood mare because of scar tissue on her

hind legs from scratches. She settled last

season to our stallion but lost the foal. She

has some of the best genetics and was

imported out of Canada from a premier

breeder. In foal for 2008 baby- Mare Died of

Colic – Plan to replace the mare in Spring

2010.

Registered Bay

Thoroughbred

Mare

10/01/05 6yr old

Excellent

Mare is currently in training to be a show

and lesson horse. She will also eventually go

to the brood mare herd where she will

produce shire sport horse babies for sale.

Registered Sorrel

Quarter Horse

Gelding

01/01/04 12 yr old

Good

This gelding is used as a lesson horse and

outrider horse for the wagon services. He is

shown and used to promote the lesson

portion of the business.

The business is fortunate that a lot of the equipment needed was in place at the start

of the business. Since the start of the business we have been able to add assets and needed

equipment as the finances would allow. Table 3.2 inventories the equine tack and

equipment owned by the business, their condition, date of service and productivity and

usefulness. By inventorying the assets by condition and productivity there is more than a

value in cash. The value is stated in usefulness and condition.

Table 3.2 Physical Resources – Equine Tack and Equipment Description of

Asset

Date In

Service

Condition Productivity and Usefulness

Meadow Brook

Cart (Draft)

01/01/04 Excellent Cart is used in lessons, showing and

promotion of the breed and business at

promotional events

Wagonette- 6

passenger

Loaned Good This vehicle is barrowed from Eaton Clyde

and Carriage. We use it for weddings and

other wagon service contracts. It would be in

the best interest of the business to eventually

purchase their own.

Hay Wagon 06/01/07 Poor Wagon running gear in good shape- box and

deck need restored. We hope to restore the

wagon so that it may be used for hay rides

and floats for parades. At this time the

wagon is in need of a lot of repairs.

Single Spotted

Draft Harness

01/01/04 Excellent Harness is used on our single driving mare.

Also used in lessons, showing and

promotion.

Set of spotted

Draft Show

Harness

12/01/05 Excellent Currently not used as the business does not

have a team ready to work. One set may be

used in the show ring for single driving.

Need to purchase two sets of show hames

and collars for the horses when used.

CC English

Saddle 17” seat

Regular Tree

01/01/04 Good This saddle is used in Lessons and by myself

in the show ring when showing hunters

under saddle. One drawback to the saddle is

it fits only saddle horses – not the drafts or

crosses.

Dressage Saddle

17” Seat

Regular Tree

01/01/04 Excellent Not used a lot in this area as there are few

Dressage shows and fewer Clients looking

for dressage lessons- but is used for showing

and lessons when need. One drawback to the

saddle is it fits only saddle horses – not the

drafts or crosses.

All purpose 17”

Seat English

Saddle Wide

Tree

04/01/05 Good This saddle is used in Lessons and by myself

in the show ring when showing hunters

under saddle. This saddle is adjustable in the

tree and fits all horses from Thoroughbreds

to drafts and crosses.

Bits 01/01/04

Present

Good Many bits on hand to fit all different types of

horses and riding/ driving styles. Bits include

Broken mouthed Liverpool; egg butt;

Kimberwicks; Western pellums, broken

pellums; French link snaffle; D- ring snaffle;

Calvary bit.

Misc. Tack and

Livestock

Equipment

01/01/04 Good This category includes halters, bridles, show

halters, show bridles, leg wraps, saddle pads,

sheets, blankets, hoods, tail bags, tail wraps,

mane and tail decorations, branding irons,

buckets, brushes, feed tubs, feed storage

containers, spray bottles, clippers, show

grooming and fitting equipment, cinches,

saddle racks, bridle and halter racks, bridle

and halter bags, reins, tack cleaning

equipment, veterinary equipment and first

aid kit, Shoeing tools, anvil, riding helmets-

all necessary odds and ends to store and use

to complete the care and handling of show

horses, lessons and everyday husbandry of

the horses on the property.

Circle Y Show 01/01/04 Good Western show saddle- quarter horse tree.

Saddle 16” Seat Used in the horse shows.

Alyson Hand

Made Saddle

14 1/2” Seat

01/01/04 Good Working saddle used in lessons and riding

colts. Also used for trail rides and everyday

riding. Fits most all horses and does not sore

horses.

Colorado Saddle

16” Seat

01/01/04 Good Working saddle- Used to start colts with and

as an extra saddle when needed for rides. Fits

drafts and saddle horses.

Dekker Pack

Saddle

01/01/04 Good Used for hunting, trail rides and camping.

Sometimes used when starting colts.

Corriente Saddle

Handmade 16”

Seat

08/01/06 Good Working saddle used in lessons and riding

colts. Also used for trail rides and everyday

riding. Fits most all horses and does not sore

horses.

Jumps 01/01/04 Good Five sets of standards with poles and five

solid fences. Used in training and lessons.

All painted and constructed of good lumber.

Stall Curtains/

Decorations and

Sign

01/01/04 Good Used to drape and decorate stalls and

displays when in the public with the horses

and business booths. Makes for a color

coordinated and colorful display to catch the

customer’s eye.

The business is building its inventory of farm and ranch equipment. Some things

we had at the start of the business. Others have been purchased with the past several years’

tax returns. These resources help keep the operation in working order and maintained.

These items are inventoried in table 3.3 below.

Table 3.3 Physical Resources – Farm and Ranch Equipment Description of

Asset

Date In

Service

Condition Productivity and Usefulness

1996 F350

Pickup

01/01/04 Good Used to pull the horse trailers, haul hay, haul

garbage and ranch supplies.

1983 Phillips

Two Horse

Trailer Extra

Wide and Tall

01/01/04 Good New paint in 2003 – side by side trailer.

Used for short trips and when hauling one or

two horses. Will hold the draft horses. Full

divider and ramp load. Fully enclosed with

vents. Great trailer for all weather travel. Not

built for off road use.

1977 Circle J 4-

Horse Trailer

01/01/07 Fair Used to haul cattle/ garbage- will be

converted to a flat bed to haul hay and tractor

2005 Titan Five

Horse Extra Tall

Slant load Trailer

10/01/04 Excellent Blue in color. Trailer was bought debt free.

Trailer will hold horses and the wagon or

cart. Walk in take room for camping and

storage- eliminates the need for hotel rooms

while showing. Vent in roof is braced for a

heater/ AC unit. In the future we would like

to convert the front with insulation, heat and

air, sink and microwave with storage

cabinets. Trailer will haul drafts to saddle

horses.

8N Ford Tractor/

Blade

07/01/05 Good Tractor was purchased with tax refunds.

Used on the place to clean pens, move hay

and dirt. Also mow and snow removal. Used

to harrow pastures and recondition roads.

Tractor is too small to unload large bales off

the semi trucks- this must be hired out.

Davis Loader 07/01/05 Good Loader was purchased for the tractor with tax

refund money. Great attachment for cleaning

pens and moving dirt and gravel.

Brush Hog 07/01/05 Excellent Bought new with tax refund money this

mower is used in the shelter belts and to

mow weeds and pasture cleanup. Excellent

for road ways and around the place. Pulled

with 8N Tractor.

4 ft harrow/ Drag 06/01/05 Fair Used to drag pastures and lots to break down

manure and groom the surfaces after grazing.

Pulled with 8N Tractor.

6ft Double Gang

Disc

06/01/07 Good Will be used to work the arena and work the

ground in the pastures when reseeding and

reclamation work is needed. Pulled by the

8N Tractor.

15 Powder River

Panels

01/01/04 Good 12 foot panels used to make pens - that is

used for colt starting and training. Also used

from time to time for lessons when needed to

make pens and holding stalls/ pens.

2 200 gallon poly

water tanks

01/01/04 Good Tanks are used as water sources for the four

runs used for foaling mares and boarding

horses.

12 Tire Feeders 06/01/06 Good Used to feed hay and grain in. They

eliminate a lot of wasted feed and help keep

parasite control in order for the horses as

they are not eating off the ground.

1 two horse

Richey Water

tank- heated/

automatic

01/01/04 Fair Used daily as it supplies continuous water to

the stallion pen and the dry lot. Used by the

majority of the horse herd.

4 Electric tank

heaters-

thermostat

controlled

01/01/04 Good to

fair

Used in the poly tanks in the runs to keep

water open for the horses that are penned.

Propane Water

Tank Heater

07/01/05 Good Used in metal stock tanks to warm and keep

winter water open. Has not been used much

as we have been using the electric water

heaters.

Extension Ladder 02/01/06 Excellent Used around the place for maintenance and

building projects. Great for checking roofs

after hail storms and repairs.

2 Battery

Chargers

11/01/05 Good Used for farm and ranch equipment- one is

specifically for the 8N Tractor and the other

is for all other vehicles.

Portable Jump

Box

12/01/04 Good Used to jump start vehicles in a pinch. Also

used with a converter for the lights on the

wagons for the light parade. Big enough

capacity to jump the diesel pickup.

Wood working

Tools

01/01/05 Excellent Chop Saw/ Finish Sander/ Table Saw/ Belt

Sander/ Skill Saw/ Jig Saw- Used in repairs

and construction of jumps, buildings,

additions and maintenance of the farm and

ranch or home.

Small Capacity

Air Compressor

01/01/05 Excellent Used for quick fills on tires and to blow out

equipment. Not big enough for industrial use

but works well for the small needs of the

business at this time. In the future it would

be nice to upgrade to a bigger and better

machine.

4 100 foot Hoses 01/01/04 Good Used to water lawns, pens, and to fill water

tanks. Also will be used to water the arena

and riding areas.

Garden Yard

Tools

01/01/04 Good Rakes, Hoe, pots, shovels, potatoe fork;

Manure fork, hand shovels and rakes. Used

in gardening and to help with water runoff

and flowers to add to the aesthetics of the

property.

Fencing

Materials

01/01/04 Good Two solar Electric fence chargers/ post hole

digger/ spud bar/ tapping bar/ post pounder/

fencing pliers/ steel fence posts/ wood posts/

wood plank and poles/ electric fence posts/

electric fence wire/ barbed wire/ fence

stretchers/ multiple fasteners – all needed

materials to build and repair fence for the

operation.

Lawn Mower-

Push

01/01/04 Good Great for trimming and lawn care around the

house and tack barn. Used in shelterbelt

between trees.

Come-a-longs/

hay ropes and

chains

07/01/05 Good Used to haul hay and wagons on flatbed

trailers and trucks. Come in handy when

needing to tow a vehicle or working around

the place.

Misc. Farm and

Ranch

Equipment

01/01/04 Good Hammers, wrench sets, screwdrivers, grease

gun, oil changing tools, extension cords,

storage cabinets etc. Odds and ends needed

to maintain and repair.

50 Foot Round

Pen –

09/28/07 Excellent 12- 12 foot panels and on 12 foot panel with

gate. Used to start colts and for lessons as

needed.

Finally, the nerve center of the business is the office. This is where business

materials are processed and handled. Contracts are put together, videos are made, web sites

are managed and publications are printed and published. Vellus orders are processed and

lessons are scheduled. The books are kept on the computer and e-mail is checked. The

inventory in this area of the business has been slowly growing and developing. We were

not as fortunate to have some of these needed assets set in place. They had to be purchased

after the business had started. Table 3.4 outlines the office equipment in place and used by

the business.

Table 3.4 Physical Resources- Office Equipment Description of

Asset

Date In

Service

Condition Productivity and Usefulness

Dell Computer 12/01/04 Good Computer is used for all business

applications. Business marketing, web

design, video production, publications and

design. All books and inventory are kept on

the computer. Photos are edited and

produced. Letters and memos are written and

printed.

Video Camera-

Samsung Mini

Digital Video

08/01/05 Excellent Used to video tape horses for promotion and

sale, video lessons and instruction for

students as well as horse shows. Video is

then downloaded to computer and put on

DVD.

Pinnacle Video

System

04/01/07 Excellent Software and tools to download video from

devices and to edit the video to make

promotional DVD’s and slide shows. Used

for personal business and horses as well as

making videos for clients.

Digital Camera

Kodak 3.1 Mega

pic

08/01/05 Poor Camera is used to shoot photos of horses and

events. Pictures are used to build the website,

publications, ads and for customer

publication designs. Camera is in need of

replacement for better and more professional

photos.

External Hard

Drive – Maxator

07/01/05 Excellent Used to store video, photos and information-

large capacity helps with storage needs and

frees up the computer for other uses. Great

source of back up information.

Light Scribe

DVD/ CD burner

04/01/07 Excellent Used to burn DVD/CD and back up

information. Light Scribe system allows for

label design and etching on the CD. Makes

for a very professional look.

Digital Camera

Kodak 8 Mega

pic

07/26/07 Excellent Camera is used to shoot photos of horses and

events. Pictures are used to build the website,

publications, ads and for customer

publication designs.

Cannon ES Rebel

53 mm Film

Camera

1/01/03 Excellent Camera is used to shoot photos of horses and

events. Pictures are used to build the website,

publications, ads and for customer

publication designs.

3.4.4 Resource Needs Assessment Plan

Based on the goals and objectives and the resources that are listed above the

business has identified several purchases and needs that we would like to meet before 2010.

The first of these to be completed in 2008, is the arena. We have looked at an indoor

facility, but have chosen against it based on cost and the ability to lease the local indoor

facility at $10.00 for three hours of riding time. The plan we have chosen for the arena on

our property is a 200 X100 foot outdoor arena. The railroad ties for posts were given to us

at no cost. The panels can be purchased through Murdoch’s Ranch Supply in Miles City,

Montana for a total of $2,377.71. This project will be contingent on tax refunds or the sale

of the foal we are expecting in spring 2008. The arena will pay for itself in several ways: 1)

we will no longer have the gas and time outlay to travel to other arenas for lessons or

clinics, 2) we will be able to add more lesson clients and work towards our own weekend

camps, and 3) it makes boarding with our facility more desirable.

The second improvement we are looking into is the wash stall and vet stocks on a

concrete pad. The cost of this project is estimated around $2000.00. The pad will be poured

and set by ourselves and the stocks will be welded and built by myself in the shop. We will

be able to cut out of pocket costs and save by doing as much of the labor as we can. This

project will be scheduled around the paying services. If we are not able to schedule the

labor in we will have to look at hiring the job done. This will allow us to do most of our

basic vet work and breeding on farm. We will have little need for a vet in the breeding area

when we get through the planned school in Colorado at CSU. These facilities will help us

cut vet and breeding expenses while giving us a place to professionally fit our horses for

show and sale. This feature will also draw more boarding clients to the facility.

The third purchase for the business is our own wagonette. This will be purchased

out of Canada from Robert’s Carriages. The purchase and delivery cost is $4000.00. With

our own wagon we will have more freedom to schedule and perform our wagon services.

We will not be limited when the people we borrow it from use it for themselves. The

purchase of the wagonette will allow us to: 1) not pay rent for the use of current vehicle, 2)

we will not loose the fuel and time to go and get the current vehicle, and 3) we will have

less loss of business with overlap of the current vehicles owner.

The fourth purchase that we will try to do in 2008, is the Artificial Vagina (AV) and

collection materials needed to train and start collecting our stallion. We feel that it is critical

that the business get into the shipping of semen if we are to be successful with our stallion.

This will cost us about $500.00 to get the basic equipment (AV, collection bottles, shipping

container). In the future, depending on the demand for the services of our stallion, we will

look into a breeding phantom and the semen processing equipment for shipping. Until that

time, we will collect from a jump mare and have all semen handled by the local vet clinic.

Most facilities charge a collection fee of $150 to $250. If we are set up to do this service

ourselves that money will go to us rather than the vet. At that time, we will also have the

ability to do all the services at the property. Eventually, we will have a breeding shed that

will have all the needed lab and handling needs. The current cost projections are between

$5,000.00 and $10,000.00 to build and furnish the entire lab and collection room. However,

the business is in no financial state to purchase and run our own facility. Plans are to

purchase the AV and collection kit needed to train and work with our stallion at home. We

will utilize our local vet for shipping and processing to out of state breeders. The collection

fee will be paid by the business for the first shipment and by the mare owners for any

collection needed after that. Shipping expenses will always be paid by the mare owner. We

will ship overnight Fed Ex or UPS. The vet will charge us $150.00 per collection and

process for shipping the semen. If this venture proves to be profitable and will support itself

we will look into the additional equipment and facilities.

The fifth purchase is to look into getting another SHS registered mare for our

breeding program. This time we will look into a mare that not only has the genetics but will

also work as an alternate for our wagon services. We are looking at $3,500.00 to

$10,000.00 depending on what we are able to find. We feel that the finances at this time do

not allow us to look into high priced genetics. We will shop and try to find solid horses at

good prices. If the mare is purchased right we will be able to net a return on her with in her

first year of service in the carriage services side of the business and her first foal.

Looking into the longer term projects we have prioritized the corral, stallion

paddock, stall additions and machine shed. We are looking at about $5,000.00 to $7,500.00

per project depending on material costs and how much labor will have to be hired out. It is

our hope to start with the stallion paddock then move to the corrals, machine shed and then

finally, the barn addition of stalls. These facilities will make the property more functional

and safe for our horses. We will have places to board additional horses and work on

equipment. The property will look nicer and perform the needed tasks better. Furthermore,

it will make the business more desirable to clients.

3.4.5 Quality Control Plan

Quality of instruction and clinics is covered by a survey that is given to the students

at the completion of the event. They are taken with the option to sign their name or not.

The information is compiled and used to improve the lessons and clinics. Students in

lessons with the business are also asked to fill out a yearly goal sheet and submit it with

parent and student signature. These are filed and used to develop each individual lesson for

the student. Changes may be made to these sheets throughout the year and lessons are then

monitored and changed to meet the student’s goals and outcomes. This process insures that

we are meeting the needs of that student. If there is a clash with a student we are very

careful to help them find an alternate instructor that will help them with the skills that they

want. To ensure the quality of instruction is up to date, each instructor (myself at this time)

is required to keep riding and taking personal lessons and classes to keep current and up to

date. ARIA Certification standards are met and used to keep credentials up to date. I also

require that instructors show periodically not only for advertisement, but to get a judges

opinion of their skills and abilities.

When possible, we keep track of the individuals that have our horses and follow up

with their satisfaction and comments. Each horse is sold with a 10 day trial basis where the

check is held and the horse may be returned in that time if all portions of the purchase

agreement are met. Additionally, we keep a very close eye on our horses during the sale

process. Horses are matched as carefully as possible to the buyer to ensure that we do not

have to take the horse back and refund the money. We listen carefully and are sure to ask

questions to make sure that the horse and buyer is a good match. So far we have not had to

take a horse back from a buyer that was not satisfied. We ensure satisfaction and quality in

our sale of breeding services only to approved mares. In the initial contact with the mare

owner, we are careful to ask the questions needed to make sure that we have the genetics

and traits that they are looking for. We also ask for pictures of the mares and a copy of any

registration papers that are available. The mares are required to pass a health exam and

make sure that there are no medical reasons that may keep them from settling and or

aborting a foal. The contract for breeding also has a clause that entitles us to ask for a

different mare or appropriate tests for a mare that has not settled after several services. By

providing these guidelines we are able to eliminate chances of dissatisfaction based on the

chance of poor quality mares or poor combinations of horses and handlers.

Vellus products are sold and represented under the manufacture warranty and

standards of excellence. Refund is given under those guidelines as set forth in the contract

with the Vellus Corporation.

In the printing and publishing business, all items are designed and proofed before

any printing or DVD production is begun. We have a sheet of questions that is filled out

and sent with any pictures or video footage prior to any design. Customers are encouraged

to look at our portfolio or submit any ideas that they have for the layout or design of their

project. That information is used to put the publication or DVD together. Once a project

meets approval it is sent to print with the understanding that the approval document has

been signed and refund is no longer an option. If mistakes are discovered we can catch

them prior to print. In the case that a print has taken place, then at that time those errors are

fixed and printed again at a lower rate or free depending on the circumstances behind the

issue.

3.4.6 Environmental Stewardship Plan

As stated before, this property was much overgrazed when purchased in the

summer of 2003. Since then, we have been working very hard to improve the conditions

and weed problem on the property. Each year we take pictures and do a range inventory of

each pasture to monitor condition and trend. We use the standard range practices set forth

by the Department of Natural Resources. We are looking at clipping and setting plots to

monitor the conditions more closely.

Our first step to improving the range condition was to develop a dry lot for the main

horse herd. This allows us to let the horses graze for short periods of time and then have

them back in on the lot to eliminate overgrazing or excessive hoof traffic. With the dry lot

we also have a place to feed winter hay, grain and to hold horses when breeding or

working. Additionally, any hay that may be weedy is fed in the dry lot and contained.

Next we tackled the few acres that were completely kochia and weeds. We started

this project in the summer of 2004, by mowing the pasture, as it was too late in the season

to spray. The next spring brought a large population of cheat grass. We had old seed that

was planted that fall. However, we did not get enough of a kill on the cheat grass or with

the drought enough moisture to get the new grass to germinate and take off. We have

mowed each year since, waiting for moisture levels to come up to seed. With no access to

irrigation it is tough to start new grass stands with the overwhelming drought that Montana

has been in. We have been able to utilize this pasture in early spring where we hit the cheat

grass very hard and this does help slow the production of seed and slowly we are seeing a

diminishing population with the early summer mowing too. With the new disk and farm

equipment, we are planning to work the pasture this fall. Then spray in the spring and plant

Crested Wheat Grass and Alfalfa for pasture.

In order to relieve some of the pressure on our own property, a lease bid came open

for the state parcel a ¼ mile west of our property on Seven Mile Road and Pleasant View.

This piece was obtain at a price of $50 per Animal Unit Month (AUM) and a total of 5

AUM’s available on the 16 total acres. The North portion of the property located north of

Pleasant View road had been grazed very hard for the past ten years by the previous lessee

as seen in figure 3.8. The range condition of the property upon our taking over the lease

was poor. The previous lessee protested the bid and both parties took part in a hearing for

the winning lease agreement. Several pictures were taken of the property in March of 2005.

These pictures with our testimony allowed the business to obtain the lease and pasture

rights. As part of the agreement, the parcel was left idle for 2005, with no domestic grazing

pressure. We replaced the fence and grazed the property in late fall of 2006 with a light

grazing after all the plants had gone to seed and went dormant. At current time we have

several stands of cheat grass still to reclaim and a small stand of Canadian Thistle to

manage. The tall grass species are starting to come back in and regain a mixed grass prairie

plant community. The range condition as of July 4, 2007 was at a high good or low

excellent. The condition is moving to climax and making great strides this is evident in

figure 3.9. The South portion of the property has never been fenced. Since this has not

been done, several hill climb roads have been run into the property. We have posted the

property as public land without ATV or motorized vehicle access. Several individuals have

since been prosecuted and charged for hill climbing. Figure 3.10 shows the current

condition of the parcel. One hill has a large population of creeping juniper. The roads are

posing a serious erosion risk and concern. We are going to fence this parcel summer of

2008, and will then be able to use it for pasture. There is no water source on this parcel, so

water must be hauled for stock.

Figure 3.8 Picture of Range Condition of State Lease Spring 2005

Figure 3.9 Picture of Range Condition Improvement of State Lease 2007

Figure 3.10 Picture of Range Condition/ Soil Damage of State Lease 2007

We have put in use a grazing rotation that allows for the pastures that are in the

worst conditions to rest till fall or late summer when the grasses are dormant or can better

handle the pressures of grazing. One good thing that having the cheat grass pasture and the

crested wheat pasture has done, is allowed for early spring grazing and for the later use of

the two overgrazed pastures. The two small pastures around the corrals and barn are great

for turnout for corralled horses or for a weekend of feed when we are heading to a show.

The range condition of the pasture at the time of purchase was poor. The species complex

was short grass prairie. The pasture was so far from climax (optimal range condition) that

prickly pear was taking over portions of the pasture. With the grazing intensity changed

and the time of year of use we have gotten the condition to improve to a low to middle

good. The prickly pare is declining in population as well as the increaser plant population

(plants the increase in population as grazing pressure increases). The decreasers (plants that

decrease as grazing pressure increases) are improving in number and the tall grass species

for the first time in 2007 are coming back with sweet clover and alfalfa. The pasture is in

need of some weed control on the flood plane of the creek. Wild Licorice is growing. Do to

the nature of the riparian area of the creek; we are pulling the plants each summer. This has

helped control the population and eliminated the issue of burs in the horses’ manes, tails

and legs. We have one patch of Leafy Spurge that we are spot spraying to keep from

having contamination in the creek. It is slow to take care of do to the chemical restrictions

on the riparian area. We have not seen a large increase or spread in the Leafy Spurge

population. This means that we are at least keeping control of the problem. We have some

Wavy Leaf Thistle that we are controlling and some Burdock. Again, both weeds are in the

creek bottom and we are pulling the weeds as method of control. In 2007 we have not seen

any of the Burdock. In this pasture, we have several areas where there is some erosion in

the creek bank. We have planted several trees along the bank to hold the soil. Several

Cotton Wood and Russian Olive trees are now three to four foot tall and growing well. Not

only will they help the bank, but they will help provide healthy habitat for wildlife and

pheasants. Trees and shrubs are protected with fencing and time of grazing to keep them

from being rubbed on or eaten. Trees are important in holding the soil, as well as providing

habitat and shade. They help hold soil moisture and add eye appeal to the property.

Figure 3.11 Picture of Range Condition of Large Pasture Home Place When Purchased in 2003

Figure 3.12 Picture of Range Condition of Large Pasture Home Place Spring 2005

Figure 3.13 Picture of Range Condition of Large Pasture Home Place Summer 2007

Figure 3.14 Picture of Range Condition of Large Pasture Home Place Spring 2005 and Water Resources of Seven Mile Creek.

Figure 3.15 Picture of Range Condition of Large Pasture Home Place Summer 2007 and Water Resources of Seven Mile Creek.

Beyond basic cleanup and range monitoring, the property has issues with manure

management and cleanup. A thousand pound horse is said to produce 50 pounds of waste

materials. This does not include the bedding waste generated from stalled animals. About

one fifth of what the horse eats is passed as manure through the digestive tract and a ton of

fresh horse manure will have the equivalent value of 100 lb of 14-4-14 nitrogen,

phosphorous, potash fertilizer (Hill (2005)). Even if not used as fertilizer, there is the issue

of disposal, smell, bug breeding grounds, parasite infestation or water contamination.

With the dry lot, stallion corral and four runs there is a lot of piled and concentrated

manure, most of which must be composted, given away or hauled away to the dump for

disposal. The latter of which is very expensive, as we pay $0.04 a pound. We have a pit that

is located in the back of the dry lot. When possible, we give away manure compost to local

individuals. In 2006, several dump truck loads were donated to the Dawson County

Detention Center for the use of an inmate garden project.

We have made sure that the manure pit has no run off. With compost there is little

nitrogen and phosphorous contamination as the nutrients are released slowly and thus

eliminates the chances of environmental pollution. Additionally, the odor is limited and the

chances of parasites or insects are eliminated with the heat of a properly composted pile.

Our pit meets the feet requirement from water sources of at least 150 feet. The pit is some

distance from our water hydrant, so watering is done with some effort and four hundred

feet of hose. We do need to invest in a concrete floor. For now we have a well drained

sight with a good gravel base. The piles are turned twice a year to allow for maximum air

flow and heat. A temperature of 100 to 150 degrees is optimal for composting and is tested

weekly with a meat thermometer. With the number of horses we have on the property, a

three bin compost bin is needed. We do not have dividers, but do have three piles with in

the pit that is dug into the hillside.

On the pastures, each one is harrowed in the fall to allow for the manure to be

broken up and put back into the soil. When needed, the pastures will be harrowed in early

spring. No horse is allowed to be turned out into pasture unless they are wormed and

properly maintained to keep from spreading to other horses.

Figure 3.16 Picture of Manure Compost Pit

Parasite and insect control are problems with any small acreage horse facility.

Horses are wormed on a rotational system every two months. Horses that come in from

other facilities are quarantined for two weeks to a month. They are wormed upon entering

the facility to ensure that once out on pasture they will be parasite free. Our manure

management program also helps us. Pens are cleaned and sanitized after each horse has left

a pen or stall. Careful attention is given to horse health and well being.

Flys are trapped and commercial sprays are also used to control the population. The

business is seriously looking at implementing the biological use of “Fly Predators.” They

are small stingless wasps that lay eggs in the pupae. With the implementation of the Fly

Predators you have to be careful of any insecticide use. When needed the horses are

protected with fly masks and sheets to keep them from having severe insect infestations.

West Nile continues to be one of the largest problems in the US for horses and

humans alike. The disease is spread by mosquitoes along with several other equine diseases

(Eastern, Western and Venezuelan Equine Encephalomyelitis and Equine Infectious

Anemia). We can vaccinate for all the diseases listed except for the Equine Infectious

Anemia. Mosquito Larvae can hatch in four days of standing water. To prevent the

mosquito population from getting too far out of control, we take several measures as

suggested by Cherry Hill in her book “Keeping Horses on Small Acreages”:

1) Clean up any garbage, old tires or old containers that my hold rain water and

runoff.

2) Fill in or drain all low spots that hold water and moisture.

3) Keep all facets and hydrants from leaking and in good repair.

4) Keep all grass mowed and shrubs and trees pruned to eliminate a place for adult

mosquitoes to find refuge.

5) Keep as few of lights as possible on to eliminate the draw of mosquitoes to the

barn yard.

6) All water troughs are cleaned, filled and drained at least once a week.

7) County spray crew sprays the creek bottom once a month.

The rodent and rabbit population is large. They cause damage to feed, buildings and

equipment. Regular mouse poison and traps are utilized for the rat and mice control. The

addition of two Australian Shepherd dogs has helped with the rabbit population and has

eliminated the need of a 22 rifle and the dangers that come with it. Other than the rabbit

and mouse problem the business is lucky enough to have no further wild animal issues.

There have been neighbors with skunk and coyote problems. The property is frequented

often by deer and pheasants. The creek houses minnows and toads. The wildlife population

is encouraged and use of the pastures is scheduled around the idea of allowing for a co

inhabitant with the horses and wildlife.

Do to the soil type present around our property, we have issues with mud and

disturbance of the ground. When we get rain storms, spring thaws or run off that creates

mud we lot the horses to eliminate the hoof action, slipping and sliding that damages the

ground and plant population. Extra hay and feed are purchased for these storms or the hit

and miss days where turn out is not possible. By keeping the top soil from being torn apart

we can eliminate the chance of erosion. Furthermore, we are then able to pick and clean the

horses’ feet and in the case of the shires keep their feathers clean to eliminate foot

problems, foot deterioration and scratches.

The business does not have to deal a lot with hazardous materials. We have some

fly spray, insecticides, pesticides and fertilizers on the property. All Montana guidelines for

hazardous materials are followed as outlined in the pesticide license regulations. Brett has

hazmat training through the law enforcement training and I have the Montana Pesticide

Training License. We make sure that all materials are handled in accordance of the labels,

stored in sealed original containers, and secure to avoid environmental or human

contamination.

A large concern in the business is with disease and health management. Although

the property has never had a break out of any equine disease, we have a higher risk with the

number of horses and clients that come and go on the property and with the breeding of

outside horses to our stallion. Horses are quarantined upon arrival and not allowed to mix

with other horses on the property. They are put through our vaccination, parasite and health

care program. Only then are they introduced to the herd while some may remain in their

designated pen. The health program will be expanded in our production plan.

Each horse that comes in to be bred to our stallion must have a uterine culture.

Additionally, like every horse that comes to our facility, they also must have all the

necessary health care to meet the same standards of our home herd. They must have a

health certificate and current coggins test. If they do not comply with these guidelines then

services are denied. For horses that travel to shows or off our property, we make sure that

there is no sharing of feed tubs or buckets. Stalls are disinfected prior to bedding down and

the horses being placed in them. As a rule of thumb, brushes, bits, blankets, sheets, hood,

cinches, pads and equipment are not shared or moved from horse to horse. All equipment

gets a yearly to monthly disinfectant bath when needed for disease prevention.

Finally, we have the issue of carcass disposal of horses that are put down or die. We

have several options for disposal in Dawson County. The first is with the city landfill.

They take dead horses and animals, which are buried as soon as they are taken in. The cost

for this service is by the pound at $0.0225. A 2000 pound draft would cost $45 to dispose

of. Second, we can bury the horse on our own property. We have to make sure they are at

least eight feet deep, not in the flood plain and a minimum of 150 feet from the water way.

The disadvantage to this is the issue of having to hire a back hoe to come in and dig the

hole. The going rate at this time is $85 per hour and mileage. Finally, we have access to a

local rancher and his disposal pit. The cost for this service is the cost of fuel, for 60 miles to

the property.

3.4.7 Production Scheduling Plan

The largest portion of our production plan is the herd health plan that we have in

place for horses. This yearly schedule can be seen in Table 3.8. We are very specific in our

timing and administration of our health program, as well as our feed and maintenance of

the property. We have a set daily, weekly, and yearly routine that we follow in the horses’

and property care. Table 3.5 outlines the daily routines that we use. Table 3.6 outlines tasks

done on a weekly basis and Table 3.7 outlines the seasonal jobs that are done in the

operation. Things do come up once in a while but it is the general overview of the tasks

done in the business on a daily, weekly and yearly basis.

The resources that have historically been in short supply are pasture and grass. The

largest reason for this has been the drought and range condition of the property from the

overgrazing that took place prior to our purchase of the property and the lease of the state

acreage. So we are often short pasture for fall grazing. Also, additions to the herd of horses

put strain on the pasture and that limits the amount of grazing. Grazing plans and

management have allowed us to get more out of our pastures in the recent years. Rotations

and the use of short periods of grazing each day rather than 24 hour grazing with the use of

supplemental feed of grain and hay, has allowed us to stretch and better manage the grass.

The past two springs have been very wet and helped develop better stands of grass. This,

along with our management has continued to increase the range conditions and capacity of

the pastures.

We have not utilized the water in the reservoir to its full capacity. We have the

pump and just need to set up the sprinkler system to apply the water to the pastures or even

the shelter belt. With all the run off that is captured each spring the water could be used to

reclaim the pasture of cheat grass into a more useable and higher yielding stand of grass.

With work schedules and a new baby we, have not taken the time to better utilize this

resource. In the long run, if used, it would significantly help the pasture and grazing of the

property. A plan needs to be developed for this fall and spring to better use this resource.

At this time the barn and corrals are another resource that is not well used. Since the

only holding area for the stallion at this time is the corral, we are unable to use the stalls for

other horses as the stallion can get up to the stall gates and cause problems with the horses

that are in them. Additionally, with the use of one stall for the tractor and cart storage we

are not making good use of the facility. The upgrades planned to the corral and barn, the

planned machine shed as well as the addition of a stallion paddock would help solve this

problem. Time and money have been the largest constraints to these projects.

Table 3.5 Production Scheduling Plan-Daily Routine Morning Mid Day (Summer-

Days off from full time

job)

Evening

Visual exam- check for illness and injury

Feed Hay and Grain

Clean Stalls and Pens- Where needed

Check Water- Fill/ Clean if needed

Hands- on Check of horses if

Exercise horses

Training of horses

Work on Publications/ DVDs

Return calls to customers

Schedule Lessons and Judging

Feed Hay/ Grain

Clean Stalls and Pens- Where Needed

Check Water- Fill/ Clean if needed

Visual exam- check for illness and injury

Blankets in winter

needed

Turn out or bring Horses in if Needed

Apply Fly Spray or Protection in buggy season

Blankets in winter

Breed Mares (Spring)

Teach Lessons

Teach lessons

Make Farrier and Vet Arrangements as needed.

Books and Accounting as needed.

Correspondence and promotion of the business.

Bring Horses in or out.

Late check for mares or sick horses.

Breed Mares (Spring)

Teach Lessons

Table 3.6 Production Scheduling Plan-Weekly Routine Weekly Routines

Restock Grain and Hay Supplies (15 min to fill bins)

Check Bedding Supplies (5 min)

Mow and maintain lawns, shelter belts and gardens. (4 Hours)

Scrub Feed buckets and water tanks (1 Hour)

Strip any stalls being used (varies)

Prepare for up coming weekly scheduled events or services: Shows, Lessons, Clinics or vet work. (1 hour)

Check and restock veterinary, barn and miscellaneous supplies. (30 min)

Check and Repair Fences as needed. (30 min- fixing time varies)

Total Weekly Time: 5.5 hours

Table 3.7 Production Scheduling Plan-Seasonal Tasks Spring Summer Fall Winter

10 Hours/Week 40-60 Hours/Week 10 Hours/ Week 5-10 Hours/Week

Spread Manure.

Keep Horses off Pastures.

Spray Early Weeds.

Check for ticks and manage accordingly.

Get out shedding Equipment.

Get fly control gear ready and clean.

Wash, repair and store winter blankets.

Tune up tractor and mowing equipment.

Make arrangement for routine vet, farrier and health care.

Look at calendar and get plan for judging, wagon services and clinics.

Contact clients for riding lessons.

Update Web Sight.

Foal Mares.

Breed Mares.

Advertise Foals for

Monitor pasture till it reaches turn out height of 4-6 inches tall.

Set out salt and mineral in pastures.

Check and ready water sources for pasture.

Assign fly sheets and masks to horses.

Introduce horses gradually to pasture- lot them when not grazing.

Mow weeds and pull burs.

Repair facilities and fences.

Purchase Yearly Hay Supply.

Ride, Train, Wagon Services, Lessons.

Judge Shows.

Present Riding Clinics.

Gather pictures and Video for Publications and DVDs.

Remove horses off of pastures- Leave half/ take half.

Harrow manure.

Remove bot eggs off of horses.

Allow horses to gain 5% in body condition for winter.

Wash, repair, and store fly sheets- assign winter blankets if needed.

Winterize tractor and mowing equipment.

Ready winter equipment for snow removal and feeding.

Winterize any water lines that will not be used.

Get tank heaters ready and in water tanks.

Install snow fence and drift protection where needed.

Work on publications and DVDs.

Update Web Sight.

Make plans for winter hoof care and maintenance.

Monitor winter water intake.

Keep feeding areas clean and free of old feed and manure.

Clean and repair tack.

Advertise stallion and breedings.

Book and finalize breeding schedule for spring.

Clean Barn

Ready Taxes and next year’s budget.

sale- take deposits and ship in fall.

Promote and order Vellus for the new show season.

Clean and organize Trailer.

Clean and organize barn.

Update Web Sight.

Take personal riding lessons.

Monitor condition of horses and feed program.

Monitor pastures and trees for over grazing and damage.

Ready fall and winter blankets.

Finish Breeding Mares.

Advertise Foals for sale- take deposits and ship in fall.

Sell any yearlings that did not sell the season before.

Breed promotions.

Horse Shows.

Clean and organize Trailer.

Clean and organize barn.

Wean and ship foals to new owners.

Clean and organize Trailer.

Clean and organize barn.

• Hours are estimates based on average daily tasks and seasonal conditions.

Table 3.8 Production Scheduling Plan-Horse Management Month Feed Vet/ Farrier Exercise Grooming Other

January Increase hay as needed – 10% per 10 degrees below freezing.

Farrier Appointment

Out during the day- in at night.

Clean Hooves daily all year.

Turn Compost as needed yearly.

Clean Pens and Manure as needed.

February Increase hay as needed – 10% per 10 degrees below freezing.

Deworm Out during the day- in at night.

Clean Pens and Manure as needed.

March Increase hay as needed – 10% per 10 degrees below freezing.

Farrier- watch moisture levels on feet.

Out during the day- in at night.

Shedding- fitting for show season.

Clean Pens and Manure as needed.

April Increase Grain as work increases.

Float Teeth

Deworm

Vaccinate- Flu, Rhino, Tetnus, WEE, EEE, Strangles

Flu/ Rhino Booster- 5,7,9 Months gestation for Bred Mares

Out during the day- in at night.

Check for ticks – medicate as needed.

Spread Manure

Clean Pens and Manure as needed.

May Adjust Feed intake

Farrier Out during the day- in at

Clean Sheaths and

Clean Pens and Manure

according to work and pasture needs.

West Nile Vaccine

night. Udders as needed.

June Begin Grazing- rotate pasture as needed.

Deworm- including bots and taper worm as needed.

Out at night Buy Yearly Hay Supply

Clean Pens and Manure as needed.

July Monitor Grazing

Farrier

Remove bot eggs.

Out at night Clean Pens and Manure as needed.

August Monitor Grazing

Deworm

Remove Bot Eggs

Out at night Clean Pens and Manure as needed.

September Organize winter water plan

Farrier

West Nile, Flu, Rhino Boosters as needed.

Remove bot eggs.

Out during the day- in at night.

Clean Pens and Manure as needed.

October Decrease Grain as work is decreased

Deworm- Including bots.

Out during the day- in at night.

Winter care; body or trace clip.

Clean Pens and Manure as needed.

November Increase hay as needed – 10% per 10 degrees below freezing.

Out during the day- in at night.

Blanket if working through winter or showing.

Spread Manure

Clean Pens and Manure as needed.

December Increase hay as needed – 10% per 10 degrees below freezing.

Deworming Out during the day- in at night.

The business continues to grow and increase in production. As we grow and

improve facilities it will be easier to increase the volume of business. Table 3.9 shows the

current and projected volumes of goods and services sold for the business. The bulk of the

income will come from the increase in horse sales and breeding services sold. This table is

drawn up from what we would like to see from the business. It may be subject to change

based on the information found in this planning process.

This level of production can be attained. With Brett and I working and utilizing

some lesson students for chores and stall cleaning, we can attain this level of production

from the service side. The breeding services and horse sales will depend largely on our

ability to market and get facilities to manage the shipping of semen. DVD’s and

publications can be worked on in the evenings, holidays from school, weekends and colder

months when the outside work of the business is less demanding. Each year we make a

calendar of events from which we schedule all our services. Weeks and weekends fill on a

first come first serve basis. We could give more lessons by adding group lessons at a

discounted rate to our clients. After looking at the finances and completed business plan we

found that our services side of the business is very solid and stands to handle the most

growth. We have added a column to table 3.9 to show the changes that will be made based

on the data given to us from this planning process.

Table 3.9 Current and Projected Volumes of Goods and Services Produced. Good/ Service Current Volume Projected Volume

Prior to Business Planning

Projected Volume After Business Planning

Horse Sales 1 horse per year 4 per year 1 to 2 Foals Minimum of $1,500.00 (Breakeven)

Stallion Services

0 Per Year 10 Per Year 5 Per year

Lessons 5 per month (3 months of Summer)

15 per month (3 months of Summer)

25 per month (3 months of Summer)

Clinics 8 Donated to 4-H 1 Paid

8 Donated to 4-H 2 Paid

Wagon Services

2 Donated Per Year 2 Paid Per Year

5 Paid Per year 10 Paid Per Year

Publications 3 Printed materials 3 DVD Productions (per year)

10 Printed Materials 10 DVD Productions (per year)

Vellus Grooming Products

20 Products (per year)

150 Products (per year)

Judging 7 Shows (per year)

15 Shows (per year)

20 Shows (per year)

Horse Camps 0 2 -four students each for 3 days. (per year)

2 -four students each for 3 days.

Boarding 1 Fulltime 3 Fulltime 5 Fulltime with Current facilities- Up to 10 Fulltime with upgrades planned

3.4.8 Production Risk Management Plan

Currently in place are several nice methods to help hedge the risk of the horse

business. We have chosen several insurance options to help with liability and loss of

horses. However, while this insurance may protect against the financial loss, it will not

protect against the emotional and mental stresses of loss.

We carry equine mortality insurance on some of the horses. Any horse that has been

sold, has a deposit paid or is owned by another individual, is required to have an equine

mortality insurance policy. If the horse is partially owned by us, we then have the pay out

of the policy pay the parties based on a percentage of ownership at the time of incident.

Policy amount is for the value of the horse in the event of death or theft. The value of the

horse is based on many factors. You can have an equine appraisal done. In the case of

horses just purchased, values are based on the sale price of the animal. As time goes on, the

value of the horse may go up as the horse receives more training, wins in the show ring,

their foals become winners, is bred to a high dollar stallion or the market/ appraised value

goes up. Most policies under $10,000 do not require a veterinary inspection unless the

breed or activity of the horse is of high risk. At that time, a veterinary inspection is needed

to determine the horse is in proper health and care. The premium paid is based on a

percentage of the insured value (usually from 3 to 5%). Currently we only have one horse

insured on the property and that is our stallion. He is at 4.2% of $6500 and the premium is

around $270.00. As a rider on these policies, you get $1,500.00 towards colic surgery if

needed for the survival of the animal. In the event that you have a serious injury to the

horse or situation that requires you to collect on the insurance, you must notify the

company by a certain time. The vet must supply a necropsy report and death letter of the

incident. In the case of a theft a case report by the authorities is sent before settlement is

given.

To insure that we do not have to use our equine mortality policies, we are practicing

safe and efficient husbandry practices. As seen in our monthly schedule we feed, vaccinate

and worm our horses according to their needs and performance. Medical procedures are

done and scheduled faithfully. Dental work and foot work are performed on a regular basis.

The business has had liability insurance for the past five years through the

insurance provided as a 4-H Leader in state. This insurance has worked well for us as we

have not worked with any clients that were not members of 4-H. With the lesson and clinic

business growing and the breeding side being developed we are in need of a commercial

policy. We are looking into insurance through Northwest Insurance for riding lessons,

training, product sales, breeding and care and custody. With our certification with the

ARIC we get a 10% discount on coverage. The premium paid is $800 annually for the

services. The commercial policy covers $300,000 per occurrence with a $900,000

aggregate. The care and custody policy covers up to $5000 per horse with an aggregate of

$25,000. The big bonus to this policy is that the Insurance Company supplies any needed

lawyer in case of litigation that may take place or claim brought against the business.

Our property and buildings are covered by our homeowner’s policy. We pay $1000

annually for personal property and dwelling coverage. The policy is paid to State Farm

through our escrow on the property mortgage. With each addition of buildings or

maintenance we inform the company and change the policy values accordingly. As the

assets stored in the buildings increases we increase the personal property amount of

coverage and take pictures and document all assets and objects.

Every year an estimated 40,000 horses are missing or stolen in the United States

(Hill (2005)). With this one of the biggest concerns is being able to identify and prove

ownership of the horses. Horse identification is handled on our property with brand

inspections, registration papers, health and coggins papers and pictures. Owners are

required to provide a copy of all identifying paper work and proof of ownership before

horses are allowed on the property. Then pictures are taken from the front, rear and both

sides. These documents are stored in the customer’s file in the main office. For our own

horses we provide a three ring note book. This book has all health records, brand papers,

registration papers and photos of the horses. We take close up photos of any scars or

brands. The business owns two brands that are located on the left shoulder. The first is a

Bar LK and the other is a Reverse BR Quarter Circle. Both brands are registered with the

State Brand office in Helena, Montana. We also own the beef brand positions as well. We

are in the process of getting freeze irons built to brand our slick nonbranded horses. Only

one horse on the property at this time caries our brand. Two carry the brand of previous

owners and the thoroughbred mare has a track lip tattoo. Each horse on the property does

have a lifetime brand inspection and that is recorded in the business name.

On the property we practice the following precautions adopted from Cherry Hill

and her guide on horse keeping to maintain a safe and secure facility:

1) Keep and maintain a secure perimeter fence to ensure that all horses are safe from

the highway. Gates are left closed even when horses are not in the pens or pastures.

This keeps out unwanted guests and keeps loose horses from getting out or in areas

they are not wanted.

2) All tools and equipment have their own place and are put away after every use.

Barns are kept clean and neat to prevent tripping and injury to people and horses.

3) Any broken boards, fence or protruding nails are fixed immediately. Fence checks

are done weekly and first thing each spring after winter snow.

4) When giving lessons, handling horses, or people on the property, the dogs are

kenneled and kept away from the situation. They are taught to respect the horses

and not bark at the horses. Dogs are trained to alert us to other dogs or strangers that

are on the property. When asked to “Hush” they are quiet and no threat.

5) “No Trespassing” signs are posted around the property- at the gate we are going to

put in a sign that asks all visitors to check in with management.

6) Horses are never turned out in halters and only tied with halters.

7) We are working on adding lights to our pens and stalls. At this time we have two

yard lights. One is on all the time with a light sensor. The other is on a switch in the

barn yard. There are lights in the tack barn and main stall barn of the corral. The

new runs and loafing shed are in need of electricity for tank heaters, pen and stall

lights.

8) The tack room and trailer are locked at all times to ensure no theft of equipment or

assets. We make weekly checks of all equipment to know what is available and

what is missing. We are in the process of taking pictures of all inventories and

saving those on CD for insurance purposes.

9) Current information is kept on each horse and in an accessible file for when needed.

All documents are in the process of being scanned and burned to a CD. The

business is in the process of purchasing a gun safe with a documents compartment

to store all weapons and important papers. The safe will be fire proof and locked at

all times.

3.4.9 Organization and Legal Structure

At this time the organizational structure of the management is the “people oriented”

management structure. There is myself and my husband. We talk and discuss all business

decisions together. I foresee a more “hybrid” structure in the future, if we gain additional

stakeholders. Stakeholder input will be important, but the hierarchy still has some top down

control for major management and marketing decisions.

The business from the beginning has been set up as a sole proprietorship. This

allows for easy development of the business and easy tax reporting. Many equine

businesses are listed as Limited Liability Companies due to the amount of liability in

equine activities. We have considered looking into this option and have not pursued it at

this time. Additionally, the business has filed a Homestead Claim with the county through

our attorney that protects our home and assets in case of a liability claim. This was done for

the business and for the nature of our off farm jobs to protect the business as well as

ourselves.

With the issue of liability Montana has set forth in Code a law that states that a

person knowingly involved in an equine activity acknowledges the chance of risk and

injury. They may not hold an equine professional liable for injury unless negligence can be

proven.

There are no zoning requirements or restrictions on our property. The only

regulations to be followed are those on the creek and ground water for water quality. The

well, reservoir and stock water on the creek are filed in Glasgow, Montana with the

Department of Natural Resources and Conservation.

The business has taken the opportunity to draw several contracts and waivers of

liability for the business. The first set of contracts to be drawn up for the business was for

breeding. All these contracts are filled accordingly and saved for ten years. They are

documentation of services rendered and the binding agreements associated with those

services. In the list below is a short description of the contracts and their use in our

business:

1) Live cover and shipped semen contract. They set forth all health, financial

requirements as well as a waiver of liability. The contracts enable us to claim and

process lack of payment with additional interest or collection of the resulting foal.

These contracts ensure us and the customer the best chance of a sound foal and

business relationship.

2) Boarding –Custody and Control Contract. This eight page contract sets forth all

guidelines and parameters of boarding at our facility. Additionally, the contract

gives us the needed information to properly feed and care for the horses while they

are in our care. We know who can and can not handle or haul the horse on or off the

farm. There is a waiver of liability that accompanies the contract for use of farm

facilities.

3) Brood Mare Lease Agreement. To eliminate costs and horses that are not needed in

the breeding program, or to add a mare to our program on a lease, it is necessary to

provide a contract for the guidelines of the lease.

4) Cash Purchase, Cash Purchase Subject to Vet Exam, Sale of Horse with Deposit

and Payments Agreement. These contracts are set forth to help in the sale of horses.

They fit the needs of payments, possession dates, vet exams, responsible parties as

and non refundable deposits.

5) Full Time & Part Time Lease Agreement. In some cases we have horses that can be

leased to our students. When this occurs, we have contracts that set forth the

guidelines and rules of the lease agreement.

6) Equine Release and Waiver of Liability. This contract was drawn up to use as our

waiver for lessons and wagon services. This waiver in conjunction with Mont. Code

Anno., § 27-1-725 (1993) is our safety net with our insurance.

7) Order Sheet, Sales Receipt and Invoices. These are used to document sales and

moneys as they exchange hands. Aids in billing and keeping customers up to date

on bills and expenses.

3.4.10 Human Resource Inventory Plan and Human Resource Risk Management Plan

The labor force used to keep and maintain the business so far has been my husband

and I. We work and repair the property, horses, and all other business ventures. I teach the

lessons and clinics and do all the judging. I produce all the video and publications for print.

Brett, my husband, assists in chores, training, shoeing, fencing and property maintenance.

When time allows I help with all outside duties and maintenance. I assist with breeding of

mares while my husband handles the stallion. All breeding is live cover with aspirations to

grow into shipped semen. We performed all the foot work and care on the horses until

2006, when time and money allowed us to hire all foot care done by a professional farrier.

All vet care is done under the supervision of a certified veterinarian.

A certain set of skills and education is required for each operation on the property.

In the future, employees will be hired based on the duties they will perform and the skills

they have that will allow them to perform those duties. Certain jobs on the property will

require that employees will be certified or college training with references. Table 3.9

details the jobs needed in the business, duties and skills required. The final column gives

the source of labor and person at this time that is performing those duties. For detailed

maps of the duties and how they are broken down within the business year refer to section

3.4.6 and the tables within that section.

Table 3.10 Human Resources and Business Needs

Job Category Duties Skills Current Source

of Labor

Management Process contracts and orders;

Hake schedule for judging, lessons, clinics and publications/ DVD’s;

Handle Vellus Sales; order supplies and materials;

Set work schedules and tasks;

Plan and manage weekly, daily and seasonal tasks;

Organize activities;

Double Check and keep track of production.

Manage employees and their duties.

Keeps business moving to meet the goals, objectives, mission and vision of the business plan.

Small Business Management, Marketing, Scheduling-Humane Resource Management, Book Keeping. Business Planning.

Leanne Hoagland- AS Agriculture; BS Ag Education; Masters of Agri Business

Breeding Handle Stallion;

Clean and prepare mares;

Animal Husbandry and Breeding

Brett Hoagland- BS Biology MT Law Enforcement

Tease Mares;

Train Stallion to Breeding procedures

Decide on mating options for production.

Leanne Hoagland- AS Agriculture; BS Ag Education; Masters of Agri Business

Animal Husbandry Clean stalls, pens;

Bed stalls and pens;

Feed and water;

Basic vet care;

Check horses;

Monitor pasture and manure management.

Animal Husbandry Brett Hoagland- BS Biology MT Law Enforcement

Leanne Hoagland- AS Agriculture; BS Ag Education; Masters of Agri Business

Hired Help- Lesson Students in trade.

Training; Lessons, Clinics and Judging

Train horses and ponies for riding, driving.

Knowledge in horsemanship and equitation.

Knowledge in horse show and breed rules and standards.

Equine Studies and Training

Humane relations and Public Relations.

Leanne Hoagland- AS Agriculture; BS Ag Education; Masters of Agri Business

Maintenance Fences,

Feed Hauling;

Pasture cleanup;

Brett Hoagland- BS Biology MT Law Enforcement

Leanne

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Manure hauling and management;

Clean barns, tack, blankets;

Weed control and brush management;

Work arena;

Yard and garden maintenance;

Keep equipment in working order.

Hoagland- AS Agriculture; BS Ag Education; Masters of Agri Business

Hired Help- Lesson Students in trade.

Farrier Foot Care and Maintenance;

Trimming; Shoeing and corrective work.

Experienced in corrective, Draft and light Horse shoeing procedures.

Barry Bolhman-

Certified Farrier- Draft, light horse and gaited horses.

Veterinarian Advanced Veterinary Care and Procedures-

Ship Semen, Surgery, Dental Care, Severe Colic and Injury, Ultra Sound.

Board Approved Equine Veterinarian

Cara Voss DMV- Dawson County Vet Clinic

Loren Appel DMV- A&K Vet

Web Page, Publication and DVD Production Specialist

Make, print and produce all publications for customers.

Produce and put together all video for DVD’s

Keep and maintain internet sight and ads.

Computer and graphic arts skills.

Video and photo editing.

Web design and internet.

Leanne Hoagland- AS Agriculture; BS Ag Education; Masters of Agri Business

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Security Monitor Security of the property and Assets

Fire plans and evacuations-

Theft and Investigative needs

Law Enforcement Brett Hoagland- BS Biology MT Law Enforcement

The equine business in Montana is very seasonal without the use of indoor riding

facilities. From August to the middle of May, I work at Dawson Community College as an

instructor and Program Director in Agriculture. This time for the business is the slowest.

We are just maintaining the horses and facilities. Once school is out, breeding and outdoor

activities begin. Summer months give me an excellent time for the active portion of the

business, which is: the lessons, clinics, judging and training of horses. First activities every

day of the year are morning chores before work in the off months and lessons or other

business in the summer. Every evening after work or summer business is feeding time. This

is about one hour each morning and evening and includes all the checks, turn out, water

and feeding of the horses. Weekends from September to May are for production of

publications and DVD’s, as well as maintenance of the property, equipment and cleaning of

facilities, horses and tack. Time for these projects vary and depend on the amount of help

and supplies needed. We make a “to do” list each year and cross things off as we get them

done. Each horse or lesson takes about 30 minutes to two hours. This time varies depending

on issues and circumstances at the given time. We only schedule two lessons per day and

three horses to work. This allows for chores, breeding, publications or office work, around

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the typical household activities which take an average 12 hours per week. In the summer

every other weekend is taken for horse shows and promotion of the horse business.

In the off season, about 2 to 6 hours a day are given to the business. This time may

change when mares come in for early breeding or we have a DVD or publication to put

together. Summer hours for the business can go from 2 to 14 hours a day for production

and products.

The workforce at this time seems to be quite adequate. We have two lesson students

that help with many chores as payment for their lessons. Though we have to be careful with

the type of projects they work on, they are very helpful. They have a great sense of work

ethic and know that the incentive is to learn more about horses and responsibility. In the

end, they get the knowledge from their lessons. Both girls are 16 yrs of age and will be

driving to work next summer. This year (2007) we have been helping transport them for

work and lessons.

The bulk of the work is performed by me and my husband. We do all the planning,

marketing, maintenance and production of the business. We have outside people contracted

for Veterinary and Foot care of the horses. I do all the marketing and public relations for

the business. All email and calls are answered by me. I am the book keeper and main

source of leadership in the business. Brett is the problem solver does the majority o the

maintenance. We do get some help from time to time in building project from family and

neighbors. With Brett’s training in law enforcement, all legal issues and security are run

through him. His background in biology is a great addition to my knowledge in production

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agriculture. The two areas together have allowed us to increase our production and

understanding of the environmental issues. One draw- back to relying on family farm labor

is that we both have full time jobs. We can be spread quite thin at times.

One skill that we lacked in the beginning was the concentrated business knowledge,

which I am gaining through the Master of Agri Business program at Kansas State

University. We are lacking knowledge in shipped semen and artificial insemination. We

have hopes of attending a class from Colorado State University soon. Additionally, we

would like to get the knowledge and certificates to help troubled teens and inmates. We

have been asked by the local detention facility to help put together a private contract horse

program for inmates. The goal is to work with these people and give them a trade and a

chance to work on rehabilitation through equine assisted therapy.

At this time, the labor force that we have is sufficient. If we add horse camps and

the riding program at the prison, we will need to add instructors or farm laborers to our

payroll in order to have time to meet the demands of the horses and all business ventures.

We may even have to consider only producing publications and DVD’s for our own

business and not offering the service to clients. The local work force is great for farm labor.

They have all the skills needed for building, fencing and farming. However, there is a lack

of knowledgeable individuals for the lessons, publications, DVDs, clinics, judging and

wagon services. A person hired for these duties would need to have a lot of training or

come from out of area. The community is having a hard time finding qualified individuals

that have clean driving records, backgrounds and can pass the drug tests. The oilfield can

pay more and is tapping out a lot of the labor force. During the school year, we can make

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use of some college students when needed. Currently, some outside needs are met with

trading services for lessons, by apprenticing with us through work.

3.5 Sales and Marketing Plan

3.5.1 Market Analysis

Big Sky Shires and Equine Services has centered its products, services and breeding

program around a key target market. All our products, and services are targeted to the

equine consumer; the person who is working in or recreating in the equine industry. Some

of our horses are sold to other equine businesses for show horses, breeding or lesson

horses. This is the only part of the business that is traded business to business.

When defining our customer we have segmented by individual products, and

services. This is done to ensure that the product or service is marketed to the best audience

for the most possible business profit. The average consumer of our lessons, clinics, and

wagon services is a person who owns horses, but is looking for a unique equine experience.

They are families with one to four children from 7 to 16 years of age. My current

consumers are Montana natives. They have at least one income from agriculture based

enterprises and one income from town. The income category of my clients at this time is

upper middle class. The education of these consumers is high school to four years of

college. A lot of my clients have little to no equine background. Half are new to horses and

showing. The rest have been around horses for ranch or rodeo and lack the finer points of

horsemanship and showing. The riding levels of my students are beginner to intermediate.

Most wagon services are used for weddings, funerals, family get together events and

community celebrations. There is little repeat business. For the above listed services, our

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customers are all located in a 300 mile area of the farm. The lesson students on average are

located around 75 miles from the home operation. The customers who purchase our stallion

services or our horses for sale are both the customer demographics listed above to the Shire

breeder who is looking to purchase genetics or show horses. They have upper middle

income with a portion of that income coming from their horse enterprise and some from a

professional career. Our breedings and horses have sold from Montana to Canada and

Florida. The judging services are provided to clubs and breeders groups around Montana,

Wyoming, North Dakota and South Dakota. Most of these groups are non- profit. They pay

mileage and day fees. 4-H Fairs and local open shows are the most common event judged.

Small to medium sized towns are the most common venue we judge.

We are able to have up to 15 lesson clients at a time. This takes into account

weekends for horse shows and clinics. Right now we have five lesson students. We can

provide clinics or judge up to twenty events in a summer. This year we scheduled seven. If

we schedule a full summer of events, then we are not able to show and promote our own

horses. We have to find a happy medium in this area to provide the proper a balance to

income and promotion of the business. The Vellus product line could reach a lot more

individuals if it were better promoted. At this time we have 9 individuals using the product.

The business also carries the dealership to help cut costs for a product that we use for our

own horses

The business is hindered by the seasons here in Montana. We ride and show from

May to October. Since the operation does not have an indoor arena, we have to lease time

at the local facility or not ride in the winter months. We also foal later than some other

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breeders since we do not have the facilities to handle all the cold, wet weather of early

spring foaling. This does not affect a lot of our marketing, as January foals are not such a

big issue in the Shire and Sport Horse world unless they want to show them as weanlings.

Most are shown as yearlings or older.

The economy in the horse world is shaky at this time. The issues surrounding the

kill market have caused the horse market to soften. The threat of the closure of equine kill

floors in the US has caused a huge increase in salvage horses on the market and has caused

a drop in the horse market as a whole. Additionally, there are money issues for most

buyers, and sales that include payment plans and lease to own contracts are becoming very

popular. We have many inquiries and sales are going well. However, our distance and cost

of shipping is hindering a lot of our national sales. Shipping of horses from Montana to

other states east and west is very costly since Montana is out of the way on most travel

routes. This has caused us to lose two sales in 2007 alone. The lack of AI and shipped

semen on our stallion is leaving us with fewer stallion services. We must resolve this to

keep up with the trends and technology of the industry.

Since the business is new and in the beginning stages of development, to date we

have concentrated our marketing to the local/ state niche markets, with goals of expanding

and competing on a larger scale in the industry. The largest breeder of Shire horses is in

Nebraska at this time and foals 35 mares each spring compared to our current mare herd of

5 (includes draft and sport horse mares). We have been quite successful in creating a niche

for us. Each year we have sold a horse. Two have gone to international customers in

Canada, one Shire filly to Florida and two Sport Horses in Montana. We have just started

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breeding with our stallion and have had many inquires on him for services, but no bookings

at this time. We have settled three mares to our stallion and will expect one foal on our

property in 2008. As stated before, the biggest draw back for our breeding entity is that we

are not currently shipping semen. With the use of shipped semen we could have booked

two mares in 2006 and four in 2007. This is a major consideration and marketing tool to

resolve for the future.

There are roughly over 150 breeders of shire and shire sport horses in the US. In

Montana there are two shire breeders. I am the only one that is marketing through

advertisement, breed demonstrations, stallion shows, donated wagon services to the

community and internet. The competition to my breeding business is several other shire

breeders. At the local level we do not have anyone that we compete with on the breeding

and horse side of the business. The 50 most active shire and sport horse breeders in the US,

our closest competition is Powell, Wyoming; Canada, and Idaho. The largest of the

breeders at this time is Jenson’s Shires of Nebraska. He has the largest herd of breeding

mares in the US at this time. The other breeders in shire horses are small, much like myself

with 1 to 10 mares. Some do not even have breeding stallions. Most stallion owners breed

20 mares on average each season. This includes personal and outside mares. Many of the

competitors in this business are importing English stock from the breed’s mother country of

England. These horses are registered in both the US and England and are proving to be

sought after by many of the buyers.

Financially, most Shire breeders in the industry do not depend on their businesses

as the sole provider for their living. Many of them are either retired or work other jobs to

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pay many of the household bills. Stallion service fees are from $450.00 to $1,500.00 per

breeding. The weanlings and young stock sell from $2,000.00 to $9,000.00. Broke mares

and stallions are selling in the same price range as the young stock, however, some will sell

as high as $10,000.00.

For the equine services segment of the industry that I participate in, there are a

plethora of businesses that fall in the same category. At the local level there are about 10

other individuals providing the same services in Western Riding. I work in English style of

riding as well. There are three other instructors at this time, but they are over 70 miles

away. With the wagon services, there are about 5 other individuals in the community. It is

tough to get a lot of business in the wagon services as only 2 of the other five businesses

charge for their services. Our business model/ combination of goods and services as a

whole set us apart from many equine businesses in the state. There are, however, multiple

businesses across the US with a similar make up. However, no one equine business is the

same because training, facilities, customers and teaching styles are never identical.

The differences in lesson services from business to business vary. Some of the

variances in the service provided among the businesses include and may not be limited to:

1) providing lesson horses, 2) styles of riding offered, 3) ages and client differences, 4)

credentials (certified, trained with a master instructor or college degree), 5) training and

teaching styles, and 6) boarding facilities and horse services offered. In the area of

Judging, the only difference in my services with others in my competition is if the others

are carded or certified. This also determines if you judge breed shows versus open or 4-H

and if you judge internationally or nationally ranked competition.

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Lessons and judging hourly rates are around $45.00 for private lessons and can

reach as high as $200.00 depending on the lesson and credentials of the instructor. Judges

are hired on a daily rate of $150.00 to $1,500.00 with expenses. Unlike the breeding side of

the equine business, most of the competition in this segment is largely dependent on the

number of instructors and judges in the area and their credentials. A lot of business is

gained or lost on word of mouth and the performance of the students. Many of the

businesses use the lessons as a major source of income.

The map in figure 3.17 ranks several of the leading and most well known Shire

breeders in the US. Tally Ho Shires has a lessons and training services operated in

Colorado along with their breeding operations, which include shires and sport horses.

Northeast Shires handles just Shires in their breeding program. They do also offer a sales

and horse placement services with website design. Jenson’s Shires are only a breeding

operation. Ox Kill Shires offer a breeding program and an internship opportunity for

individuals who are interested in learning and showing the Shire Draft horse. At Big Sky

Shires & Equine Services we sell and breed Shire and Shire Sport horses as well as provide

lessons, clinics, judging, wagon services, publication design, DVD production and Vellus

Equine Products.

Rivals are moving fast, becoming more competitive to gain a larger market share.

Right now the Shire horse is relatively rare in the US. The number of registered horses is

about 2,500. Of these it is estimated that only a third of them are breeding animals. The

competitors are diversifying their businesses and breeding programs. Better horses are

being imported from England and Canada with more athletic ability. The breeders are

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marketing new multi purpose use of their horses while crossing for Sport Horses for the

dressage and jumper markets. The new hobby horseman is enthralled with the large size

and disposition of the Shire and is willing to ride and drive their gentle giant. The new

discipline of use for the Shire horse is the riding venue. They are even adding riding classes

to the draft shows.

Figure 3.17 Strategic Map of Competitors

We are looking to expand our niche by working into the dressage, hunter and

jumper market with the use of the Shire Sport Horse. Currently we have several outfitters

looking at our horses and stallion to cross for trail horses. However, the real money lies

Tally Ho Shires

Big Sky Shires

Ox Kill

Northeast Shires

Jenson’s Shires

Size of Breeding

Operation

High

Low

High Number of Services Low

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with the hunter/ jumper and dressage industries. We also have hopes in looking at the

amateur and youth markets of the horse world. Most rush after the much larger dollar and

chase the open and futurity horses that can bring upwards of $30,000 to hundreds of

thousands of dollars. We are hoping to meet the needs of a sector that often have a hard

time finding the right horse and will pay a decent dollar around $5,000.00 to $15,000.00.

These individuals are usually first time horse owners or riders who are revisiting the area of

ownership. They want the build and movement of the warmblood without the attitude and

energy issues of the warmblood. They want a partner and do not expect the horse to

perform beyond the armature and lower levels. The right Shire Sport Horse will fulfill these

needs. I have expanded my own salability by getting certified with a nationally known

agency (American Riding Instructor’s Association) as well as taking lessons and clinics

from well known and talented riders.

We have made taking a payment easy by using Pay Pal as a payment method for

our stallion fees and services. Our next expansion is to offer shipped cooled semen on our

stallion. This will allow us to ship our horse to other clients over the US and Canada. The

next endeavor is to move to frozen semen. This will allow us to ship and permute our

stallion to a larger international market. When shipping over 36 hours you must be able to

freeze the semen for long term storage. In 2009, Brett is going to Colorado State University

to learn how to do our own on farm Artificial Insemination, stallion collection and semen

processing. This will make us a one stop shop breeding facility and allow our customers to

use us and only us for their breeding needs.

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Our costs for some inputs are lower than most of our rivals while some are higher.

We are able to get pasture and hay much cheaper since Montanan is a state with a large hay

base with multiple acres of range land and state leases available to producers. Land costs

are cheaper as well. One disadvantage to our location is shipping of horses. It is more

expensive to ship from and to Montana than other states as we are not a major through way

for the shipping companies whose major routes are in Colorado. Transportation costs are

affecting items such as certain feeds, tack and health care items. Local feed stores have

higher costs in shipping and offset these by increasing the retail price of the goods. Mail

orders are also becoming more expensive to ship. We are at a disadvantage in the area of

veterinary care. Although our vets are very qualified and up to date on all the new

practices, most do not have the capital to build and maintain the equipment to provide the

higher level services. Other states have better veterinary facilities. Additionally, all the

advertisements, web pages, and other promotional materials are done in house. The

showing expenses of the horses are kept to a minimum as the horses are trained and shown

by the business. Outside trainers are not used for this purpose as they are in many other

businesses.

3.5.2 Market Strategy

The strategy that Big Sky Shires & Equine Services has put in force is working

quite well. The business has laid out a great group of products and services that work well

together. There are however, some issues that need to be addressed. The first is getting the

facilities together in order to ship semen and AI mares on the farm. The addition of an

arena is needed in order to do on farm lessons. The business is currently leasing an arena

for these purposes. The business has yet to put an official small business and marketing

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plan on paper and follow through implementation. The strategy and marketing being used

at this time is fragmented and not well constructed. They are bits and pieces added to fit the

needs of the business as they have arisen.

In Eastern Montana, there is little opportunity for the people to find lessons and

clinics in the art of good solid correct horsemanship. Many people want to get into showing

and riding and have very little formal instruction in correct riding and equine care. Our

business provides that service to not only riders who want to ride and perform, but also

riders who want to ride just for recreation. The area is also short on qualified and affordable

open/ 4-H judges. The business provides this service. My experience in the equine industry

allows our business to tap these areas. The outlook for these services is outstanding at this

time. The potential for growth and prolonged business is solid and well suited for the area.

With the research on importing and exporting horses, semen and embryos, I found

the sources and resources needed to ship my business overseas and to the global market

place. Many of the breeders and people that deal with this market at this time say they get a

broker/ export business or leave it to the purchaser to do the bulk of the work once the sale

of the horse, semen or embryo is done. However, you have to know enough, for example,

with the semen and embryos to make sure that you and your facilities meet the

requirements. The hard part here is the various countries are not all alike. This explains

why most people who are in the global business of horses are picking one or two countries

or regions to market too. The rifle approach is most common for this reason. Breeders

pinpoint the countries in which they want to work with since it is expensive to meet all the

import requirements. The region or market is often hit by chance as the breeder does not

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know that they are going international until that surprise day when some call or buyer steps

on the place. Very few horse people choose to venture outside the domestic market as they

are not looking beyond what they know and often times are able to make the money needed

to survive in this home market. Canada is and will be Big Sky Shires major focus in the

future. We have already exported four horses to buyers in Canada as well as providing

printed flyers for a stallion farm in Saskatchewan.

Some strategic options that are open to the firm are: The business offers a cost

advantage product to the consumer. This is done by the firm implementing use of cheaper,

but effective and adequate inputs in order to broaden the profit margin. So far the business

has done this by finding a creep byproduct feed that meets the same nutritional values as

the expensive commercial feeds. The hay and bedding are bought in large volume and

hauled in by truck load. Veterinary supplies can be ordered through wholesalers at bulk

and discounted rates. All the breeding services could be performed on farm by the business

and the chute fees would be paid to the farm and not to the vet. The foals, services and stud

fees will be held down and the profit margin will be wider. Furthermore, the ability of the

business to upgrade its facilities and property would greatly increase the lesson, breeding

and boarding opportunities. Training and development for me is another strategy that we

are and will be doing more of. Keeping certified in all the new methods and management

for the industry will keep people coming to the business to utilize the services and products

that we provide.

As for our pricing scheme, we have found that as long as we are within the ranges

of the industry, we will continue to get customers who are willing to pay. There are more

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and more people wanting to get into horses, but do not have the knowledge and therefore

seek those that do. Shire horse interest is at an all time high and the breed is being sought

after. The rates in Montana for lessons, judging, products and clinics are much less than

those paid in other venues. However, if the products are promoted and well organized,

clients will stay with providers and keep using the services. The biggest boost to our

breeding will be the introduction of shipped semen and showing and promoting our

stallion’s offspring. This year we are going to price per lesson with a time limit of an hour

and half rather than on time as we have done in the past where the prices were hourly.

Stallion fees are firm and priced to make it worth our time and energy to breed outside

horses. $650.00 is our rate and no discounts are given unless multiple mares are brought to

service. Sale prices of our horses are based on the market for the given type of horse and

the training and breeding of the individual horse. Furthermore, price also reflects the issues

discussed earlier with the shipping costs to the buyer. We sell on average $500.00 to

$1,000.00 less than the east and west coast breeders. This has seemed to help our sales of

horses.

Advertising is helping our business. Word of mouth has been the most popular form

of advertisement. Several of our largest clinic, judging and wagon service contracts have

come from word of mouth this past year (2007). We advertise in the local paper during the

annual Glendive Agri- Trade Exposition (GATE). We participate in the stallion show that

is held with the GATE show each year. In 2007, I was president of the GATE Committee

that puts together the show. This event got me, my business and family in the eye of many

agriculture members of the community. We show in the local horse show circuit and help

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with the local 4-H program by donating time to their weekly clinics. Most of our lesson

clients come to us from these activities. One area that needs improvement is the fact that I

have not been riding a lot lately in the public eye. If I get to riding and showing myself and

not just the horses, I then will market my own skills and stand to gain a lot more clients and

horses in my business. The business needs to look at showing the horses at larger draft

shows starting like the Calgary Stampede and several shows in Idaho and Colorado. This

will begin the promotion or our horses and stallion on a national and international level.

The biggest show to date that I have judged was the Powder River Quarter Horse Breeders

Futurity. A $10,000.00 purse was at stake. Through my performance there, I made a

contact to judge another futurity in the area next summer. Our goal is to sell ourselves well

enough to keep attracting new clients and to retain the old for a solid foundation.

In addition to the promotional techniques used, we also do our own printing of

publications that are used for promotion. In the appendix A through K there are copies of

the current publications. All are matching in the colors of the business with royal blue and

teal. Multiple pictures and information are available for the customer to view. For the ease

of the customer we have divided the publications into the individual services and products

provided. The Equine Services publication markets me as well as all my credentials and

services that are provided. The breeding business and Vellus Grooming Products have their

own publications. When we are at shows and places where we can put up our decorations

and display we set up our individual flyers and a scrap book. We offer a bowl of candy for

the kids and provide a comfortable setting that allows for the individuals to pet the horses,

take wagon rides or ask questions about the business or the breed. We even have a brochure

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that is published by the American Shire Horse Association that we encourage people to

read to learn more about the breed as a whole. Figure 3.18 shows the booth that we had set

up for the 2007 Glendive Bridge Day Celebration where we gave wagon rides as a

community service donation. The information is a big hit and we always get a lot of

compliments on our horses and information. Events like this allow us to touch more than

200 prospective customers. These individuals contact us for horses, lessons, clinics and

wagon rides.

Along with the printed material, the business can be seen on the web from our web

page. You can find this page by searching Big Sky Shires on any search engine. The web

site is managed by me for the business. It is updated every month to three months. We have

several contacts made through this site. Furthermore, it allows us to have a place to send

clients for more information or pictures. It saves the time and hassle of emailing a lot of

material. With the web site we are in the process of using you tube video to provide video

of horses, services, and information that needs that added touch. We provide all perspective

breeders a DVD video produced by ourselves for their examination of our horse. With this

DVD we package our contract, flyer, and a breeder’s letter.

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Figure 3.18 Promotional Booth Glendive Bridge Day Celebrations

Sale horses and stallion services are promoted on the internet through three horse

advertisement sights: 1) DreamHorse.com, 2) DraftsForSale.com and 3) Equine.com. They

offer color photos for a reasonable fee and text only ads for free. You can link to You Tube

for video or pay additional fees for video on the ad. Five generation pedigrees and a

demographic layout of the horse and their details is included in all ads. In one day a horse

can be looked at by over 400 people. These prospective buyers are then able to contact you

the seller and additional information will exchange hands. With the use of the internet we

can take check card or credit card payments through Pay Pal. All funds are guaranteed and

move seamlessly from account to account. The last four horses sold by the business have

been through these web sights. It is great advertisement for a large number of prospective

buyers. We can hit markets and individuals that otherwise would have never been met. It is

a great opportunity for sales, or even purchases.

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All of this helps us provide an image to the prospective customers. In Figure 3.19

you can see that we continue to share our image with stall decorations and color at the

breed shows. We make sure that we are always providing our customers with the best

image and product possible. The decorations in this photo were made by me. They are easy

to install and put together. The solid panel is our tack stall where we hide all our tools and

equipment. It also gives us an office on the road. When on the road we keep stalls as clean

as possible and horses spotless for all to see. We provide our information booth whenever

possible.

Even when we donate services and the clients are most likely not coming back to

take advantage of our services again, we make sure that we provide the most hospitable

service and information to them. The 2007 Miss Montana Pageant came to Glendive this

year. By word of mouth we were asked to give the judges panel rides from their dinner to

the local high school for the night’s pageant. We provided decorations, information and

Champagne for the ride. Figure 3.20 shows the effort that we take to make our image stand

out in the minds of the community and participants. These individuals were all from out of

state. We try hard to sell ourselves and our home; hospitality at its finest.

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Figure 3.19 Stall Decorations Montana Fair

Figure 3.20 Promotional Information and Complimentary Champagne for Miss Montana Judges Carriage Rides

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We find that our advertisement is as important as anything else that we do. We

present ourselves to our community, clients and neighbors the best image of ourselves and

our business. We try to be strong supporters of our community and participate on the whole

level through donation and community organizations. We place ads in the local rodeo

flyers and the newspaper. We know that a lot of our breeding business will not come from

our area, but our services are based here and this is where many service clients come from.

We strive to keep the most positive image possible to the public. We have yet to take

advantage of radio or other media forms for advertisement.

We are currently looking at pricing options for our 2008 lesson and breeding

season. We are going to offer package deals with savings for the lessons. We are offering

volume discounts on DVD and publications as well as breedings. Once we develop a final

pricing plan we will then market those options through our web page and events. We are

thinking of providing a spring news letter to our clients with these options.

With the little that we have done to promote the business, we are seeing more

clients with a more diverse background and needs. We are helping a few clients find horses

and work with them in their horsemanship needs. There is room to grow for the business

when we get facilities organized and working.

3.6 Financial Plan

3.6.1Current Financial Assessment and Financial Structure

At this time, a lot of financial support is coming from personal funds provided by

our jobs. We provide the funds for activities, supplies and things that the lessons, judging,

horse sales and other services do not provide for. For the past three years, tax refunds have

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helped to purchase equipment, pay debt and supplies. The money gained from lessons and

judging has helped to pay for the annual hay expenses. Some items have been financed,

such as the purchase of horses and the property on our personal credit and credit history.

We recognize that the amount of tax refund that we get from the state and federal

government is because of the business. This is largely due to the tax benefits associated

with the business, so we apply that money back into the business needs.

The financial records for the business (as well as the personal records) are

maintained in Quicken on the home computer. We try to separate as much of the expenses

as possible. Our goal is to get enough cash flow to pay for all the business expenses from

the business account. We have an accountant that does all our taxes and guides us through

our finances. He is very knowledgeable in the area of agriculture and animal businesses.

With his help, we have been able to get our business up and running. We are making better

use of funds and starting to develop a financial direction. In the following section you will

see the statements representing where we hope the business will be financially in five to ten

years. The business will be able to support all its own finances, growth, marketing and

business efforts. From this, we will be able to pay down the personal debt acquired through

the purchase of assets to set up the business.

The business has seen some set back in achieving its financial goals in 2007. We

were expecting two foals which were to be sold in the spring, but both mares lost those

foals sometime in the winter. One mare died in the spring from a heart attack. A second

mare was lost in early September from compaction colic. This mare was bred and

confirmed in foal for 2008. She was the foundation of our mare herd and the only mare

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registered with the mother registry in England, replacement will be in the future as funds

allow. Additionally, our thoroughbred mare became ill this fall and required major health

care. In 2007 the business has acquired substantial vet bills and very little return. We did

purchase a paint mare for resale and sold her for a $900.00 profit after all expenses. To

cover some expenses acquired in 2007, we also sold one shire mare for $4,500.00. To aid

in our pricing and selling of our foals, we have found that selling them as weanlings is

more profitable to the business. We have less feed and inputs in the horse when they are

eating off the mare. After looking at costs we found mare care for one mare per year to cost

the business $650.00. If we sell the foal for a minimum of $1,300.00 we make $650.00 to

cover our stallion fee. This way we make at least the profit of one breeding. Anything over

this base price is additional profit. Foals are priced at $4,000.00 and prices are adjusted as

needed to get them sold before winter of their weanling year. If the foal is retained, then

training and showing has to be done to maintain the cost of return on the asset.

The business has had a couple years of growth and development from the lessons,

publications and judging services. We have produced several videos for clients in Canada.

We have seen the receipts from these three areas grow and develop to cover the feed

expenses. The Vellus Grooming Products are showing a slower growth. Now that we are

the exclusive dealer we are hoping that this niche will give us more growth and income..

3.6.2 Financial Projections and Strategic Analysis

To help gauge our future financially, we took our optimal production that we

foresee in 5 to ten years and placed all those numbers in a balance sheet, income statement

and a cash flow statement and compared them to the numbers for the current year (2007).

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With these we were able to see that certain areas of the business will meet the current goals

and objectives where other areas are questionable. It is clear from the statements that the

services side of the business is carrying the breeding portion. There is still room to grow in

the services sector where we could generate more income by increasing the number of

lesson clients. We could increase the number of group lessons that would enable us to

touch more people. Furthermore; we could promote more boarding services and Vellus

products. These two areas would generate more cash flow for the business, with very little

overhead.

These projections could change from year to year. These changes could be brought

forth by: death loss in the breeding herd, market prices of horses shifting with supply and

demand, feed costs and expenses, number of breedings that will vary from year to year,

number lesson clients and board horses, and veterinary bills for the year. The expenses in

the projections are based on the business working with most improvement completed and

only maintenance and minor investments needed. Some of these numbers could be high

estimates and some could be low depending on the year.

During the years where cash flow was low, the off farm incomes would have to

cover the costs in order to keep from financing as it is now. Our main financial goal is to

keep from having to use operating loans or financing in the business. The business would

have a hard time paying for long term liabilities with the amount of cash flow that is has at

this time or in the future. There may come a time in the future that the business is showing

enough cash flow that this is not true. At that time we would have to hire additional

instructors and help for the services in order to attain that kind of volume.

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CHAPTER IV CONCLUSION

4.1 Verbal Description of Competitive Advantage

Big Sky Shires and Equine Services have several competitive advantages. We know

that this is a revolving thing and that you must seek new ways to gain competitive

advantage in the market place in order to survive. By having competitive advantage, the

business is able to perform in one or more ways that its competitors can not. The following

is a list and discussion of the competitive advantages that the business currently holds:

Vellus Grooming Products: As of October 3, 2007 Big Sky Shires and Equine

Services has the exclusive dealership rights to the equine grooming line. The

company wanted one dealer to work with on a special order basis. 2008 will be a

trial year in which we will see if the business can generate enough income after

inventory to keep this contract. We have an initial purchase of $1000 of inventory

that will retail for over $3000 when sold.

Credentials: At this time I am the only American Riding Instructors Association

certified instructor in the area. I also have the most showing and equine

background. As long as I keep my own development moving foreword I will

continue to keep the advantage.

Reputation/ Longevity: In the area of judging, clinics and lessons, we have been here

long enough that our reputation and longevity have helped us out a great deal. We

get out into the community whenever possible and this helps promote the business.

Variety and Uniqueness of Services: The services offered by the business are unique

to our area and are followed with talented skill sets that are not found in our area.

We provide a mix of opportunities that are sure to meet the needs of a wide variety

of horse people.

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4.2 Actions to be taken

After putting together this business plan several things became apparent to us.

We noticed that we were doing a lot of things right and needed to improve on a few things

as well. The business is on its way to be productive, but the biggest action to be taken at

this time is facilities and improvements. These changes however, can and will be very

costly. It will be important to develop these as needed and only when the business is

showing enough growth and cash flow to sustain the cost of the facilities and

improvements. The property has the basics to continue as it has. However, if the goals and

objectives are to be met, the business needs to acquire the facilities to operate and function.

There are two major facilities that need to be put in place in the next two years. They are

the arena for lessons and clinics and the basic breeding facilities and equipment to collect

and properly manage the stallion on the property. If the stallion can not be marketed to

meet his costs for up keep; the business will need to look at selling, or leasing him to make

better use of the resource. The arena situation will be handled with an out door facility and

any need for an indoor will be handled by leasing time from the local facility.

The business also needs to look at the addition of stocks and wash rack with an

upgrade to the corrals and the addition of stalls to the barn. This will be a couple of years

down the road after the arena and breeding services start to make a return. The property is

in need of fence repair and some landscaping for visual improvement. The BNSF railroad

runs down the front side of the property and they will provide the supplies to fix that fence.

We will have to provide the project labor. That will begin in the spring of 2008 after we

finish the fence on the state lease summer of 2008. Although the property as is functional

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now it is lacking the finishing touches needed to produce at its full potential. It is our hope

that little by little each year this will be accomplished.

Range conditions, although they are improving, continue to need to be monitored.

As the numbers of horses increase on the property the more keen we need to be on our

environmental plan. We found that in the past few years of business we had no formal plan

but were doing a lot of things right. We put this in writing with all the pictures that we have

used to document the progress on range condition and clean up of the property.

Marketing beyond the local levels and web sight should be looked into. Breed

shows and stallion shows nationally and internationally should be looked into. The

purchase of outstanding mares to replace the death loss in 2007 is one area that needs

addressed in the next two years if the equine sales are to continue to support cash flow. We

recognized from the planning process that we need to be careful in the expansion of our

breeding program. The numbers have shown us that our competitive advantage is in our

services. Our biggest return is not from the breeding and sales side of our business. Return

is coming consistently from the services portion of the business. Breeding can only be done

if we can get good genetics at affordable costs. After that we will have to think seriously if

this is a wise position to take at this time.

We also noticed that we needed marketing materials with our website and DVD’s.

We had some of these publications put together and with the assistance of a graphic design

person we took their thoughts and ideas to improve and redesign some of our publications.

We found that regular updating and maintenance is critical to this area of management. The

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biggest change to be made here is to update the promotional DVD for our stallion and do

professional photos to market with. We also need to do a general DVD to play at trade

shows and send to prospective clients for lessons, camps and clinics.

Finances right now are the biggest challenge to the business. There is no room for

long term debt. For survival we need to increase cash flow so that the business no longer

has to manage on personal funds for improvements, functionality and business needs.

The business found that we did not have the legal contracts needed to manage our

business deals. We contacted a lawyer and had these contracts drawn up while we were

doing the business plan. They are now in our plan and attached in the appendix.

4.3 Monitoring Plan

Every year the business needs to update and change the business plan to fit the

current production and direction of the business. Changes should be documented with data

to prove the need and usefulness of the change. Services and products should be watched

for individual growth and development. If one or several are not carrying their weight and

dragging down the other products and services, then that area should be considered for

termination. Finances should be monitored every month the first year and then every six

months after that. A picture record should be kept on the improvements and their

usefulness to the business. All of these items need to fall in line with the goals, objectives,

mission and vision of the business as it grows changes and develops.

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4.4 Outlook for the Business

The business shows a lot of potential. If we continue to grow the business and

promote it as it is on a part time basis, we will gain enough reputation and stability to be

able to supplement our retirement income when worked and focused on full time. We see

this time as an opportunity to promote and build a reputation for the future that will allow

the business to prosper when we can devote more time and energy. We can use this time to

grow and develop the areas of the business that will make the most return and keep the

business alive for our future. Changes to offerings and the business plan will help us

accomplish this.

We see that a lot of personal money and time will be going into the business as it

grows. It is critical that we get the business producing enough cash flow to remove this

need. However, with the right marketing and changes to the business offerings, we feel that

the financial projections for the future have potential to be optimal for what our goals for

the business are. We look foreword to the growth of our business as it takes us into our

future. It is our hope, after we implement what was found here in this business plan, that we

can get the business to work in a breakeven state. It is here that we will promote and build

our business until retirement, where we hope to work it more aggressively to supplement

our retirement income.

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REFERENCES

American Equestrian Alliance. (2007). “Montana Legal Code for Equine Activities.” (Online), January 15, 2007. http://www.americanequestrian.com/legal/MT.htm

American Quarter Horse Association (AQHA). (2003). 2003 Annual Report; Horse

Statistics. The American Quarter Horse Association.

American Horse Council. (2005). “Horse Industry Statistics.” (Online), February 2,2006. www.horsecounclil.org/statisics.htm

American Riding Instructors Association. (2007). “Instructor Certification.” (Online),

June 12, 2007. www.riding-instructor.com/certification/ Blazer, D. (2003). You Can Do It! Make Money with Horses. Arizona: Success is Easy. Henley Centre, The. (2004). A report of research on the horse industry in Great Britan.

British Horse industry Confederation and Department for Environment Food and Rural Affairs.

Hill, C. (2005). Horse Keeping on Small Acreage: Designing and Managing Your Equine

Facilities. Massachusetts: Storey Publishing. Oden, L.D. (N.D.) Top Ten Horse Business Concerns. (Online), February 25, 2006.

http://www.equiworld.net/uk/services/topten.htm Oden, L. D. (N.D.) Steps to Success for Your Horse Business. (Online), February 25, 2006.

http://www.equiworld.net/uk/services/steps.htm Stull, C. (1997) “Physiology, Balance and Management of Horses During Transport”

(Online), February 27, 2006. http://www.vetmed.ucdavis.edu/vettext/INF-AN/INF- AN_HORSTRANSPT.HTML

USDA/ APHIS. (2004) Report of the Committee on Import Export. United States

Department of Agriculture. USDA/ APHIS. (2006) Import Export Requirements on Live Animals and Products.

(Online), March 2, 2006. http://aphis.usda.gov

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APPENDIX A STALLION PROMOTION DVD COVER

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APPENDIX B BUSINESS INFORMATIONAL FLYER

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APPENDIX C BUSINESS CARDS

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APPENDIX D STALLION SERVICE FLYER

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APPENDIX E INVOICE FOR BILLING

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APPENDIX F BIG SHIRES FLYER- PAGE 1

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APPENDIX G BIG SHIRES FLYER- PAGE 2

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APPENDIX H EQUINE SERVICES FLYERS- PAGE 1

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APPENDIX I EQUINE SERVICES FLYERS- PAGE 2

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APPENDIX J VELLUS PRODUCTS FLYER- PAGE 1

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APPENDIX K VELLUS PRODUCTS FLYER- PAGE 2

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