equestrian horse

Cash Flow in Your Horse Business

Manage Your Money Effectively

cash flowA cash flow statement for your business is the most important financial statement for you, the business owner. Cash flow is simply the money coming and going from your business each month.

The time to do a cash flow statement is before you start your business. You may find that your anticipated business model will not provide enough cash flow to keep a business going.

Most businesses fail because they did not thoroughly analyze their cash flow prior to opening. If you overestimate sales or underestimate expenses, your business will have a strong potential to fail.

Cash Flow and Cash Reserves

cash flow

Recent events have highlighted the need for small businesses to be able to manage cash flow. Cash flow represents the amount of money coming into the business and going out during a month. Cash flow is represented by income and expenses due in any given month.

Cash Flow Includes:


-Receipts from sales of goods and services such as sales of merchandise in a tack store or stall rental in a boarding barn.


-Interest payments

-Income tax payments

-Payments made to suppliers of goods and services used in production

-Salary and wage payments to employees including the owner

-Rent payments

-Any other type of operating expense


Most horse businesses depend on a steady stream of income each month in order to pay bills.  Your cash flow statement will show the amount of cash each month to meet obligations. It will also allow you, the business owner to project the amount of income that might be lost during pandemics, hurricane, tornado, earthquake, fire, new competition, owner's health issues, or recession.

Thus, when planning cash flow you should also plan for a cash reserve to use when income decreases.

If you have rental income such as horse boarding, your monthly income is generated by rent payments from boarders. Since there is usually turnover among boarders and sometimes slow payments, your rental income may vary from month to month. Thus, you have to save money when the income allows, and use those saved funds to make up lost income from vacancies and slow payments.

Income fluctuation is also true for equine service businesses such as veterinarians, horse trainers, or farriers. Due to o the nature of the business, income varies from month to month while the expense obligations remain relatively the same. The income variation can be extreme, as when there is some kind of interruption in normal business such as with a pandemic, or other natural disaster.

small business cash reserves

Cash reserves

can be provided for in several ways:

-Insurance. Business insurance may provide for lost income as a result of a natural disaster such as a hurricane, flooding, fire, or tornado. It does not cover loss income because of economic conditions such as a recession or increased competition.

-Savings. Establishing a savings account for emergencies and lost income is probably the best way to provide for cash flow shortages. You can add to the fund every month and draw on it only for emergencies.

-Prepayments. Ask your customers to prepay their rent or service fee in advance by offering them a discount. For example, our veterinarian offers a discount for prepaying for an annual plan for routine quarterly vaccinations. It gives him cash in advance and guarantees a portion of his income for the year. Horse owners like it because it saves them money and they do not have to worry about routine care for a year if their own income becomes stressed.

-Line of credit. Establish a line of credit at a bank or credit union and use it only for emergencies. You will be able to withdraw money from the line of credit as you need it and pay it back as you get the funds.

-Credit cards. By keeping a credit card with little or no balance, you can use the remaining credit for emergencies. Be aware that banks may reduce your available credit limit in times of economic distress.

-Personal loan. You may be able to get a personal loan to cover some of your expenses, but if your business income is suffering, such a loan becomes less likely to get approved.

-Borrow from your personal savings. This would be the last resort and should be documented as a loan from you to the business. Remember too, that your personal obligations will also continue and you should not be causing stress in both areas of your life.

-Cut expenses. Look for ways to save money on your monthly expenses both in the business and your personal life. This will help reduce the amount of income you will need to keep your business going.

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