Looking for a horse reseller business plan? You're in the right place.
A horse reseller pays for every animal before it earns anything from it. So how much money do you need to buy stock and keep it fed until it sells? How many horses must move each year before the farm breaks even? And what happens when buyers are slower than you hoped? A blank template will not show you what a sensible answer looks like.
In this article we'll walk through a complete sample business plan for a horse reseller in Louisville, Kentucky, section by section. We'll cover the executive summary, the SWOT analysis and, in particular, all of the financials.
Here's what you'll take away:
- The executive summary: see how to fit a buying, schooling and selling business on one page, so a lender can see what you are asking for within a minute
- The SWOT analysis: learn how to state a one-buyer business and a lame horse as risks without scaring a reader off
- The start-up budget: find out what a truck, a trailer and a stock reserve add up to, so the first spring does not catch you short
- Stall and rider capacity: check that the horses you plan to sell fit the stalls and riding hours you actually have
- The first year, month by month: spot the quiet winter months before you reach them, and plan cash around them
- The five-year profit, cash flow and balance sheet: see how stock on hand, hires and pay raises show up in the numbers
- The downside case: have an answer for "what if sales run 20% short?", with the steps the owner takes in response
If you're planning a horse resale business, read this before you write your own. The business is fictional, so keep what fits and change the rest.
In this plan
To turn this example into your own horse reseller business plan, use the horse reseller business plan template.
Crest Moor in Brief
Crest Moor is a horse resale business that opens on a leased 20-stall farm in Oldham County, northeast of Louisville, Kentucky, on 1 January 2027. It buys horses it can school and describe honestly, rides them for about two and a half months, and sells them to amateur riders and families. It also sells horses on consignment for other owners and finds horses for buyers who want a second pair of eyes. Founder Tessa Brannock owns 100% of the business.
The business needs $330,000: $180,000 of Tessa's savings and a $150,000 bank term loan. Of that, $75,000 buys a truck, a trailer, arena gear and farm repairs, $16,500 pays for legal work and the launch, and $238,500 is held as a reserve, because every horse in stock is cash spent before it is cash earned.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $374,100 | $683,000 | $861,000 |
| Net income after start-up costs | ($107,604) | ($25,210) | $34,104 |
| Closing cash | $123,833 | $70,544 | $88,109 |
Year 1 sells 30 horses from its own stock, 10 on consignment and 8 buyer searches. It loses money because rent, a barn hand and the stock on hand run all year while sales cluster between April and July. Year 2 edges past the monthly break-even line but still shows a small net loss after interest. Year 3 is the first profitable year.
The plan also tests itself against a sales year 20% short. In that case the rider is hired later, the second barn hand is dropped, marketing and Tessa's pay are cut and the second barn is not leased. Cash stays positive in all five years.
Crest Moor sells one kind of horse: sound, honestly described and ridden before it is listed. Each sale comes with the pre-purchase exam results, a written account of what the horse has and has not done, and a seven-day trial period under a signed agreement.
The Operation at Crest Moor
Legal name: Crest Moor Horse Sales, LLC, a Kentucky limited liability company. Owner: Tessa Brannock, 100%. Farm: a leased 35-acre horse farm in Oldham County with 20 stalls, an outdoor arena, a round pen and a covered wash rack, on a five-year lease. Start date: 1 January 2027, ahead of the spring buying and selling season. Stage: pre-launch. The lease is in draft, the bill-of-sale and consignment forms are with a lawyer, and Tessa has sold nine horses from rented stalls over the past year.
Why a horse reseller
Most horses that suit an amateur rider are not on the market in a form the rider can trust. They are green, unridden for months, or sold by a seller who knows less than the buyer would like. Crest Moor buys at the point where a horse is worth more with schooling, a vet check and a clear description, and sells at the point where the buyer can see all three.
Where Crest Moor wants to be by 2029
- 30 horses sold from stock in 2027, and 52 in 2028.
- A profit after tax in 2029, the third year.
- A rider on payroll from month 14, and a second barn leased in 2030.
- Written sale records for every horse, kept for the life of the business.
Four lines of work
| Line | How it earns | Year 1 share of revenue |
|---|---|---|
| Retrained off-track Thoroughbreds | Bought cheap, schooled for about 75 days, sold at $8,200 on average | 35% |
| Amateur-ready sport and trail horses | Bought ready or nearly ready, sold at $15,000 on average | 56% |
| Consignment | 12% commission plus a $350 preparation fee | 5% |
| Buyer search | A flat $1,800 fee to find, vet-check and negotiate | 4% |
Rules a horse seller works under
Horses that enter Kentucky or move to events generally need a negative Coggins test and a certificate of veterinary inspection. Secondary sources disagree on how recent the inspection must be, so Crest Moor confirms the current rule with the Kentucky Department of Agriculture's Office of State Veterinarian before each trip. Kentucky also has a statute on liability for equine activities. Counsel reviews the warning wording on the sales contract and farm signage before opening, and the sale agreement states plainly that a horse is sold as described, with known issues listed.
Louisville's Horse Trade
Louisville sits between the Thoroughbred country around Lexington and the hunter, jumper and trail riders of southern Indiana, northern Kentucky and Tennessee. The track at Churchill Downs in Louisville and the Lexington training and sale circuit send retired racehorses into the area every year, and the riders who want a first horse of their own live within a half-day haul. The plan does not put a number on the market, because no figure for the Louisville horse trade could be found at a source the plan can cite. Prices and volumes in this plan are the business's own.
Who pays for the work
The Bureau of Labor Statistics gives a median annual wage of $39,990 for animal trainers and $35,530 for animal care and service workers, May 2025 data. Crest Moor's barn hand is paid $34,000 and its rider $42,000 at launch, because the work is seasonal, physical and carries injury risk that shows up in workers' compensation cost.
What the alternatives look like
| Where a buyer could go | What it offers | Where it falls short for an amateur |
|---|---|---|
| Private sellers and classified listings | Lowest asking prices | The buyer carries the vetting, and the description is the seller's own |
| Auctions and sale barns | Large choice in one day | Little time to ride or inspect each horse |
| Trainer-dealers | A horse already ridden and shown | Often priced for competition and sold fast |
| Bloodstock and sport-horse agents | Search and negotiation | A percentage fee, and little help after the sale |
| Crest Moor | A ridden, vetted horse with a written history | A smaller range at any one time |
The table describes categories of seller and where each tends to be strong. It is not a ranking. Names and prices are left out because they change often.
SWOT
| Strengths | Weaknesses |
|---|---|
| Twelve years around Thoroughbreds and sport horses | One senior buyer: if Tessa is injured, buying stops |
| Four income lines, two of which need no stock | No brand outside her own network at launch |
| Seven-day trial and written history that private sellers rarely offer | Year 1 and Year 2 are loss-making and depend on the reserve |
| Opportunities | Threats |
|---|---|
| Off-track horses needing homes every season | A horse that goes lame in the barn can wipe out a month of margin |
| Riders who want a vet check without hiring an agent | Feed and hay prices that rise faster than sale prices |
| Referrals from vets, farriers and instructors | A weak market for $15,000 horses in a downturn |
Who Buys a Made Horse
The amateur adult rider
Usually 30 to 55, rides two or three times a week, has trained with an instructor for years and wants a horse she can show lightly and trail ride without a fight. She will pay more to avoid a horse that bucks, bolts or fails a vet exam after the purchase.
The family buying a first horse
A parent buying for a teenager looks for a quiet horse and for someone to be straight about its limits. This buyer visits twice, brings an instructor and asks about the trial period before asking about the price.
The owner who needs to sell
A rider who has outgrown a horse, moved or lost time to work often lacks the barn space, time or photos to sell well. That owner is the consignment client, and later often a buyer.
The buyer who wants a second opinion
Some buyers have found a horse and want a second opinion: ridden, seen by a vet, and priced against what is out there. That buyer pays the flat search fee and goes to someone else's barn to buy.
What buyers ask
Has it been ridden this month? What did the vet find? Why is it for sale? Can I try it for a week?
Moving Horses Through the Barn
From inquiry to bill of sale
An inquiry comes by text or the website form and is answered the same day. A video call or viewing follows, then a ride and, for buyers who want one, a pre-purchase exam by the buyer's own vet at the buyer's cost. The sale is closed with a bill of sale and a deposit, and the horse leaves only after cleared payment. The trial agreement then holds for seven days, with a written return rule: the horse comes back if the buyer's vet finds a defect that the seller's records did not disclose.
The Year 1 pipeline
The plan expects about 9 inquiries and 3 viewings for every horse sold, which is roughly 360 inquiries for the 40 horses sold from stock or on consignment. The 8 buyer searches come mostly from the same inquiries: buyers who want a horse that Crest Moor does not have.
| Source of buyers | Share |
|---|---|
| Referrals from vets, farriers and instructors | 35% |
| Paid listings on horse-sale sites and social media | 30% |
| Repeat buyers and past consigners | 15% |
| Open-barn days and show contacts | 20% |
How prices are set
Each horse is priced from what comparable horses are listed at in the Louisville region, the cost of the horse to date and the schooling it has had. The plan expects to sell at or slightly below the first asking price after a viewing or two. Retrained Thoroughbreds average $8,200 in Year 1 and sport and trail horses $15,000. Both rise 3% a year from Year 2. Prices may need to move with the market, and the plan's figures are its own.
Repeat buyers
Buyers who ride up a level often come back for a bigger horse, and the barn's trade-in terms help. The plan counts on a small number of repeat buyers from Year 2 and does not rest on them.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Horses sold from own stock | 30 | 52 | 62 | 70 | 76 |
Growth slows after Year 2 because barn space, riding time and the number of good horses available to buy limit sales, not demand.
Nine sales before opening
Tessa sold nine horses from rented stalls over the past year, six off-track Thoroughbreds and three sport horses, to riders she knows through her old barn. These sales tested her buying eye and her sale paperwork, and they supply the first referrals. They do not count in the Year 1 figures.
Where Buyers Find Us
Marketing spend and what it buys
The Year 1 budget is $34,000: $12,000 of launch costs paid from start-up capital and $22,000 of running costs. That is 9% of Year 1 revenue and falls to 3% by Year 5 as referrals and repeat buyers take over. Spread over 48 sales and engagements, Year 1 costs about $708 each.
| Channel | Year 1 spend | What it does |
|---|---|---|
| Website and listing pages (launch) | $5,500 | A page per horse with video, vet findings and price |
| Video kit and photography (launch) | $5,000 | A flat-lit riding video of every horse, filmed in the arena |
| Signage and farm entrance (launch) | $1,500 | Visible to riders on the road and to vets and farriers |
| Sale video and photography per horse | $6,000 | About $150 a horse for editing and extra shots |
| Paid horse-sale listings and social ads | $6,500 | Reach beyond the Louisville area; about 30% of buyers |
| Open-barn days and trial-ride events | $3,000 | Two spring days and two fall days |
| Referral thank-yous to vets, farriers and instructors | $2,000 | The source of about 35% of buyers |
| Local show sponsorships and ads | $3,000 | Name seen where amateur riders gather |
| Email list and monthly horse update | $1,500 | A list of past buyers and inquirers |
Marketing milestones
- January 2027: listing site live, first six horses photographed and filmed.
- May 2027: first open-barn day, 12 horses sold to date.
- September 2027: 25 horses sold, the fall buyer bump tested.
- December 2027: 30 horses sold from stock and 10 on consignment.
Stalls, Vets and Turnover
The Oldham County farm
Rent is $3,900 a month ($46,800 in Year 1) for a 35-acre farm with 20 stalls, an outdoor arena, a round pen and a wash rack. The lease runs five years with a personal guarantee. Utilities add $6,000. From Year 4 the barn leases an adjoining 8-stall barn, which raises rent to $57,600.
How a horse moves through
A horse arrives, goes into quarantine for about ten days, and has a vet exam, vaccines, dental work and a farrier visit. Over the next 60 days it is ridden five days a week and prepared for sale. About 78 days after purchase, on average, it is sold. The plan holds stock at about 21% of the year's direct costs, which is 77 days.
Stall capacity
Year 3 needs about 18 of the 20 stalls on average, and Year 5 about 21, which the second barn covers. A barn that runs at 90% full has no room for a horse that fails a vet exam, so the plan keeps two stalls empty for new arrivals.
Who does the work
Tessa and a barn hand run the farm in Year 1. A rider and trainer joins in month 14, and a second barn hand who also rides quiet horses in month 40. A horse is ridden by Tessa or the rider at the barn's pace of six or seven rides a day each.
Insurance and paperwork
- Commercial equine liability and care, custody and control cover.
- Mortality and major medical cover on horses held for sale, bought by horse value.
- Commercial auto cover on the truck and trailer.
- Workers' compensation for barn staff, which is a large share of the 30% on-cost.
- A written bill of sale, trial agreement and consignment contract for every horse.
Insurance budgets at $12,000 in Year 1.
Vets, farriers and haulers
Crest Moor uses two equine vet practices for pre-purchase exams and treatment, one farrier on a standing schedule and a pair of haulers for long trips. None is hard to replace, but a good vet relationship is also a referral source.
Who Runs Crest Moor
Tessa Brannock, owner and head buyer
Tessa has twelve years with horses in Kentucky. She grew up working at a Thoroughbred farm in the Bluegrass, then spent six years as an assistant at a sport-horse sales barn in Oldham County, where she rode and prepared horses for sale. She has bought and resold nine horses on her own over the past year. Her $180,000 contribution is nine years of savings.
Where she needs help
Tessa has not managed a payroll or kept books for a business of this size. The plan covers this with a part-time bookkeeper on contract, included in professional fees, and a lawyer on call for contracts. She has never run a consignment line at scale, so Year 1 keeps it to about 10 horses.
If Tessa is hurt
Tessa buys and rides most horses in Year 1. A rider injury would stop sales for weeks. The business carries disability cover on her, and the rider hired in month 14 reduces the risk. Until then, one trusted trainer has agreed to ride in an emergency.
Advisers
A retired equine vet who consults on difficult pre-purchase exams, and the Kentucky Small Business Development Center for the lease and loan review.
The bank and ownership
Tessa owns 100% of Crest Moor Horse Sales, LLC and gives the bank a personal guarantee. The loan requires quarterly accounts and a stock list with each horse's cost.
Five Years of Numbers
The model covers 60 months. Year 1 is shown month by month, and Years 2 to 5 are annual totals. The figures that drive it come first, then the tables.
Truck, trailer and stock money
| Use of funds | Amount |
|---|---|
| Used three-quarter-ton truck | $34,000 |
| Used four-horse gooseneck trailer | $22,000 |
| Round pen, arena drag, tack and grooming kit | $9,000 |
| Fencing, stall and wash-rack repairs on the leased farm | $10,000 |
| Legal: entity, lease review, bill-of-sale and consignment forms | $4,500 |
| Launch: website, sale-video kit, signage | $12,000 |
| Cash reserve for horses in stock and the winter trough | $238,500 |
| Total uses | $330,000 |
| Source of funds | Amount |
|---|---|
| Tessa Brannock's savings | $180,000 |
| Bank term loan | $150,000 |
| Total sources | $330,000 |
Tessa puts in $180,000 of savings, 55% of the total, and borrows $150,000 from a bank over ten years at 10%, with interest only for the first 12 months. The bank takes a lien on the truck and trailer and a personal guarantee. The rate is a planning figure and a real quote may differ. The $238,500 reserve is the largest line on purpose. A horse is paid for the day it is bought and earns nothing until it sells, so growth in the stock on hand ties up cash, and Year 1 loses money before the spring buying season pays back.
Figures behind the forecast
- Retrained off-track Thoroughbreds sell for $8,200 on average in Year 1, rising to $9,200 by Year 5. Each costs about $4,100 to bring to sale: roughly $2,300 to buy, $650 for vet work, dental and vaccines, $800 for feed, hay, bedding and farrier over about 78 days in the barn, and $350 for transport. That is 50% of the sale price. Year 1 sells 16 of them, then 26, 30, 34 and 36.
- Amateur-ready sport and trail horses sell for $15,000 on average in Year 1, rising 3% a year. Each costs about $9,450: $7,500 to buy, $700 for a pre-purchase vet exam and treatment, $820 for care and $430 to haul. That is 63% of the sale price, so the barn keeps $5,550 a horse before wages and rent. Year 1 sells 14, then 26, 32, 36 and 40.
- Consignment pays a 12% commission on a horse that sells for $12,500 on average, which is $1,500, plus a $350 preparation fee. Direct costs are 7% of the fee for listing media and travel. Year 1 has 10 consigned sales, then 18, 26, 30 and 32. The horse stays on the owner's books, so the barn holds no stock cost.
- Buyer-search work is a flat $1,800 fee to find, vet-check and negotiate a horse for a client who is buying elsewhere. Year 1 has 8 engagements, then 16, 22, 24 and 26. Direct costs are 8% of fees for travel and inspection time.
- Stock sits for about 78 days from purchase to sale, so horses in stock at year end are valued at 21% of the year's direct costs: $42,073 in Year 1, rising to $126,320 in Year 5. Buyers pay in cleared funds before a horse leaves, so receivables average 5 days. Vets, farriers and hay suppliers are paid on 20-day terms.
- Not every horse sells on plan. A stock write-down line covers horses that go lame, are injured or sit unsold and are marked down: $5,000 in Year 1, rising to $13,000 by Year 5. Mortality and major medical cover on stock sits in the insurance line.
- Stall capacity holds. Year 3 has about 62 own-stock horses and 26 consignments on the farm over the year, which fills about 13 stalls with own stock, 2 or 3 with consigned horses and 2 held empty for new arrivals, 18 of the 20 on the farm. From Year 4 the barn leases an adjoining 8-stall barn, which lifts rent from $49,600 to $57,600 and covers the roughly 21 stalls Year 5 needs.
- Payroll adds 27% for Tessa and 30% for barn staff and riders, covering payroll taxes, health cover, paid leave and workers' compensation, which is expensive for work around horses. Annual pay raises of 3% appear as a separate line from Year 2. Tessa draws $60,000. The Bureau of Labor Statistics put the median animal trainer at $39,990 and the median animal care and service worker at $35,530 in May 2025, and the plan pays a barn hand $34,000 and the rider $42,000, close to those medians.
- Rent is $3,900 a month for the leased farm: 20 stalls, an outdoor arena, round pen, wash rack and 35 acres of pasture. Insurance of $12,000 in Year 1 covers commercial equine liability, care, custody and control, mortality and major medical cover on horses held for sale, the truck and trailer, and farm property. Truck and trailer running costs are $10,000 in Year 1.
- Tax uses the 21% federal corporate rate and a 5% Kentucky placeholder, with losses carried forward, so tax is first paid in Year 5. The business would normally run as an LLC taxed through its owner, and the state rate should be confirmed with the Kentucky Department of Revenue. No owner distributions are paid in the five years.
Revenue by line of horses
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Retrained off-track Thoroughbreds | $131,200 | $218,400 | $261,000 | $302,600 | $331,200 |
| Amateur-ready sport and trail horses | $210,000 | $401,700 | $508,800 | $590,400 | $676,000 |
| Consignment commissions and prep fees | $18,500 | $33,300 | $49,400 | $58,500 | $64,000 |
| Buyer-search fees | $14,400 | $29,600 | $41,800 | $46,800 | $52,000 |
| Total revenue | $374,100 | $683,000 | $861,000 | $998,300 | $1,123,200 |
| Growth on prior year | – | 83% | 26% | 16% | 13% |
Sport and trail horses carry the plan: 56% of Year 1 revenue and 60% of Year 5. They also earn a thinner margin, about 37 cents of each sales dollar before wages and rent against 50 cents on the retrained Thoroughbreds, so the Thoroughbreds matter more to profit than their 35% share suggests. Consignment and buyer-search fees are small but need no stock, no stall and almost no cash, which is why both grow faster than the horse lines.
Month by month in Year 1
| Month | Retrained off-track Thoroughbreds | Amateur-ready sport and trail horses | Consignment commissions and prep fees | Buyer-search fees | Total revenue | EBITDA |
|---|---|---|---|---|---|---|
| Jan 2027 | $8,200 | $0 | $0 | $0 | $8,200 | ($15,958) |
| Feb 2027 | $8,200 | $15,000 | $0 | $0 | $23,200 | ($8,991) |
| Mar 2027 | $8,200 | $15,000 | $1,850 | $1,800 | $26,850 | ($7,296) |
| Apr 2027 | $8,200 | $30,000 | $1,850 | $1,800 | $41,850 | ($329) |
| May 2027 | $16,400 | $30,000 | $3,700 | $1,800 | $51,900 | $4,339 |
| Jun 2027 | $16,400 | $30,000 | $3,700 | $3,600 | $53,700 | $5,175 |
| Jul 2027 | $16,400 | $30,000 | $1,850 | $1,800 | $50,050 | $3,479 |
| Aug 2027 | $8,200 | $15,000 | $1,850 | $1,800 | $26,850 | ($7,296) |
| Sep 2027 | $16,400 | $15,000 | $1,850 | $0 | $33,250 | ($4,323) |
| Oct 2027 | $8,200 | $15,000 | $1,850 | $1,800 | $26,850 | ($7,296) |
| Nov 2027 | $8,200 | $15,000 | $0 | $0 | $23,200 | ($8,991) |
| Dec 2027 | $8,200 | $0 | $0 | $0 | $8,200 | ($15,958) |
Sales are lightest in January and December and peak from May to July, with a smaller bump in September. EBITDA turns positive only from April to July. Every other month loses money, and the first quarter loses the most because stock bought in the winter has not yet sold. The monthly view does not time horse purchases against sales, so the reserve is sized from the annual balance sheet, where stock on hand reaches $42,073 by December.
Who is paid, and when
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Founder and head buyer | $60,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Barn hand | $34,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Rider and trainer | $42,000 | Month 14 | – | 1 | 1 | 1 | 1 |
| Second barn hand | $33,000 | Month 40 | – | – | – | 1 | 1 |
| Total payroll incl. on-costs | $120,400 | $170,450 | $175,000 | $207,175 | $217,900 |
Tessa and one barn hand run the barn from January. A rider and trainer joins in month 14, once about 8 horses are on the farm at a time and the schooling load outgrows two people. A second barn hand, who also rides the quieter sales horses, joins in month 40 with the extra barn. Tessa is on payroll from month one at $60,000 plus on-costs, so the profit lines show what remains after she is paid.
What the barn earns
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $374,100 | $683,000 | $861,000 | $998,300 | $1,123,200 |
| Horse purchase, care and transport | ($200,347) | ($365,777) | ($461,103) | ($534,634) | ($601,523) |
| Gross profit | $173,753 | $317,223 | $399,897 | $463,666 | $521,677 |
| Payroll incl. on-costs | ($120,400) | ($170,450) | ($175,000) | ($207,175) | ($217,900) |
| Rent | ($46,800) | ($48,200) | ($49,600) | ($57,600) | ($59,300) |
| Utilities | ($6,000) | ($6,200) | ($6,400) | ($7,000) | ($7,200) |
| Marketing | ($22,000) | ($26,000) | ($28,000) | ($30,000) | ($32,000) |
| Insurance | ($12,000) | ($14,500) | ($16,500) | ($18,500) | ($20,000) |
| Professional fees | ($4,500) | ($5,000) | ($5,500) | ($5,500) | ($6,000) |
| Software subscriptions | ($3,000) | ($3,500) | ($4,000) | ($4,000) | ($4,500) |
| Truck fuel, repairs and trailer upkeep | ($10,000) | ($13,000) | ($15,000) | ($16,000) | ($17,000) |
| Sale-day, show and clinic fees | ($4,000) | ($6,000) | ($7,500) | ($8,000) | ($8,500) |
| Dues, licenses and registry transfer fees | ($1,500) | ($1,800) | ($2,100) | ($2,300) | ($2,500) |
| Tack, bedding gear and equipment replacement | $0 | ($4,000) | ($5,000) | ($9,000) | ($5,000) |
| Stock write-downs: lame, injured or slow-selling horses | ($5,000) | ($8,000) | ($10,000) | ($11,500) | ($13,000) |
| Bad debt and payment disputes | ($2,000) | ($3,500) | ($4,500) | ($5,000) | ($5,500) |
| Annual pay raises (3% a year) | $0 | ($5,114) | ($10,657) | ($19,211) | ($27,348) |
| EBITDA | ($63,447) | $1,959 | $60,140 | $62,880 | $95,929 |
| Depreciation | ($12,657) | ($12,657) | ($12,657) | ($12,657) | ($12,657) |
| Interest | ($15,000) | ($14,513) | ($13,379) | ($12,126) | ($10,742) |
| Income tax | $0 | $0 | $0 | $0 | ($7,090) |
| Net income before start-up costs | ($91,104) | ($25,210) | $34,104 | $38,097 | $65,440 |
| Start-up costs expensed at opening (legal, forms, launch marketing) | ($16,500) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($107,604) | ($25,210) | $34,104 | $38,097 | $65,440 |
Year 1 loses $91,104 before start-up costs and $107,604 after them. Year 2 loses $25,210: EBITDA is barely positive at $1,959, and depreciation and $14,513 of interest take it below zero. Year 3 is the first profitable year at $34,104, a 4.0% net margin, and Years 4 and 5 earn $38,097 and $65,440, the last after $7,090 of income tax. Gross margin stays near 46.4% because the mix barely moves. EBITDA margin eases from 7.0% in Year 3 to 6.3% in Year 4, when the extra barn, the second hand and the pay raises arrive together, then reaches 8.5% in Year 5.
Where the cash goes
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($131,167) | ($42,460) | $29,527 | $37,461 | $66,004 |
| Equipment and fit-out | ($75,000) | $0 | $0 | $0 | $0 |
| Funding received | $330,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | ($10,829) | ($11,963) | ($13,216) | ($14,600) |
| Owner distributions | $0 | $0 | $0 | $0 | $0 |
| Net change in cash | $123,833 | ($53,289) | $17,564 | $24,246 | $51,405 |
| Closing cash | $123,833 | $70,544 | $88,109 | $112,354 | $163,759 |
Closing cash is $123,833, $70,544, $88,109, $112,354 and $163,759. Year 2 is the low point, because stock on hand grows from $42,073 to $76,813 while the business is still loss-making, and loan principal starts to be repaid. Cash from operations is negative in Years 1 and 2 for the same reason.
What the barn owns and owes
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $123,833 | $70,544 | $88,109 | $112,354 | $163,759 |
| Accounts receivable | $5,125 | $9,356 | $11,795 | $13,675 | $15,386 |
| Horses in stock (at cost) | $42,073 | $76,813 | $96,832 | $112,273 | $126,320 |
| Equipment and fit-out (net) | $62,343 | $49,686 | $37,029 | $24,371 | $11,714 |
| Total assets | $233,374 | $206,399 | $233,763 | $262,674 | $317,180 |
| Accounts payable | $10,978 | $20,043 | $25,266 | $29,295 | $32,960 |
| Bank loan | $150,000 | $139,171 | $127,208 | $113,992 | $99,393 |
| Paid-in capital | $180,000 | $180,000 | $180,000 | $180,000 | $180,000 |
| Retained earnings | ($107,604) | ($132,814) | ($98,711) | ($60,613) | $4,827 |
| Total liabilities and equity | $233,374 | $206,399 | $233,763 | $262,674 | $317,180 |
Margins and break-even point
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -17.0% | 0.3% | 7.0% | 6.3% | 8.5% |
| Net margin (before start-up costs) | -24.4% | -3.7% | 4.0% | 3.8% | 5.8% |
| Payroll incl. pay raises as share of revenue | 32% | 26% | 22% | 23% | 22% |
| Revenue per full-time equivalent at year end | $187,050 | $227,667 | $287,000 | $249,575 | $280,800 |
| Average monthly revenue | $31,175 | $56,917 | $71,750 | $83,192 | $93,600 |
| Monthly revenue needed to cover operating costs | $42,559 | $56,565 | $60,960 | $71,910 | $76,388 |
| Debt service cover (EBITDA / interest + principal) | -4.2x | 0.1x | 2.4x | 2.5x | 3.8x |
Year 1 averages $31,175 of revenue a month against $42,559 needed to cover operating costs. Year 2 averages $56,917 against $56,565, so it clears the line by under $400 a month. Years 3 to 5 clear it by $10,800 to $17,200 a month. Debt service cover is 0.1x in Year 2, well below one, which the reserve absorbs and which a lender would test. It reaches 2.4x in Year 3 and 3.8x in Year 5. The ratio of sales to staff is the number to watch: revenue per full-time person at year end is $287,000 in Year 3 and $280,800 in Year 5.
When sales run a fifth short
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $299,280 | $546,400 | $688,800 | $798,640 | $898,560 |
| Net income before start-up costs | ($106,215) | ($39,638) | ($24,107) | $9,688 | $46,710 |
| Net income after start-up costs | ($122,715) | ($39,638) | ($24,107) | $9,688 | $46,710 |
| Closing cash | $115,967 | $54,231 | $17,031 | $15,526 | $50,620 |
This case cuts every revenue line by 20% in every year, with horse purchase costs falling in step. The response: the rider and trainer joins in month 20 rather than month 14, the second barn hand is never hired, marketing is cut 20%, Tessa takes a 20% pay cut to $48,000, the barn stays at 20 stalls with no second barn, and no distributions are paid. On those terms cash stays positive in every year, at no less than $15,526, in Year 4. Losses run through Year 3 and the business is profitable from Year 4. Equity ends Year 1 at $57,285 and retained losses push it below zero in Year 3, so the bank would hear about it well before any covenant date, and a small operating line of credit would be asked for. Without the response, the same shortfall would leave the barn out of cash in Years 3 and 4.
Sources
- Bureau of Labor Statistics, Animal care and service workers, Occupational Outlook Handbook, May 2025 wage data for animal trainers and animal care and service workers.
- Kentucky Horsemen's Benevolent and Protective Association, health requirements for horses entering Kentucky tracks, from January 1, 2025: a secondary source on Coggins tests and certificates of veterinary inspection. Kentucky's own Office of State Veterinarian page could not be opened, so entry rules for other settings are not quoted.
- Kentucky corporate income tax rate: not confirmed at a primary source. The plan uses a 5% planning figure. Confirm with the Kentucky Department of Revenue.
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