Friday, May 7, 2010

Birds and Financial Modeling

There have been some wonderful bird visitors this week in the pastures - Meadowlarks, Bobolinks and White-crowned Sparrows. Meadowlarks and Bobolinks are both grassland birds that are in serious decline due to loss of habitat, and our pastures provide just what they want. They both have beautiful songs - the links have recorded songs you can play. The White-crowned Sparrows are a favorite spring bird of mine - they are perky and bold and have recently been gathering dandelion fluff in my yard for their nests.

We've got chilly, rainy weather - the horses are out in their rain sheets. Maisie's been doing really well with her half-day of dry lot turnout, so I'm keeping my fingers crossed that the worst is over.

The past few days I've been working on some financial modeling for our barn. Fortunately, we have very good data on our spending, as the husband of one of our boarders keeps our books and has detailed data for me to use. As anyone who's ever done (good) modeling knows, a model is only as good as the data and assumptions that go into it (a point that the creators of some of the synthetic mortgage-related products on Wall Street seem to have forgotten). We're basically a small business with some unique features. Our barn's a bit of an odd duck - it was set up by the developer about 15 years ago and is now owned by a non-profit corporation that we set up - so there's no one who's its true owner who could invest in it or profit from its operations. We've struggled for years - I've had at least one horse there for 9 years now - with the fact that we have very high labor costs and maintenance and capital costs due to the way it was set up and built, combined with relatively few horses. Property taxes, for example, are a real killer in this part of the world, even though we were able to get an open space abatement. As our number of horses declines - we have capacity for 12 currently but will be down to 10 when Maisie moves to her new barn, and I expect at least one or two more to leave over the summer - and our remaining horses age - many are seniors - we need to figure out a way to operate that works. We have no indoor, and really can't take boarders who aren't able to do quite a bit of volunteer work to make things go.

We've done versions of this analysis twice before since I've been here, and have made some substantial improvements, mainly related to working to reduce expenses where we can and carefully control labor costs. In one of my past lives, I did a lot of modeling and was a bit of an Excel spreadsheet jockey, and I actually enjoy this sort of thing. The model I'm working on shows our expenses by type - some vary pretty directly by the number of horses, and some are fixed - and their impact on the bottom line (money available for maintenance and capital improvements) under certain assumptions, including varying numbers of horses. The trick with modeling, I've found, is to find a way to not just show a bunch of data, but rather to present it in a way that highlights the critical issues and helps get a handle on them. I've done about 3 hours of work so far and should complete it this weekend. Then we'll have some conversations about what needs to change to make things work better. I'm beginning to get a clear picture, but still have work to do to have the data presented in a way that will clearly help others see what I'm beginning to see - or the data may show that my inklings aren't right - I'm not quite there yet but I think the fog is beginning to clear.

8 comments:

  1. Glad that Maisie is doing well!

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  2. I find this fascinating. As I explore the possibility of our own land, I wonder at the actual financial aspect of it. It seems like it makes no sense not to board our horses because of the costs involved. We pay 275 a horse and we have very inexpensive home. I can't imagine it would make sense.

    I'd love to see your excell sheet if you can share a dummy version of it. (I'm a file maker pro geek, and aspire to being an excel one as well).

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  3. I probably should set up some kind of accounting for my horses at some point, but keeping them home here with me is definitely cheaper than boarding out here in Central New Jersey.

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  4. Breathe - Once I'm done with it, I'd be glad to share it - it's just a summary but could be set up to feed into data you enter on a monthly basis - I did that part manually based on historical data.

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  5. Glad Maisie is doing better! We spend a lot of time forecasting financials ourselves, it is so important in any business to spend quality time running (and understanding) the numbers.

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  6. Glad to hear Maisie is doing better. I'm out as far as the financials go, hope it all works out well for everyone concerned.

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  7. Wow, Kate! That's a lot of work but sounds like you are good at it and like it....I'm not a numbers person at all!
    I am so glad and lucky too that I have Pokey and Gilly here on our farm and don't have to board. There is a lot of contend with when you board, I admire those who do and make it work for them. I think it would be hard, dealing with people and personalities, other horses; a lot of responsibility too.
    Gilly and Pokey come and go as they please and our barn isn't as nice as I would like but the boys don't care. They have shelter when they choose to use it, hills to run over, trees to shade them, a ravine to explore....they think they are wild horses and seem very happy.
    Glad to hear that Maisie is doing better! :-D

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  8. I, too, would love to have a copy of your spread sheet for the barn, Kate, as I am seriously thinking of embarking into the world of boarding horses. The fellow where I now pasture board Cookie is seriously thinking of closing the barn board option (18 stall barn), and maybe shutting down the stable entirely. We've actually batted the idea around for a couple of years, and the owner is actually interested in having me take over the barn part of the stable. He has recently presented me with a couple of leasing options. The stable is located about 5 miles from VT (where there is a vet school), and caters to VT and VT vet students who bring their horses to college with them.
    I'm actually very excited to jump into this adventure - not looking to make a killing (so to speak) but I love the folks, the kids, the horses and the place. I've been there with Cookie for going on seven years now and consider it my "home-away-from-home".

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