In her Horse Business Profit Tip: The Secret Power of November Numbers, Elisabeth McMillan reminds us that, 'It's that time of year again, the middle of the final quarter. '
"With only two months left in the year, the fourth and final quarter is a critical financial time for most mainstream businesses and investment managers. But for the horse world, it goes by largely unrecognized.
Most of the horse professionals I know are still hustling to finish out the show year. Sure there is a moderate hope (or quickly forgotten promise) that you will work on the financial end of your business over the holidays, or perhaps when the weather gives you a bit more time, but usually not enough formal action is planned or taken. Sound familiar?
And yet, of all the months of the year, November may be the most important month financially for your horse business than any other month. Why?
With the first three quarters under your belt, you should have enough information to create projections for the rest of the year. These numbers will enable you to estimate whether your business is likely to have operated at a profit or a loss in 2011.
Here is the kicker. No matter which it is, a profit or loss, what you do in November can give you more cash by spring of 2012. Here's how:
A. If your business operated at a profit, you may be in a position to re-invest in your business prior to the close of the year so that you can reduce your tax liability for 2011. Come spring of 2012, when the 2011 tax bill comes due, you won't have to pay as much in taxes.
B. If your business operated at a loss (and even if it didn't), November is the best month to look at your overall profit margins from the year and determine whether you need to raise your prices, cut expenses, grow your business, or all of the above. Identifying these issues now will enable you to make the necessary changes in prices and planning (i.e. creating a marketing plan to attract new customers and a budget to anticipate and hopefully reduce expenses) before the end of the year. So that, by spring of 2012, your horse business will be reaping the benefits from the decisive actions you are taking now.
TIP: Look at all three of these elements (pricing, growth, and expense reduction) and experiment with different scenarios. When a horse business has issues with profitability, the cause is usually a combination of the three. However, it is important to know precisely which areas need to change and by how much so that you are able to take the correct actions.
For example, if your business's core profitability issue is that it needs to grow, but you raised prices instead (and lost clients), your actions would cause more harm than good. Similarly, if your business needed to increase prices, but focused on growth, that growth could negatively affect your profitability because it would multiply the problem rather than mitigate it.
This is why November is such an important month for your horse business. The beauty of November isn't just in the season, it is in the numbers. The numbers of November enable you to clearly identify where you are financially. These numbers give you a critical compass point so that no matter where you currently find yourself, you can chart a new course and change your future for the better."