In a Horse Business Profit Tip: The Secret Power of November Numbers, Elisabeth McMillan reminded us that, 'It's that time of year again, the middle of the final quarter. '
Looking ahead with your horse business
November is the time to create financial projections for the end of 2013 so you can estimate whether your horse business will have operated at a profit or a loss.
"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 horse professionals are hustling to finish out the show year, but this is the time for a horse owner to take stock of what is, what should be, and what needs to be done to reach financial goals.
"Of all the months of the year, November may be the most important month financially for your horse business." Here's why:
With the first three quarters of the year gone by, 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 2013.
No matter which it is, a profit or loss, what you do in November can give you more cash by spring of 2014. Here's how:
- 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 2013. Come spring of 2014, when the 2013 tax bill comes due, you won't have to pay as much in taxes.
- If your business operated at a loss, or 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 by 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 2014, your horse business will be reaping the benefits from the decisive actions you are taking in November.
Tips for looking ahead with your horse business
Look at all three of these elements in your business: pricing, growth, and expense reduction. Now, 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."