In conjunction with Cheryl Johns from LiveryList and the Yard Owner Hub, SEIB’s Livery Yard Insurance team recently held a webinar helping yard owners understand the costs related to the running of their yards.
In this article, Cheryl will be covering the important points raised in that webinar to help yard owners better understand how to run a sustainable and viable business, with longevity for the future.
The main benefits of understanding your costs are to know that you are covering your outgoings with the charges your clients pay for your livery packages. Being able to cover your own business can offer you a level of financial stability and long-term success of your business. It also allows you to maintain the standards and quality of service that your clients are accustomed to. Ideally, running your yard will also enable you to make a profit from your business to either earn an income, or to help invest in improvements in the yard for the future.
Unfortunately, it is common that yard owners do not calculate their costs properly, or at all, before deciding on their charges for their livery packages. This can mean that they are running at a loss, often unknowingly, because the charges they receive do not cover their outgoings.
One of the biggest omissions by yard owners when calculating their costs is to allow a suitable hourly rate for their own time, both practically and administratively running the yard. If you are failing to include an hourly rate for your time even at the equivalent of minimum wage then this can severely impact any income that you are able to make from running a yard.
With the increased cost of living, national minimum wage, and inflation over the last 12 to 18 months, many yard owners have not increased their prices to reflect this potential increase in their business costs. All yard owners at the very least should raise their prices annually in line with the inflation rate, and this should be part of their livery contracts. Under normal circumstances it is recommended that this annual rise should be around 2% to 3%, but in 2023 the interest rate has been as high as 10%, and those yard owners that are not increasing their prices in any way will be absorbing the raised costs of running their businesses, often from their own pocket.
It is a common misconception to maintain low prices to be able to compete with other yards locally to keep stables full, and to avoid price rises so as not to lose liveries. However, this can be a false economy if these low prices mean that you are subsidising your liveries from your own pocket because your livery charges are not covering your costs. It is important for all yard owners to calculate their costs properly and to make sure they are charging a suitable amount to cover these costs, and to allow themselves a wage too.
The reluctance or failure to raise livery charges is not only damaging to the yard itself, but potentially to all yards in the area. Collectively yards in a local area tend to compare to one another when it comes to prices, even though realistically despite similar facilities and services they may not be at all comparable in a financial sense. If all yards in an area try to keep their prices the same to remain competitive, all of these yards will have a reluctance to increase prices, and ultimately this can result in detriment to the industry as a whole by the livery prices of an area being kept low by giving horse owners a false impression of livery costs. Those yards choosing to keep their prices low and absorb price rises may start to find it difficult to pay their bills, start accruing debt or find they have to reduce services or provisions.
For the good of the industry, it is therefore important that yards calculate their costs, and review them on a regular basis- ideally bi-annually- and adjust their prices accordingly. Whilst it is good to remain competitively priced within your local area, you must remember that your own business is the priority and that you need to make sure you are charging the correct amount for what you are providing.
Another important point is to not cut costs on areas of running your yard. This can often be a false economy and open you up to potential costly problems down the line. This could include reducing livery yard or professional insurance cover, purchasing lower quality consumables such as hay and bedding, or reducing staff training and health and safety considerations. All of these can make it more difficult for you to maintain suitable standards on your yard, and could potentially lead to other problems.
For yards worrying about price increases, often these are well received by horse owners who understand that, just like their own household costs and utility bills, the cost of running a yard and providing livery must increase as well. Considering your pricing can be a great opportunity to reconsider what you offer as a yard. Think about where there may be any niches or gaps in the market that means you can offer something different to other yards locally, therefore making you more difficult to compare when it comes to pricing. It’s also worth looking at the packages you offer, the inclusions of these packages, and the way you market your yard to attract the right clients who are prepared to pay the amount you need to charge to provide those services.
All of these aspects of costings for yards and implementing price increases effectively are covered in the webinar. The webinar is free to access and is approximately 1 hour long. It gives additional details and reasoning to the points raised in this article, as well as pointing you in the right direction to resources and support on the LiveryList Yard Owner Hub, all of which are completely free to access.
You can view the webinar here.
About the author
Cheryl Johns, SEIB Equestrian Business Writer and the founder of LiveryList and the Yard Owner Hub, is a qualified and experienced yard manager, marketing advisor and business consultant with experience across a range of industries.
About SEIB
SEIB have been arranging livery yard insurance and riding school insurance for over 60 years. This experience allows us to tailor policies to suit your circumstances and ensure that you and your horses are covered should the worst happen.
