Turnover is vanity, profit is sanity and cash flow is king said a very wise business person! I’ve never met an equestrian entrepreneur who didn’t want a more profitable equine business. The fastest way to do this is to increase your prices but sometimes this isn’t easy when you are operating in a competitive environment.
Over the last couple of months, I have spent a lot of time at airports and on planes and there are definitely some ideas that the equine industry could copy from airlines to increase profits. So as I am sat once again in a departure lounge, here are three easy ways to improve the profits of your equine business, inspired by Ryanair!
1) Premium Pricing
Can you offer your clients a more convenient or upgraded version of your product or service and charge extra for it? A more convenient version of your product might be something that happens faster (like speedy boarding on an airline) or at a time that better suits your customer.
Can you shorten the delivery time for a made to measure bridle and charge extra for it? Could you offer a 48 hour turnaround time on photos after a photoshoot instead of your standard two-week delivery window? What about delivering your product or service at a more convenient time? If you are a farrier you could offer evening appointments one night a week or work one weekend day and charge a higher price than your normal rate card during these periods. For your busy amateur rider customer who has to take part of their holiday allowance from work to meet you at the barn during a weekday, the chance to save their precious holiday time is well worth the extra charges. This strategy doesn’t mean you have to work extra hours either, just that you take your time off in a different schedule to your current one.
The other way to attract premium pricing is to offer an upgraded version of your product. This doesn’t always have to involve more raw materials either so you can increase your profit margins as well as the total sale. If you are selling tickets to a symposium or clinic, how about charging extra for the first couple of rows of seats with superior views. For the product based businesses, what about offering a limited edition range? Eskadron does this very well with their platinum range by producing smaller amounts of the collection than their main ranges and offering them during a limited time frame. Anyone who is in one of the many Facebook groups dedicated to matchy-matchy will know the extreme lengths dressage fans will go to in order to secure their set of choice, even though they cost more than a standard Eskadron product, often with no extra technical features.
The more in advance you book your plane ticket, the cheaper you can secure it. Why not use the same principles with your equine business and get your customers to pre-pay for a discount? Whilst this doesn’t seem like it will directly increase profits because you are offering a discount, the improvement in your own cashflow will allow you to save money by reducing the debt levels in your business (credit cards, overdrafts etc) and saving on interest payments. Also, many of your suppliers are likely to offer their own discounts for pre-payments, again saving you money on your expenses, which in turn increases your profits.
Here are two examples of how to do it in different equine businesses:
- Sell a package of 10 lessons with a discount (perhaps offering 1 lesson free, so they only pay for 9)
- Ask clients to pay for 3 months of social media management or training livery upfront.
Not only is this great for cash flow but it makes it much easier to plan your workload as you know you have guaranteed work for the next quarter.
3) Accept Card Payments
When I ask equine business owners (like my farrier!) why they don’t accept card payments, I’m often told it’s too expensive. Perhaps this used to be the case when you were tied into long contracts and monthly fees with expensive card machines but now with mobile card readers like iZettle (Europe) or Sumup (USA & UK) you can take payments quickly and easily. In many cases, the money is available in your business bank account within 1 working day.
Yes, there will be a fee (typically 2-3% of the transaction) but there are hidden costs in your existing payment methods too. Get paid by cash or cheque? Then you need to find time to get to the bank and pay them in, plus your bank might also charge you for doing this. If you are one of those horse pros that takes a very long time to bank your cheques, not only are you harming your cash-flow but also risk annoying your customers when money is taken from their account that they had forgotten about and not budgeted for.
Get paid on credit terms (typically 30 days)? Then you will be helping to fund someone else’s equine business via your goods and services whilst you wait to get paid. Plus by accepting card payments you’ll be saving time spent chasing up slow payers or those who have forgotten to make a BACS payment.
As fewer customers have chequebooks, you’ll be doing them a favour too. No more hunting for a cashpoint in the countryside when you realise your trainer arrives in an hour and you don’t have the correct cash in your wallet.
So there you go, three easy ways to make sure you have a profitable equine business. If you are already using some of these methods in your business, I’d love to hear more details, post them in the comments below.