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By: Dr. Betsy Greene, Equine Extension Specialist, University of Vermont
There are numerous factors that will help to determine if your efforts in the horse industry will result in either a successful endeavor or a money draining and expensive proposition. Several critical factors to consider include presentation of yourself, your facilities and your product (usually horses); a well thought out marketing plan; and fortuitous choices in placement or methods used in sales. Along with these considerations, the vigilant marketer also will be familiar with seller responsibilities, warranties, waivers and disclaimers, and in worst case scenarios, potential fraud. Finally, after all of the preparation, advertising, and salesmanship have been completed, focuses will need to shift to retention of established customer base while continued efforts to seek out new clientele are put into action.
PRESENTATION
Whether you are selling one or a thousand horses a year, your reputation will have a huge impact on your success in the industry. The old saying, “Word of mouth can be your best friend or your worst enemy” still holds true in all aspects of business. If you have the reputation of being knowledgeable about the current horse market and capable of choosing and/or training your animals in a proper manner, past customers will be more likely to recommend your services to additional friends or contacts. Furthermore, clientele frequently value honesty and trustworthiness above both salesmanship and horsemanship. The customers may not need to “always be right,” but they do need to feel that they are being treated in a fair and equitable manner. When you consider that the average disgruntled customer will share his bad experience with nine other people, it becomes critical to establish and maintain a strong reputation and to pay attention to customer service.
The presentation of your facility and the actions of your employees may be of either great benefit or a detriment to your reputation. The barn does not need to be outfitted with brass light fixtures and oak panels to make a favorable impression. However, cleanliness, organization, obvious attention to the health and safety of people and horses in a low cost but functional stable will outshine a disheveled and unkempt expensive facility every time. The appearance and attitudes of employees may contribute to the atmosphere as well. Horse presentation is a critical factor in success. In addition to the level of training, all horses should be on a balanced nutritional ration, regular vaccination, deworming and farrier programs and exercise protocol. If the horse is under saddle, it will need to be fit and ready to show. If you must explain that “He just needs a little tuning up,” you have probably knocked money off the top of your asking price.
MARKETING PLAN
Proper identification of the target market will enhance the likelihood of success in your program. It is necessary to research the market by attending sales, checking out the competition, and talking to people in the industry to establish fair market values. One of the most frequently cited reasons for business failure is a lacking or nonexistent advertising program. An effective advertising campaign for even the smallest of equine businesses will extend over an entire twelve-month period. Research through breed organizations, state and county extension agents, local clubs and organizations, the American Horse Council, and the Chamber of Commerce can help you to become familiar with your market. Often, the majority of your business will come from within a 150-200 mile radius.
Some tips regarding ad placement include:
1) running smaller ads on a more frequent basis rather than a one shot deal,
2) targeting appropriate time periods for running more ads (i.e. prior to breeding season for stallion advertisements), and
3) planning ahead. Several magazines have a three-month lead-time for publication.
Carefully plan the content and layout of your advertisement. Take your ideas from favorable existing ads that have a clear and concise message, and are easy to read. If you use pictures, use professional quality photographs, and be sure to put a contact name and phone number in the advertisement.
Throughout the planning process, it will also be necessary to establish reasonable prices that your market will support. Whether you choose to market horses by auction or private treaty, you will usually have two prices in mind. Usually the minimum amount that you will accept is the base price (i.e. cost of breeding fees, veterinary and board bills). The second price might factor in extras, such as training and profit. If the base price of your horses cannot be met within the available market, it is a distinct sign that you must reevaluate your product, methods, or geographical location. Selling horses below costs invested will certainly not result in a profit margin at the end of the year. Auctions allow the seller to place a reserve or minimum bid on their horse in order to prevent a sale well below the base price.
These are not usually published, therefore allowing a fair shot to both the seller and the buyer. An additional way to establish value for your horse is to employ a certified equine appraiser.
METHODS OF SALE
The methods utilized most frequently for marketing their horses are private treaty and auctions. In the case of “on the farm” sales, be sure the horse is prepared to be shown at all times. Advertising printed in classifieds, newsletters, and posted at horse shows, tack shops and feed stores usually serve the low number marketer. The internet has become a huge medium for connecting buyers and sellers, but also sellers and scam artists! An effective ad will emphasize good points, include the price, and a number of contact methods. On the internet, choose sites that both offer diversity as well as breed or discipline specific. Picture ads may cost a little bit, but are cited often by purchasers as what caught their eye and made them take a second look. Bad pictures are worse than no pictures, however! Often, people don’t like to include the price in the ad, but usually the first question from their callers, if they bother to contact you at all, is some form of “What are ya asking…” Ideally, of course, your farm should be neat and clean, and have a specific place designated to show the horses (i.e. arena or walking ring).
There are several options if you market your animals through auctions. You yourself can take the horse through the ring, and be the one to field all questions, or you can turn the horse(s) over to a consignor. The consignor acts as an agent for the owner and has authority to sign the bill of sale and collect money. The consignment agreement usually provides limited power of attorney, commission, board fees and responsibility for care of the horse. The horse will be listed in a catalogue. However, if you “no sale” the horse (RNA= reserve not attained) or the horse does not reach the minimum bid, you are still responsible for a commission to the agent and the sales agency. Unfortunately with this method, as a seller you have less control over the final destination of your horse.
RESPONSIBILITIES/WARRANTIES
“Buyer beware” is the most common perception in horse transactions today. An express warranty can actually translate to “money back guarantee” if what was said about the horse resulted in a purchase. These situations often go to litigation if a “guarantee” of soundness or gentleness is stated during the purchase and is later found to be untrue. The statements need to be factual and realistic rather than opinion for the express warranty to hold up in court. However, be aware that a seller can actually create a warranty unintentionally by providing information to the potential client. An implied warranty is similar, but is usually related to a specific purpose or use of the horse. The difference, however, is determined by what is not said. For example, a horse purchased for a young rider may have an implied warranty of gentleness, while broodmare prospects will have an implied warranty for fertility. If the owner withholds knowledge as to why the animal would not be suitable for the stated purpose, silence may create another money back guarantee.
Things may get interesting, if, for instance the buyer finds out the “show jumping prospect” is not sound, but decides to breed her. At this point, the implied or express warranty becomes void, since the buyer exercised control over the mare. In addition, the longer the buyer has the horse in his possession, the less likely the courts will rule in favor of the express or implied warranty. It will be harder to prove that the condition existed prior to the transfer of ownership (i.e. the new owner could have caused the problem).
If the situation deteriorates to the point of fraud, the buyer will have to prove:
1) The seller made a false representation (i.e. the horse is sound),
2) The seller knew it was false,
3) The seller intended the buyer to rely on the representation,
4) The buyer relied on the false representation and,
5) The buyer was injured by the sellers misrepresentation.
How can such a situation be avoided? A written report from your veterinarian regarding health and soundness may transfer potential liability from the seller to the veterinarian. The seller can disclaim (in writing) any implied or express warranty by stating that the horse is being sold “as is.” A similar statement is usually written in the Terms and Conditions section of most auction catalogues. The seller may also demand that the buyer inspect the horse thoroughly, and if the buyer refuses to do this, he may in fact be waiving his right to any warranty.
FOOD FOR THOUGHT
Business research has shown that approximately 65% of clientele for an average business are made up of established, repeat customers. Almost 90% of dissatisfied customers will not return to make another purchase; therefore it is very important the sellers value the customer service aspect. While it may be impossible to satisfy everybody all of the time, there are many things that can be done to build the satisfied customer base. The attention to detail and a strong reputation for honesty and integrity will go a lot further than trying to impress only the “important” clients. Treat everyone as a potential client, and choose not to make snap judgments based on appearance, knowledge or background of your potential client. If you act professionally for no other reason than common courtesy and respect to the customer, remember also, that you never know whom they know.
—Dr. Betsy Greene, Equine Extension Specialist, University of Vermont
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Equine Industry Issues Discussed at the American Horse Council Forum
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