Business continuity planning for equine farms and equestrian operations
Thursday, April 23, 2020 @ 3:20 PM | By Breanna Young
With all of these income-producing activities prohibited for the foreseeable future, it is crucial that equine farms and equestrian operations plan and prepare for the financial impact COVID-19 will have on their business.
Business continuity planning is a helpful tool to identify business risks, assess the impact of those risks and create a plan to ensure critical aspects of the business can continue to function with minimal interruption.
The basic steps to create a business continuity plan are as follows:
- Undergo a business impact analysis;
- Develop recovery strategies;
- Devise a plan; and
- Test and implement the plan.
Business impact analysis
The first step of business continuity planning involves identifying and prioritizing the businesses’ key functions in order to create a final plan that will ensure these critical functions can continue with minimal impact. Public-facing activities such as lessons, clinics, shows and summer camps will not be a priority for equestrian operations, whereas maintaining a minimum level of care for the horses, completing barn chores and performing basic facility maintenance will become a priority.
To assess the impact that COVID-19 will have on the business, equestrian facility owners should compile data on their monthly business expenses and monthly income sources and input this information into an excel worksheet. Facility owners should use this data to assess the impact a 50 per cent reduction in monthly income would have on their ability to pay expenses as they come due, then a 75 per cent reduction and finally a 100 per cent reduction.
This information will provide the equestrian facility owner with valuable information about what their cash flow will be during this time and will enable them to make decisions accordingly. It will also uncover the amount of financial reserves the business has and how long these reserves will last.
A recent survey of 640 equestrian farms and facilities administered by EC uncovered that 36 per cent of farms offering equestrian activities had no financial reserves available and 31.1 per cent had enough financial reserves to last one month. The survey also concluded that the average percentage of business income derived from equestrian activities is 73 per cent, which is predicted to result in a 65 per cent to 100 per cent income loss due to COVID-19.
These figures are shocking and should encourage equestrian farms and facilities to undergo business continuity planning to minimize the impact that COVID-19 may have on the business.
Develop recovery strategies
Once an equestrian facility owner has assessed the impact that an income reduction will have on the business, they can turn to developing strategies to mitigate that impact. Some strategies for increasing overall cash flow include:
1. Increasing revenue from current profit centres.
- Unfortunately this may be difficult for equestrian operations as their main profit centre is generally through public facing activities.
- Only if this is possible while maintaining the minimum standard of care for the horses.
- Connecting with suppliers and financial institutions to request payment deferrals
- Consider liquidating any assets to increase cash flow temporarily
- Consider using the COVID-19 loan and wage subsidy relief available though the government.
- Boarding and lesson barns can organize virtual watch parties of horse movies, create blogs and videos on stable management and training exercises and provide their clients with at-home exercise programs;
- Coaches can engage in online education to improve their skills and qualifications;
- Facility owners can build their business by developing their website or by enrolling in a marketing course
Devise a plan
As part of the plan to address the COVID-19 impact in particular, equestrian facility owners should update their current daily routines and management procedures and ensure this information is readily available. This becomes crucial in an unfortunate situation where current management personnel fall ill and must be replaced immediately by an employee who is less familiar with these processes.
Secondly, equestrian facility owners should review their current inventory of hay, shavings, feed and medication and take steps to obtain a two- or three-week supply of these essential items.
Thirdly, facility owners should determine the number of staff necessary to continue maintaining the essential operations and divide those staff members into two teams; rotate the teams so they remain isolated from one another. If a member of one team falls ill, the other team remains unaffected and can continue to carry on the essential operations.
Lastly, facility owners should develop a communication system to provide all employees, owners, riders and third-party service providers with regular updates on the policies and protocols in place at the facility that are designed to address the pandemic.
Test and implement plan
As we are currently in the middle of the pandemic, it is too late to test the plan. However, there is still time to implement the plan and minimize the financial impact of COVID-19. Once the business recovers from the pandemic, facility owners can reflect on the plan and make any necessary changes for the future.
Breanna Young is an articling student at Torkin Manes LLP in Toronto and she obtained her juris doctor from the University of Ottawa in 2019.
Photo credit / Cattallina ISTOCKPHOTO.COM
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