WHAT DOES IT TAKE TO SURVIVE AS A HORSE BREEDER? Dr. Simon Ramo, a legendary American engineer wrote a book in 1970 about, of all things, tennis, titled Extraordinary Tennis for the Ordinary Player. The engineer in him noticed that the game of tennis involves two games – he concluded that professional tennis players win points while amateur players lose points. In other words, for professionals, most points are won by the pro hitting a spectacular winning shot that is just out of reach of their opponent (a “winner’s game”), while amateurs typically lose points by making an unforced error (a “loser’s game”). Writing in a famous 1975 Financial Analysts Journal article, noted investment analyst Charles Ellis extended Ramo’s tennis concept to the investment business. Ellis said investing had flipped from being a winner’s game to a loser’s game. I think what he meant was that to succeed at investing you need to focus on making fewer avoidable errors as opposed to making spectacular winning investments. Now making fewer avoidable errors is a worthy goal at any time, but it is critical in today’s more mature property markets. So what has all this got to do with Horse Breeding? The best way to explain this is that during booms it’s easy to look smart. Rising numbers of buyers cover up many mistakes in the industry. But the horse markets around Australia are very fragmented and just after a period of reasonable growth, seasonal or economic factors bring boom times to a quick end. Historically there have been many reasons why people have gone out of horse breeding (a good thing) and horse buying (not so good) and these include more recently EI, GFC, Hendra and flood and drought. That reminds me of 2 of Warren Buffet’s famous sayings: 1. “A rising tide lifts all ships” and… 2. “When the tide is out you can see who is swimming naked.” Yet some horse breeders survive year after year producing quality, useful stock and have a steady market through word of mouth and repeat buyers. These successful breeders are not trying to get rich. In fact, we all know that that is almost impossible with any facet of owning horses, least of all horse breeding. Instead they focus on making fewer avoidable errors by using proven trusted methods. In my opinion these are – 1) Having a vision and written goals about what they want to achieve over 5, 7, 15 years, aiming for quality, and knowing what that means. 2) Having a well thought out budget for each year and a suitable financial buffer. 3) Having contingency plans for accident and emergency (both financial and strategic) and wind-up plans. 4) Having a mentor(s) whom they trust to give unbiased insightful advice, someone who has been there, done that and importantly, whom they actively listen to when discussing and critiquing. 5) Seeking out education in the areas that matter – horse care and handling, nutrition, breeding practice, bloodlines, genetics, property maintenance and the like. Taking courses for theory and getting practical experience in those areas they are least proficient in. They never stop learning by experience. They question why did that happen? 6) Being professional in their approach to horse breeding on every level, which includes being involved with their Association and peers and contributing towards the future. They see conversations with peers are important for insider information that is “hidden” from the average breeder, and know it gives a backup network for help in tough times. 7) They are, or have been, a horse rider. They understand their horses and importantly require them to be broken, ridden and promoted. They have a greater understanding of what they are trying to achieve in terms of goals/discipline, bloodlines and marketing of stock because of this. 8) They have essential promotion, marketing, and sales skills involving honest communication with potential buyers. This is usually tidy, rather than expensive or slick. 9) Have ability to recognise and be flexible during inevitable market downturns. 10) And importantly – a successful breeder has strength of character and passion to do what is necessary, rather than putting off, or only doing what is ‘easy.’ Horse breeding is not for anyone who finds it difficult to handle stressful situations, short or long term, It takes GUTS or internal fortitude! It is NEVER easy.
Posted on: Wed, 01 Oct 2014 01:17:59 +0000
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