C A S I E H E LT O N , L E X Y W I L L I S , H E AT H E R

M C K E N Z I E & K E N N E D Y H A R R I S O N
 Business Description & Mission Goals

Cedar Bluff Mares is a Broodmare Farm that specializes in marketing weanlings and yearlings that is an
all-female owned C corporation. Our focus is to bring new people into the world of thoroughbred racing
and we offer 4 internship positions a year. Herd consist of 6 broodmare with an average of 83% foaling
rate. Yearlings are sold during the fall sales in September & October.

Short-Term Goals Long-Term Goals

 Increase sales price of yearlings  Double Broodmare Herd to 12
 Diversify sales to weanlings and yearlings  Add a boarding / sales prep side to
 Upgrade Broodmare Herd business
 Remove need for financing
 Management & Organization
Professional Services: Heather
Personal Plan: Lexy
Advisor Board: N/A
Board of Directors: N/A
Management Team: Kennedy &
Casie
Personality Index:
 Heather:
 Choleric Personality & Thinker
 Lexy:
 Melancholy Personality & Planner
 Casie:
 Choleric Personality
 Kennedy:
 Phlegmatic Personality
 Capital Request
Our operation currently doesn’t have any outside financing. Slightly
above breaking even with current changes made, but with our short-term
goals of upgrading quality of the Broodmare herd & adding a second
barn: Our business would benefit from a small outside financing influx.

With increased staff, we want to employ top-notch people, ability to hire

without concern of pay.

Once our herd has doubled: First crop from them sells the equity line will
once again be paid off.

Our operation will keep the equity line in order to: Help grow the herd
long-term

Make necessary upgrades to board & sales prep horses

Risks of the Cedar Bluff Mares Operation

Personal Risks: • Lack of qualified employees; Risk of being kicked by foal/mare.

• Herd breaks fence and breaks into neighbor’s property (property damage to
Legal Risks: others)

Financial Risks: • Yearlings fail to sell during sale; birthing complications/loss of foal

Market Risks: • Yearling sales could go down (lost interest in buying)

• Foals at risk of sickness/diseases = possible death.

Production Risks: • Mares may not get into foal during the season
 How Cedar Bluff Mare Handles Risk
Breeding to
Over Coverage of
Herd Health SOP Daily Herd Checks (TPR) Proven/Contracted Vet Checks for Pregnancy
Insurance
Stallions

Vary Foal Quality to 24hr Foal Watch Camera

Business Reports on Installation of Quality
Different Levels of Worth & Birthing Technology/ Facility Check SOP
Clients Currently Buying Fencing
at Sales Seasonal Employees

Create a Strong
Networking Team, Limit
Nepotism, & Utilize
University Internships &
Connections
SOP for Horsemanship
Health Insurance When Working With
Foals & Broodmares.
 Implementation Timeline
 Breeding Fees:

 Few seasons to collect needed funds to up our allotted cash amount into breeding fees vs.
being still able to pay for our regular fees.
 Correlation with the creation of herd health SOP (few days to create)

 Vet Schedule (few weeks)

 Proven Stallion contracts (few months)

 Varied yearling quality (2 years)

 Labor:

An immediate prioritized change ensuring our operation has educated/attentive workers.

 Gaining connections with universities (weekly)

 Extra employees during foaling season (seasonal)

 Regular shifts for everyday herd feeding and TPR’s (few months to find perfect matches)
 Implementation Timeline

• An immediate change to allow higher profit to be made.

• Allowing up-to-date pricing in market & selling off property (month to years)
Sale
Fees:

• An immediate change that is a gradual increase rather than having an immediate one-
time increase.
Selli
• Conform to the industry market & make sure you can increase your sales fees without
ng
Price overpricing yearlings.
:
 Marketing Plan
Market Trends:

• Current sales market in the Thoroughbred industry is still strong for sound quality bred weanlings/yearlings.
• Has been a small drop in what is considered the middle market ($75,000 - $150,000)
• Seen more on the pinhook side vs. the homebred side we’re on.
• Market supports first year crops with unraced mares

Customers:

• Varies year to year

• Individuals who purchase our weanlings/yearlings either at Fasig-Tipton or Keeneland sales
• Our horses go to both pinhookers & end user

Pricing:

• Determined by sales market

• Stud fee is taken to consideration & our operation won’t sell our horses for less than 3-5 times the stud fee.
• If horse is an outstanding specimen with strong pedigree then the reserve set is even more than 3-5 times the stud fee.
• Number of showings & vets the horses have been going through the ring helps us to determine the expected value
 SWOT
Internal Strengths Internal Weaknesses
• Quality Mares • Owner’s Lack of Time
• Knowledgeable Owners • Inability to Plan for
• Self-financed Exact Cash In
• Nutrition Program • Death/illness of Herd &
• Extensive industry Babies
network

External External Threats

Opportunities • Thoroughbred Industry
not Currently Stable
• Sales Prep of Outside • Stallions Bred To Do Not
Horses Produce
• Start Our Own • Rising Costs From
Consignment Inflation
• Acquire Land Next to
Our Property
 Balance Sheet Interpretations

Working capital is -$4,151.00

Debt Ratio: 0.482

Current Ratio: 0.928

Net Worth: 324,180

Profit Margin Ratio: -47.39

Some of these numbers listed above are bad but aren’t completely reflected on how our operation is doing because the balance sheet shows
exactly how a business is doing during a month’s period.
 Income Statement

Return to labor & management was -$62.692.60

Assumption to return to labor & management was -$87,692.60

Formula:

• (return to labor & management) – (less opportunity cost of management) = returns to labor
• -62,692.60 – 25,000 = -87,692.60
• Way to improve this is by decreasing expenses by purchasing cheaper, but good quality hay.

ROA calculated at -7.58%

• Means that for every dollar of assets we have incurred a loss of $7.58 in this period.
• To improve this is by increasing sales price of the weanlings/yearlings for our ROA & ROE.

ROE value calculated at -19.34%

• Means for every dollar of owner equity, we have incurred a loss of $19.34 in this period.
 Income Statement
 Opportunity cost of capital: $50,000

 Opportunity cost for labor: $25,000

 Opportunity cost for management: $25,000

 Our operation has 25 acres

An acre cost in Lexington is marketed at $4,000/acre, so 4,000 x 25 =

100,000
To be reasonable, we lowered it to $90,000

 To improve this would to be to continue growing the business & making

changes to increase production.

Changing breeding fees
Increase of our sale fees
Enterprise Budget
Heightened cost of stallion Fees heightened due to
Higher quality foals Increasing labor fees
care increase in stud fees
Since increase on other
To make profit,
fees then we need to
advertising our yearlings Increasing the selling price
increase selling price to
in sales & the care
compensate spending
 Partial Budget
Purchase price of
equipment
•Monthly rent of land
•Insurance on Equipment
Revenue from •Insurance to over rental on
selling left over land
•Cost of labor to harvest
hay hay
•Cost of seed
•Cost of fertilizer
Additional Additional •Cost of soil testing
•Opportunity cost of time
Revenue Costs when land is not used for
production

Reduced Reduced
Costs Revenue

Amount of $$ • N/A
spent on
purchasing hay
 Even though our operation is positive for the year, Cedar
Bluff Farm needs to bring in money at the beginning of
the year to avoid being negative during summer months.
Using cash-flow will more sufficient since our operation
only makes profit in September & October.

 We going to buy one mare in November to increase

Cash Flow herd to 6

 Be able to sell four of our yearlings in Sept. & Oct.

 Then sell the remaining 2 in January at the short

yearling sales.
Historical Projections/Benchmarks
 Some historical performance benchmarks in this case study include
turning a negative profit margin into a positive profit margin, the
ability to be self-financing, and a more profitable business.
 Financial Projections
 Short-Term Goals Include:
Increasing sales price
Diversifying weanlings/yearlings
Upgrading the broodmares herd

 Long-Term Goals Include:

Doubling the broodmares herd to 12
Adding a boarding/sales prep side to the business
Removing need for financing

 There will be an increase in costs due to the creation of two business

subsections. However, that means once the branches are up and
running there will be a massive increase in revenue, which will allow
for an increase in profit.
 Role Reversal-Assume
 As a lender, our group believes we would take a
chance on this business because based on the
changes stated above like the knowledge of
breeding, the nutrition program and the good
credit standing; this operation has a lot to offer
to their consumers.
Areas of improvement:
 if the racing industry crashes due to the social
license to operate, then this operation will have to
change their business plan to stay afloat.
 Cedar Bluff mares is an established all-female owned
Thoroughbred Breeding farm. Handed down from the
previous generation, the current owners and operators have
increased the herd and diversified into yearling and weanling
sales; with an additional branch of boarding and sales prep to
come. Increasing cash in on a yearly basis by adding to the

Executive herd, improving quality of stallions bred to, and focusing on

equine nutrition the farm has become profitable. The

Summary profitability of the farm will increase in years to come and

has put Cedar Bluffs in good credit standing. The owner’s
knowledge and extensive network in the Thoroughbred
community lends to the long-term goal of Cedar Bluff
becoming a strong reputable pillar of the horse capital
world’s Thoroughbred industry.