Farriery Enters the Service Sector
by Andy Juell
|Published in the January 1999 Issue of Anvil Magazine
Because of the nature of this article and the legal requirements in various states concerning employer/employee relationships, no names are being used. Anyone considering adding “staff” to their respective business should seek legal and professional help. While many farriers have expressed the distinct advantages to acquiring “help” with their business, a great deal of liability goes along with it.
As the current millennium rapidly comes to a close, farriers for the most part are not worrying about the Y2K problem as much as how to make their businesses succeed in a very changed world. The era of the “spreading chestnut tree,” and sinewy-armed blacksmith is being usurped in favor of laptop computers, high-tech materials, automated scheduling and billing; i.e., what America seems to want: not service with a smile just service. Don’t bother me with the details; just change my damn oil.
The reason for this transition is two-fold: First, we discovered the microwave oven, the home version of fast food, which helped to facilitate our perverse desire to have the whole family put in fourteen-hour days either working in some job we basically hate, or reducing stress by walking up Mt. Everest backwards. The second major change was the de-industrialization of America. Railroads and steel mills have given way to, well, Bill Gates, I guess. Software has replaced hardware, e-mail reduces the need for real conversation, and haircuts don’t require an appointment.
Horseshoeing cannot be considered immune to the trend, and cynicism aside, it is not necessarily a negative. The era of the sole propriertiship, Longfellow’s poetic salute to America’s old stoicism, is dying on the vine. Business is less and less a personal relationship, at least in those areas where urbanization and expendable income collide East Coast, West Coast. Horses are no longer large, hairy varmints assigned to the task of managing a herd of rib-eye steaks destined for the nearest Safeway. They are BMWs finicky machines that are not allowed to strand the pilot along the side of a freeway. Sure, farriers probably still have better than a 50% chance of getting fired on a regular basis, but the positive side is the overall continuity within the industry, meaning that most jobs nowadays are somewhat generic. With the advent of professional associations, clinics, seminars and skill sharing, a competitive advantage, via some spiritual enlightenment, simply does not exist in this, the information age. Certainly a sliding scale of talent does exist, which is true with virtually every business, but nowadays many farriers can move up to middle management, taking full advantage of the impersonal nature of the service sector.
So how does one go forward? Two premises seem valid: the first is the nature of demand in general; the opposing limitation being that one man or woman can only do so much. Some farriers simply play the price card, raising fees and then culling by a process of economic warfare aimed at the less flush clients being served.
A few things happen, though, in that process: clients are lost that you happen to really like, service may go to hell because you simply do not want to make such a choice, or the body falls apart anyway the price per capita may have gone up, but the physical carnage to the few remaining moving parts has remained about the same.
Staffing is the obvious solution, but certainly not the easy choice, it may seem. And it is not a new concept, just far more prevalent within the industry today. To make the leap, a farrier must have the volume of horses to justify the help, the personal desire to make such a move, and, most importantly, the business acumen to pull it off and sustain the decision. A good portion of the success or failure of such a move falls under marketing, which will place the new “boss” in the middle employees below, clients above. Both parties in this new relationship will expect you to make it work, to sell the idea, especially to offer advantages to clients who may feel they are losing a degree of personal attention. Service can make up for some of these feelings. Read a few books on management, especially those written for people who have suddenly been “bumped up the ladder.” Find out if your personality could convince a firing squad to shoot somebody else. A little soul searching is always in order before you make a leap that could have serious and long-term effects on your business, not to mention your life.
Most new additions to a business fall under the categories of partners, direct employees, subcontractors or apprentices. They all have advantages and disadvantages for the parties involved. Partnerships are by far the most perilous, given the degree of financial risk if the relationship sours. Partnerships always entail a “loss of control” within the business by each partner. Decisions become a joint process and while one partner may have a more dominant personality, resolving a conflict by simply terminating the relationship goes a long way to explain just how nasty divorces can become.
Some businesses hire direct employees, many times a spinoff of the apprenticehip system. Some may be recent farrier school graduates seeking immediate work or additional skills. Others simply do not want the headaches involved in running their own business. However, an employee or an apprentice falls under the labor laws enacted by virtually every state decades ago. The employer has a legal responsibility concerning the health and safety of that employee (workmen’s compensation, $1600-2600 a year in some states due the perceived risk rating of the profession), assorted requirements to guarantee the payment of state and federal tax requirements, and a greatly increased liability exposure since the employee is a direct representative of the company. Most businesses with one or two employees simply cannot absorb the additional risk and expense.
Most of the businesses interviewed for this article have taken on the last option subcontracting. Additional farriers are added to the business, quite often on a regular, long-term basis by contracting for their services, rather than directly employing them. Staff shoers normally have their own business licenses, separate vehicles, their own health and safety policies and perhaps a private business on the side. In many states this is perfectly legal as long as certain guidelines are met. Liability exposure still exists, but most farriers contracting for services carry “error and omission” policies running between $1 and 3 million dollars in coverage. These policies cover a number of situations, and one popular policy is offered through The American Horse Show Association in New York. The underwriter is Equisure, Inc., based in Denver, Colorado (see end of article), which specializes in basically third-party issues, what the industry refers to as “care, custody and control.” Jay Ginnow, Executive Vice-President of Equisure, Inc. stresses that farriers often have a misconception about what this really means. Custody occurs the second a horseshoer puts his hand on the horse and regardless of the notion that the farrier is a professional, the horse is considered real property. Real property can be damaged, the ultimate being the death of the animal. Some farriers believe that a standard homeowner’s policy will cover such a perceived liability. Wrong. Virtually all such policies discount activities identified as a “business pursuit.” Without a separate business policy to cover “any horse or equine-related activity,” litigation is going to fall under the umbrella of “perception,” which means that a jury or judge is going to decide the real nature of your activity. As Ginnow points out, and this article has tried to reinforce, “we are in a different arena.” These “people [clients] are wealthy, they are professionals,” and they are not inclined to look the other way when the unexpected or unanticipated occurs. Animals are no more predictable than people.
A West Coast farrier, who has been in business for twenty-six years and contracts with three farriers and a couple of helpers, manages the business in a very efficient and pragmatic manner, though not without figuring out some ups and downs along the way. He firmly believes in paying commissions versus day rates, though all helpers just starting out get a flat rate of $50 a day. Commissions are paid based on skill levelreally, overall value to the business as a whole. AFA Certified Farriers receive 55% on the work they perform, Journeymen 60%. A typical $130. job would net the Journeyman $78., the business owner (let’s just say manager), $32. He has to take care of the books, bill and schedule, handle the marketing and ordering, plus he shoes a number of horses himself a day. He also pays for all materials, fuel and propane and offers a 5% rebate if the staff farrier uses his own vehicle. One interesting aspect to this arrangement is that this sudden “manager” has to be home by 3:00 p.m. every day just to handle the paperwork. His initial question, at least to himself, was: “Where do I want to be in the financial arena?” Given his current net worth, it is not under that “spreading chestnut tree.” What makes his business work is, in a way, a simple equation: service, quality work and on-time delivery. His contractors are a direct tax deduction, his clients are happy, and the people who work with his business are given the incentive to advance their own skills while making a pretty decent living. The really hard part? “I had to learn how to step back and supervise, and really let the guys go forward.”
Another California farrier adopted the same theme in 1990. Believing that “for and together” was better than going it alone, he found he could immediately increase his work by 25% and grow from there, really creating “your own salary.” He also carries a $1 million liability policy (through the AHSA) and has gone as far as steering his contractors into incorporation a further protection for his own business. $1-3 million might seem excessive to some, but in the real world, most attorneys see it as “chump change,” the minimum anyone should carry in a service industry. Given the fact that a half-way decent hunter costs about $100,000, $1 million in coverage is little more than “annoyance money,” enough to make somebody go away, but not necessarily enough to protect your backside. In fact, many large stables and training centers now demand such policies in exchange for the privilege of working on their premises. They have enough potential exposure without feeling financially vulnerable to third-party contractors.
The trend in contracting actually developed on the East Coast, traditional old-money areas that always commanded high prices for horseshoeing. Some farriers confessed to paying little more than “laborer’s wages” in the beginning, only realizing later that it was getting more and more difficult to get people who were “really qualified.” As one farrier put it, “it doesn’t pay to run naked” in this business. The financial ceiling that one person’s back could carry was impenetrable. As many of the farriers interviewed noted, lifestyle dictated that the old system had to go.
One West Coast farrier discovered another way to approach the need for dedicated help, even if not highly qualified. International organizations exist that specialize in exchange programs with a number of foreign countries. One such group, Communicating for Agriculture, based in Minnesota, has been placing young people from throughout the world in agriculturally-oriented enterprises. They have an equine branch that looks for sponsors in all aspects of the horse industry farriery included. The host must provide a minimal financial stipend, housing, and all basic necessities including workmen’s compensation. The six-month sessions include not only working within the business, but training as well. While this farrier notes that the exchange does not always work, given individual personalities or expectations, the experience has been a positive one, particularly since education is always a two-way street. While this organization is not well known, it has been placing international trainees for over twenty-five years.
For many farriers, adding help is simply not practical or desirable. Geographic location, lifestyle choices, the volume and pricing of services, ego, fear, or furious independence sometimes an inherent desire for a less complicated lifeall play a role in the decision. However, the nature of this business is changing. There is a certain standardization of work, ever increasing professional and social contacts between farriers (which has changed the nature of competition within the industry), and one important fact that came out of this article: most of the farriers taking this route have been in the business for over twenty years. They have mortgages and kids that are thinking about going to Harvard. And they are also finding out that the human body has certain limitations.
For most farriers, this mainstream approach can be a win/win proposition. Income increases, personal labor goes down, vacations or a bad case of the flu don’t have to be postponed until winter, cranky clients can be appeased, and, for once, not at the expense of family and friends. For new farriers entering the field, it represents the best of on-the-job training, a way to gain valuable experience, and a decent wage at the same time. This also applies to experienced farriers who live in places like Antarctica (or maybe Colorado), who find it difficult to sustain a year-’round practice. As one farrier told me, he probably gets a dozen inquiries a year from horseshoers looking for work.
He will probably add another journeyman next year. But the whole crew has to work for the common benefit. And that’s what makes it work. Above all, get some professional help when considering expanding your business most of all, don’t view insurance as a luxury. The more successful you become, the more you have to lose.
American Horse Show Association
Communicating for Agriculture can be reached @:
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