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facility is also not designed for horse boarding,leaving a conflict between stall rentals <br />for horse shows and stall rentals for a "livery stable".In one of our scenarios we include <br />$100,000 per year in alternativerevenue,but the generation of this revenue will require <br />considerableentrepreneurial ingenuity. <br />Costs. <br />We used two methods of calculating operating costs.First,we estimated the cost of <br />each componentof operations(e.g.labor costs,utility costs,etc.)and add them <br />together (the componentapproach).Alternatively,we informally surveyed existing <br />horse parks to discover their operating costs (the survey approach).Each method has <br />disadvantages.The componentapproach has the disadvantagethat we must estimate <br />the quantities of all inputs -we must know how many workers will be hired,how much <br />fuel will be used,etc.Such estimates generally assume efficient operations,which is <br />unlikely in any new business. <br />The survey approach has the advantage that it reflects the costs of actual operations, <br />but the disadvantagethat other facilities may have very different operations -for <br />examplethe number of non-equestrian events may be substantiallylarger or smaller. <br />Both of our approaches yielded similar results,giving us substantial confidence in the <br />approximatecost of operations. <br />The 1998 feasibility study conducted a component cost estimate,based on estimates <br />by the Langer Equestrian Group and confirmed by a survey of 13 equestrian facilities. <br />That estimate was $445,500 as a first year operating cost,and we scaled that estimate <br />up by the amount of inflation from 1996-2005,resulting in an estimate of $516,232 for <br />the first year of operation..Another component based cost estimate was performed <br />independentlyby Ed Lapsley as part of his re-estimation of construction costs.His <br />result was within $12,000 of ours. <br />29