Category Archives: Home-Based Business

Side Hustle to Dream Job

Whereas Mike Rowe encourages people to explore the trades as a permanent position or a jumping point to starting your own business, Joel Salatin regards that a backup job is necessary to transition into farming full time. Both are right, of course. If you have the interest and natural ability to be an electrician or other, you can make a lot of money! However, if your dream is to be a farmer or, for that matter, any startup self employed career, a good supply of cash on hand and steady income before starting makes the idea a dream rather than a nightmare.

Consider Joel’s latest musing on the subject – food for thought.

NEW FARMER BACK UP

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NEW FARMER BACK UP

            My post last week about whether or not farm aspirants should attend college stimulated some extremely thoughtful and heartfelt responses; thank you all for chiming in.  I was going to leave the discussion there but one young fellow asked if trade school would be beneficial to have a skill as a back up plan to the farm.

             I always loved Gene Logsdon’s books and writings and am disappointed I never met him personally.  His Contrary Farmer is iconic in sustainable ag writings.  About the only thing that stuck in my craw about him, though, was his adamant position that a small farm was not economically viable on its own.  He declared that you really needed an off-farm income to support the farm.  His writing filled that bill.

             I don’t disagree with Gene lightly, but when this question came out of the comments, I couldn’t help but think of Gene’s position.  While I do NOT agree that an off-farm income is necessary for success, I DO agree that it’s wise and can smooth some rough edges. 

             Almost no entrepreneurial venture starts pure.  Either it taps into an existing nest egg or it transitions using income from other sources to finance it until it scales to stand-alone viability.  I’ve always told folks who want to go from zero to full-time farming to have at least one year of living expenses before making the leap.  Scratch starting takes time to get things up and running.

             That nest egg would include being able to buy a property launch pad for cash.  Teresa and I were blessed with second-generation mortgage-free land, but didn’t jump until we had 1 year of living expenses in the bank.  I fully expected to go back to off farm income when that ran out; it never did.  But, during those first few years, I picked up some side jobs:  built a fence for a friend, helped another friend plant trees in the spring. 

             Teresa and I lived on $300 a month in the farmhouse attic, so these little side jobs of $1,000-$2,000 a year were huge in keeping us afloat as we struggled to get our production and sales income high enough to cover all our living expenses.  Fortunately, firewood sales were good at the time and I sold enough of that in the winter to keep gas in the car and utilities paid.

             Although I had not been to trade school, I had acquired skills just growing up on the farm:  building fence, planting trees, running a chain saw.  I’d say these were equivalent to saleable skills you might acquire at vocational school learning a trade like plumbing, electrical, small engine repair, welding, construction.

             While I wouldn’t say my bottom line disagreement with Gene Logsdon has changed, I would agree that at least starting out, a fall back option with a marketable trade is certainly wise, even if you never have to use it.  Chances are, if you have a marketable skill, opportunities will knock on your door to enable you to leverage that skill.  If you can synergize your willingness to help with some mastery, it makes your worth go way up.

             So yes, if you want to farm I would encourage knowing a trade, whether you do an apprenticeship or go to a vocational school.  In what I call the triumvirate of practical income strategies–building, growing, repairing–possessing a skill that complements growing (farming) offers another leg to your income stool.

             I appreciated the probing question and this chance to examine a bit more of the college/farm nuance.  It’s certainly not black and white.  Income redundancy never hurt anyone.  One more reminder:  achievability is easier the lower your living expenses .  Eliminating the mortgage, driving a $5,000 car, living in a camper, becoming a master of personal doctoring–these are all ingredients in the secret sauce of farming launch success.

             What are your favorite farm-complementary vocational skills?JOEL SALATIN

MARCH 3, 2021

Comments (10)

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Kevin Pennell 9 hours ago · 4 Likes  

Finally, something I can comment on.
I am a small farmer in Mississippi. I raise sheep and pastured poultry.
Before I pursued my farming dream, I was an electrician. I completed a five-year apprenticeship, and worked as a Journeyman for a few years before farming; and though it may seem like an unrelated trade, the skills, know-how, and work ethic I picked up during my apprenticeship was INVALUABLE in my farming venture.
Besides having practical knowledge of electrical theory, installation practices, and building codes, I also learned to calculate concrete, read blueprints and manufacturers schematics (which came in handy when I read Polyface Designs), and how to plan a project through. I learned the value of having a plan, and working hard to see it accomplished. I toughened my hands up. I learned that electrical tape makes a good bandage. Always lift with your legs. Do it right the first time. Have a positive attitude.
Watching the change in my attitude and work ethic during my apprenticeship really gave me a huge confidence boost. It was the greatest period of personal growth in my life, and I didn’t start until I was 22.
Also great to know that if farming doesn’t work, I have something to fall back on.
My apologies if this is hard to read, my written English skills need some work.

WILL 3 hours ago · 0 Likes  

It reads just fine. I’m a pipefitter making the transition soon. I agree 100 percent the skills you learn will never be wasted. Just the problem solving you are required to have being in the trades has helped me exponentially when it comes to thinking outside of the box with small scale farming.

Alex Sanderson 9 hours ago · 2 Likes  

A trade for income is valuable, yes. Any trade on a farm is absolutely invaluable. Whether it keeps purchase or repair costs down or helps with invention and innovation.

George 9 hours ago · 1 Like  

Tinkering still makes a lot of sense.

Sam 3 minutes ago · 0 Likes  

Thank you for answering my question and for the good advice. Also thanks to the people in the comments for sharing their stories. I do a lot of odd jobs already, cutting grass, landscape work, tilling gardens, etc. It might not be skilled work, but I’m building a reputation as someone who works hard. It seems like if your willing to work hard, jobs find you rather than you finding the jobs.

I thought about selling firewood, but it probably would not be worth it without a dump truck and front end loader. There’s so much good wood where I live that goes to waste.

I’ll think more about an apprenticeship or trade, and see where I am at the end of this season. What I would really like is a dependable winter job, during my off season.
Thank you again so much for the advice!

Permaculture Pimp Daddy 38 minutes ago · 0 Likes  

I’ve been an IBEW journeyman electrician for the last 24 years. While every tradesperson I know was out buying new trucks and houses my wife and I were saving, learning and doing. We were following your example.

I retired from the trade two years ago and now spend every single day joyfully working my farm.

Teresa Seed 4 hours ago · 0 Likes  

Just to say, Kevin Pennell, your English skills are well-nigh impeccable, you might have been self-deluding on that score!

Bonnie 7 hours ago · 0 Likes  

Absolutely agree that an apprenticeship of some sort would be an excellent “Plan B”, in the event that your farming endeavor hits an unexpected roadblock.
Another similar idea is to gain skills needed by a farmer, by using Paul Wheaton’s skill-building program (www.permies.com). This link shows the details:

https://permies.com/wiki/156601/Podcast

Plumby’s grandkid 7 hours ago · 0 Likes  

Not sure it complies as a trade school vocation – but my cousin married into a Northern Illinois big farm family. They are big farmers but are also known in their county for being the go to people for professional tax preparation. Their son even went from school to working for the IRS – before returning to the farm when the dad had health issues (and grain price reached 8 dollar corn) That always seemed to me to be a particularly smart play.

BJ 8 hours ago · 0 Likes  

Your advice to know a marketable trade is spot-on, and I don’t think it is at all in conflict with your disagreement with Logsdon about needing an outside income to support the farm. Having a back-up plan (along with the ability to implement it) is wise in just about any endeavor, whether it’s your life’s work or anything else. Not that one would pursue the trade to support the thing he or she really wants to do, but simply as a fall-back or temporary solution if and when it’s necessary. In a perfect world, we would all be able to simply pursue our passions and not worry about anything else. But in the real world, and especially in uncertain economic times, a backup plan not only is wise, it seems almost essential, even if the new farmer takes your wise advice and starts with at least a year’s worth of “nest egg” funds. The back-up skill will provide peace of mind, if nothing else, and I believe that having peace of mind will help facilitate the success of the farm.

NEXTAGRICULTURE COLLEGE:  TO GO OR NOT

© 2018. JOEL SALATIN. ALL RIGHTS RESERVED.

Book A FarmStay!!

12 Stones Farm Guest House

As promised, more information is coming your way about my amazing friends and their outreach to better the lives of others.

First up, are my friends, Eric & Hope Bright, who owned and operated a profitable dairy on their farm with lovely Jersey cows grazing and gracing the green hills of north Missouri.

Enjoy following along families, children, duck, chicken, and cow adventures on Instagram or Facebook.

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Alas, once their children, who were homeschooled like ours, flew the coop, they moved to warmer clime in south Missouri, just a 30 minute easy drive to Branson. We miss them being our neighbors. 😦

12 Stones Farm Guest House is a unique farm stay with children enjoying bottle feeding dairy calves, rounding up the ducks into their pen each evening, feeding the chickens, collecting eggs (then fixing those fresh eggs for your own brekkie!), milking gentle Jersey cows (and enjoying the milk!), playing with the cats, watching the dog guard the fowl from aerial predators (he takes his job seriously!), helping with the garden if you like, or launching a kayak in the Swan Creek just outside your cabin door.

If active farm stay is not your cup of tea, enjoy the peace and tranquility of a rural setting as you relax into your private hot tub just off the master bedroom with sounds of a tom turkey gobbling occasionally and the splash and gurgle of nearby Swan Creek. Then you might be off to take in the sights and sounds of the ever popular shows and attractions in Branson, MO. Each evening, build an outdoor fire, roast marshmallows and enjoy brilliantly starlit skies.

Enjoy eggs and milk fresh from the farm during your stay and extend the memories and enjoyment by purchasing extras at the 12 Stones Mercantile located on the farm.

As the weather warms, availability may become an issue as families and couples seek to get away from the city and breathe fresh air and relish peacefulness. Start your enquiry at 12 Stones Farm Guest House (sleeps 5) on AirBnB, VRBO, Flipkey, through Eric and Hope’s website, or just give them a ring!. You won’t meet nicer hosts! Also, if you need a really private getaway, take a look at their 2 person cabin on the same property but just a bit away. Available through AirBnB. Eric and Hope have 5.0 star reviews and are Superhosts!

The master bedroom accommodates a queen size bed and a twin size bed.
French doors adorned with quilted window dressings lead to your private outdoor hot tub!
Forgive my terrible photo, but i include it anyway to give you an idea of the spaciousness of the open areas of the 5 person cabin. Behind the DeKalb sign is the loft with 2 twin beds for low ceiling sleeping. Cabins are fitted with all the comforts of home. Quick snapshot in between packing water to Eric who was laying tile in the fabulously upgraded yet still retaining its rustic feel shower and bathroom. Yup, i was helping!

Don’t even hesitate to book this 2 person cabin on the same property and enjoy the same amenities as the 5 person cabin. This trip was the first time i have seen it finished (it was in the infant stages when i visited before) and, as expected, Eric, with his amazing carpentry skills, and Hope with her eye to artistry and detail, have created another oasis.

Duties Of The Housekeeper – Cato

Part 4 of my sharing a summation of thoughts and ideas of managing a profitable farm by Marcius Cato and published by Forgotten Books.

The overseer should be responsible for the duties of the house keeper. If the master has given her to you for a wife, you should be satisfied with her, and she should respect you.

She should:

  1. not be given to wasteful habits
  2. no gossiping
  3. don’t receive visitors in the kitchen or her quarters
  4. don’t attend parties
  5. no gadding about
  6. practice religion with the permission of the master or mistress
  7. be neat in appearance
  8. keep the house ‘swept and garnished’
  9. every night the hearth is swept and clean
  10. prepare food for overseer and hands
  11. have plenty of chickens and an abundance of eggs
  12. diligently put up all kinds of preserves every year

Something for nothing?

Making Something out of Nothing.

What goes through your mind when you first say those words or read them in an article? At first, you might think wow, someone has come up with a great and helpful item to market. But then stop and think – something out of nothing is a fallacy once a little elementary biology and science is applied. Only YHWH can create something out of nothing. Creatio ex nihilo.

A recent editorial by a young woman in Journal of Nutrient Management with that very title caught my attention – what is this miraculous ‘something’!

Her editorial started out nicely, but when she compares the ‘trial’ of manure management to the hardiness and courage of our ancestors striking out across the country in a covered wagon to carve out a living, it was going to be difficult to glean anything of value from her story. But, out of curiosity, i read on.

As suspected, the ‘something’ was marketing a highly valuable nutrient (nothing?) off the farm. But, everyone knows that if ‘something’ is removed from the environment, sooner or later there is a cost to replace it. And in many cases, the cost to refine, remove, transport is astronomical. This is not to say it won’t pencil, but the cost is still more than financial.

Manure management by allowing natural processes is the best use of resources.

For the record, she is writing in support of a magazine which promotes the use of practices which require extreme movement and management of animal manure (nutrients) and in that respect, she accomplishes the purpose of her editorial.

Anytime there are closely confined animals or even people, there is a manure (sewage, nutrient) management issue. Our beef operation on pasture only means that if we manage the animals’ grazing, by default the manure is managed appropriately with the animals movements from paddock to paddock thereby reducing and eliminating environmental issues (no bare soil) and building soil by encouraging a habitat soil microbes and animals (earthworms, etc) will enjoy living and working in.

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nutrient management

A Perfect Match by Jim Gerrish

Once again, Jim Gerrish, owner American GrazingLands,  pens a thorough and relevant article.  This one published in The Stockman GrassFarmer June , 2020 issue.  Click here if you’d like to request a free copy of The Stockman GrassFarmer.

A Perfect Match

May, Idaho

Some things just seem to fit together really well.  Bacon-lettuce-tomato sandwiches come to mind, among other things.

How about no-till, cover-crops, irrigation, and MiG?  That is another combination that is hard to beat.

Industrial farming with conventional tillage has led to widespread land degradation through soil erosion, loss of soil carbon, and destruction of soil life.  No-till minimizes soil disturbance and the concurrent loss of organic matter soil life.  The downside of no-till farming over the 50 or so years since its inception has been heavy reliance on potent herbicides like paraquat and glyphosate.  To eliminate the need for those herbicides and their toxic side effects, innovative farmers have figured out approaches.  The roller-crimper as a mechanical tool can terminate existing vegetation and turn it into moisture-conserving mulch.  High stock density grazing can also terminate or suppress existing vegetation and turn it into dollars.

The exponential growth in cover-crop use over the last decade has also accelerated the adoption of no-till farming across the USA and around the world.  While many farmers started using cover-crops based solely on soil health benefits, others came to realize livestock were the missing link in their efforts to heal the land.  We quite talking about sustainable ag a few years ago and started talking about regenerative ag.  Why settle for sustaining the agricultural wreck we have created over the last century?  Why don’t we try fixing it instead?

Ray Archuleta uses a great example to illustrate the difference between the sustainable and regenerative concepts.  ray asks,  “If your marriage is a wreck, why would you want to sustain that?  If your farm is a wreck, why would you want to sustain that?”

Regeneration is meant to create something healthy and strong that will last your lifetime and beyond.  I think it is a valuable lesson in world selection and world viewpoint.

In a similar vein, many years ago I said the most tragic divorce that has happened down on the farm was the divorce of livestock from the land.  Taking grazing animals off the landscape and locking them up in concentration camps removed a critical component of ecosystem health.  We will only regenerate a healthy landscapes with effectively managed livestock as part of the process.

We can argue about the sustainability of irrigation.  Around the world, including the USA, aquifers are being pumped to the point of depletion.  Land is being degraded due to salinization from irrigating with high salt content water.  Pumping costs are increasing in many irrigated farming areas as water is pumped from deeper and deeper wells.  No, irrigation in that sense is neither sustainable nor regenerative.

Living in the Intermountain Region of the USA for 16 years now and enjoying a different type of irrigation basis.  I think there is a time and place for irrigation in a regenerative ranching or farming context.  With direct snow-melt as our water source we avoid aquifer depletion and most of the salinity risks associated with irrigation in semi-arid landscapes.

For many years, a lot of this region was flood irrigated.  There are a number of benefits to flood irrigation.  Flood irrigation can rely entirely on gravity flow of water so there is no pumping cost.  It can hydrate parts of the landscape outside of the farmed fields.  The infrastructure investment is fairly low.  However, Water use efficiency cannot be counted as one of the favorable aspects of flood irrigation.

Per ton of forage grown, flood irrigation typically uses about 50-80% more water than sprinkler irrigation.  As we think more and more about the pending worldwide water crisis, all of us in agriculture must become better versed in water conservation whether we are in high natural rainfall or irrigated environments.  That brings us back to thought of no-till farming with cover-crops and the role of grazing animals in groundwater management.

We have all heard and read those popular press articles citing how many pounds of water it takes to produce a pound of hamburger or a steak.  Some beef industry estimates are as low as 1000 lbs of water per lb of beef all the way up to 12,000 lbs of water/lb of beef claimed by some vegan groups.  Since a pound of beef only contains about 10 ounces of water, the rest of all that water has to be somewhere else.  That somewhere else is mostly in the soil or the atmosphere meaning that same water will be used for something else tomorrow or the next day or the next.

Our job is to get as much back into the soil or the deeper ground water system.  This is where MiG comes into the picture.  We use time-controlled grazing management to manipulate the amount of living plant residual and the amount of trampled litter we create in the pasture.  Both of those grazing management responses are critically important factors in managing soil water.  Infiltration rate and surface runoff are directly tied to our day-to-day grazing management choices.

When we can easily produce twice as much animal product per acre using MiG compared to ineffectively managed pastures, that translates to a doubled water use efficiency.  Think about the cost of seeding cover-crops on irrigated land and the relative return on investment between those two different management scenarios.  Regardless of the particular pasture in question.  MiG always increases the return potential.

Jim Gerrish is an independent grazing lands consultant providing service to farmers and ranchers on both private and public lands across the USA and internationally.  He can be contacted through www.americangrazinglands.com.  His books are available from the SGF Bookshelf page 20.

 

 

 

 

Starting a Ranch – Is it Viable?

Here’s another great blog by Dallas Mount who owns Ranching Consultants (Ranching for Profit).  He outlines the start up costs of beginning a ranch.  It’s never been easy to ranch or farm – even when US government was giving away land.  Most of that land was harsh and unforgiving and many families were starved off trying to make a living.  However, there have a been a very few years in the last century which might have made purchasing land to farm a viable option.  At today’s land prices, that is not an option.  Prices are way out of whack in regards to its agricultural productivity.

bakingCan’t be done. At least that is what conventional wisdom says. I’d agree that it can’t be done, if you follow the rules of traditional ranching – running cows the way everyone else does and owning everything. If you are willing to break some rules and challenge conventional wisdom maybe you can join the amazing group of people that have done it.

Let’s look at the economics of conventional wisdom for starting a ranch from scratch. You’ll need land. Of course, if you want to be a real rancher (so the thinking goes) you’ll need to own it. If you are going to ranch full time, you’ll need enough cows to support a family so let’s plan to buy a ranch that will run 400 cows. In much of ranching country, the rule of thumb is 35 acres per cow. Let’s push that to 40 and ask those cows to graze year-round.

The value of the land will be driven by things other than its forage producing value. Generally aesthetic value and proximity to a metropolitan center will drive the land values. Let’s say we found a ranch that will sell for $600/acre. We will need 16,000 acres so our purchase will be about 9.6 million. Of course, we need to own the cow herd as well. 400 cows, 16 bulls and 80 heifers will cost us about $700,000 in today’s market and we will need an arsenal of machines so let’s add another $300,000 to make it a round $1 million for livestock and machines.

If we find a bank willing to finance all of this, we will likely need to come up with 20% down at least. So we will need about 2 million for the land and $200,000 for the livestock and machines. It just so happens our great aunt just died leaving us 2.2 million! Now all we have to do is service the remaining debt! Should be easy right? If the bank finances the land at 5% for 20 years and the cows and machines for 5 years at 7% that will leave us with a payment of about $600,000 per year on the land and about $200,000 on the cow/machine note.

If we divide our total payments of $800,000 by our 400 cows then each cow will need to generate $2,000 annually for debt service not to mention covering her bills for feed, vet, trucking, and all the other overheads. We better wean some big calves! Are you ready to buy yet? Maybe we should just sit in the coffee shop and complain about all of this? Oh … I know … it’s the banker’s fault for charging interest!

Hopefully this demonstrates that ranching the conventional way is not a realistic path to ranching from scratch. So what is? Firstly, I think it is important that we make a separation in our minds from operating a ranching business and owning land. After all, you can run 1,000 cows and not own a single acre of land, and you can own a million acres of land and not own one cow! Being in the land investment business and being in the livestock business are two separate businesses. The land investment can be a great place to park money and enjoy appreciation and wealth building over time. It can be a terrible place to park money when you need cash flow.

At the Ranching for Profit School, we teach an economic planning process that requires any livestock you run to pay fair-market rent for the grass they consume. Not including this in your planning essentially subsidizes your livestock enterprises with free grass from your land business. Conversely, asking cows to make your land payment might subsidize your land investment by overcharging your livestock business.  You must do the economics right to know where you are creating value. If you want to buy land, let’s establish a profit target that you will need to achieve to reach your goals and develop a business around that profit target.

Many of our alumni get into ranching from scratch by custom grazing cattle on leased land. This is often a model with a strong cash flow and can allow the operator to build reserves that can be used to invest in livestock or real estate. This certainly isn’t a utopia. There are the challenges of finding leases, managing landowners, developing good grazing infrastructure and many others. The skills necessary to be successful in this path include:

  • People Skills – managing landowners, marketing yourself as a lessee and custom grazer, putting a team together to do the day-to-day.
  • Grazing Skills – planning, implementing and monitoring land health and reporting back to landowners.
  • Economics and Finance – planning for profit, budgeting, and cash flow management.
  • Livestock Handling – leading your team or managing yourself to meet livestock performance objectives.

I’d love to hear from those of you who started from scratch. What advice would you have for someone else looking to do the same?

18 Responses to “Ranching from Scratch”

June 24, 2020 at 3:57 amjames coffelt said:

Excellent discussion

Ranching is a great life style.

Is it a great business? Peter Drucker, the great business writer, suggests every business, every idea, every activity, and every employee, should be on trial for its life, every day.

Can a ranching business succeed? Yes, and there are plenty doing it. However, that is not the right question.

We should ask: How are these assets, efforts, labor, and risk, performing relative to other alternatives?

An S + P 500 index fund has averaged a 12% return for years.

So, is the equity invested in the ranching business, cattle and land, performing better than 12% ? Note, I used the word equity, not assets for the comparison. That is, net assets.

I would suggest the following:

The only management model to consider is a low input management model. Work toward eliminating or reducing, shots, worming, tagging, calf checking, weaning, machine work, hay. Let the cows rehab the land, and produce cattle genetically fit to thrive in the all-natural survival of the fittest, model.

Work from set stocking, to rotational grazing, to mob grazing, as able. Each step is better for the land, and permits an increase in stocking rate. Stocking rate influences profitability more than any other trait, more than performance, milk, growth, marbling, etc..

Find a way to sell into premium markets. A quality animal sold by the piece is 3-4 k retail, $800 at the sale barn. That spread requires sales and marketing effort.

The land is a separate business which can include revenue from gas and oil, hunting, fishing, timber, tourism, etc..

The choice to ranch for love of lifestyle is admirable. However, it is a business which requires economic performance.

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June 24, 2020 at 4:09 am, JOSH LUCAS said:

Learn how to be an effective communicator! (Like they teach at the rfp school) Managing the landowner relationship when leasing can be challenging if you don’t communicate your goals for the property well enough.
Oh and definitely don’t buy equipment!

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June 24, 2020 at 6:07 amShelly Oswald said:

Good points but where is the marketing component where you know the intrinsic value of your products, communicate that to your customers and obtain the premium you need to be profitable without cutting corners?

The other point missed is that your approach conserves capital investment in the land and treats it like the profit center it should be. In order to conserve our farmland and keep it in the hands of our citizens, we need to be paying fair rent to ourselves or our neighbors and not asking them to subsidize the food we produce.

I love the principles you teach!

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June 24, 2020 at 6:15 am, Rebecca Patton said:

My husband and I came back to his family ranch in the hopes of developing a succession plan and being able to take over and run a successful ranching business, however, we were stuck in the paradigm that there is such a huge barrier to entry in ranching that our only opportunity to make money with cattle was to be successors to a debt free ranch. Apparently the older generation had different priorities than ranch transition, so we are now looking to break away with the new perspective that we can do what we want through custom grazing and leasing, and we have never been more excited! Thanks for sharing Profit Tips with us!

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June 24, 2020 at 6:20 am, Clint Hoelting said:

If you are going to take care of other people’s cattle on other people’s land, you might as well get a job on a ranch. Same thing, except with Custom/Lease you will have to pay for overheads a ranch hand wouldn’t.

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June 24, 2020 at 7:42 am, Justin Tollman said:

I was stuck in the “How To Own It” traffic jam for a while, and then was introduced to Ranching For Profit. In 2014, my wife and I had no ranch, and no idea how to step into a ranch, but I knew I wanted to. We went to a RFP School, and that really sparked an idea for me to set up a business plan that I could get people to buy into: Leasing a ranch!
Prior to that shift in paradigm, we were stuck. You see, I grew up on the ranch that we now lease. But, so did my sisters. It’s been in the family for over 120 years, but my parents were stuck in the asset transition trap: How do you be fair to everyone? My wife was extremely scared of going into a huge amount of debt, and quite frankly was scared of what happens if it doesn’t work.
The lease model has opened many doors! It got us unstuck. Has it been perfect? Of course not! I don’t know a ranching family that has everything go perfectly. When the all of the cattle issues go right, people issues may flare, when the people are happy, water issues might pop up, this business has a way of humbling anyone who knows everything. And then, there are always customers to deal with, and luckily almost every “contentious moment” with my customers has been built up worse in my mind than in reality. But, I’ve heard it said that people get paid by the size of the problems they can solve, so if you want paid more, choose bigger problems.
I’ve heard so much “I don’t think you can do that!” Well, my favorite saying now is “You never know what you can do until you have to.”

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June 24, 2020 at 7:44 am, john marble said:

I think the biggest roadblock to starting or maintaining a successful ranching business is the commonly-held belief that ranching is somehow different than other businesses or industries. Loving to work outside, handle livestock, smell the new-mown hay…all of that is fine, but it doesn’t have much to do with running a successful business. People who want to enter the ranching industry need to do the same things that new entrants to the gas station or motel or bowling alley business have to do: market goods and services at a profit. Not very romantic, but clearly true. Successful business people study marketing and logistics. They develop relationships with other progressive, smart operators. They avoid enterprises that lose money.

Sorry to break the new: ranching is just not that special.

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June 24, 2020 at 11:02 am, Marc Cesario said:

John – love it!

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June 24, 2020 at 8:01 am, Davene Finkbeiner said:

I started from scratch at 50 years old. Now I am 62. I followed ranching for profit Allan Nation Joel Salatin Bud Williams.Turing the ranch over to my children. It has been one hell of a ride.

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June 24, 2020 at 8:48 am, Marc Cesario said:

It’s amazing how often you can hear advice, even believe the advice that’s been given, then somehow rationalize why your situation is different. It’s so easy to fall into the trap of machinery, equipment and barns but it’s a dead end more often than not. Grass, appropriate fence and a good water system is really all what most start from scratchers should focus on.
It’s good and necessary to believe in ourselves, but too often we think we can do more than we actually can. At best, I feel we can only do two things well, and more likely it’s probably just one thing. Often multiple enterprises just drain resources from the each other. Stay focused.

The word priority was only ever used in the singular until the 1900’s. There can only be one priority.

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June 24, 2020 at 8:52 am, Marc Cesario said:

Josh- yes, Managing expectations is extremely important. underpromise and over deliver.

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June 24, 2020 at 9:54 am, Ross Macdonald said:

Don’t get caught up in a recipe, what you know today will change/evolve over the next several years.
Let your definition of profit drive your decisions and recognize that it is never perfect but with effort, desire and experience it gets much better.
Soils, grazing, stockmanship, marketing, relationships are get better if you work to make them better but it is a journey not a destination, so your definition of profit had better include happiness.

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June 24, 2020 at 11:49 am, john marble said:

Gosh, Clint, I haven’t found that to be true at all. I’ve rented quite a number of places over the years, and the amount I pay in rent has absolutely nothing to do with land overheads. On occasion, I’ve had land owners express their desire for the rent to cover property taxes or some other irrelevant item. I try to be fair with owners, but in the end I will only pay a rental rate that allows me the opportunity to make a good profit, and that is often based on running “other people’s cattle” on that rental land. Sorry, but negotiating land rentals, signing contracts on custom cattle and designing business plans that result in profit are not “hired hand” jobs. Those are business owner jobs.

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June 25, 2020 at 9:45 am, Justin M Tollman said:

I think John and Clint may be looking at two sides of the same coin. To paraphrase Clint “you’re working for someone else if you custom graze on leased land.” I will say that the thought has crossed my mind over the last 3 years that I would be better off financially if I just worked for someone else. That’s on a cash taken home basis. But, when you look at net worth vs. cash flow, that isn’t the case. To John’s point, working on the business is different than working in the business. If I didn’t want to set direction, plan my own time, work on the big picture stuff, and play the virtual 3-D chess game that is forecasting, contingency planning,etc., then yeah, working as a hired hand on an outfit might be better. But, always know, you are always working for a customer. Whether that customer is someone who writes you a paycheck for labor, or a customer who writes you a paycheck for cattle that you sell, or a customer that writes a paycheck for custom care. But, ranching from scratch, to me it’s about setting the direction, the mission and vision, the building for a brighter and easier tomorrow, and taking ownership of that process. I’m not as excited about the ownership of land or things, but the ownership of happy business partners.

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June 26, 2020 at 6:14 pm, Amber said:

I totally agree. My husband and I and our two kids lead a great life on leased land, with custom grazed cows and building our own cowherd on the side. We work for ourselves, while functioning in a great network of relationships. It is all about how you treat people.

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June 27, 2020 at 12:36 am, Graeme Bear said:

A great topic Dallas. Often the most thought provoking topics are those that challenge traditional thinking and paradigms. Love the collection of views and contributions by everyone on this one. The fundamentals of successful business are the same whether it be a cattle ranch or transport or manufacturing business, exactly the same principle apply.

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June 28, 2020 at 5:12 am, Doug Dillon said:

It can be done! I have done it twice. I purchased my first ranch in 2009 after graduating college. Purchased another ranch in 2014. Sold the first ranch in 2015. I attended two RMC schools and was in the Executive Link from 2010 until 2015. The two biggest things I think any one starting from scratch needs to keep in mind is you have to be passionate about what you are doing, it’s going to be tough. Keep you pencil sharp and make the hard decisions that make you money.

The 2nd is don’t get married to a ranch. In 2015 Mike Hall spoke at the RMC summer meeting in Laramie WY. He talked about “not being married to a ranch.” I realize not all ranches are equal, and its hard to walk away from something you have built. He talked about making your land business profitable by selling land. Its a difficult thing for most people or families to do, but if you are starting from scratch you are going to have to do some of these difficult things to generate cash to get out of debt.

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June 28, 2020 at 7:15 am, Davene Finkbeiner said:

I started from scratch 10 years ago with leased land and share cattle. I agree about selling land. Bought pasture based on its resale value and now have it listed for double the price I paid for it. When cattle prices were at there peak I did not buy more cattle I took share cattle instead and put cash into rental houses.Now they are producing a income of 1200 per month.Biggest problem in our area is I am surrounded by inheritance ranching operations who spend a lot of time trying to derail the start from scratch operations. They are especially hard on young people just getting started.I am looking for a good support group for my 2 Kids just coming into the cattle business.

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Tradition vs Innovation Paradox

Another great blog from Ranch Management Consultants (Ranching for Profit).  If what you are doing regularly is only a tradition – start questioning why you continue and if the practice is still effective for today’s economy, whether for your home or business.

sunset cowboyAgriculture is steeped in tradition. These traditions serve as a source of pride and continuity which help make us who we are in agriculture. However, these same traditions create a paradox of sorts when it comes to managing the business of ranching. Balancing respect for traditions and fostering innovation can be tricky to navigate. Another complicating factor in ranching is that business leadership is often slower to transition than most. Generally this is because the decision making is in the hands of a generation that would have retired 10-20 years ago in any other industry. This generation is often making decisions from a place of risk minimization … rightly so from their perspective. However, when Junior is wanting to expand the business to support a growing family this can pit two very different business strategies against each other which often creates conflict on the family ranch.

I think there are some traditions on a ranch that need to be challenged to position the ranch to be successful in the coming decades. Each operation will need to find its own balance between tradition and innovation. Having clear goals will help determine the appropriate balance of risk management and growth strategy for the business.

Below is a short list of common ranch traditions that I suggest you look at and examine why you are doing what you are doing, then put some numbers to what it might look like if you did things differently. I’m certainly not suggesting everyone must change these traditions but have a discussion with your team about the pros and cons of staying the same or changing.

  • Grazing management
    I see far too many ranches where tradition determines the grazing plan rather than good planning. Effective grazing management is one of the most powerful economic levers you can pull. Does each pasture get adequate rest for plant recovery after every grazing? Are your animals in a pasture long enough to allow a second bite? I have never visited a ranch that couldn’t improve their grazing which would allow the ranch to increase carrying capacity, often as much as doubling historic stocking rates, while still improving the condition of the land. Often the driving force for not improving grazing practices involve hanging on to old traditions. Many equate better grazing with more fences or more work. Neither of these must be true.
  • Needing lots of stuff to ranch
    Here is an interesting thought experiment. Make a list of every piece of equipment on the ranch and what it would be worth if sold today. Total up the dollars and now pretend you have that money as cash in your hand and you have no equipment. Paint a picture in your mind of the type of business you want to build. Now, ask the question, “How would we best deploy the capital we now have to create the business we want?” Would you spend it all or save some for a cushion? When times are good on the ranch, we often fall into the trap of upgrading tools that make our lives easier. It is very difficult to go backwards in creature comforts once we step forward. However, from the numbers I’ve seen it is the rare piece of equipment that creates more cash flow than it costs in depreciation and repairs. Tradition might lead us to believe that we need all this stuff to ranch, but economics might be telling us that all this stuff is part of what makes ranching so financially difficult.
  • We should be running cows
    But we have always run cows! What is the purpose of your ranch? Is it to create opportunities for owners to do the things they enjoy or is it to create cash flow and profit to support the owners and provide opportunities for others? Might these two things be in contrast? I’m not saying you can’t run cows and be profitable, but often I observe ranchers who see no other alternative to the current enterprise structure on the ranch. I also don’t believe it is a problem if ownership sees the ranch as a place to allow them to do the things they enjoy – such as running cows. I do see a conflict when the ranch isn’t creating the outcomes required and people are unwilling to look beyond traditional enterprises. Might it be that the ranch could be an even more enjoyable place if it were highly profitable?

Following that line of thought, what other traditions should be challenged on your ranch? Which traditions must be held on to? There are some traditions that are core to who we are, let’s be sure we don’t jeopardize those in pursuit of profit. Balancing the paradox of tradition and innovation is part of what makes this business so interesting.