Category Archives: Home-Based Business

Consider the Future by Kit Pharo

This goes for any business, but is specifically written by a rancher to ranchers/farmers.  It is sad how few ranching businesses stay as such from one generation to the next.  Kit explains again one reason for this.

 

PCC Update

November 7, 2018

Cowboy Logic: “The future ain’t what it used to be.”

Consider the Future –

By Kit Pharo

Have you noticed that the most successful and happy people throughout history have been those who made decisions that were based on the future?   It’s true!   Successful people know that nothing stays the same.   The present is different from the past – and the future will be different from the present.   Those who make decisions that are based on the future will always have a HUGE competitive advantage over those who continue to make decisions based on the past and/or the present.

Unfortunately, nearly all people from all walks of life are afraid to make decisions that are based on anything but the past or the present.   It has always been this way, and it will probably always be this way.   Even though they can see things transforming before their very eyes, they are reluctant to make any changes in what they are doing.   It’s as though they would rather fail doing what they have always done than succeed if success requires change.   That is a shame – but it gives you the opportunity to move your family and your family’s business to a very sought-after position.

Based on what you think about the future, what kind of management decisions should you be making in your cow-calf operation?   I’m not going to tell you what I think.   I want you to do your own thinking.   You may come up with something different and/or better than what I have.   The decisions you come up with, however, need to be based on what you think the future holds.   Be bold in your actions.   Those who are slow to take the appropriate actions may lose all they have – forcing their kids and grandkids to get jobs in town.

Quote Worth Re-Quoting –

“The past cannot be changed.   The future is yet in your power.”   ~ Unknown

PHARO CATTLE CO.

Phone: 800-311-0995

www.PharoCattle.com

Facebook Pharo Cattle Company

About the Farm this Fall

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Late afternoon break from work to enjoy my workplace view shed.  Missouri is having splendid fall color this year!
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One of my pretty Corriente cows.
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Bald Eagles seemed skittish this year, thus difficult for casual snapshots.
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Another corral improvement for this year, is that i set up these old panels across the upper part of my round gathering pen.  This way, the calves could be sorted into it as they come by, whilst the cows go on by to another pen.  Worked slick as a whistle.  Someday, though, i’m going to have to get some help, these panels weigh at least 75 lbs a piece and moving them into position to hook together is getting more difficult for me.  However, since it worked, these will stay put now.
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Showing how difficult it is to shift cows from one paddock to another.  HA HA!  Open the gate and get out of the way!

 

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Buckbrush, as we call it in north Missouri, grew prolifically this year, i guess due to excessive heat and dry weather.  Bonus for the deer and many other wildlife this winter.  
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Improvements to my corral.  Here i’m hanging gates and cutting a hole in my corral to make it easier to sort off animals which need to go back in a pen rather than let loose.

 

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This gate is used to make the runway (race) more narrow for young calves.  Once installed, it reduces the passageway from 28 inches wide (for cows) to 16 inches wide (young calves).  Everything i do, i try to repurpose stuff we have.  Profit margin in cattle is too narrow to spend money unless absolutely necessary.  Here, i’ve added this black plastic taken from a busted feed bunk and drilled it onto my gate.  This way the calves don’t stick their heads between the bars.  It worked!

Have a great weekend and Shabbat Shalom!

tauna

What Is Sweat Worth?

What Is Sweat Worth?  By Dave Pratt, owner of Ranch Management Consultants

 

What is Sweat Worth?

by Dave Pratt

Most family ranches are subsidized with free, or underpaid, family labor. Sometimes the difference between what family members get and what it would cost to hire someone else to do the work they do is made up with the promise or expectation of sweat equity. But sweat is not a recognized form of currency and people counting on sweat equity usually have a grossly exaggerated idea of what their sweat is worth. This often leads to serious disagreement and disappointment.

If you are going to count on sweat equity and want to avoid the inevitable misunderstandings that happen when it comes time to cash in on your sweat, then you’d better start actually counting it. How many hours? For how many years? At what rate of pay? With what interest on the unpaid balance?

I mentioned the perils of relying on sweat equity in a workshop recently. I suggested we stop using the term sweat equity and call it what it really is, “deferred wages.” My comments apparently struck a nerve with one 30-something rancher. He approached me after the program and asked if I could help him calculate what his sweat was actually worth. He said that he’d come back to the family ranch after college 10 years earlier. He’d been drawing a low wage and banking on sweat equity. As is usually the case in family ranches, there was no formal agreement documenting exactly what his sweat was worth.

He was being paid $25,000 a year, but his compensation package included a nice home, a vehicle and insurance for his family. All-in-all a compensation package worth well over $50,000. “Maybe I’m not as underpaid a I thought I was,” he said.

I suspect that he was probably being underpaid somewhere between $10,000 to $20,000 a year. I showed him that for every $10,000 he’d been underpaid, he earned 0.1% equity in his family’s $10,000,000 ranch.

($10,000 ÷ $10,000,000) x 100 = 0.1%

I showed him that over the previous 10 years, compounding interest at a rate of 3.5%, he’d earned a whopping 1.2% equity stake in the ranch. Like a lot of young ranchers returning home, he hadn’t ever thought about how much his sweat was worth but had assumed that it would add up to a lot more than that.

Sometimes sweat equity isn’t just about compensating someone for the work they do. It’s about acknowledging the sacrifices someone may have made, foregoing other opportunities to come back to the ranch to support the family. If there are several kids in your family, but only one has invested time and energy working on the place and has shown a desire to continue the business, it may be fair to give them an equity position.  After-all, as succession planning advisor Don Jonovic points out, fair doesn’t necessarily mean equal.

But whether sweat equity is a substitute for a paycheck or acknowledging a sacrifice, we need to be clear about what we are compensating and its value. We need to convert assumptions and expectations into agreements. We need to figure out what our labor is worth (the topic of the last ProfitTips column). We need to document the value of our sweat while we are still sweating.

For more on documenting the value of sweat equity watch the video below:

What is Sweat Worth? youtube video

First Stab at Mob Grazing (UHDG)

About a week ago, despite our poor pasture growing situation due to dry and hot weather, i tried what others have done and that is UHDG or ultra high stock density grazing.  There are some who have successfully managed shifting cows 5,7,9 times a day and obtaining up to 1 million pounds of livestock per acre!  That can result in a phenomenal improvement in soil quality due to deep rooted plants and evenly distributed manure.

My experience was far different and after a couple of hours quickly realised my misgivings as to mob grazing’s effectiveness in our area.

  1. Cool season grasses often don’t have deep roots, by and large, unless allowed to grow quite tall (and mature) which results in unpalatable grazing.
  2. Mature grasses are unpalatable and very low ‘octane’ (nutrition)
  3. Laying down cool season, fine stem grasses by trampling is virtually impossible.
  4. Toxic endophyte fescue is poisonous at all stages; recent research shows the bottom 2 inches is as toxic as the seed heads.  Forcing cattle to consume it is detrimental to their health.
  5. Hot, humid weather causes some animals to suffer and they need shade – not all small paddocks can have shade.
  6. I quickly realized that i was exhausting myself setting up polybraid and posts to shift the cattle.  To the point that, instead of accomplishing other tasks whilst at the farm, i felt like napping instead!!
  7. A problem perhaps unique to my situation is the distance from the stock.   My farm is 35 minutes’ drive (via JD Gator) from our home.  Though  my solution was to shift cattle often on the days i could go up there, then give them a large break to last up to 3 days, but i found point 6 overwhelmed even that idea.

 

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This photo shows my mob at an estimated 50,000 lbs per acre.  Not even close to what is needed to see positive effects of mob grazing.  Nevertheless, i have discovered an optimal balance of dividing my 20 acre paddocks (paddock sizes vary) in half results in acceptable utilization plus gives an extra day and a half of grazing over giving access to the entire paddock.  This is very important; instead of 3 days grazing, there are 4.5 days, which over the course of 24 paddocks results in an additional 36 days rest period!

Putting dollars to that extra growth:  In normal and decent growing conditions (not over 90F and normal rainfall), cool season grasses and legumes could potential produce 8-12 inches of growth in 36 days.  An average pasture with little to no bare ground (spaces between plants) might yield 300 lbs to the inch per acre.  So, if the entire farm received that additional 36 day rest, then 400 acres x 300 lbs per inch x 8 inches growth  = 960,000 additional lbs produced.  Reduce that by 20% to get a hay equivalency and price it at 5 cents per pound, then 768,000 lbs x .05 = $38,400 worth of hay that is not needed to purchase and maintain or grow the herd.  OR, consider that as my wages for setting up and taking down posts and polybraid during the summer.  Of course, nothing is perfect or normal, so even these conservative figures may fall way short in the face of a drought or hot temperatures.  Nevertheless, there is gain to be considered IF the labor does not become cumbersome and cost more than the value of forage.

Well, this was all written on Monday the 21st of May – a week later – still no rain and temps continue well into the 90s with heat indices above 100 for several hours each day and little to no wind.  It’s muggy and hot; cool season pastures are no longer growing, so the planned grazing is relaxed already since the cows need shade and i’ve set up a paddock with a big timber patch.  Guess where most of the manure (nutrients) will end up?  Yeah, not where planned.  As usual, theories, plans, scenarios all go out the window in the face of nature.  Like any other year, we just do the best we can with the conditions we are given.

Cheers!

tauna

Ranching for Profit

I always chuckle a bit when i type out ‘ranching for profit’ because it’s almost an oxymoron!  Yet, David Pratt, owner of Ranch Management Consultants and Ranching for Profit instructor, contends that there is such a beast if we ranchers use sound financial and economic principles.

Mr Pratt’s most recent blog discusses using debt properly.  Now, okay, my mind goes immediately to the song, ‘Neither a borrower, nor a lender be.  Do not forget, stay out of debt.’  Which then led me to wonder where that came from.  I knew it was from Shakespeare’s ‘Hamlet’ (Polonius counsels his son, Laertes in Act-I, Scene-III of William Shakespeare’s play, Hamlet by saying, “Neither a borrower nor a lender be; / For loan oft loses both itself and friend.”  But what about the tune?

Completely surprised when i discovered that it was created and made famous on the TV sitcom, Gilligan’s Island, which i watched religiously when i was young.  SO FUNNY!  It is sung to the tune of the Toreador Song in Bizet’s Carmen.

The Bible also has advice on debt and teaches us to guard against being in debt, likening it to slavery and bondage.  However, debt does not seem to be a sin, but a tool to earn money wisely, but counting the cost before taking on the burden.

May 9, 2018
ProfitTips
from the Ranching for Profit School
A lot of people tell me that they want to be “debt free.” They are tired of making big interest payments on land, livestock, machinery and their operating note. They have had too many sleepless nights worrying about making the next payment. They believe that if they didn’t have to borrow money they would be more profitable and financially secure.
But the proper use of debt makes us more profitable, not less. And being debt free doesn’t make us financially secure. In fact, for most of us, short of winning the lottery, the appropriate use of debt is our only realistic path to financial security.
The problem isn’t debt, it’s our misuse of debt. The two most common ways we misuse debt are:
  1. We put finance first and economics a distant second
  2. We use debt on the wrong things.
Using debt effectively begins with understanding the difference between economics and finance. It boils down to this: In economics we ask, “Is this profitable?” In finance we ask, “Can I afford to do it?” If we are going to be smart about our use of debt, economics must come first. If it isn’t profitable you don’t have to worry about how you’ll pay for it, because you shouldn’t do it in the first place.
Smart Debt
Economics vs Finance
When RFP grads evaluate the profitability of a livestock enterprise they include opportunity interest on the herd as a direct cost in the calculation. If the enterprise has a healthy gross margin it tells us that borrowing money to expand the herd will increase profit. If we haven’t included opportunity interest in our calculation we can’t be sure if expanding the herd is a good idea.
Opportunity Costs
The other problem is that people use debt on the wrong things. There are two primary places where we put money in our businesses: fixed assets and working capital. Simply put, fixed assets are things we intend to keep (e.g. land, cows, infrastructure, vehicles, equipment). Working capital is the money tied up in things we intend to sell (e.g. calves). Most of us have most of our money invested in fixed assets. This is the biggest financial problem in agriculture. It’s a problem because when most of our money is tied up in things we intend to keep, we have relatively little to sell and generate very little income relative to the value of our assets. Making matters worse, a lot of the income that we do create gets spent maintaining the fixed assets. That’s why most ranchers are wealthy on their balance sheet and broke in their bank account.
Borrowing to buy fixed assets may be a smart long-term investment strategy, but it might cause you to go belly-up in the short term. We’d be better off to use debt to buy assets that directly produce income.
We shouldn’t be afraid to borrow money, provided the economics of our enterprise is rock-solid and we use the borrowed money to buy income producing assets.
2018 – 2019 School Schedule
Sept. 9-15, 2018
Boise, ID
at Holiday Inn Express
Dec. 2-8, 2018
Abilene, TX
at MCM Elegante Suites
Jan. 6-12, 2019
Colorado Springs, CO
at Radisson
Jan. 13-19, 2019
Billings, MT
at Billings Hotel
Jan. 20-26, 2019
Rapid City, SD
at Best Western Ramkota

Productive & Organized at Work

ZipRecruiter author Kaila Kea offers these five tips to be productive and organized at work.

It is no secret that being productive and organized at work leads to positive professional outcomes. Being organized and productive can help you feel less stress and greater satisfaction at work. Increased efficiency and better communication are just two of the positive side effects of employing organization skills in the workplace.

While you must find a system that works for you, there are some strategies that can help anyone become more organized and productive.

We have put together 5 top organization skills that will enable you to increase efficiency, maximize your workspace, effectively use information, and employ timely communication skills.

  1. Use Your Time Wisely.

The importance of time management cannot be overstated. Time is the one resource that cannot be replenished, so it is best to use it wisely.

Improve your time management by setting reminders. Technology makes setting reminders easier than ever! Between phone alarms, calendar reminders, and smartwatch cues, we can effectively manage our time. In addition to this, note and prioritize your goals, eliminate distractions, and say “no” when necessary.

Read more about the importance of time management here.

  1. Write it Down.

Writing notes is one of the best ways to be organized and productive. Mueller and Oppenheimer’s classic study indicated that writing requires the processing and rephrasing of information, which makes a lasting impression on the notetaker’s memory. This results in an increased ability to recall what is required of you to be productive for the day.

Keep a calendar, planner, notebook, or set of post-it notes along with plenty of writing utensils in your workspace. When an important commitment is brought to your attention, you will have what you need to record it. Keep notes that are brief, detailed, and legible to help you stay organized.

  1. Work Ahead of Schedule.  

Why work up to the deadline when you can work ahead of schedule? Use this form of time management to set gradual deadlines that are at least three to five days earlier than the official deadline. This aids in being more productive and avoids last-minute communication with colleagues about tasks that require immediate attention.

If you need to respond to pending inquiries in your inbox by close of business, set your deadline just before lunch. Or, if you must submit your contribution to a team project by Friday, set your planning tools to remind you to meet gradual deadlines then aim to submit it a day early. The key to getting better at working ahead of schedule is viewing your final deadline as a last resort. Instead of working up until the very last minute, work toward an earlier deadline that gives you space to walk away from your work and return to it later to apply finishing touches.

  1. Keep a Clear Workspace.

The space in which you work affects how you work. Working in an orderly space will help you reduce distraction and keep a clear head and keep track of all your notes and calendars. You can extend this idea to your digital workspace. Just a physical files on your desk will hinder your productivity, so will stray files on your computer desktop or having tabs open that you don’t need to look at. Taking a little time each day to do some basic housekeeping will help you stay organized, productive, and on task.

  1. Customize Your Approach.

For maximum efficiency, customize your approach to work for you and the way you operate. Some people organize assignments according to the order in which they are due while others tackle tasks in order of difficulty.

To customize your approach, consider the ways you work best一do you fare better with visuals, words, or a combination of both? Perhaps you are more audial and would benefit from leaving voice notes for yourself or listening to soothing sounds while you work. You can do some trial and error and be mindful of what helps you work best.


Written by Kaila Kea.

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Progressive? Marginally.

Why the mass exodus of young people from farming?  Here is another example of  one of several problems – well identified – yet apparently laughed off by the current generation of farmers and ranchers left scratching their heads wondering why junior is leaving for good.  Sad, very sad.

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Copied from The Progressive Farmer – April 2018