Tag Archives: business

ESSENTIALISM – RanCHING FOR PROFIT

Another excellent blog from Dallas Mount who now owns and operates Ranch Management Consultants aka Ranching for Profit. Although i’m most interested in the ranching bent to this business, many of the articles written by Dallas, Dave Pratt, former owner, and Stan Parsons, creator and former owner of Ranching for Profit are easily applied to any business or home life decision making.

You can spend money buying books or shelves or containers to declutter or you can save money by making better decisions. Starting with ‘do i really need this?’ then follow up by selling, giving away, recycling, upcycling, renovating, throwing away the stuff you haven’t used in ‘x’ amount of time. If you don’t do it now, it’s called hoarding and whatever value it might have will be lost to you and to whoever may be able to use the item to start a business or help their lives be better. Before you know it, 40, 50, 60 years have passed, and the item is obsolete and worthless. Now, that’s a waste and selfishness!

Essentialism

by Dallas Mount

closet

Each fall and winter our Executive Link meetings start with a continuing education program. We usually reach for something outside the ranching world that our members would not otherwise be exposed to. Often this is a book from business management circles. This fall our book is Essentialism: The Disciplined Pursuit of Less by Greg McKeown. The book challenges us to think about all the things we do in our busyness. Then develop focus by cutting out the trivial and finding the essential.  

In agriculture it is easy to constantly pile on more to our already busy lives. When you step back to really analyze what makes the difference in your life or your business, there are really only a few things at the core of what you do and who you are, that matter. This is the essential. McKeown challenges the reader to think of the things in your life, like you would clothes in the closet. Often, we cull the closet by asking the question “Is there a chance I’ll wear this someday in the future?” When using that broad criterion, we end up with a closet full of Garth Brooks 90’s era neon colored Brush Poppers. McKeown suggests changing the question to “Do I absolutely love this?” allowing us to eliminate the clutter to create space for something better.

I often hear from ranchers that are too “busy” with the daily tasks on the ranch to come to a school, or work on their numbers. What they are saying is that they are too busy to find time to complete the high value work that will make the difference in their businesses long term success or failure. This is a perfect application of McKeown’s assertion that an Essentialist separates and focuses on the vital few from the trivial many.  

In ag, the unspoken culture tends to value work, misery and sacrifice over financial success and healthy work-life balance. I often hear stories being swapped where we are competing over who has the ranch that creates more misery and work then the next. We tend to wear it as a badge of honor, who has to work the longest hours in the harshest weather. Maybe it is long days in the hay field, calving in the winter or feeding our way through the ongoing drought. If you want to get uninvited to the coffee shop pity party ask the question, “Why do you choose to structure your business in a way that creates these challenges?” We need to find the courage to push back on this culture of unsustainable work, coupled with unrewarding results. 

If you want to dive in and examine the essential in your life, here are a few questions to get you started. Take 10 minutes, write down your answers and share them with your spouse or confidant. 

  • What if your business could only do one thing, what would it be?  
  • Where do your passions, purpose, and skill set align? 
  • What specific things will you eliminate to create time to focus on the essential few?

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Already Dead

Already Dead –

By Kit Pharo

Henry Ford once said, “The man who is too set to change is dead already.   The funeral is a mere detail.”   I had to read that quote a couple of times before I fully understood how powerful it is – and how appropriate it is to the current beef industry.   You may have to do the same thing.

I want you to think back to the drastic changes that were taking place when Henry Ford made this bold statement.   The horse and buggy were being replaced by automobiles.   Draft horses were being replaced by tractors.   For many people, these changes were beyond comprehension.   If you and I lived during that time period, there is an excellent chance we would have been extremely reluctant to accept those changes.

People hate change!   Nowhere is this more prevalent than in the cow-calf sector of the beef industry.   It often takes two or three decades for cow-calf producers to make simple changes – even though they know the change will be for their own good.   Some changes are not possible until one generation gives way to the next.   As stated in the leadoff article of our Summer 2020 Newsletter, many family businesses advance one funeral at a time.   If you don’t think this is true, you are living in la-la land.

Cow-calf producers who think they can continue to do things the way they have always done them need to WAKE UP and smell the coffee.   As Henry Ford said, “Those who are too set to change are already dead.   The funeral is a mere detail.”   Are you already dead?   I hope not.   It’s not too late to make the necessary changes in your program and genetics – but time is of the essence.   Nothing stays the same.   It’s Time to Change Horses!

No One Owes You A Living!

 

The world, including the US, does not owe you a living. Or as Dave Ramsey would say, “You Are NOT Entitled To Anything“. If you dream to make a widget and insist that everyone must support you in your dream and insure that you make a full time living making that widget, then i fear you may be sorely disappointed.  Especially, if your widget making imposes on others’ freedom and property rights.

There are very few, if any, financially successful people with no debt and have, or are building wealth, working only one job.  Often the most successful have at least 2 or 3 other gigs on the side going.  (Even Warren Buffet has several unrelated income streams going!)  When you are in your teens, twenties, and even into thirties, you have energy, vision,  and motivation that enable you to put in 10-16 hours a day, 6 days a week.  This allows you to save, build equity, and work towards your dream job if you aren’t already doing that.  When you are older and that energy level drops, hopefully those side gigs are the money invested which are then working for you rather than you working for it.

I recently wrote a blog which told of the near impossibility of a person to get into farming or ranching these days.  This is largely due to the out of balance cost of land vs its productive value.  However, it is not yet impossible to farm and build wealth – even without incurring massive debt!  It may take longer, however.  And, i know of absolutely no one – young or old, in the present or in the past- who can farm or ranch (or any other business for that matter) full time without some sort of side gig.  Read stories of old timers – they were blacksmiths, carpenters, mechanics, traders, transportation specialists, suppliers; any skill they could put to use for pay was engaged.  Wives farmed alongside their husbands, raised the children, and often had a couple side gigs as well.  (Yes, i know that many women are farmers and ranchers, i am one, but also raised my own children, managed the household, and help with the farm.)  It is the same today – if you want to farm (or start any business for that matter) you’d better put a sharp pencil to how you’ll put food on the table and a roof over your head.  Don’t incur debt and make sure you have some savings.  (a borrower is always slave to the lender).  Operational farm debt is as bad as school loans.  Debt for building  a depreciating asset may be the worst of all!  What if something happens to you?  make sure you have plenty of life insurance!  Liability, maintenance, disease, accident associated with buildings and machinery are expensive and ongoing.  Once debt is incurred for a single purpose gadget, you have to keep it going or you may default or leave your family with a ball and chain which seldom adds value (it may actually devalue) to your property. Better yet, don’t go into debt.

Keep your paying job and save your money before you buy a single acre or cow or gadget. Many ranchers today are leasing both land and cattle which can be a great way to get started with very little investment or risk.  Best book i’ve read on this is Greg Judy’s book, No Risk Ranching.  Maybe you won’t have the exact same opportunities that Greg has, but use your imagination – maybe you’ll have to move – as Allan Nation, founder and former editor of Stockman Grass Farmer, used to say, “Everyone has an unfair advantage.”  Figure out yours and put your best foot forward.

Many farmers today still abide by the ways of Earl Butz to ‘get big or get out’ and we now have such an abundance and overproduction of all products that prices continue to slide.  Yet, the mantra continues to be ‘produce more’  and use the economy of scale to maximise profits.  That may good to a point, but the cost to the environment has been substantial by farming ‘fence row to fence row’  and with government subsidies now firmly entrenched there is less risk of a ‘failed crop’ resulting in going broke regardless of debt load or lack of wise financial planning.

I’m not espousing a return to farmers falling out due to the vagaries of weather, political machinations, or burdensome regulations.  Without subsidies, food, fiber, energy prices could soar to the level of parity and the consumer would certainly cry ‘foul’.  But, we all must remember that the economic  rule of supply and demand may cause us to consider better management practices.

There is the concept of focusing on profit rather than production.  If it is possible to make more money producing 120 bushel corn to the acre rather than 200 bushels to the acre, would that be something to consider?  what is the cost to the land and quality of life to produce 200 and even 300 bushels to the acre?  Can i do a better job of regenerating and improving the soil i have to increase pounds, bushels per acre and lower cost as well?  There are a lot of opportunities and new/old practices to learn – the hard part is keeping it simple and CHANGE!  This is a head issue – don’t be a stiff necked people.

Speaking of quality of life – how have you organised your dream?  does it enhance and edify others?  or detract from the lives of others?  is it sustainable?  is it regenerative?  can you keep doing this for the next 60 years?   If not, it’s not sustainable and you had better have a plan in place for the future, less strong, less energetic you.  Will your model rely on unpaid labor of yourself or your family?

Happy Planning!

 

Proverbs 6:

1My son, if you have put up security for your neighbor, have given your pledge for a stranger, 2if you are snared in the words of your mouth, caught in the words of your mouth, 3then do this, my son, and save yourself, for you have come into the hand of your neighbor:  go, hasten,a and plead urgently with your neighbor.

4Give your eyes no sleep and your eyelids no slumber; 5save yourself like a gazelle from the hand of the hunter,blike a bird from the hand of the fowler.

6Go to the ant, O sluggard; consider her ways, and be wise. 7Without having any chief, officer, or ruler, 8she prepares her bread in summer and gathers her food in harvest.

9How long will you lie there, O sluggard? When will you arise from your sleep? 10A little sleep, a little slumber, a little folding of the hands to rest, 11and poverty will come upon you like a robber, and want like an armed man.

12A worthless person, a wicked man, goes about with crooked speech, 13winks with his eyes, signalsc with his feet, points with his finger, 14with perverted heart devises evil,
continually sowing discord; 15therefore calamity will come upon him suddenly; in a moment he will be broken beyond healing.

16There are six things that the LORD hates, seven that are an abomination to him:
17haughty eyes, a lying tongue, and hands that shed innocent blood, 18a heart that devises wicked plans, feet that make haste to run to evil, 19a false witness who breathes out lies, and one who sows discord among brothers.

 

Old, Stupid, and Lazy?!

I know I promote Dave Pratt and his Ranching for Profit video blogs a lot and, even though i don’t agree with him on many points, there are a lot of good points he eloquently describes which are applicable to any business – not only ranching.

I’ve ’bout got my hobby farm to the ‘old, stupid, and lazy’ stage, but gracious, how could i attract anyone to cover for me if they thought i was needing someone old, stupid, and lazy ?  😀

Here’s another great one!

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

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

Profitable Ranch Strategies

Although Jim’s article in On Pasture is specifically geared towards livestock/pasture management, the principles can easily be applied to any business.

 

Kick the Hay Habit – Jim Gerrish’s Tips for Getting Started

By   /  September 17, 2018  /  No Comments

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This week’s Classic by NatGLC is from Jim Gerrish. Jim will be speaking about Grazing Lands Economics at the National Grazing Lands Conference in Reno in December, so we thought you’d like to have an idea of what he might cover. Jim is one of over over 50 producers who will be part of the conference talking about innovative grazing management. We hope you’ll join us! Register before October 16 to get the reduced rate of $395, and bring a friend or spouse with you for just $175 more.

Hay feeding still ranks as one of the top costs of being in the cow-calf business in the U.S. The good news is we do see more and more livestock producers ‘Kicking the Hay Habit’ with each passing year. There is much more to kicking the habit than just deciding one day that you’re not going to feed any more hay. It usually takes several management changes to get there.

Here are what I am seeing as the top five moves for getting out of the hay feeding rut.

1. Have a plan for year-around grazing.

This doesn’t mean just hoping you have some grass left over in the fall to use during winter. It means making a critical evaluation of all of your forage resources and mapping out when they can be used most optimally. Develop a calendar of when your stock are going to have their highest and lowest demands. As an industry we have given a lot of lip service to matching forage and animal resources, but the majority of ranchers still do a pretty poor job of implementing a sound plan.

2. Change your calving season to a less demanding time of year.

It is much easier to graze a dry, pregnant cow through the winter than a lactating mama. For many of today’s moderate to high milk producing beef cows, daily forage demand at peak lactation is 50-80% higher than when she is at dry, pregnant maintenance. Late spring or early summer calving seasons work well in a lot of ranch country once you change your mind about a few things. I’ve met very few ranchers who switched to later calving who ever went back to winter calving.

3. Make sure your cattle match your environment and climatic conditions.

You really want your cattle to survive and thrive on the native resources of your ranch. The more petroleum and iron you put between the sun’s solar energy and your cow’s belly, the less profitable you are likely to be. Cattle should be able to earn their own living. You shouldn’t have to earn it for them. Consider every head of cattle on your place to be a ranch employee. Your primary job as manager is to create a working environment for your employees to do their job.

4. Manage all of your pasture and rangeland more intensively.

CP snow grazing Oct 26This does not mean graze it more intensively, this means manage it more intensively. If you do, you will get more forage production and greater carrying capacity from your land. Simply rationing out what you are already growing is one of the easiest places to pick up more grazing days from every acre. One of the strongest arguments I can make for Management-intensive Grazing (MiG) in the summertime is to create more winter pasture opportunities.

5. Change range use from summer grazing to winter grazing.

In most environments with degraded rangeland, switching to predominantly winter use is a great strategy for improving range condition. Many public lands offices are very willing to work with ranchers on this kind of positive change. We do see some agency offices and employees who drag their feet on making any kind of change, but most are willing to work with you if you have a grazing plan that will help them meet their conservation goals.

IMG_9954You may not need to make all these changes in your operation. It depends on where you are right now and where you want to end up being. While some operations go cold turkey and try to make the entire shift in a single year, it may be easier to make the transition over 3 or 4 years. You will take some learning and adjustments to get comfortable with the new approach. Your livestock will also need to adapt to the new management regime.

Most beef herds in the US and Canada are made up of cows that are too big and have too much milking ability to live within the resource capability of the land base. Winter grazing is a lot easier with the proper type of cow on your place. Making the switch in calving season might be as easy as just holding the bulls out for a couple extra months. Changing cow type to a more moderate framed and lower milk producing animal will take quite a bit longer.

The key point is to have a plan for making the transition with a clear target of where you want to go.

Thanks to the National Grazing Lands Coalition for making this article possible.

We hope you’ll join the On Pasture crew at this year’s conference in Reno. We love it because there are so many producers sharing their experience from all across the country. We always learn a lot! Remember – registration goes up to $475 on October 16!

 

 

Thanks to the On Pasture readers providing financial support.

Can you chip in? To be sustainable, we need a $15,000 match from readers to make our grant happen this year. If it’s an option for you, consider becoming an “Ongoing Supporter” at just $5/month. Being able to show that kind of support is especially helpful when we’re approaching outside funders.

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ABOUT THE AUTHOR

Jim Gerrish is the author of “Management-Intensive Grazing: The Grassroots of Grass Farming” and “Kick the Hay Habit: A Practical Guide to Year-around Grazing” and is a popular speaker at conferences around the world. His company, American GrazingLands Services LLC is dedicated to improving the health and sustainable productivity of grazing lands around the world through the use of Management-intensive Grazing practices. They work with small farms, large ranches, government agencies and NGO’s to promote economically and environmentally sustainable grazing operations and believe healthy farms and ranches are the basis of healthy communities and healthy consumers. Visit their website to find out more about their consulting services and grazing management tools, including electric fencing, stock water systems, forage seed, and other management tools.