Tag Archives: RMC

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.

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

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

A Great Place To Raise A Family by Dave Pratt

Dave Pratt, owner of Ranch Management Consultants (formerly known as Ranching for Profit) hits it on the head again with another great blog entry.  Although his niche is specifically ranching, the ideas he shares are often for any business.

 

Home > A Great Place To Raise A Family

A Great Place To Raise A Family

I occasionally lead workshops I call Hard Work and Harmony: Effective Relationships In Family Businesses. In it I like to ask participants to explain to the person next to them why they ranch.  Some say they love being their own boss, or love working outdoors and with livestock. Almost all of them say something about loving the lifestyle. Near the top of most people’s lists is, “It’s a great place to raise a family.”

I agree. I grew up on a small place. The biology lessons I learned from tending livestock were more influential than any I ever had in a classroom.  I learned other lessons too. I learned how to work hard and how to be resourceful. But it wasn’t just about work. Our place was a great setting for any adventure my imagination could conjure up. My mom sold it when I was in college and it just about broke my heart.

A ranch can be a great place to raise a family, but it isn’t always. I worked with a rancher shortly after my son, Jack, was born.  When we broke for lunch he asked about my new baby. I told him that when they placed Jack in Kathy’s arms for the first time, I could hardly see him for the tears of joy streaming down my face.  Tears welled up in his eyes too, but they weren’t tears of joy. Trying to hold back a flood of emotion, he told me how he had worked sun up to sun down to build a place “for the generations to come.”  He said that he hadn’t been as involved in his children’s lives as he should have been. As we sat on the hill, he told me that now he rarely hears from his adult children, who want no part of the ranch. A ranch can be a great place to raise a family, but it is not a substitute for our active involvement in family life.

Many ranchers are addicted to work. I’ll bet you’ve even heard some of your colleagues brag about how long and hard they work, proudly proclaiming things like, “I haven’t taken a vacation in 20 years.” They say it as though it is something to be proud of.  When I hear things like that I shake my head wondering, “Are things that bad?” You can’t run a sustainable business on unsustainable effort.

Intentional or not, work can become an excuse to avoid working through the issues every healthy family faces at one point or another.  When work consistently takes precedence over family needs, we set ourselves and our families up for trouble. Engaging in what may be uncomfortable conversations when issues first come up can keep them from growing into big problems.

In the last few months I’ve met a number of people who are learning that lesson the hard way. After decades of avoiding uncomfortable family issues they are facing extremely difficult challenges regarding succession.  Now, without any experience working with one another to resolve small issues, they are hoping to work through the most difficult challenges many of us will ever face. The conversations are made even more difficult because of the hurts that have gone untended and the resentments that have grown from not taking care of the family in the family business.   It’s a tough way to learn that success has more to do with healthy relationships than with conception rates and balance sheets.

I don’t mean to suggest that the physically demanding work that ranches require can be ignored, but it doesn’t have to be all consuming. Many Ranching For Profit School alumni have discovered that the ranch was all consuming only because they allowed it to be that way. After the school they restructured the business to increase profit and liberate their time to put more life in their work/life balance. They still work as hard as anyone, just not as long. Their ranches are great places to raise their families, andthey actually take the time and make the effort to be directly involved in raising them.

To hear how one RFP alumnus decreased the work required to run their ranch while increasing profit and improving their quality of life, click here.