Category: Economics & Finance

The Unit

Improving gross margin per unit is the second of the Three Secrets For Increasing Profit™. It is also the most misunderstood. Gross margin is the contribution an enterprise makes toward covering overhead costs and producing profit. Gross margin per unit measures the economic efficiency of  that enterprise. It is a powerful tool for comparing enterprises […]

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4 Strategies to Improve Gross Margin per Unit

As a student in my very first Ranching For Profit School I was told to make sure I was shooting at the right target before taking aim. That’s common sense. But it’s not commonly practiced.  Livestock producers are great marksmen, but they are often shooting at the wrong target. The target most producers aim at […]

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Professionalizing Your Ranch

There are two types of athletes, professionals and amateurs. The professionals get paid to play. The amateurs have to pay to play. I look at ranches the same way. The professionals get paid to ranch. The amateurs subsidize their operations with unpaid family labor, off-farm income and inherited wealth. Some people balk at the idea […]

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The Laws Of Economics

My Cousin Vinny is one of my favorite movies. There’s a scene where Vinny, played by Joe Pesci, challenging the witness, asks, “Are we to believe that the laws of physics cease to exist on your stove?” That line, makes me think of some people who market grass finished beef and use grazing practices that […]

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When Assets Become Liabilities

Look up the definition of asset in Webster and it’ll tell you an asset is “anything owned that has value.” But Webster has it wrong.  If I put a down payment on a ranch, financing the balance, the full value of the land shows up in the asset column of my balance sheet, but I […]

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Sustainability: What’s In A Name?

Maybe it’s just semantics, but I think the words we choose are important. 40 years ago, when I was in college, “sustainable agriculture” was a revolutionary concept. Forward-thinking universities created Sustainable Agriculture Departments. Most farm and ranch kids enrolled in the Animal Science or Crop Science programs while the hippies enrolled in Sustainable Agriculture. But […]

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How Much Can You Afford To Spend On Feed?

A midwestern University specialist recently wrote a column for a leading beef industry magazine claiming that winter feeding is the biggest expense in most cow/calf enterprises. That may be true in most cow/calf enterprises, but I doubt it’s true for any of the most profitable cow/calf enterprises. The specialist offered suggestions to “reduce feed costs […]

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A True Story About A Real Manager

About 15 years ago I met an absentee owner who was responsible for a family ranch that was losing money. It had lost between $200,000-$300,000 year after year for a long time. Over those years she’d made several threats to the two managers that if things didn’t turn around, the family would have to sell […]

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5 Keys to Quality Cattle

A popular industry magazine found its way to my desk this week. An article that described five essential “wisdoms” for producing quality cattle piqued my curiosity. According to the author, the first key is “Be fanatic about animal health.” Key number two is “Pay the extra money for a good bull and build a reputation for […]

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What is Sweat Worth?

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 […]

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