Leasing Like a Boss
This morning I found a great post on the Executive Link private Facebook group. A current EL member was looking for input on information that he should share with the landowners of various properties that he leases. There were several great suggestions ranging from wildlife population status to water infiltration rates. After weighing in myself, I went about my day.
The route this morning led me across all three of our private leases. With the Facebook conversation fresh on my mind and the leases under my feet, my mind was very preoccupied with one question: What customer value do we provide to our landowners?
- Healthy lands, reducing bare ground and increasing effective rainfall.
- Infrastructure maintenance and improvement.
- Opportunity for family in…
“WAIT A DAMN MINUTE!!!” Suddenly it slapped me upside the head. “WE write the check to them. THEY deliver a product to us in exchange. WE ARE THE CUSTOMER.” I reframed the question. What customer values do our landowners provide to our business?
Doesn’t it seem like some people work endlessly trying to find leases? Knocking on doors, ringing phones, buying advertisements, pounding the pavement. Then when they do finally find a chunk of land available, there is an inevitable conflict. Sometimes there is a difference in perception of proper land care, infrastructure maintenance, price structure, or just plain old personality differences?
Meanwhile others are having leases seemingly fall in their lap. They are turning down leases that don’t meet their needs. They are developing relations leading to exceptionally long terms, and/or leasing at significantly reduced prices. Is this second group of people just lucky? Or do they expect to be treated as a customer? Have they done a much better job of honing their mindset and defining their own mission and vision, which allows landowners to seek THEM out?
There are obviously things that a landowner must have control over. For example we wouldn’t expect to lease an excavator, then cave in the cab or run a track off and expect to pay the same price as if we had taken exceptional care of the machine. Nor should we expect to overgraze plants, overstock land, or allow fences to fall down and not have to suffer some consequences. At the same time though, leasing that excavator (should) come with a promise of rapid service response, timely pickup/delivery, affordable rates, etc. What kind of customer values should you expect from your landowner? That all depends on your business and the expectations you have of your business.
In ranching most of us are price takers. Whether we want to admit it or not, most of us still take what the market gives us. Some have figured out how to understand market relationships in order to make the market work better for them. Others have found customers willing to allow price setting. Could there be similar opportunities with leasing land? Can we better understand relations in order to make the lease work for us? Could we become such a sought-after customer that we can set our own price? There are people doing both of those things. Fair lease price is only necessary for benchmarking and finding the deadwood in our business. Otherwise, it is another substantial overhead in an industry that is struggling with high overheads. In the words of my late uncle, “Fair is where you go to see the hogs.”
So, what did I discover when I reframed the question? We provide customer value to each other. Our mission and the mission of our landowners seem to align. Not perfect alignment, but enough so that if a wire gate needs tightened, you would be just as likely to see the landowner stretching it as me. Enough that you will find the landowner in our pens on shipping day. Enough for us to get to implement some of our “crazy” ideas on their property. Enough alignment that if somebody were to offer them more money, shorter terms, or a generally sweeter deal, that person would be shown the door.
At our Ranching for Profit Schools we spend four out of the seven days working to develop your people management skills. We help you establish clear goals for you, your family, and your business. We teach you the tools to hold people (including yourself) accountable for the results you want without damaging relationships. In addition to understanding and excelling at husbandry and ecology, you need to develop your people management skills to run a successful profitable ranch business.
January 11, 2023 at 8:33 am, Garry S Mahrt said:
This has always been a difficult area to navigate. Leasing from retired ranchers is much different than leasing from people that have purchased a view shed. I am eager to see comments on this subject.
January 11, 2023 at 9:37 am, John+Marble said:
At the height of our ranching enterprise we had nearly a dozen places under rental contract. Granted, these were mostly small properties, places where the owners actually lived. I think that small, intimate nature made the relationships easy to manage as I actively worked to educate the owners on what we were trying to achieve: healthy land, happy families, profitable businesses. (Sound familiar?). Being open and honest was helpful, as most land owners quickly became very helpful and happy. This may not work on places of large commercial scale, but it was great for us.
January 11, 2023 at 2:07 pm, Tom A Krawiec said:
Great article Shanon! When I was custom grazing on leased land my mindset was that the landowner was doing me a favour by leasing me their land. It was the wrong frame of thinking as you pointed out. When people started approaching me to rent their land I still kept that same dynamic. In hindsight, the relationships would have been much better had I realized what I was doing for the landowner had as much value as what the landowner was doing for me.
January 12, 2023 at 10:00 pm, Monte+lerwick said:
Thank you for this perspective here Shanon and I like how you pulled it back to brass tacks at the end. I definitely agree that aligned interests are a key here. Operational companies are trying to discover and serve the needs of landowners and customers or “serve two masters” as it were – easy to get between a rock and a hard place. My thought here is that the deeper purpose that often keeps our interests aligned isn’t financial or ecological, it’s a genuine care for each other’s welfare.