Tag: gross margin

Enterprise vs Entity

ranch barn

During the Ranching for Profit School, we focus on the economics of the “operating business” and not the “land investment.” The operating business must rent the land at fair market value from the land investment for the agricultural use. In other words, the cows don’t get to graze the ranch for free. This is a […]

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Fix the Cow Business Before You Sell ‘em

calf cow

Somewhere along the line Ranching for Profit has gotten a reputation for being the “sell your cows school”. I want to push back against that. I hope that Ranching for Profit is the “let’s build the business that you want and is profitable school.” I’d hate to think that someone comes to our Ranching for […]

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Benchmarks are Overrated

benches

At the Ranching for Profit School, we teach people how to use benchmarks to identify deadwood in their businesses which allows them to find focus areas for managerial leverage. When we finish teaching the benchmark section participants are excited to run their numbers in the RFP format and compare them to the RMC Benchmarks to […]

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Working Backwards

Planning Backward

One of Stephen Covey’s seven habits of highly successful people is to “start with the end in mind.” We use this a lot at our Ranching for Profit School, particularly during the evening coaching sessions when students are preparing their economic numbers. The Ranching for Profit economic model breaks down a business into gross margins […]

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Economic Planning

toy soliders

Dwight Eisenhower said, “In preparing for battle I have always found that plans are useless, but planning is indispensable.”   Eisenhower might as well have been talking about ranching. Speaking of planning … How is your economic plan coming along for next year? Things are changing rapidly. Costs and returns have taken some dramatic shifts in the past few years. The […]

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A Perspective on Gross Margin from Aaron

sheep

Aaron Helmick is a pain in the rear. Even worse he is a dairy farmer from West Virginia pain in the rear. 😆 Somehow Aaron managed to marry Tara and that vastly improved his chances in life. Aaron and Tara are alumni of Ranching for Profit and Executive Link. They are amazing and thoughtful people […]

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Overheads

tractor team

My last ProfitTips article focused on the difference between being productive and being profitable and I used gross margin as a measure of profitability of an enterprise.  In introducing gross margin I made the statement, “The best measure of profitability that I know of, is gross margin per unit.”  I misspoke … or mistyped … […]

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Productive But Not Profitable

cows tractor

North American agriculture could be described in one statement. “Productive but not profitable.” For decades the primary messaging to farmers and ranchers has been to become more productive. You see it everywhere, from the magazines, to the radio ads, to the messaging in our youth development programs. “It’s your responsibility to feed the world. Less […]

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Economic Analysis

economic planning

We recently wrapped up our two day Economics Intensive where alumni of the Ranching for Profit School prepared their economic plan for the coming year. For many of us, if we are left to our own devices, we often put off making an economic plan or get stuck figuring out how to handle a certain […]

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Moneyball is a Movie About Ranching

baseballs

The first time I watched the movie Moneyball, I about came out of my chair thinking, “This movie is about ranching”. The correlations are strong and the lessons from the movie are absolutely appropriate to agricultural businesses. In the movie Moneyball, Billy Beane is the general manager of the Oakland A’s, who have just lost […]

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