Is Opportunity Interest, Real Interest?
An opportunity cost is the lost benefit of choosing a different option. The opportunity cost of going to college is losing out on four years of wages; the true cost is tuition plus lost wages. At the Ranching for Profit School, we include opportunity interest as a cost on owned livestock herds, because there is […]
Read MoreEconomic Planning
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 […]
Read MoreA Perspective on Gross Margin from Aaron
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 […]
Read MoreWhat Price Should I Use?
For the past 3 weeks we have been holding our Executive Link meetings from New England to Texas. We have about 110 businesses that are currently members of Executive Link (EL). These businesses meet as boards of directors three times a year to give and receive strategic advice on their business and be held accountable […]
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 […]
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 […]
4 Reasons Why Increasing Weaning Weights May Not Increase Profit
I gotta stop reading this stuff. A recent article in a self-proclaimed “progressive” magazine claimed that July deworming was an often-overlooked opportunity to increase weaning weight and therefore profit. According to the article, deworming can increase weaning weights by at least 30 pounds at a cost of $7.85 per cow/calf pair. With a market […]
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 […]
Game Changer?
Income – costs = profit, right? The answer is “sort of.” It’s a little more complicated than that because we need to adjust for inventory changes, consider non-cash costs like depreciation and non-cash income like retained heifer calves. But over the long haul, for the most part, income – costs = profit. The obvious conclusion […]
Is Your Ranch Fire-proof?
The risk of wildfire has always been a normal part of ranching. But today we are faced with a new normal that includes the increased risk of catastrophic wildfire. The number of wildfires hasn’t changed much. There are roughly the same number of fires now as when I was cutting fire lines on a Forest […]