What is Your Role in the Ranch?
Is your primary role in your business working as a doer or a planner? When the doer goes out the door in the morning, they get to work doing all the things that need to be done in the business. The list is never ending. Fix the water in the Smith pasture, put out mineral to this group, complete the pasture move of that group. Then it’s to the shop to replace the axle in the trailer and then on to another project.
The planner holds the Monday morning meeting where tasks are coordinated among the team. Who will take the lead on what? What kind of help is needed? The group discusses ways to streamline or eliminate tasks altogether. The planner considers whether we should build this ourselves or outsource it. Sure, we could do it, but it would take us away from these other important things that create real value in our business. If we hired it out, they might even do it better, and in half the time.
In agriculture we are taught to be frugal. Rightly so. Commodity agriculture is often a business where the low-cost producer wins. But our frugal nature can get in the way of running a successful business. Why would I hire someone to do that, when I can do it myself? With that kind of thinking we end up with a million jobs to do and just when we start to get good at that thing we are off to do something else. Also, the frugal thinking we needed to get the business off the ground isn’t the same thinking we need to grow the business to support multiple families.
If we look at an average size family ranch the annual overheads might be somewhere around $300,000 to $400,000. These are just the costs of keeping the doors open on the place including land and labor related costs. Let’s assume someone works 5 days a week and takes 2 weeks off a year. (If some of you are rolling your eyes, then this may be part of the problem.) That leaves 250 working days a year. Just to cover overheads, not including profit, each working day the business must create $1,200 of gross margin. For a deeper dive into this read Profit Tips The Value of a Day.
I find that identifying that number can give management focus on the things that really create significant value to the business. To make any business successful someone needs to be the leader. If the leader is too busy putting out mineral and fixing the water in the Smith pasture then is it really even a business or just a bunch of assets and a collection of jobs?
I’m not saying we shouldn’t know how to fix stuff or be able to work in our businesses, but I am saying that if you’re in a leadership position your primary job is to plan and lead, not to labor. Shouting orders from the cab of the backhoe isn’t leading. Leading the business involves strategy, enterprise analysis, budgeting, vetting ideas, and turning others loose to leading efforts. It’s time we redefine the leader of a successful ranching business from the person with the most calluses, to the individuals who have the self-discipline to be the leaders their business needs. How are you making an effort to lead your business?