You Might Be Ranching For Profit If …

by Dave Pratt

You might be ranching for profit if your spouse doesn’t have to work in town so you can have health insurance.

If you are making a profit you ought to be able to pay yourself whatever it would cost to replace yourself and the business ought to be able to provide a benefits package, including health insurance. The sad truth is that most ranches are subsidized with off farm income. When you are ranching for profit there is no such thing as free labor.

 

You might be ranching for profit if you don’t put up hay.

Most ranchers shouldn’t be putting up hay. They don’t have the scale to justify owning equipment. If they grow hay, they ought to hire someone else to put it up. Can’t find anyone reliable in your area to put it up? Sounds like an opportunity to start a profitable custom hay enterprise. Of course, you should hire someone else to drive the tractor.

 

You might be ranching for profit if you don’t feed hay.

There are some profitable ranchers who feed a little hay, but they don’t feed much (generally less than ¼ ton per cow per year). To minimize or eliminate hay we need to match our production schedule to the forage cycle. With cows this usually means calving a month after the grass starts growing and/or creating seasonal enterprises. If you have deep snow for 4 months, maybe it is time to admit that you don’t live in cow-country … at least not year-round cow country.

 

You might be ranching for profit if your enterprise mix matches the drought risk of your ranch.

If you don’t have the grass, you better not have the mouths. You can’t feed your way out of a drought. You’ve got to destock. Destocking becomes less painful when your enterprise mix matches the drought risk of the ranch. This means having a “keeper herd” and a “disposable herd” (a group that you can easily liquidate). If the drought is too severe you may need to destock some animals in the keeper herd. You’d be smart to make a destocking plan before the drought hits to take some of the emotion out of the destocking decisions.

 

You might be ranching for profit if you had to rent your ranch from a neighbor.

Some folks own their land outright and don’t make land payments or pay rent. If that’s you, congratulations. It’s a whole lot easier for your operation to cash flow without having to write that big land check every year…but if you are ranching for profit, you would be able to pay it if you had to. The operating business should be thought of as separate from the land business, and that operating business ought to be paying market rate rent for the land it uses. If your place is really profitable, you ought to be able to make it even more profitable by renting the neighbor’s and expanding.

 

You might be ranching for profit if you know the 3 Secrets for Increasing Profit™.

There are only three things you can do to increase profit in any business, including your ranch, keep overheads low, improve the gross margin per unit and increase turnover. The real trick is to know which of the three secrets applies to you right now and what to do about it. If you are ranching for profit you’d know your numbers and you’d know what they mean.

 

If you aren’t ranching for profit, I hope we’ll see you at an Ranching for Profit school soon so you can get started.

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