Presentation at Southwest Missouri Spring Forage Conference
Ranch Management Consultants Inc. runs two programs, The Ranching For Profit School and the Executive Link.
"When we work for ourselves, we work at what we are good at." Pratt says. We are doing the $10 an hour job. However, we may be leaving the $100,000 per hour job undone.
Most ranches are likely losing money.
Pratt encourages the audience to subscribe to the Ranching for Profit blog.
What letter is most different?
b? c? d? q?
What about the t?
We see things through the lens of our expectations.
What if the t is a threat? What if you didn't even see it? What if the t is an opportunity? It is a lot easier to see threats and opportunities at your neighbor's operation.
Too often, we wait till we are out of time and money to make changes.
We hear the phrase, "If you always do what you have always done you will always get what you've always got." But, in the cattle business, "If you always do what you have always done you will lose your shirt!" Ranching costs continue to go up.
We have to think about our paradigms and values. Nothing will happen until you change your paradigm. You will not do things differently until you think differently.
We develop 20 heifers per every 100 cows (replacement rate is 20%). Half of our cows have 3 calves or less.
A bred cow costs about $1,800. A cull cow is worth $900. So, the value of $900 divided by 3 calves is $300. So, the average cow depreciates by $300 per year.
We teach our kids that they have to work to make money. Want some extra cash, do chores for mom or a neighbor. We then think that working harder and working more is the key to get more money.
The biggest problem in agriculture is not commodity prices or land prices. Young people blame the older generation for not letting them make changes. However, the younger generation knows with in a matter of months that the older generation is not going to change. So, the older generation may be responsible for the first few months. However, the younger generation is responsible for staying. We put up with bad situations for far too long. However, generational transfer is not occuring. Of the people who want to pass their ranches in tact to the next generation only 30% are successful.
Why does this happen?
- Poor communication and planning (no one want to think about their own demise, no one wants to talk about competing sibling interests, etc.)
- The business isn't viable
- Heirs are incompetent. We teach our kids how to raise calves and tend to crops. We don't teach them how to run a business.
Is your ranch a business or is it a collection of assests and a bunch of jobs?
Does your ranch serve a customer? If your ranch is to serve yourself, it is not a business. Businesses serve specific customers. Are you solving your customer's problems?
Does our ranch work for us or do we work for the ranch? Can you leave the ranch and everything go fine?
What is your reaction to $100,000 ideas? If the response is "We don't have time!", then you are not running a business.
If sold, would we be selling a system or assets?
Do we invest in professional development?
When we say "We ought to run it like a business" we are admitting it is not a business! It is either a business or it is not.
We work ON it, not just IN it. Should we own the cows or should someone else? If we own the cows, when should we be calving?
Does it make a profit? Profit is the breath of business.
There are 4 ways to make money. Employee, Self-employed (you work for a lunatic), business, or investor.
If you are an employee or self-employed you have to work for your money. If you are a business owner or investor, your money works for you. If you work for money, you manage to avoid what you don't want. If your money works for you, you manage for what you want.
Lifestyle or business? If ranching is a business, the ranching lifestyle improves!
Derek, a Ranching for Profit alum said, "If we focus on business, our life gets better. If we focus on life, we worked our butts off! Now we work our mind much more than our bodies."
You are not there to support the ranch, the ranch is there to support you!
There is a difference between working in the business and working on the business.
Working in the business:
What should I do today? Put up hay? Feed cows?
Working on the business:
Should I own cows? Should I put up hay?
Need to set aside two mornings a week to work ON the business.
We need to work on the business, so instead of 30% of ranches being successfully transitioned between generations so that 70% of ranching businesses are successfully transitioned to the next generation.
Decker's Additional Thoughts
Genetic decisions, including breeding objectives, need to be an important part of working ON the business.
- Should I crossbreed? If so, which breeds should I use?
- Should I use a terminal crossbreeding system? If so, should I be buying heifers?
- How can I use genetics to better market my cattle?
- What are the goals of my breeding program?
- Should I be DNA testing my cattle? If so, which ones?
- Which economic selection index should I be focused on?
- How can I turn over generations faster?
- What data should I be collecting?
- Who is going to analyze that data for me? Breed association? Private firm?
- Does my breeding program meet my customer's needs?
- How can I provide better customer support?
- Should I be buying my customer's calves?
What working on the business (WOTB) questions related to genetics would you add to this list?