Is Your Ranch a Business or a Lifestyle?
By Dallas Mount, UW Extension Livestock Extension Educator
What is the purpose of your ranch? I ask this question of ranchers frequently and get answers that often include taking care of the land, to produce quality beef, to carry on my family legacy, to support my family and to make a profit.
If your answer to this question includes either of the last two on this list, then do you operate your ranch as a business or as a lifestyle ranch?
I find that many ranchers want the ranch to produce a profit and not be something that has to be supported with off-farm income, yet their actions don’t match up with their goals for the ranch. Here is what I mean. Does your ranch have regular business meetings where budgets are reviewed and strategic objectives are discussed? Are economic and financial implications considered in decision making? Are economic projections complied at least quarterly and reviewed as the year plays out? Are managers held accountable by owners and are employees given authority relevant to experience and position?
I find that it is the rare operation where these things are in place. Which of the things that I have presented here does a business not need to do? If your ranch is a hobby, then these things are not necessary, but if it is a business then these things must be done. Often in family run operations decisions are made by tradition and accountability for management is non-existent. Economic analysis of strategic decisions may be done on the back of an envelope, if at all, and business meetings often consist of lining out Junior on the daily tasks rather than discussions of strategic objectives with accompanying budgets and well thought out projections. The owners are often serving in management and labor roles and the duties of doing the day-to-day jobs usually trump doing the management and leadership tasks that any real business must do.
Jolene Brown, a family business consultant said, “Habit, patterns and traditions make for great family history. Vision, creativity and commitment make for a long-lasting business.”
I think she got it just right on this one. Who in your business is making sure the vision, creativity and commitment are occurring?
Often times we stick to doing the day-to-day tasks of working in our business because that is what we are comfortable doing. No one ever taught us how to do a budget, put together an economic projection or run an effective business meeting. You have three choices – learn how to do it, hire someone to do it or don’t do it. If you choose not to do it, then is your ranch a business or a lifestyle? The choice is yours.
My business is teaching ranchers how to do these things. I enjoy it because of the improvement in quality of life and profitability it brings the ranches I get the privilege of working with. We teach these skills as part of the High Plains Ranch Practicum School. There are other great educational programs where you can learn these skills as well, but just like anything else, the only way to get good at applying these tools is by doing it, goofing up and doing it again.
For any business to be sustainable it must be profitable or be subsidized. I think the former is more fun than the latter.
Dallas Mount can be reached at email@example.com or 307-332-3667.