Quickest Ways to Profitability & Harmony

This list is old news, but reviews are seldom a waste of time. Oftentimes, we need to revisit a topic to find the low hanging fruit of our business or keeping a home to be more effective in our lives.

Questions to ask yourself:

“Am i asking the right question?” How can i do this without spending money? Do i need to do this? Am i very efficiently doing the wrong thing?

If you think it won’t work for you, then it won’t. If it’s something we don’t want to change, we will set up the situation to fail on purpose. We often are the biggest stumbling block to harmony in our professions and relationships by refusing to seek a solution which, oddly, in many situations would not only enhance our lives, but be more productive and profitable as well!

As Kit Pharo says, ‘The easiest money you will ever make is the money you don’t spend – and that money is tax-free.”

In ranching:

1. Combine animals into as few herds as possible. One or two is best. One cow herd, one bull herd kept separate until breeding season. Having one cowherd will greatly reduce the number of bulls you need to cover the cows. A single herd moved multiple times per day will actually improve productivity of the soil and increase desirable plant species (aka regenerative ranching) more rapidly than some popular managed selective grazing programs. Think outside the box on this one. Although one herd is ideal, sometimes there may be a reason for another. In the season of life you are young, strong, energetic, it is important to have cash flow and other income streams. Use separate pastures (leased or owned) for short term use. For instance, you may have a herd of yearling heifers or steers. Perhaps you want to breed your yearling replacement heifers to easy calving bulls. If you have many multiple pastures, miles apart – consider another use for the far-reaching ones. Perhaps hay it in the summer, then allow to grow for short term yearling grazing (sell the animals before winter). Lease or sell the land and focus on the main portions. Chances are very good that profitability will increase, labor will decrease, family life will improve.
2. Calve in sync with nature. In our part of the world of north central Missouri, one would look back in history and learn when the bison calved. This is typically mid-May through June, perhaps a bit into July. Oftentimes you may hear, ‘when do the deer fawn?’ But deer are more like sheep or goats than cattle and breeding season weather needs consideration in many parts of the world. While you are at it, shorten the breeding season to discover your most fertile cows.
3. Let cows raise their calves. In extreme weather conditions, it may be necessary to wean calves early and sell either them or their mommas.
4. Select animals for your breeding herd from your own stock. Starting out, try to find local animals raised the way you will be. This will likely be nearly impossible, and you’ll end up culling a lot. Expensive up front, but long term is the best solution to finding adapted animals which can perform without expensive inputs.
5. Incorporate some sort of managed grazing. I use Real Wealth Ranching techniques which is a way of incorporating nonselective grazing, identifying adapted animals, matching calving/breeding season with forage availability, increasing profitability, and creating harmony in your life and human relationships.
6. ‘Kick the Hay Habit‘ might be the name of a book by Jim Gerrish, but it is great advice for reducing costs. Hay and all the labor and machinery expense associated with it seldom makes sense in today’s ranching world. There are exceptions – especially weather related – but by and large it takes a huge bite out of the bottom line.
7. Reduce overheads! Stan Parsons said you only need a hammer and a wheelbarrow to be a financially successful rancher, and the wheelbarrow was questionable. Now, i might be paraphrasing, but his point is clear; that which rusts, rots, and depreciates is not an asset and likely adds labor and other unnecessary costs. Machinery, buildings, vehicles, even a stack of hay!

Decades ago, i sat in on an introductory Ranching for Profit course taught by Stan Parsons and i thought he had the craziest ideas. I’ve long since embraced many of his precepts, but the concepts need to be revisited to keep on track. I’m constantly making mistakes and forgetting to keep my life in harmony with my work.

Hopefully, future blog entries will dig a bit deeper into each point with real life, personal examples, and experiences.

Shabbat Shalom!

Create beauty and harmony!

When Assets Become Liabilities

March 27th, 2019 by Dave Pratt

Look up the definition of asset in Webster and it’ll tell you an asset is “anything owned that has value.” But Webster has it wrong.  If I put a down payment on a ranch, financing the balance, the full value of the land shows up in the asset column of my balance sheet, but I don’t own the whole ranch. The bank probably owns more of it than I do. No, an asset isn’t necessarily something you own. An asset is something you have. Your net worth (Assets-Liabilities) is what you actually own.

Although your banker would disagree, there is a completely different way to define assets. In his best seller, Rich Dad, Poor Dad, Robert Kiyosaki defines assets as “things that put money in your pocket” and liabilities as “things that take money out of your pocket.” Between monthly principle payments, interest, insurance, maintenance and repairs, most of the things your banker calls assets are, according to Kiyosaki, really liabilities.

Ironically, the fancy cars and homes that we see as the trappings of wealth are actually huge constraints to generating wealth. That doesn’t mean we can’t enjoy the finer things in life, but until we build a wealth generating machine as our foundation, buying “liabilities” will slow, and may block, our ability to create wealth.

There is an even bigger problem with assets.

In the final chapter of his wonderful book, Nourishment, Fred Provenza writes about taking a sabbatical to Australia with his family. To finance the trip he needed to sell their home in Utah. He explains that he didn’t build the house himself, but had done a lot of work on it and had “a lot of skin in the game.” Unfortunately, at the time of the sale the housing market was very depressed and, while they got their investment back, they didn’t get much more. Between the time of the sale and their trip to Australia, they rented a smaller house Fred called “the dump.” At first he was resentful of having to give up owning his “castle.” But after a couple of weeks in the dump he began to realize that he hadn’t owned the house he’d helped build. He explained,  “It owned me.” It owned him financially, requiring huge monthly payments. Even after the sale, it owned him emotionally.

Assets can clutter our space and minds, causing distractions and stress. They make it more difficult to clean and organize. They tie us down. The biggest constraint to moving for some of us is the burden of taking all of our stuff with us.

The things we own trap us. I recently had lunch with a couple who’d been ranching for about 10 years. They both worked off-farm to make ends meet. Over the last several years they’d bought a small place, secured several leases, and built up a herd of a couple hundred cows. But now, with a young family, significant debt and the off-farm jobs, they seemed stuck.

After subtracting the liabilities from their “assets” their net worth came to $1,300,000. On the back of a napkin I wrote them a “check” for $1.3 million and asked them, “If you had nothing but this check and the clothes on your back, and still wanted to achieve your dream, would you use this money to recreate the situation you are in? If not, how would you deploy this money to accelerate progress toward your dream?”

Their expression changed almost immediately. While they’d made progress over the last 10 years, the business they created was going to make it difficult if not impossible to achieve their dream.  Rather than a stepping stone, their operation had become an obstacle to further progress. They set out to use the wealth they’d created to change their course.

I went through the identical exercise with another couple whose net worth was closer to $3 million. When I asked if they would recreate the situation they were in, they immediately and in unison said, “No.” But, when I met with them again a year later, they hadn’t changed anything and resigned themselves to “staying the course.” Rather than using the assets they owned to create the lives they dreamed of, they were owned by their assets, which they used as an excuse to stay stuck. Chuck Palahniuk, author of Fight Club, described it perfectly when he wrote, “The things you own end up owning you. It’s only after you lose everything that you’re free to do anything.”