Rust, Rot, Depreciate

Starting with point #7 from last week‘s entry of setting oneself up for financially healthy ranching or business.

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!

Nearly every ranch or farm has a massive amount of iron and steel piled around the farm or taking up space in a barn or shed of questionable value. Both the barn and the machinery must be pulled under scrutiny. Some farms may even have extra homes, though often the old homes and ancient barns may not even be worth tearing down, but the satisfaction of cleaning up a place may provide the incentive. However, there is also the issue of liability and, even the threat to health of livestock to leave such structures in place. Livestock has no need of buildings or machinery.

Approach each piece of machinery, barn, shed, house, corral, etc with a very critical eye. Be careful you aren’t fixing machinery and buildings you don’t even need! Additionally, consider whether or not you are making an overhead expense as a monument to tax evasion. If you purchase fence supplies, fuel, machinery, etc to offset income every year, what advantage is there except needing more room for storage and increasing chances of obsolescence and decay. Is it important to hoard fence supplies when you really don’t need to build fence? Even in our remote area with few people to do work, we can hire a fencing crew.

1. When was the last time i used this machine and why did i use it?
2. Do i have time to run this machine?
3. Does it have a purpose right now, this very moment in time which will add harmony to my life?
4. Does it have more value to someone else – in other words – before it is obsolete, would the kinder thing be to sell it to a younger person to give him an opportunity to purchase a needed piece at a discounted (used) price?
5. A shed or building may have value to someone else – either as selling it and moving it off your property (ideal) or if it’s in good condition and easily accessible maybe repurposed from storing your machinery you don’t need to leasing out the space. Remember though that maintenance expenses, depreciation, damage will still fall on you.
6. If a building is needed for necessities, be sure to update it so that it is easily used by all who need to. Consider overhead doors or smaller ‘people’ doors. Eliminating heavy sliding doors will save on health issues.
7. Corrals – good ones are a necessity on any ranch. There may be too many expensive systems scattered at various small parcels – Why? If the money has already been spent it becomes more difficult to decide the path forward. Should more money be spent to tear it out and sell the parts? or just leave it and use it once a year?

In some cases, the time to make the decision whether or not to spend wads of cash comes BEFORE the money is blown. This is most assuredly the case with more permanent type structures such as corrals and buildings.

I’m going to go so far as to say, the many farms, ranches, and businesses, could have ‘estate’ sales to generate 100s of thousands of dollars to reinvest and actually free up valuable time and be more profitable. In fact, you may have other valuable assets which need selling before they become liabilities or worthless. Harvesting mature trees comes to mind. Take inventory of your farm, ranch, and business. Decide what is not needed to keep it moving forward so it’s more rewarding – perhaps the next generation will be more interested in continuing the legacy you built with literal blood, sweat, and tears.

All the points i will be covering are so intertwined, it’s difficult to pull out each one as a standalone. Case in point is the example of excess corrals. Before spending 10s of thousands of dollars on multiple corrals, the better direction is likely to combine herds and build one good corral. If a small catch area is needed at another location, perhaps a mobile unit would be helpful. But better yet, the satellite location can likely be leased out or sold off.

The bottom line:

Sell off all unused machinery, buildings, vehicles, tools, etc   All these are liabilities and cause a lot of wasted time and expense in maintenance (labor and supplies), insurance, and depreciation.  Hoarding is not a good trait – help someone get started by selling off unused assets before they are obsolete.

Shabbat Shalom!

Create Something Beautiful Everyday!

Incredibly, this is an actual race (alleyway) that we still use. It is very dangerous with broken boards on each side which are sharp, jagged, but wired back into place. The remaining boards are just waiting to bust with a minimum amount of animal pressure. A few years ago, whilst quickly sliding a bar in behind an animal just at that crowding area, my finger was smashed against a bolt sticking out. Didn’t quite cut to the bone. It’s ridiculous, IMHO, to spend 10s of thousands of dollars on new seldom used corrals, when the main ones are badly neglected, yet are used quite often. Gates should swing and easily latch, proper sized race for type of cattle, butt stops, sharp edges, blind spots addressed, etc. Installing good equipment that can be used that will be far less than even one trip to the emergency room. Alleyways or races should be appropriately sized for the stock and have a back up gate. From experience, i’m so tired of bringing one calf at a time only to have the bloke manning the butt bar at the chute to miss and the calf barrels back into me, then having to crowd the calf back up to the headgate.

Piles of materials taking up valuable space and rusting down this past year. I’ve even toured farms and came upon a huge pile of brand new steel posts and multiple rolls of barbed wire completely engulfed by years of mature grasses and tree sprouts in the middle of the pasture! Not in good shape after 30 years or more. Count the cost BEFORE buying stuff to put into storage. The cost should include whether or not you have time or any help to get the job done. FIRST – do i really need this?

Building a corral with new materials, but in the wrong spot or in the same footprint which didn’t work before is a waste of time and money for decades. If the flow of stock didn’t work in the old layout, it won’t work even with new materials.

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!