Working cattle ranches is a fairly stable economy. Fuel prices or the cost of equipment may have gotten more expensive but the actual cattle value itself has not risen very much. However, they do tend to go down sometimes and will likely do so again so here are a few tips on how to keep cattle ranches profitable.
- The size of your ranch If you own a small ranch, then it is recommended to procure some other source of income along with the cattle itself. Small ranches do tend to struggle sometimes and be able to keep up with the better known ranches. A small ranch should keep it simple and make sure that the overhead is always at a minimum. This will help out a lot and will allow them compete with some of the bigger ranches.
- Ratio of cows and workers
A lot of money goes towards the workers than the cows themselves. Make sure that you have the correct number of workers per cows according to regulation, but don’t overdo it, to make sure that you are not overpaying for the amount of labor getting done. There are plenty of ranches that get by very well with almost a thousand cows per worker. Paying the one worker a little more for the extra work will still work out more beneficial for you than paying several workers less pay to do the same thing.
- Ratio of acres and cows
It is not necessary to purchase more land as your stock grows if you simply add fencing and manage the grazing. More land means higher payments, more worker and higher overhead. You can avoid all of these costs by simply managing the space better.
Take a look at the type of feed you are giving the cattle. Working cattle ranches involves understand what keeps them healthy and happy while not breaking the bank. Grazing more and feeding less is a great way to make financial progress in your ranch. Grazing management can be a great tool for increasing animal productivity and the efficiency of labor. Cattle are made to graze and can do it, and like to do it, in tougher conditions than we give them credit over. Extreme wind chill can really hurt the stock, but believe it over not, grazing can help them weather it through.
- Debt to Equity Ratio
This should always be kept low. Having a low amount of debt can give you flexibility when it comes to changing things around and new circumstances that may arise. It even gives you more opportunity to try out new ideas. Make sure that you are paying off old loans and credit before trying to do new things on your ranch. Farms and ranches should be thought of as the same as any other business. You would not try to acquire more debt under your business name if it was a corporate company, so don’t try to do it while working cattle ranches.
This one is pretty simple to accomplish. You want to cut as much overhead as possible. Overhead is basically your monthly expenses. Take a look at everything you have and determine if you really need it. Equipment, building, facilities, even the stock; how much do you really need to run an efficient ranch? It takes less than you would think to run a fairly good sized farm.
- Total return on investments
Returns are basically how much you can sell over a certain period of time and how well they are sold; for how much. Gross margin is another thing to keep an eye on. This is when, not only have you sold well, but the use of the income is put to good use. You have to make sure that the input is going to make a profit as well as pay for itself, otherwise it is not recommended to use it at all.
Working cattle ranches can be very rewarding or very stressful, depending on how it’s done. Follow these tips to make your work the satisfying kind!