Improving Ranch Profits by Paying Attention to DetailsTue, 04 Mar 2014 12:07:57 CST
Today's ranchers are experts when it comes to managing money for profit. Wyoming cattleman James Sewell of TA Ranches breaks down how he decides what stays and what pays.
"Coming into a new operation, the first thing I had to do was look at the financial statement in terms of what I wanted to attack or change or look at in management. And when I look at the profitability of an operation, I look at the basic profit equation which is: revenue minus direct or variable costs-the things that change per unit-and that gets me a gross margin."
Then it's time for management decisions that affect the present and future as, Sewell says, an early expense at TA Ranches often leads to greater profit down the line.
"On the fed feed we found we actually had good cattle, we had a nice Angus-based cow herd, we really were selling calves for good money, but we weren't quite giving them enough fed feed or supplemental protein to get the cows bred the way we wanted them to get post-weaning gain on the calves. And, so, coming in and needing to lower costs, I had to actually raise one of the three highest costs already just so we could express the genetics that we had."
Keep quality in mind with every decision, even little things like cleaning up and selling old equipment, Sewell says.
"We run a clean, tight ship at ranch headquarters and with equipment. It's nice. You have a pride of ownership with working there. Just when you come onto the place you're like, 'Hey, these people care about quality.' And I think that really holds through to a lot of things: It's how the employees conduct themselves in town, how they take care of their cows and what kind of calves we have, how we sort them up for shipping."
Maintaining low-cost production requires documentation along the way and that keeps all members of the team on the same page.
"What's written down, I can communicate that to the owners, to the employees and then it's just a reminder for myself where we're going."
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