Cattle Ranching Business Techniques
Big Business Doesn’t Have to Rule
Many would say that one of the hardest industries to make money is agriculture.
Even with demand for beef on a recent upswing and emerging trends fueling an increase in the smaller ranching
operation, cattle ranching today is big business, with a handful of large companies controlling most of the
But just because these larger corporations have the resources to run a profitable
business, doesn’t mean you can’t turn a profit in today’s cattle industry.
Here are a few tips with an eye towards the big business style of business management:
Know what you spend
A rancher must be an economist. As much as you may dread the thought of balancing the
books, understanding complex economic systems or can’t stomach the idea of math, you must know what you spend,
where you spend it. Not only do you need to know the total expenses to run your operations, but you need to know
how much your business costs you PER COW! Organize all your expenses into a list, not only how much grain each
individual cow needs and costs to feed, know them down to the electricity. Even turning off lights can allow you to
reallocate money to higher cost items, such as feed and equipment.
Focus on what costs you most
Feed costs during the winter months will be one of the greatest, if not the
greatest, expenses you incur in your operations. Plan for this in the spring and summer months. Try to reduce
expenses as much as possible in preparation for the winter.
Sometimes, it may be easy to forget that, while cows turn the profit, the feed turns the
cow. Once your herd is in good shape and your operation is running steadily, focus instead on pasture management
and divert resources to make sure you are getting the most out of the land that you can. Make sure your cattle
don’t overgraze, either. So pay close attention to feed management.
Be realistic about what you can and cannot do
We often think that our hard-earned sweat will turn into equity, but this is not
always the case. When deciding what tasks to undertake, first look at what the market rate is for contracting or
hiring outside help, even if it’s a single ranch hand. Keep in mind the equipment costs as well. If you plan to
grow and harvest your own hay, what equipment will you need and what will it cost to purchase? How much time will
you have to spend on the hay rather than focusing your attention on the herd? Then, look at how much it costs to
purchase the hay from an outside provider. They have the equipment and the resources. Once you do a cost analysis
that realistically includes the costs of the labor you are performing for a certain task, you could find yourself
spending the same amount of money (or less!) yet rather than tending to the hay, you are tending to the herd and
the land, where your profits will ultimately materialize.
Know and thank your customers
When the time comes, do you really know the people you are selling too? What is
your goal? Customer retention can be the surest way to sustain profitability over the long run. Rather than
diverting marketing resources to attract more customers each year, sometimes, it may be better to focus on keeping
the customers you have. Over the course of the purchase period, make sure to maintain relations with key buyers.
This can be as simple as a phone call or a birthday or anniversary note. It can also mean calling your customers at
key points in the production process to let them know any advances you have made and keep them abreast of the
current estimates. By doing so, you are investing in a relationship. The cost of marketing to new customers can be
high because they usually include advertising and expended resources to promote your business. Rather than wasting
a $100 to run a few ads, spend $50 and take your key customers from last year out to lunch.