Ways to Improve Profitability and Productivity for Cattle Producers
Profitability and productivity, they are two things ranchers always want more of, right? After interviewing over a hundred guests on the Casual Cattle Conversations podcast and being boots on the ground for family ranches my whole life, I’ve picked up on patterns and strategies that are imperative to improving both profitability and productivity.
First, it is important to know the relationship between the two. Ranchers know the meaning of ‘time is money’ all too well but is increased productivity directly correlated to increased profits? I would argue they are not directly related unless you are being productive in the right areas. For example, feeding cattle is a necessary task that is always on the list during the winter months for many people. However, is your time better spent on other areas of the business like refining your marketing plan, building customer relationships, increasing days spent grazing or gaining a better understanding of your finances? More details on this to come but I find it important to understand what the relationship between profit and productivity can and cannot look like depending on where your time is being spent.
Increasing profitability is a topic you see in every issue of any newsletter, publication and many podcasts. Cattle producers run on tight margins and many work to defy the old saying that ranchers are only profitable one out of every ten years. By far, the most common piece of advice I’ve heard and witnessed when it comes to profit is knowing your numbers. Knowing your numbers isn’t just being prepared for tax season. It is knowing where you stand today so you can make accurate decisions. If no one on your operation is interested in and capable of managing the finances, then hire it out to someone who is. You wouldn’t think twice about asking a veterinarian or nutritionist for advice, so why would you question the outsourcing of your books?
Knowing your numbers shows you where you stand today but if you don’t know where you want to go, how can you confidently make any decision about your operation? The goal setting system that works well for our family farm and my business is the one, five and ten year outlook. Sit down with your family or business partners and write down what you want the ranch to look like in ten years. What does this look and feel like financially? Who is on the operation? In what areas do you excel? Why do you want it to look this way?
Next, write down where you want the ranch to be in five years. Are the goals you have set for five years steppingstones to your ten year goals? For example, if your ten-year goal is to have an alternative revenue stream that brings in an additional $30,000 of profit then your five-year goal could be to have the business plan developed or even implement phase one of this business.
Once you have the five and ten your goals complete, look at the next twelve months. What do you want the ranch and life to look like in one year? What actions are you going to take in the next twelve months that are in line with your five- and ten-year plans. Break these down into the simplest actions and designate which month is the deadline. For example, if you want to create a more profitable marketing plan the first step might be to contact your sale barn representative to learn who has been buying your calves. Step two might be contacting past buyers to learn the strengths and weakness of your calves after they leave your ranch. This exact goal setting outline goes into more detail in the Move Your Ranch Forward goal-setting book on my website for those interested in starting today.
You might be saying, come on Shaye this is all basic stuff. What about cutting inputs and cattle marketing and other actions? Truth be told, increasing profits is dependent on the individual operation. Once you know your numbers, where you stand today and where you want to go; those other practices and decisions will fall into place for you if they are in line with your goals and numbers.
Productivity is what will help you get from Point A to Point B faster and probably reduce some stress along the way. There are ample tools and technologies that can be implemented to increase productivity but none of these matters if you have poor communication. Communication is the number one driver or killer of productivity. I know this because my lack of communication has decreased productivity. On the flip side, when everyone communicates our productivity increases drastically on our diversified operation. Some argue there is no sense in planning so far ahead when things always. I say it is better to have a plan and change it than to have no plan at all. During the fall months many families are balancing harvest, cattle work, hay hauling, fall grazing and the work schedules of family members with additional careers. One strategy I’ve used for years is to share a rough idea of what my week looks like on Sunday night. This way everyone knows when I am available to help or if it would be beneficial for me to move some meetings. Flexibility with scheduling must work both ways. Additionally, we try to connect daily about who will be available to help and who is doing which tasks on the farm for the day.
Outside of communicating about schedules, working on giving clear instructions and gauging how well you communicate is equally as important. If you feel like people aren’t listening to you or notice a lot of miscommunications; ask the people you work with how you can improve your communication. Ask them if there would be a more effective way to communicate with them. Treat it like a workplace. Chances are everyone can do something to improve how they communicate.
After communication, start looking at automating, delegating, eliminating and reducing to increase your productivity. Look into different software to help with cattle and financial records. Make a list of all the things you do in a day and put stars by which ones make money or move the ranch forward. Can you delegate other tasks or reduce how much time you spend performing them? Are there tasks you can completely eliminate? You might not be able to make all these changes today and that is to be expected. If you want to do it in the future, put it on your goal list. One unexpected way I freed up time in my schedule was by reducing screen time. I set limits for how much time per day can be spent on certain apps and I even deleted a few off my phone. Turning off notifications for email and social media has also been impactful.
Increasing your profitability and productivity is truly a set of simple actions. Take the time to be honesty with yourself about where your operation stands today and where you want it to stand in the future. If you are committed to these goals, the rest will fall into place.
