How to Successfully Scale Your Cattle Operation

Whether you farm, ranch, feed or own any business; chances are you’ll have an opportunity to scale your business model. Scaling is exciting and exponential growth can lead to exponential results, but it has to be done correctly to work. 

Thaddeus Tharp is a cattleman and ag lender in western Illinois. As a blue-collar banker, he has the opportunity to help ag businesses across the country grow and achieve their goals. He says, “So many times growth happens before the financials are ready.” However, there are ways to avoid this and several commonalities between his successful clients that are worth noting. 

Relationships and Team Development

Cattle producers need to have a team of experts in their corner to help them scale and be profitable. Thaddeus says, “A successful cattleman is not a standalone person. You need a team to fly.” This team can include an ag lender, nutritionist, veterinarian and accountant to name a few people. 

A solid relationship with your ag lender is especially important when you are scaling. “The relationship is the most important thing. A lot of times people like to keep their lender at arm’s length but I view it as being on the same team to help you win,” says Thaddeus.

Share the full picture with your lender to help them help you. This not only includes your financials but also your long-term goals. If goal-setting is challenging for you and you struggle to define what you want in five, ten or twenty years; start by writing down what you don’t want to give you direction. 

Once you’ve defined your goals, take the time to consider how you want to get there and how fast you want to do it. 

Know Your Numbers

We’ve all heard the saying – you can’t manage what you don’t measure – but it is truly one that needs to be taken to heart. Thaddeus says, “Year over year the guys and gals who improve their number managing capability show steady growth.” Knowing your numbers allows you as a manager to make more informed decisions and be honest about what does and doesn’t work.

Knowing your numbers takes personal responsibility. Working in the business may be more enjoyable but if you forget to work on the business, you won’t be able to do those enjoyable opportunities forever. 

Some of the key financial pieces Thaddeus recommends knowing are the balance sheet, working capital, cost of gain, cost of production, interest and depreciation to name a few. However, knowing and sharing the full picture with your team is the best option.

“If someone is really motivated to grow, they are going to see the numbers and know the importance of tracking them,” says Thaddeus.

With knowing your numbers also comes risk management, specifically price protection. He says, “There’s a difference between risk and calculated risk.” Know your breakeven and explore opportunities to set your floor price and protect your bottom line. 

Leverage Technology

Technology isn’t just a luxury, it’s essential for success. “There is a consolidation continuing to happen in agriculture. We need to become more efficient,” says Thaddeus. Technology is an easy way to increase your efficiency while simultaneously allowing you to make more informed decisions.

One technology Thaddeus’s clients use is Performance Beef. Performance Beef is a cattle management software that allows users to accumulate pertinent data and analyze that data quickly. It saves cattle producers time by aggregating the data for them and allows them to have the full financial picture of each pen of cattle. And, if it’s helpful, producers can allow their ag lender to see their financial picture in real-time. 

Technology is also attractive to the rising generation as it not only increases efficiency but also allows operators to spend more time doing what they enjoy. “Thank God for family and thank God for generational transitions,” says Thaddeus. If the senior generation desires to pass down their business, it’s important to make it financially possible and attractive to the next generation.

Scaling your operation will naturally come with growing pains, but if you establish a team, know your numbers and leverage technology you’ll be on a path to success.

Learn more about how Performance Beef can help you get more organized here.