With almost no exceptions low-cost production ranchers are more profitable than other beef producers.
Low-cost cattlemen who are highly successful permanently should save 20% or more of their annual profits every year. It's been my experience that you just do not see anything fancy or polished in their lives except for their positive attitudes. They tithe 10% of their income to the Lord, they save 20% or more and then pay their bills, and raise their families with the rest or maybe less. And there is no law against saving more than 20% every year.
It's also been my observation that highly successful ranchers stay out of debt. Being debt free increases profits by an average of 10%. At 499 Ranch we expect our cattle to perform the majority of the work and make a profit every year. A part-time rancher should save 100% of ranch profits, after paying expenses, if he/she ever plans to be full-time someday.
On a grass-based operation there are three assets that most always should increase in value:
1. Cattle under 5 years of age.
2. Land that is debt-free.
3. Pastures with healthy plants and soil which get more productive every year.
With few exceptions, everything else is an expense.
If we increase the pluses and hammer the minuses we are moving in the right direction. Skip a meal or a snack from time to time. Chances are it might toughen you up and not hurt much.
Execution means putting those "smart money" goals you have elected into action and jumping into a success rut. The first thing I recommend is the identification and elimination of the Big 3 expenses. Any costs that account for more than 10% of our annual gross need to be scrutinized closely and done away with. When you marry the profit driver I call "state of mind," life gets easier and more fun.
Likely targets for elimination on most ranches and all universities that I visit are:
1. Equipment – Tractors, hay equipment, bush (brush) hogs, trailers and most everything that rusts, requires maintenance and uses fuel, if not needed on an almost daily basis.
2. Buildings – Remember there are construction cost, taxes, maintenance and insurance. They also tend to collect stuff you cannot find and probably do not need.
3. Feed and feed delivery systems – Cattle need lots of grass and a little supplement. Do away with hay rings, feed troughs, creep feeders, and the accompanying expense of ownership.
4. High-end cattle – Big 1,400-pound, pretty cows are a long way from being near-perfect cows and can be replaced with two 800-pound, highly profitable cows. How old are your cull cows and what do they weigh? Consider keeping bull calves every year to breed your herd. They need to be from smaller, older and proven efficient cows.
5. Anything new – New vehicles do not make sense. New clothes probably don’t either, up to a point...
6. Unmanaged family budget – Successful ranchers require family support. Constant outside pricey entertainment can break the bank.
It's been my observation and experience that most of the money to be made in our business comes from eliminating the things most producers accept as "normal" costs of the cattle business. Some folks consider such gospel to be negative. I disagree and think it is more fun and less stressful to be profitable.
The remainder of our increases in profitability come mostly from forage and soil health increases (doubling) that have resulted in two to five years by following the institution of complete plant recovery, followed by high-density grazing. The execution results in fun and stress-limited living.