“It’s not that expensive” can be a very dangerous justification in the ranching world. Let’s be honest, we have all told ourselves that regarding expenses either in our business or personal life. Whatever that expense might have been is probably connected to items that create a cumulative effect. That’s what I am going to call the overhead creep.
Let’s start with a paraphrased story from “How to Not Go Broke Ranching” by Walt Davis. He talks about ranching now, compared to the late 1800s cattle drives. After the Civil War, wild cattle could be gathered, trailed to a market, and sold for cash. It wasn’t an easy business, but here are the fundamentals of that business:
- The cattle survived with no human interaction.
- Once they were gathered, they walked themselves to market.
- Tough cowboys, good horses, and the cook-wagon were the only overheads.
I am simplifying things but in this business structure, the cattle thrived as feral bovines, took care of themselves, and then walked themselves to market.
Fast forward almost two centuries, and as a culture we still view ourselves just like we are in Lonesome Dove. Trailing cattle and living on the range. However the business structure is vastly different. Now we take care of the cows instead of them taking care of themselves. Too many cows are hand delivered balanced rations and live in a barn during the winter. Who is supposed to work for who again?
It’s always easy to pick on winter feed, so what overheads are included in a ranch business structure feeding cattle for 4+ months a year? Most ranches aren’t using small square bales anymore, so a pickup and a hired hand (or kids!) isn’t practical to feed 500 cows full feed every day. So we buy a tractor with a loader or a bale spear to feed large round bales, not that expensive right? Well we can still only haul a couple at a time, so we drive back and forth to the stackyard, too much. Let’s buy a feed wagon, not that expensive right? Well the cows eat it better if it goes through a haybuster, so let’s buy one of those. Not that expensive right? Well we need a bigger tractor to run the hydraulics on the haybuster, so it’s not that expensive to upgrade right? And we will just keep the older tractor because it isn’t worth much on a trade in anyways. It’s not that expensive to keep anyways right? And it can pull the hay rake in the summer so we don’t have to hook and unhook hay machinery all the time. Well it would be nice to not drive the tractor across the highway, so let’s buy a hydra-bed for the pickup to feed the bulls across the highway. Not that expensive right? What about all the extra fuel, repairs, insurance, licenses, and other operating costs on all equipment?
Do you see the rabbit hole I am going down here? Pretty soon we end up with a machinery fleet bigger than most excavation companies, because we have turned luxuries into necessities for ourselves. And, all for cattle that should be taking care of themselves in the first place.
Since winter feed is too easy to pick on, let’s pick on a hobby like hunting to make it more relatable. Well we need a rifle, not that expensive right? Probably want a scope, some ammunition and a sling to carry it. Then a case to store and transport it. Maybe we should get a gunsafe for the house too. Not that expensive right? Then we need hunter safety courses, annual licenses, conservation stamps. We should practice, so we buy shooting benches and targets, and more ammunition. Not that expensive, right? Are we going alone, or do we need to hire a guide? What about an ATV to pack in the woods, and a tent to sleep in? Not that expensive right? All to be used for one hunting trip a year? Oh and the ATV isn’t for long distance, so we need a pickup and trailer to haul it.
These rabbit holes can be dangerous. To see for yourself pick one item in your business, and follow the trail of what it’s related to. Just as we talk about cutting twigs or deadwood at the Ranching for Profit School, remind yourself that many small twigs can make a big difference too.
As always, I am not telling you to kick your cows out to pasture, never look at them or never feed them. But I do want you to be aware of the systems we trap ourselves into when running a business. I understand that there will be a minimum amount of overheads that a business can run on, that is true in any industry, we just want to keep our finger on that number. If you are profitable, and truly love every day running your business, fantastic keep it up! If you are struggling with profitability or a healthy work-life balance, then we need to define and reconsider our paradigms. I encourage you to challenge your business systems and overheads, so check out our Ranching for Profit schedule to join other like minded business owners at one of our upcoming schools.
