Do you have herd goals? Spending your money on cattle just because the price is right may not be your best investment. You need a plan. But you can’t plan if you don’t know what you are working towards. Whether you are new to the ranching game or a seasoned pro, you need goals. Find out how Herd Goals can help maximize your profit potential.
The Biggest Question to Ask
You may have heard about goal setting in the past. Weight loss and fitness gurus have tackled goal weight and goal activity for years.
Now, goal setting has become a force behind all successful businesses.
Your cattle business is no different.
What is the main reason you invest in the cattle business or improve the herd you have?
What is your WHY?
If you have never heard the words “what is your why?” you may find it silly. The reason your WHY is so important is to help you remember why you wanted to start this business.
What’s your why?
To make a side income?
For the agriculture tax break on your property?
To have a business to fall back on if you lose your job?
Because your family has always raised cattle?
Your “why” is essential for your results. When you know if you are investing for the long run or just spending money, you can make your best business decisions.
Business or Hobby?
There is a common misconception in any business:
If you are bringing in money, you are making money.
It is easy to boast at the local coffee shop about the money you “made” with the latest sale from your herd. Forgetting how much you spent to get to that sale will cripple you if you think you have a profitable cattle business.
The next question to ask yourself:
Do you want a business or a hobby?
The IRS has special rules for businesses. Speak to your CPA about what kind of profits you need to make to avoid ‘hobby status’ on your business. Knowing your profit and loss will help you run your business as a business.
Take time to map out a business plan for your ranch. A business plan will guide you and your business when it comes to making your herd goals a reality.
How much do you want to make?
The reason (or your WHY) you want to jump in the livestock game or improve the herd you have will help you determine how much money you want to make. It is not reasonable to buy cattle at a high price and expect to have much of a gain from there.
What is your end goal profit?
With your goal profit in mind, how fast do you want to make this amount? Set the date you want to attain this profit.
When is your end goal date?
Profit is the money you make AFTER you deduct your expenses. Do not consider the check you receive after selling your cattle to be your profit. Even though your costs have been paid, they come from your profit.
What about setting a Herd Number Goal?
I’ve had conversations with clients about wanting a desired number of cattle before seeing their operation as a success.
The problem with only setting a herd size goal is you may sacrifice herd quality to reach the quantity.
Although you may need to have extensive head numbers to reach a big profit goal, focus on keeping expenses down and quality up. Continuous market planning will help you navigate marketing options when prices are affected by the economy or climate.
Are you ready to set your Herd Goals?
Remember, this is a goal, and you can always change your plans. As you work your business, you will see what is working for you, and what you want in the end will likely develop into something different.
As you reach your goals and set new ones, you will determine what types of livestock and selling styles bring you the most profits. You will only be able to get a clear reading on your goals with good record-keeping and bookkeeping.
Review your goals often and make it a part of your daily routine to keep what you are working towards fresh on your mind.
So, pull out your notebook and start working towards your goals. The success of your ranch depends on you.