“Can I make money in the livestock business?” This question is the number one thing I am asked. Let’s find out.
I read a Facebook post yesterday by one of the leading beef magazines. The question was something like, “What piece of advice would you give someone new to the cattle industry?”
The question didn’t bother me. It was some of the answers that furrowed my brow.
Many of the responses were: Don’t get in. Have a second and third job if you want to be in this industry. It’s a money pit.
The answers went on like these for quite some time.
At the risk of starting a war on social, I decided to leave my thoughts here on the page where people came for answers on how to make profits, not just “be in debt” in their operation.
“CAN I MAKE MONEY IN THE LIVESTOCK BUSINESS?”
This is the NUMBER ONE question I hear in my business:
“Can I make money in the livestock business?”
Ironically, the answer to this question is woven into the entire reason Texas Farm & Ranch Solution, LLC was created. I was unhappy hearing my family, friends, and people I didn’t know passively say there’s no money in agriculture as if it was something they did because no one else would do it.
It was as if being in the agricultural business was like taking out the trash that sat by the front door for days. As if no one else would do it, so they might as well do it themselves.
DO YOU EVEN WANT TO MAKE MONEY IN THE LIVESTOCK BUSINESS?
Some do it because it is their lifestyle. Others do it for the extra income. While others want animals at their place for their ag exemption for property tax.
Regardless of your reasons, if you want to make money in a livestock business, you must run it like a business.
You have to do all the things that business owners do:
- Set business & personal goals.
- Think in terms of profits, not just making money.
- Evaluate income streams.
- Keep good livestock performance records.
- Maintain daily bookkeeping habits.
- Eliminate what is costing you more money than you are profiting.
HOW CAN I INCREASE PROFITS?
Remember, you are growing food for yourself, your family, other people’s families, people you’ve never met. In short, you may not control the end price you receive, but you can put yourself in a better position to receive profits in several ways.
- Sell through private treaty.
- Sell meats directly to the consumer.
- Research local barns for the best commission, advertising, and buyer relations.
- Switch to raising desirable animals that buyers pay more money for.
- Market your animals.
When you keep your books up to date, it’s easier to see what costs you more money than it’s worth.
Controlling how much you spend is critical to increasing profits.
Yes, expenses are inevitable to running a business. Make sure that what you are spending passes the test.
Will the expense help you:
- Increase skills
- Decrease money loss
- Add value to your business
- Increase profits
- Free up your time
Be sure you understand the difference between spending and investing in your business. So many times, owners will spend more than they need to in order to avoid paying more taxes.
However, if you plan to apply for a loan, the bank wants to see that you can make a profit. Spending money for the sake of spending will not help you make money in the livestock business.
A line of defense that you have against money loss is decreasing your waste.
Controlling your feed waste is huge. Feed and supplements make up a considerable expense category.
Many micro-farmers and ranchers feed from sack feed because having large bins of feed to supplement their animals doesn’t make sense.
When you are required to feed hay, make sure that you are feeding a high-protein, clean bale. It’s disheartening to see a bale you paid lots of money for half-eaten because it contained a large percentage of weeds.
Do your research and plan for the winter and drought months to start collecting better hay at a better price before you need it.
Keep track of your hay with The Hay Inventory Worksheet. This simple record-keeping system will keep your past inventory organized for future purchases you may need to make.
The more informed you are about the costs you’ll routinely expect, the better your budget and bank account will be.
FEED THE RIGHT ANIMALS
Whether you are raising cattle, sheep, goats, swine, chickens, or horses, if an animal isn’t producing, you won’t see a profit from it.
Here, the definition of producing means producing a proper income.
If an animal is late in producing offspring, she could jeopardize your end goal. Sometimes, these animals have breeding issues they will never rebound from and should be culled from your herd.
Here are a few times when culling should be highly considered:
- Extended periods of barrenness
- Poor body condition with no improvement after supplementing and vet care
- Multiple losses of offspring
- Lack of market performance in offspring
Culling can be an emotional experience, especially on some of the animals you have had in your operation for an extended period of time. However, culling is part of business. It costs money to keep animals that are not producing according to your Herd Plan.
MAKE PROFITS A HABIT
Once you sort through your income, expenses, and herd, you must stay on top of this practice to make money in the livestock business.
So many things out of our control affect the agricultural community. The practices you control during your office and field time will ultimately be your reward.
Ultimately, if you run your livestock operation like a business, you will have to wait a while to see some profits, especially when just starting.
I encourage you to look at adding income streams that are low in cost and time to help supplement your ag income.
These posts will give you some great insight:
You’ve mastered your primary micro-farm or ranch income. How do you add extra income to diversify your income streams? Check out these ideas.
You are on your way to creating a beautiful business life. The entrepreneur in you is proud of how far things have come. Time is money. All the time you’ve spent in your business has cost you. Find out how to calculate the cost of your time.