In ranching, there’s a common misconception that knowing how to raise crops or livestock is synonymous with understanding how to run the business side of a ranch.
Dallas Mount, the owner of Ranching for Profit, challenges that notion and sheds light on the importance of competent management in the ranching industry. Ranching for Profit is a seven-day intensive business management course tailored for those in agriculture. Dallas emphasizes that while many of his students excel in the production side – be it getting calves on the ground or ensuring successful crop yields – they often lack the business acumen to make their operations profitable.
Ranch Investor General Partner, Colter DeVries, joined Dallas on our podcast to discuss how you can ensure your operation is successful, or flip the script from losses to gains.
Challenge Deeply-held Beliefs
Challenge existing paradigms is often the first step in creating a profitable ranching operation. Dallas points out that there’s a prevalent belief that ranching can’t be profitable, which can make attempts to change or innovate moot.
For example, Dallas notes that often, the animals NOT deemed “high quality” by industry standards end up being the most profitable. This challenges another common belief: that doing things the “right” way is the only path to a profitable ranch.
Trying to do things the “right” or “traditional” way can also leave owners with incompetent management. Dallas emphasizes the need for a shift in decision-making authority. In many agricultural businesses, decisions are held tightly by the older generation, focused on wealth preservation. Dallas advocates for transitioning this authority to the younger generation, eager to seek new opportunities, such as new models of ownership. At Ranch Investor, we offer a Direct Participation Program where you can claim your stake in a ranch and enjoy the benefits without the burden of operation, starting with a $50,000 investment. Learn more here
Find the Right Manager for a Profitable Ranch
Competent management is at the center of all successful ranches. All too often, a new owner hires a lifelong resident of the area, often an excellent cowboy or foreman, to run the ranch. But is this person equipped to manage a multi-million dollar asset with significant annual turnover?
Dallas’s advice is clear: look for competent business managers. It’s not just about managing livestock or grass; it’s about understanding the owner’s values and vision for the ranch. Whether it’s maintaining a welcoming atmosphere, prioritizing healthy natural resources, or ensuring the ranch is financially self-sustaining, a competent manager will be able to articulate and execute these goals.
If you’re interested in the potential in ranching but are wary of the operational challenges, Ranch Investor offers expert management dedicated to ensuring that ranches under our care are managed efficiently and profitably. As a Limited Partner with Ranch Investor, you gain partial ownership of a ranch alongside other Accredited Investors, as well as seamless management. This not only diversifies your investment and ensures profitability, but also relieves you of the complexities of ranch management.
Understand the Role of a Ranch Manager
When ranch owners say they want a “ranch manager” but list tasks like fixing machines or checking water, they’re actually describing a ranch labor unit. A true manager will develop plans, budget, strategize, and communicate with ownership.
In agricultural and ranching businesses, management is the biggest factor determining long-term profit or loss. Yet, ranchers often focus on uncontrollable factors like weather, market fluctuations, and government actions. Dallas challenges this mindset, emphasizing that high market prices don’t necessarily equate to business success.
The difference competent management can make is staggering. Dallas mentions that it’s not uncommon to see ranches under incompetent management incurring financial losses of $300,000 to $400,000 annually. With the right manager in place, these losses can be turned around, leading to a break-even point or profitability.
Lean Into the Future of Ranching
The next 10 years are going to be an exciting and volatile time in the ranching industry as generational ownership changes.
With advancements in technology, one could assess the health of landscapes simply by using tools like Google Earth. This will bring clarity to which ranches are well-managed ecologically and which aren’t.
Dallas also predicts a growing demand for competent ranch managers as the divide between ownership and operation continues. Many owner-operators, according to Dallas, are currently running their ranches into the ground. With new owners stepping in, there’s hope for improvements in land and soil health, leading to more profitable businesses that can support rural communities.