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 production – getting calves on the ground or ensuring successful crop yields – they often lack the developed business acumen to make their operations profitable.
Ranch Investor General Partner Principal Colter DeVries, AFM, ALC 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
Challenging 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 the animals that are NOT deemed “high quality” by industry standards often end up being the most profitable. This challenges another common belief: doing things the “right” way is the only path to a profitable ranch.
Trying to do things the “right” or “traditional” can 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 ownership models. At Ranch Investor, we offer a Direct Participation Program where you can claim your stake in a ranch and enjoy the benefits without the operation burden, 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 maintaining a welcoming atmosphere, prioritizing healthy natural resources, or ensuring the ranch is financially self-sustaining, a competent manager can articulate and execute these goals.
Competitive Advantage of having the right ranch manager:
- Well-executed business operations
A full-time ranch manager with solid business acumen will have the initiative to hire the human resources needed to run the ranch. Owners will need the ranch manager’s management skills to ensure that everything runs smoothly, even in times of emergency.
- Long-term strategic planning for the ranch
Business leaders who have strong business acumen will understand the ranch owner’s vision and mission and will set goals for supply chains, profitable products and services, and long-term plans for cash flow to keep the ranch afloat for generations.
- Using Social Media to Boost Ranch Income
Nowadays, part of growing the ranch income is opening the space to recreational activity or adapting new business models. On that note, the power of social media is vital in the problem-solving stage of making the ranch known to the target audience.
Suppose you’re interested in the potential of ranching but are still determining the operational challenges. In that case, Ranch Investor offers expert management to ensure that ranches under our care are managed efficiently and profitably.
As a Limited Partner with Ranch Investor, you gain partial ranch ownership alongside other Accredited Investors and 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 describe a ranch labor unit. An actual manager has the ability to understand that he needs to develop plans, budget, strategize, and communicate with ownership.
Management is the most significant factor determining long-term profit or loss in agricultural and ranching businesses. 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. These losses can be turned around with the right manager, leading to a break-even point or profitability.
Check out the following role of a ranch manager:
Operations Management: Overseeing daily ranch activities and equipment.
Financial Management: Budgeting, expense monitoring, and financial decisions.
Strategic Planning: Setting long-term goals and growth strategies.
Livestock and Land: Caring for animals, land use, and conservation.
Personnel Supervision: Hiring, training, and safety oversight.
Compliance: Adhering to regulations and managing permits.
Record Keeping: Maintaining detailed records and reporting.
Stakeholder Relations: Communicating with owners and stakeholders.
Environmental Stewardship: Promoting sustainability.
Risk Management: Preparing for emergencies and mitigating risks.
Market Awareness: Monitoring market trends and adapting strategies.
Innovation: Integrating new technologies for efficiency.
Lean Into the Future of Ranching
The following ten years will be an exciting and volatile time in the ranching industry as generational ownership changes and business issues may arise.
With advancements in technology, one could assess the health of landscapes simply by using tools like Google Earth. This will clarify which ranches are well-managed ecologically and which aren’t.
The bottom line is Dallas also predicts a growing demand for competent ranch managers as the divide between ownership and operation continues. According to Dallas, many owner-operators are currently running their ranches into the ground. With new owners stepping in, there’s hope for land and soil health improvements, leading to more profitable businesses supporting rural communities.