Tag: profit

If you Think Profit – you will find Profit

I am going to give away a secret to making money in the cattle business, no matter which segment you are in.   You must think profit, and commit to it.   If you hope to make a profit but spend most of your time worrying and/or thinking about losing money the predominant thought will certainly cause you to lose money.   And you already have your excuse handy, its these up and down markets that make it impossible.   There is nothing we can do right.   However, if you commit to making a profit you will find yourself taking the necessary steps to hit that mark.

Here’s my closing thought this week: People are upset and saying silly things like the market is broken and we need government intervention or a bail-out for cattlemen.   I, once again, outlined the market is trying to help us this week.   How is that broken?   We can make money on fats.  We can make money as back grounders.   The cow calf operator can make money with all the different classes of cattle in their inventory.   The market is giving us a chance to make some real money right now.   It’s also giving us the opportunity to lose big.   Our free will and our way of thinking will dictate which side we choose to walk on.

https://farmprogress.com/marketing/black-swan-markets-still-offer-profits

The 7 Critical Skills Of Successful Strategic Thinkers

Life as business are both long-term races. They require to fully commit to the present while seeing through years ahead in order to define and achieve the best of the future. They require to embrace today while deciding on objectives, understanding the options, creating possible alternative scenarios and situations and determining the direction to be followed. They require strategic thinking.

Defined as the process that determines the manner in which people think about, assess, view, and create the future for themselves and others, strategic thinking is basically the ability to know what you want to achieve and how to achieve it. Developing a strategic approach is not always easy as it is as much a mindset as a set of techniques. However, it does result in the main difference between an average and an exceptional achiever.

Success and achievement can not just be left to hazard.  In a study conducted by Harvard Business Review, 97% of the 10,000 senior executives asked chose strategy as the most critical leadership behavior to their organizations’ future success. Strategic thinkers are able to imagine the big picture, identify the possible impact of their decisions and project the way to get there. These are the seven traces that define them all.

  1. Vision

Strategic thinkers are able to create and stick to a very clear visioning process. Using both the left (logical) and right (creative) sides of their brain, they defined an ambitious but rigorous vision of what needs to be achieved. A clear, positive and big enough vision is what inspires for action and pulls in ideas, people and other resources. A vision is what enables commitment and moves the needed energy to make it happen. In this way, strategic thinkers are visionary leaders. They see the potential for how the world should exist and take steps to get there.

“The purpose of life is a life of purpose” (Robert Byrne)

    1. Framework

Vision should be carefully embedded within a framework. Successful strategic thinkers have the ability to define their objectives and develop an action plan with goals broken down into tasks specifically measured in terms of timeline and resources. They set up deadlines and they commit to them. Self-aware enough, they are conscious of their own biases and factor their own circumstances, perspectives, and points of view within this framework. This helps them to ensure that their own backgrounds are not an impediment but a boost to their goals. Their framework envisions always a plan A, B, and C that drives them all to the same expected result. They factor all possible ways within a reasonable timeline for action.

  1. Perceptiveness

Strategic thinkers are able to look around and understand the world from all the different perspectives. They listen, hear and read between the lines. They observe before forming a judgment and absorb and make use of the different angles that could be helpful for better guidance. They understand peoples’ intentions, hopes, and desires and play with them in a symbiotic way that could help all to achieve greater. They recognize internal and external clues that may sharp and clear the direction to be taken. They are able to grasp the perfect match and put together all the pieces of the puzzle. They are able to feel the breeze because they know that big achievements are just the collection of all the different angles.

  1. Assertiveness

They are good at decision-making. After a comprehensive evaluation, they chose the way to go and walk firmly into it without vacillation. They may doubt but they do not let the doubts to fog the vision. They communicate effectively what they want and need by using clear orders while simultaneously respecting the thoughts and wishes of others. They are able to react appropriately under pressure and reduce anxiety by sticking to their decision and avoiding excessive questioning. Through high levels of confidence and self-esteem, they receive both compliments and critics in a constructive way. They defend their points of view without harming others and manage to convince without force or hostility. They are easily followed.

“Your attitude, not your aptitude, will determine your altitude” (Zig Ziglar)

  1. Flexibility

Strategic thinkers are clearly aware of their weaknesses so they are committed to seeking the advice of others. They are humble enough to be flexible and twist their ideas and framework as to truly achieve the desired vision. They do not confuse flexibility with lack of structure. They accept the rules of the game because they are aware that without rules there is no fair game. Strategic thinkers are flexible thinkers what allows them to shift gears and think about something in more than one way and develop different strategies. Along with working memory and self-control, flexible thinking is one of the three main executive skills allowing to properly manage thoughts, actions, and emotions to get things done.

“Life is a sum of all our choices” (Albert Camus)

  1. Emotional Balance

Strategic thinkers are able to balance their emotions in a way that always favors the achievement of the ultimate goals. They are aware of their emotions, they are able to name them when they arrive, they do not react to them as an important element of accepting them and just when they are over control of them, they take a decision. Whether they received positive or negative feedback, they are able to deal with it, understand and respond in a way that protects and progresses toward their desired outcome. They are able to control and master the three drivers of any emotional state. They stand tall and breathe fully as part of their physiological reaction. They think positive and look for the opportunity as part of their psychological reaction. They are kind, compassionate and optimistic whenever facing their language response.  Strategic thinkers are tremendously creative but they are able to balance this creativity with pragmatism through a sense of realism and honesty about actuality. They are realistic optimists.

       7. Patience

Strategic thinkers do not ignore that achievement is a long-term ride. Milestones have all a concrete time and moment. And success is the result of a process of strategically planned work and efforts. Strategic thinkers have the ability to be patient. They do not rush conclusions. They do not bet it all at once. They invest their energies in a way that is sustainable and led by a long-term vision. They have learned to wait.

“The two most powerful warriors are patience and time” (Leo Tolstoy)

10 Best Management Practices for Running a Profitable Ranch

Some folks purchase rural land for pleasure as much as for profit. Motivated by a dream of running a hunting operation, raising cattle or having their own place to roam, they may forget that the land can help to pay for itself.

Do first things first. Most people never accomplish their goals because they focus on what they know how to do, what they like to do, what’s easiest and what’s urgent. – Danny Klinefelter (Texas A&M University agricultural economist)

“Most people ranch or farm because they love growing things, they love animals, they love being outside, or they love being independent,” says Danny Klinefelter, an AgTexas Farm Credit board member and Texas A&M University agricultural economist. “Not as many enjoy the financial, marketing and people management sides of the business. But these days, that’s where you need to focus.”

Klinefelter offers ten best management practices that can be especially helpful for new ag operators and rural landowners.

“These are things that any producer can do, but that 95 percent of producers don’t,” says Klinefelter, who is also a farm management expert with Texas AgriLife Extension. “If you’re looking for ways to get better, this list would be a good place to start.”

 

1. Match costs with revenues. (Book)

Too many producers treat costs and earnings separately. Focus on managing the margin between costs and revenue by looking a few months ahead. Cattle producers, for instance, can lock in the price of future inputs such as feed, and then use the cattle futures market to protect their selling risk.

“Too often, farmers and ranchers wait to get a better deal,” Klinefelter says. “If you lock in a profit, it’s hard to go broke.”

2. Play “What if?” . (Website)

Don’t limit yourself to considering most-likely outcomes. Plan for the worst. Start with the four Ds—what if someone dies or becomes disabled, what if there’s a divorce, or what if a key player departs?

Klinefelter uses insurance to illustrate the need for contingency planning. If you take off a hay crop every year for extra income, you might be able to ride out a drought. But if you produce hay and cattle in a drought-prone region, you may want to consider weighing the cost of Pasture, Rangeland and Forage Insurance against the cost of  purchasing hay for feed.

“You might hate to pay the premium, but look at what could go wrong and ask yourself if you can afford it,” Klinefelter says.

3. Stay on top of your business. (Book)

“Successful managers monitor and analyze their performance,” Klinefelter says. “They’re more likely to spot problems and opportunities before it’s too late. Business problems are like cancer—they eat away at profits. But if you spot them early, they’re often treatable.”

For example, many ag operators take last year’s cash-flow budget and adjust it for next year.

“Usually, lenders won’t settle for this,” Klinefelter says. “They know that ranchers and farmers consistently overestimate projected earnings.”

Each month, check projections against current cash flow. If this month proves worse than projected, you may need to adjust your expenditures.

4. Establish priorities—the 80:20 rule. (Book)

The 80:20 rule says that 80 percent of what we accomplish is produced by 20 percent of what we do.

“Do first things first,” Klinefelter says. “Most people never accomplish their goals because they focus on what they know how to do, what they like to do, what’s easiest and what’s urgent.”

For example, if you operate a hunting ranch and prefer the hands-on work of building feeders and maintaining deer blinds over marketing, it might pay to hire a marketing professional to promote the business.

profitable ranch advice

5. Conduct autopsies.

Evaluate key decisions to avoid repeating mistakes. What went well and what went poorly? What did you overlook, and which assumptions led you wrong? What did you learn?

Consider the rancher who raises purebred cattle for potential embryo and breeding stock sales. If that business model is too labor- or input-intensive, it may be time to switch to a more traditional cow-calf business model.

6. Do little things better—the 5 percent rule.

“Studies show that the most sustained success comes from doing 20 things 5 percent better, rather than doing one thing 100 percent better,” Klinefelter says. “Also, the most profitable producers tend to be only about 5 percent better than average farmers in terms of costs, production or marketing.”

He uses wheat to illustrate how little things add up. Assume the seasonal average wheat price was $7 a bushel. Others waited for prices to hit $8, but that never happened. You locked in a sure thing by forward-contracting for $7.35, just 5 percent higher than the average price.

7. Benchmark your performance.

“Most producers have no clue how they stack up against their competition,” Klinefelter says. “They think they’re average or a little above—but it’s not possible for everyone to be average or above. How do you stack up against the top 25 percent?”

Consider, for instance, that you raise cattle, and your calves have a lower average birthrate than those on similar operations. Find out how others have improved survival rates in their herds.

profitable-ranch-advice-cows

8. Analyze what to stop doing.

“Successful managers spend as much time analyzing what they need to stop doing as they do evaluating new opportunities,” Klinefelter says. Such analysis can lead to shedding assets, enterprises, people, land leases or unnecessary practices.

He cites the case of a family that produced milo and cotton crops that were only marginally profitable. They generated more profits buying calves and putting them on winter wheat in November, and selling them each spring.

“These brothers decided to lease their cropland to other farmers and focus on what they did best—raising cattle. It made a huge difference,” he says.

9. Use accrual-adjusted income to evaluate profitability.

“Cash-basis accounting is great for simplicity and tax management, but it’s a poor way to measure true profitability,” Klinefelter says. “Cash-basis often lags accrual-adjusted accounting by two to three years in recognizing profit downturns and upturns. By then, it’s too late to respond.”

You don’t need an accrual accounting system, however; simply prepare balance sheets that reflect the beginning and end of the period for which you’re measuring income. Include inventories, accounts receivable, prepaid expenses, accounts payable and accrued expenses.

10. Learn from the E-myth principle. (Book)

The E-Myth” a book by Michael Gerber, talks about how many people believe they can succeed as entrepreneurs, when in reality most small businesses fail. Gerber maintains that most business owners begin with a fatal assumption—that if you understand the technical side of your business, you understand how to run the entire business.

Klinefelter suggests you apply this lesson to ranching, by learning about other players that affect your operation—employees, buyers, suppliers and funding sources.

“Find the top three things that most frustrate each of these groups in dealing with a business like yours. If you can reduce those frustrations, you can become the supplier, customer, employer, borrower or tenant of choice,” he says. For example, ag lenders such as Farm Credit like to hear from customers when changes occur—don’t wait until the end of the year to contact them.

Do you manage a ranch or farm? Share your tips for running a successful business in the comments section.


This article appears in the fall 2016 issue of Texas LAND magazine and was provided by Farm Credit Bank of Texas. Visit www.landmagazines.com to read more and subscribe to future issues of both LAND magazine and Texas LAND magazine.