Editor’s note: This is the first installment of an ongoing series “The Business of Ranching,” provided through a partnership between Drovers and the Noble Research Institute.
As we work and talk with ranchers, we meet many who tell us they’re in ranching because they enjoy it. They like being cowboys. That’s great, and yet it is concerning if they focus more on working “in” the business than “on” the business of ranching.
One of our producers said something that has always stuck with me – “Ranching is a business within a lifestyle we enjoy.” He mentioned business first, and that shift in mindset is important for ranchers to manage the business of their ranch with as much care and attention as they would if they owned a business on Main Street.
Knowing where you stand
We think it’s important that ranchers keep good records and complete a balance sheet at the end of every year. Not only is knowing one’s net worth crucial for meeting with your banker and doing estate and succession planning, but there is so much you can calculate and learn about the financial health of your ranch based on a balance sheet.
The balance sheet is something you should be looking at annually, because it is a treasure trove of information, especially if you know how to use it. It’s the basis for making projections that inform business decisions that can culminate in thousands or tens of thousands of dollars in outcomes.
Benefits of multiple enterprises
Part of keeping good records is assigning them accurately to your enterprises so you understand your cost centers and revenue sources. Such enterprise accounting should come into play even though you may consider yourself to be strictly a cow/calf operation. In truth, once those calves come off the cow, they move into a different enterprise, be it preconditioning, stocker, etc.
As we’ve been transitioning our Noble Ranches to regenerative management, we’ve found ourselves adding (and keeping records on) multiple enterprises that benefit the ranches in several ways, economically and beyond.
When we add sheep and goats to our cattle grazing operations, we’re spreading our risk across more than one livestock market. We now have revenue streams that come in at different times of the year, helping level out cash flow. Using goats for brush management cuts our use of fire, mechanical and chemical control, reducing overhead costs that go against the entire operation.
From a biological standpoint, the goats eat things that a cow won’t, better using our forage resources and opening up pastures. Goats and sheep take something – brush and weeds that would otherwise incur expenses to control – and turn them into an asset, a valuable forage for noncompeting animals. Diversifying both the animal and plant populations on our ranches is a key strategy helping us advance our soil health goals with little additional expense while also adding revenue sources.
Noble’s educational mission
Our mission at Noble Research Institute is to guide farmers and ranchers in applying regenerative principles that yield healthier soil, more productive grazing land and business success. We offer hands-on, practical courses to producers as part of that guidance, starting with Noble Land Essentials and Noble Grazing Essentials, to provide the tools and support they need to begin or continue with regenerative ranching.
We’re not stopping there. We know how important preserving your ranching legacy is to you and your family, and that requires financial success. Watch for news of our upcoming business courses, where you can learn how to be even better at running that business within the lifestyle you enjoy.
Note: Noble Research Institute offers courses that help ranchers gain hands-on skills to build healthy soils while improving productivity and profitability. Registration for 2024 courses is now open here.
