Creating Wealth as Beef Cattle Producers
Question of the Week: Do you know what is making and losing money?
When you look at your operation, do you know exactly which enterprises, practices, inputs and strategies are profitable and which ones are losing money?
While no one wants to lose money, we need to be honest with ourselves about the financial status of our businesses and use that information to make appropriate changes. If we don’t take the time to do so, we could be digging ourselves a deeper hole without even realizing it.
Carve out some time to look at this or find someone to do it for you. Who knows, maybe this knowledge will save you time and money in the long run.
Mary Jo Irmen works with cattle producers to help make their money work for them by helping them take control of their finances. She helps them create their own system of money to borrow from with infinity banking. This allows the bank to be plan B. She explains more about this system in her book, Farming Without the Bank. Irmen takes the time to share how cattle producers can take steps towards wealth and what type of mindset this requires.
“It is liberating and fun to see producers taking control of their operations. There is nothing better than getting an email from a client who tells me that when the bank told them no to something, they still said yes to themselves and borrowed from their life insurance policy because they knew it would be the right management decision to move forward,” says Irmen.
Shifting Your Mindset
Mindset matters in all aspects of life and business. This is especially true when it comes to the financial side of ranching. Why? There are a lot of limiting beliefs floating around that impact how we not only view money but also how we use it in our day-to-day lives. Think about how many times you’ve heard the coffee shop talk about there being no money in ranching. How many times have you caught yourself thinking or saying this too? This is just one example of how our thoughts and mindset impact management decisions.
“Instead of saying you can’t buy something because you can’t afford it, you need to ask yourself how can you afford it? We are not taught to think like that, right?” says Irmen.
When you think about being wealthy, is it a good or a bad feeling? Another common limiting belief about wealth in ranching is that because we aren’t supposed to ever make money off of cattle that we should feel guilty about having wealth, right? WRONG!
“All business is business at the end of the day. When we see other businesses outside of agriculture going under or losing money, we ask ourselves how can they afford to lose money. It’s the same for ourselves. Ask yourself the same question,” says Irmen.
Losing money, being broke and putting more hours in than everyone else to the point you are running yourself to the ground is not a badge of honor. Everyone should be looking at their operations and figuring out what they can change year in and year out to remain profitable.
How to Become Wealthy
How do wealthy people become wealthy? This is the question Mary Jo Irmen asks herself and her clients.
“We are taught from the beginning to use cash whenever possible and to borrow if you can’t use cash. We aren’t taught to question how others become wealthy or how to create cash flow,” says Irmen.
Irmen looks at business models across all industries to learn how wealth is created and has found several commonalities.
Honing in on an abundance mindset as opposed to a scarcity mindset is where everyone needs to start. With an abundance mindset, business owners are willing to talk to one another and openly share both failures and successes. Business owners ask for help and other business owners provide it. This is true during all times and not just during times of tragedy.
Wealthy people are also learning how to use the tax code to their advantage. This means not taking advantage of the tax code but using it in ways that allows them to create more cash flow. “Wealthy people think about money differently and use money differently.”, said Irmen.
Where to Start
The thought of finances can feel overwhelming right away until you shift your mindset to make if feel liberating. For those who feel buried, overwhelmed and unsure of how to break the vicious cycle of debt; start with little changes. Irmen encourages producers to look at what is keeping them in this cycle. Does it all go back to pride and emotion? After that, one step producers can take to start paying off their debt is to look at how much unused machinery is around and can be sold.
“If we are on the verge of losing our operations, think about if you can sell all the cows and start over in a way that will be more successful by starting smaller or maybe implementing new practices. The neighbors and other people are going to talk. It takes guts to eat your pride and make these types of decisions. But, at the end of the day it might be the only thing that keeps you in business and that makes it the right decision,” said Irmen.
What steps can you take today to begin creating wealth? Start between your ears and determine what matters to you. Do you need to own the land or the cattle or will renting suffice and generate a profitable business. Do you need to run pairs, or would a feedlot or yearlings fulfill you as a business owner and person? Do you want to rely on off-the-farm income or do you want to make steps towards creating a more profitable operation that will support your family? There are no wrong answers as long as you are honest with yourself and understand if the business is structured in a way to accomplish your goals. It all starts with little changes that add up over time.
