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HERE IS SOMETHING ABOUT THE START OF A NEW YEAR that just screams “get organized!” Maybe it was the lecture from your CPA last year when you
dropped off that shoebox of receipts. This article is not about organizational methods.
You know what fi les you need and you know you will swear off the shoebox system again this year. This article is about taking time to review 2015 and con- sidering what to do about the near misses. Were there any accidents on the ranch last year?
Did any cattle get out on the road and almost hit by a motorist? Did you pitch in to help a neighbor who had had a fi re, or bad health, and needed to get cattle moved or get the hay baled and put up? Did anyone in your family face unforeseen cir-
cumstances that set them back? Just the term itself, unforeseen circumstance, indicates the randomness of accidents. Nevertheless, with a little thought, a rancher can still prepare. “I think we need to prepare ourselves to respond to unforeseen circumstances,” says Paul Burrough, National Finance Credit Corporation of Texas, Fort Worth. The best place to start is with an inventory of your-
self and your business, he says. “Personally, I prepare a balance sheet, a listing of everything I own and every- thing I owe. I do that at the end of the year so I have a point of reference to go back and compare to previous years. It’s hard to manage what you don’t measure, so that’s the fi rst place I start.” Burrough says he likes to sit down with his clients
and help them evaluate their balance sheet. “We can look at their assets and I ask them to answer this ques- tion, ‘What is critical there? Which one of the assets, if its value were materially impacted, would be critical to your ability to continue in business?’ “I’m not just talking about your land and your cattle
and your pickups,” Burrough says. “I’m talking about you. I’m talking about your employees, if you have them. I’m even talking about your lawyer and CPA. Is he or she a critical advisor to your business? Who fi lls that role if something happens to him or her? What have you done to prepare for that unforeseen circum- stance so it does not become a critical negative event in your business?” Burrough has seen this next scenario happen all too often in the ranching business. “If I’m the only one
in a ranching operation who is taking care of things and, heaven forbid, I get bucked off my horse tomor- row and am laid up in the hospital, and I’ve sold calves for delivery next week, how do those cattle get in the pen?” he asks. Burrough points out that when it comes to accidents
on the ranch, “people are more likely to be hurt than be killed.” Accident and disability insurance policies can keep
fi nances fl owing, but many of those policies have a waiting period of 60 days, or “some period of time that you have to prove you’re not able to work,” he says. In ranching, many commitments must be fulfi lled
within a 60-day period, such as getting the bulls out with the cows, or delivering cattle to a client, or planting or harvesting a crop. “Neighbors will pitch in and help and they are usually great about getting you through a short-term crisis, but they have ranches of their own to run,” he says. “They will get you stabilized, but you have to make some long-term decisions. Those decisions are all easier to make when there is money in the bank account. They aren’t very easy to make when you’re facing fi nancial crisis as well. Insurance can help, but planning is the key. And good records.” Therefore, evaluate what happens over 60 to 90 days
on your ranch and develop a plan that will make sure commitments are met if you are physically unable to do the work yourself. Let’s say the accident doesn’t harm any humans,
but does damage to the buildings or infrastructure of your ranch, interrupting your ability to conduct your business and keeping a steady stream of income. One tool to address this risk might already be in
your ranch general liability policy — business inter- ruption insurance. According to the Insurance Information Institute
(III), “Business interruption insurance can be as vi- tal to your survival as a business as is fi re insurance. Business interruption coverage is not sold separately. It is added to a property insurance policy or included in a package policy.” Burrough says, “That’s the thing everybody talks
about… ‘I have insurance if there’s a disaster and I lose this building.’ Okay, that pays for the building but it does not pay for the fact that you could not service your customers for however long it took you to get a
70 The Cattleman January 2016
thecattlemanmagazine.com
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