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RITING A RANCH BUSINESS PLAN IS AS IMPORTANT AS having good genetics that generate strong gains and quality calves. Your access to suf-
fi cient fi nancing may hinge on your business model. In addition, your ability to withstand market wrecks may rest on whether the plan’s marketing component helps you prepare for disastrous drops in prices. Chris Farley, assistant director of the TCU Ranch
Management Program in Fort Worth, says a business plan provides direction to the ranch and outlines the purpose of the business. “First, determine your mis- sion statement. Once that’s determined, the next step would be to defi ne the goals and objectives, along with a timeline to achieve the mission,” he says. “In the specifi c framework of a cow-calf operation,
the business plan will lay out all of the production de- cisions as well as the fi nancial needs of the business. The business plan will predict the fi nancial return of the investment.” “No matter how many cows you run, the fi nancial
and marketing components are essential in a ranch business plan,” adds Stan Bevers, Texas A&M Univer- sity AgriLife Extension economist in Vernon. “Know your cost of production and know who your customer is — a cattle buyer, feedyard or someone else purchas- ing your meat.”
Two sections of a business plan Bevers says a good business plan “forces you to look
at all of the risks” your operation may face. He suggests that new producers take the time to write a business plan early on, one that is likely divided into 2 sections. The fi rst section needs to establish where the ranch is currently, as well as its performance the past year. If
We want to admire
the past, but attack the future.
it is a new operation, consider using data provided by the Beef Cow-Calf Standardized Performance Analy- sis (SPA). SPA analyzes production data from hundreds of
Texas and Oklahoma ranches. It provides the mean production fi gures that can help new producers deter- mine minimum goals for their operation.
88 The Cattleman March 2016 Chris Farley,
TCU Ranch Management assistant director, Fort Worth
“SPA data can be used as a broad comparison of
how to estimate expenses and incomes for a start-up business if no other data is available,” Farley says. “SPA data is normally determined by well-established businesses that use SPA to make fi ne adjustments to their business.” When starting a cow-calf or stocker operation,
nothing can replace experience in various aspects of a ranching operation. If you did not grow up around ranching, look for a reputable operation and offer to help. If you cannot hire out, at least seek out the wis- dom of veteran producers. Lend a hand in supplemental feeding, processing
or other chores. Learn what works in your particular climate or production environment. Find out which types of cattle may perform best in your situation. This knowledge will help when it is time to develop and write a business plan. Bevers says the plan’s fi rst section is the starting
point against which future performance will be mea- sured. “It is a summary of where the ranch was at the end
of the past year,” Bevers says. “The past year’s perfor- mance should be analyzed to provide a picture of what actually happened. “The second section should detail where the ranch
is expected to be at the end of next year. We want to admire the past, but attack the future.”
Business plan — section 1; 4 components Bevers says the fi rst section is typically divided into
4 components. The fi rst is a general statement of overall observations. This would include rainfall during the year, the overall market situation or any abnormal situ- ations that the ranch had to face during the past year. It should set the tone for the fi rst section. “This fi rst section should then focus on 3 additional
things; production, resources, and the fi nancial situ- ation and performance,” Bevers says. “Each of these areas affects the others.” Using SPA, the rancher can determine just what
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