Business | Ask a Banker Six Steps to Navigating Ranch Finances in the New Year
Kick 2017 off right with these tips from a banker who understands your business By Katrina Huffstutler
E
very year on Jan. 1, we’re granted an incredible op- portunity: To start over. Some choose to embark on
a weight loss journey. Others set career goals or vow to fi nally go on that vacation they’ve been putting off. For ranchers, it might mean expanding their herd, buying more land or improving working facilities. Texas and Southwestern Cattle Raisers Association
(TSCRA) Director Van Baize, who serves as branch presi- dent for Wellington State Bank in Bowie, says it’s also a good time to get your ranch fi nances in order. He offered the following tips for ringing the New Year in right.
1. Know where you are. “Before you can set any goals for the new year,” Baize
says, “you have to know where you’re starting from.” That means taking a thorough inventory of livestock,
crops, feed, supplies and pre-paid leases. He says that at his bank, they have a detailed fi nancial statement they work through with their customers for this pur- pose, but anyone can create their own document to help get organized.
2. Know where you’re going. Baize says ranchers must have a long-term goal
to work toward if they want to be successful, and yet many operate on a week-to-week or month-to- month basis. What they need, he says, is a roadmap. “Where do you want to go?” Baize asks. “Sure,
there may be some detours you have to take to keep up with market trends or account for weather or other challenges, but if you don’t know where you’re going, how are you ever going to get there?” Although the cattle business will always be some- what unpredictable, there are ways to plan ahead.
“Where do you want to go?” Baize asks. “Sure, there may be some detours you have to take to keep up with market trends or account for weather or other challenges, but if you don’t know where you’re going, how are you ever going to get there?”
78 The Cattleman January 2017
Baize suggests doing your research and gathering as much information about the markets as possible before making any big fi nancial decisions. “Right now, it looks like this is going to be a year
that oil and gas income is down and the cattle markets are down,” he says. “This is probably not the time to do any major capital improvements, but instead to look at investments that we can make. We may not be able to cut corners in our business, but if we invest $1 into something, we need to be able to show that it’s going to produce $1.25 or $1.50.”
3. Get better at record keeping. When you sit down to take inventory and make
plans, how quickly can you assimilate that informa- tion? If the answer is “Not very quickly,” Baize says it’s time to make a change. “If it’s diffi cult to fi gure out where you are, maybe this
is a good time to set up better records for documenting what we’re going to do for this coming year,” he says.
4. Don’t be too embarrassed to go to your lender for help. Was 2016 a bad year? You’re not alone. Baize says
that most agricultural producers are coming out of a 3-year low in profi ts as the cattle industry has faced a 50 percent correction in pricing over the last year. What’s important, he says, is to work with your lender on a game plan for 2017. “Don’t feel like you’re a failure or you’re the only
one that’s having problems,” he says. “Everybody across the board is going through the same thing. Instead, develop a survivor mentality. Pick your head up and look for opportunities — they do exist.”
5. Focus on marketing. Cattle prices may not be where we want them right
now, but that doesn’t mean we can’t get the most out of each head sold. “I think, historically, a lot of cattle producers have
done a good job raising a quality product. But then they just load them in the trailer, take them to the sale, and see what they’re going to bring,” Baize says, adding that it doesn’t have to be that way.
thecattlemanmagazine.com
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116