Many folks have the dream of owning a ranch and having all that open land to themselves. However, in the twenty-first century, is this dream still possible to attain without losing money? It is a logical question to ask yourself. Can owning a ranch be profitable in today’s world?
Owning a ranch can be profitable in today’s world. To be profitable, a ranch needs to be the right size, have the right amount of workers, and not have a lot of overhead. Many ranches can be run simply without the need for a lot of equipment. Careful planning is key to success when owning a ranch.
Understanding what makes a ranch successful in the twenty-first century is the first step to making your ranch profitable. Moreover, knowing why other ranches have failed will help you avoid the same mistakes. Read on to discover what you need to know about successful ranches, including 5 ways to make owning a ranch be profitable.
Article Contents
Is Owning a Ranch Profitable?
While the simple answer is that ranches still can be profitable, it goes a little deeper than that. Many folks who have never owned a ranch before may think that they can just buy a property and not worry too much about the operations. However, this is not the case.
Several factors must be considered when thinking about the viability of a ranch. If you want a ranch to be successful, you have to plan ahead. You must know what you need and what you do not need. Oftentimes, people will get more equipment than they know what to do with. Everything costs money if you want to make money in return on a ranch.
A ranch is more than just owning cattle and having open pastures. Ranches can vary depending on the person running them. However, they all share some common characteristics for being profitable. Consider these factors when thinking of the profitability of a ranch.
- Size of the ranch. Larger ranches will have an easier time being profitable. This does not mean that a smaller ranch cannot be profitable, but it will be more difficult. With a larger ranch, you can have more cattle and livestock that will increase your capacity to sell.
- Employees needed. Make sure you have the money to invest in employees before hiring them. The more employees you hire, the more overheard you will incur. Moreover, try to keep the number of cattle per employee high to mitigate the number of employees needed.
- Many ranches have too many pieces of equipment. The fact is that a ranch can be run successfully with very little. Buy only what you absolutely need. The more your ranch makes, the more you can invest in further equipment down the line.
- Costs associated with the land. Many folks do not think about the costs associated with the land of the ranch. A ranch is more than just the animals and equipment, e.g., if you want to install a fence on the land, you will have to pay. Moreover, if you want to create an irrigation system, that also costs money.
- Marketing is not something just for businesses in the city or online, it is also a vital part of the profitability of a ranch. You need to get the word out that your ranch is open for business. Moreover, you need to use all possible avenues to accomplish this. This means using social media, among other tools.
- Planning for the future. It can be difficult to think about the future, but a lot of ranches fail down the line because there was no plan for how to transition to a new owner when the time arises.
If you have a detailed plan for your ranch, and you consider your debt-to-equity to make good decisions for your land, then you are creating the best scenario for a successful ranch. It is a lot of work to make a ranch profitable. You may need a second job at the beginning, but as long as you carefully consider each element, it can work.
Why Do So Many Ranch Owners Go Under?
Despite the potential profitability of ranches in the twenty-first century, many still go under. It is natural to wonder why. A lot of ranches go under because they did not plan properly. They are spending more than they are earning, and their debt continuously grows.
You do not want your ranch to fall into the red too far, because there will come a certain point when the hole is too deep to get back to the green. Here are some reasons to consider as to why so many ranch owners go under.
- Too many investments. It is tempting to want to invest in numerous amenities for your ranch. However, this can put you in deep debt quickly. For example, you may want to invest in several tractors, but you only need one. You may want a fence, but you get a more expensive material than you need.
- No marketing. Marketing is easy to overlook, but you must not make this mistake. Insufficient marketing can make a ranch invisible to the world. If you want people to conduct business with your ranch, they need to know about you and what you offer.
- Ranches that go under sometimes try to stretch what their land can do. For example, a ranch can only sustain a certain number of cattle. If you have too many cattle, the land will become overgrazed, which can lead to dust and failure.
- No employees. Small ranches are usually the first to go under because they cannot compete with larger ranches that can employ hundreds of workers. A few employees may be all you need to be profitable, but if you have zero employees, you may need a second job, and this can cause the ranch to fail.
Above all else, many ranchers simply do not calculate the costs and the time necessary to run a ranch. Your ranch deserves your time if you want it to be successful.
5 Ways to Make Owning a Ranch Be Profitable
There are ways to make owning a ranch be profitable. While it is not as easy as it once was, it can still be done with a little work. Remember, the price of cattle will go up and down depending on the market, so you need to expect to have a year or two where you may struggle. However, if you plan properly, you can pull through.
How can you make owning a ranch be profitable? Consider these 5 ways:
- Improve Your Grazing Methods
- Use Less Equipment
- Monitor Your Debt-to-Equity
- Consider Boarding Horses
- Consider a Garden
Looking more closely at these methods will show why they can help your ranch be successful. Before anything, though, you should know what your land can handle, and you should know exactly what your goals are.
Improve Your Grazing Methods
Many ranches fail because their grazing methods are not up to par. They may be splitting up their herds, which can be more difficult to control. Moreover, you should be looking to graze for most of the year.
Remember, cattle can graze in difficult conditions. Until the land is completely frozen over or snow-covered, you can still have them graze. When they cannot graze, for whatever reason, be sure to have protein to add to their feed.
A great way to maximize your grazing is to graze your entire herd together. It is more effective because it is easier to control them and you know they are all being fed at the same time. By maximizing the grazing of your land you will cut down on costs for feed. You will also increase the production of your land over time.
Use Less Equipment
Large overheads can overwhelm a ranch and put it under. One of the biggest overheads is unnecessary equipment. Equipment can be anything from tractors to the buildings used to house the tools you use.
The less equipment you use, the more money you will save. Moreover, you probably do not need much storage space. The most important facility is the protection for your cattle (or any other livestock) you have. Otherwise, minimal storage is necessary.
Monitor Your Debt-to-Equity
Sometimes you do need to make investments for your ranch. This can include putting up a new fence around the perimeter to ensure your cattle stay on your property. It may also include an irrigation system to help funnel water in. However, if your debt-to-equity is too high then you will not be able to make these investments.
Your debt-to-equity is important to monitor. You want to make sure it is low. This will ensure you can still borrow to make necessary improvements to your ranch. If you maintain a low debt, you will have much more flexibility with how you run your ranch.
Remember, a lot of ranches fail because they do not monitor their debt-to-equity ratios. They fall deeper and deeper into debt and are unable to improve their ranch, thereby going under.
Consider Boarding Horses
A ranch does not necessarily need to include only cattle. A ranch can be recreational, and it can have other features to attract people to conduct business with your ranch. One way to do this, if you have the space and infrastructure, is to board horses.
There are a lot of people who own horses but do not have the space for them. You can offer that space to them. Moreover, you can simply provide the space for the horses, or you can also take care of the horses. It is up to your discretion.
Either way, boarding horses can create a good revenue stream in addition to your cattle and other features.
Consider a Garden
You may also want to consider constructing a garden. If you have the space, a vegetable garden is a great addition to a ranch. It is beneficial because you can sell what you produce.
If there are local farmers markets, you can sell your produce there. You can also use it as a perfect opportunity to market your ranch. Many people visit farmers markets, so you never know what networking can be accomplished there.
A vegetable garden can help supplement the revenue that comes in through your cattle, and it is a good way to pay for certain costs, especially during the summer months.
Conclusion
Ranches can be profitable if the right steps are taken to achieve success. You need to have a firm plan and a set of goals you want to achieve. You also must market your ranch so that it does not fall into obscurity.
Moreover, by implementing some simple methods to your ranching activities, you can avoid a lot of the pitfalls experienced by many ranchers. Debt is the main element you need to avoid if you want your ranch to succeed.
