on the road

on the road

Friday, January 21, 2011

A Pile of Assets and a Collection of Jobs

I just returned from two days at the American Sheep Industry conference in Reno.  Most of my time was spent in a Ranching for Profit seminar presented by Dave Pratt from Ranch Management Consultants.  It was outstanding!

On the first afternoon, we talked about the difference between being self-employed (or owning your job) and being a business owner.  Dave asked, "Is your ranch a business or simply a pile of assets and a collection of jobs."  I have to admit that on most days, my "business" is the latter.

Most of us involved in small-scale farming or ranching love the day-to-day work. I enjoy working with sheep, being outside, talking to customers - "working in the business," as Dave would say.  With the amount of work required to raise sheep, I find that I often lose sight of the need to work ON the business - to think about the issues that will make my business more profitable.

Economically, my business has reached the point where it needs to grow or become part-time.  To make this a full-time business, the farm must pay me a full-time wage and make a profit.  Our current flock of 180 +/- ewes isn't big enough from an economic sustainability perspective.  The question now turns to whether I can feasibly grow our operation to the size (probably 500 ewes) necessary, or whether I need to shrink the business so that it is truly part time.

This is obviously a weighty question - one that will take some time for me and my family to answer.  I'm inclined to grow the business, but I'm not certain where the necessary capital will come from.  Purchasing an additional 200 ewes, which, given our cross-breeding system will achieve the necessary scale within a year or two, will take more capital than I have on hand.  Debt may be a necessary part of achieving my goal of making this a full-time business, but debt makes me nervous.

Any thoughts?

PS - I went to the conference with our local farm advisor, Roger Ingram, and with friend and fellow sheep farmer Robin Lynde (Meridian Jacobs).  For another perspective on the meeting, and for some outstanding photos, go to Robin's blog at http://meridianjacobs.wordpress.com/.

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