Q4: What are your family living expenses? Gessner is an advocate of separate household and business accounts. This allows for costs to be more accurately and effectively tracked and evaluated. It is her advice that the family sit down and develop an attainable and realistic family budget that each member of the unit will adhere to. Her rule of thumb, for those new to household budgeting, is $20,000 per adult and $10,000 per year for each child in the family.
Q5: Can production be improved to boost revenue? Cutting costs is most oftentimes the first place a producer turns when faced with diminishing returns at the end of the year. However, it is important not to overlook the importance that boosting revenue can have on an improvement of the bottomline. Gessner places most importance here on increasing weaning percentage and/or increasing the number of pounds sold as prime opportunities to increase income. This doesn’t happen without investment in genetics, or at face value, a cost up front. She points out that knowing your current weaning percentage and pounds marketed are a prime pieces of information to start evaluation of this question.
Q6: Has the operation’s marketing plan been reviewed? In farming and ranching it’s easy to get caught in the “this is what we’ve always done” way of doing things. However, the reality is that the market is constantly changing, and what the consumer demands does not always remain the same over time. Consider opportunities to add value to your current operation. Value-added opportunities come in many different shapes and packages. Maybe it’s as simple as changing a health protocol, developing a Facebook page, backgrounding, utilizing a bull test program, maketing via video auction, participating in a branded beef program, the list goes on and on.
Q7: Could you provide custom services? An option that every producer should consider to fatten up the revenue column is using owned equipment to provide services for other producers. Gessner suggests such options as baling hay or custom feeding calves, heifers, or even bulls. For those farming families that try to increase income by one family member working off of the daily operation, Gessner stresses that the costs must also be considered. “If town is 70 miles away, is it worth it? What does it cost you?” she questions. “With any changes that are made to the operation, the additional expenses must be evaluated and monitored to ensure that the change isn’t costing more than the revenue it’s generating.” Gessner concludes, “Continuously asking questions to evaluate the efficiency and profitability of a farm or ranch business is a necessity in today’s volatile ag market.”
Volume 33 • Issue 2 • 2018 l BRAFORD news
11