Business Protocols for your Beef Operation
Protocols are a way to document when and how you will manage important aspects of your business. You probably already have them in place to help manage important practices like calving, breeding or vaccinating. But, do you have a protocol for how you will manage the business side of your farm? Raising livestock all but guarantees there will be a constant stream of work that needs to be done. If you’re not intentionally developing a plan on how to make business decisions for your farm, you can easily find yourself managing day to day without making time to run your business. To help manage your farming operation, consider these five steps:
Set a budget for the year.
Making the time to set a cash flow budget for the year ahead helps you understand what kinds of opportunities you may be positioned to capitalize on. If your budget is showing concerns, that is okay because you still have time to make changes. Maybe this is the year you capitalize on strong cull prices to sell off the bottom end of your herd and reduce feed expenses. Perhaps you need to look at updates to your breeding program to improve calf performance. These types of decisions are much easier to make with supporting numbers and a plan.
Calculate your cost of production.
Every year you will make significant investments into your cow herd. Feed, facilities, labor, veterinarian expenses are a few of the big ones. But, do you know how much it will cost to feed your cows in 2022? You can’t rely on industry averages or a number that you calculated five years ago. With $7.00 corn, and alfalfa over $210 per ton, your cows will cost more to feed than a couple years ago. Every year, you should figure what your costs are, so you can ensure the calves you’re raising will be profitable.
Review your farm’s strengths and weaknesses.
Every farming operation will have competitive advantages, and areas that require focus. What allows producers to stand out is their ability to capitalize on their strengths, and minimize their weaknesses. Maybe you have higher veterinary expenses than average. This is not inherently bad, especially if you are able to generate returns by weaning off more calves per cow than average.
Set goals to improve performance.
At this point you should have the information you need to decide where to focus your efforts in the year ahead. Do you want to work 90% of your herd into a 60-day calving interval? Perhaps you want to increase weaning weights by 5%. No matter your program, there should be opportunities to drive towards improved performance – and improved profitability.
Compare performance to budgets.
We all know that budgets are just a tool to forecast our expectations. It is equally important at the end of each season to take a look at how our actual performance compared to our budget. Was your performance in line with what you expected? If your veterinary expenses came in higher than expected, take the time to understand why. Is it because the cost of medication increased? If so, then you probably need to keep this in mind for next year’s budget and know that we need an increased margin going forward. But, if it is because you had to doctor more sick calves, maybe you need to spend some time with your veterinarian identifying the root cause of the health issues and implement changes for next year to improve calf health.`
The cattle industry provides us with many different models to manage our farming operation. No matter what kind of production practices you deploy, the key to success will be an intentional management protocol that helps you leverage data to improve your performance. This does not have to expensive or difficult – the key is to be consistent and intentional. If this is an area your business is looking to improve, reach out to a trusted advisor to help you get started.
For more information, contact one of our specialists today.