This week, we’re talking a bit about diversification, providing some examples of what it might look for different operations and how folks make the decision to diversify. This example comes to us from the Anderson’s of Whitman, Nebraska. We also share the story of Suzanne and George England, who decided to diversify instead of expand.
In this podcast, Rosemary Amderson describes the wide variety of enterprises she and her husband Kevin have taken on over the years and how they decided which ones to start, which ones to continue and which ones to let drop by the wayside.
Click here to listen to this 19:06 podcast. Or paste http://feeds.feedburner.com/unlbeefwatch into your podcast app and choose “Using Goals with Ranch Decision Making – A Producer’s Perspective.”
Goals Lead the Way
Whether it was running contract heifers, synchronizing and AI-ing them as her grandfather had done, leasing spring cows, running a herd of fall cows, or running a stocker calf enterprise the Anderson’s had four goals guiding them:
• Make money
• Be happy
• Raise good kids
• Contribute to the industry
Rosemary notes that these are goals that many would share. They kept their goals fairly broad, testing each new enterprise against them and asking how each new opportunity or challenge fit. So, when their family grew, they realized that to meet one of their goals, raising good kids, they needed more time at home. Having both a spring and fall calving season kept them from their kids, so the fall cows were sold.
Rosemary says that as they’ve become more profitable they become more focused on the best and highest use of their resources and time. At first they would say yes to any and all AI jobs, and they ran “crappy used machinery.” It was all about getting through the first ten years and making enough money to pay down their debt. Now they can afford a little better equipment so the can do things in minutes that took hours in the past. They’ve adjusted their enterprises and the way they work to be more efficient and flexible so they have time as a family.
Because one of their goals is to make money, the Anderson’s require each enterprise to stand on its own. Rosemary says they apply fair market values to everything and use partial budgets a lot. Having these records helps them make good decisions, and they don’t require fancy accounting software. Rosemary says she prefers pencil and paper and Excel spreadsheets, though she’s considering “getting with the times.”
Questions for You
Are you among the 4% of people who have actually written down your goals? Or, like most of us, do you find the whole thought of goal-making very painful? If you’re in that second camp, what kind of information might help you to consider setting goals and writing them down? Tell me and I’ll see what I can do to help.
Next, how do you decide which new enterprises to add to your operation? Do partial budgets play a role, or like me, do you sometimes choose to do something just because it seems fun and MIGHT have the potential to make money? Would you be interested in more information on Partial Budgeting and would you like me to help?
Answer these questions and share your thoughts and experiences in the comments below.