Last week after wrapping up my latest marketing school, my wife and I took our daughter to the Nebraska State Basketball Tournament. We then took her to a tournament she played in over the weekend. This means that some mornings I am done feeding cattle before most people get out of bed, and I am also feeding late again at night.
As we were driving to one of the games I had a podcast on. It was a compilation of sound bites from Eric Thomas. He made a statement that his wife and kids do not care, he is the number one motivational speaker in the world. What they care about is if he is the number one husband and father. In order to do that he has to be present in their lives. This is why I am so intense about making money with cattle.
We should, and we can, make enough money from raising cattle that we do not need an off-farm job. This will require some scale, meaning you will need to have enough head to live off of. The work will still have to get done at home. The thing is no one is setting hours for you or telling you what to do on any given day.
Being able to take off and be there for my daughter has made me realize that wealth is not a dollar amount.
This doesn’t happen overnight. This business is extremely capital intensive which makes it seem impossible to get started. Thing is we have to start somewhere and that starting point is different for all of us. The start is probably the most difficult thing to do. The start is what stops most people. Once we do begin we can build momentum. Our success in this business will be determined by the number of successful trades we do over decades in business.
Successful trades generate positive cash flow. If we start small and reinvest profits back into growing the business by buying more cattle we build that momentum. If we were to invest our money in anything else we would hear about compounding. Compounding takes place in the cattle business all the time. The trick is we must do things in a certain way in order for this compounding to take place, and of course I mean marketing and resource management.
There are very few people who fully grasp the power of sell/buy marketing. Understanding price relationships and the affect our costs have on those relationships gives us a huge advantage. I’ve written about the cattle I bought for my daughter years ago. I started her with five head and have reinvested the profits back into buying more cattle for her. I have not invested any more original money. The growth of her herd is from compounding, and it’s blown the doors off any other conventional methods of investing.
Here is the neat part. This compounding can take place if the market is inflating, like right now, or deflating. I do not know of any other investing methods that can compound when the market is deflating. With sell/buy marketing done in a certain way it is rather simple to generate positive cash flow during a bear market and buy more assets.
Doesn’t have to be a struggle
Think of this, if we start these kids off with a small investment of only three or five head, and we do sell/buy marketing in a certain way reinvesting the profits as we go these youngsters will have a great start, and a small business with some momentum by the time they graduate high school. This compound effect will take time, so why not let their little sideline business grow while they are growing too.
Imagine their lifestyle if we help them in this way. If we give them a better mental model meaning both paradigms and skills, along with values and a vision they can be wealthy.
This idea that the cattle business is some kind of struggle and it’s a labor of love is only a systemic thinking problem. We can fix that. The power of paradigms is extremely strong and most people will cling to that idea, and look for others to blame for why it is “impossible” to make money in the cattle business.
For you others, those of you who want something better for yourself and your kids I am adding more sell/buy marketing schools. Our next one is in June. More details here Marketing School – Mr Cattlemaster Let’s put the power of compounding to work in your operation
We all know that cow numbers are down. We keep hearing about herd rebuilding. I have written in here before that some of the fences are gone and the cows are not coming back. This week traveling down the road I noticed that some grassland has been broken up. Other people that were traveling to state basketball texted me and said they were seeing the same thing.
Cattle market view
Another thing that sets off a flurry of texts is the prices people are seeing at their local auctions. While the feeder markets are high and give us reason to smile the female market reports I looked at are not following the rising feeder market.
When we look at feeder markets like I said we have reason to smile. When we examine price relationships it gets real interesting. Heifers seem to be holding their VOG better than steers this week.
Some of the auctions I was at this week the heifer tickets made steers look cheap. These heifers were not being bought for breeding purposes. Fly weight cattle have a huge VOG this week signaling they do not have any friends on the seats. This is what a buddy of mine called “to small for grass syndrome.”
Another thing that I’ve been seeing in the seats and that has been playing peek a boo on the smoothed out data sets is leap frogs. When the cattle weigh over 600 pounds there is the possibility that a heavier weight could bring less dollars per head than the weight class right below it. This is devaluing your feed and subsidizing the buyer. This is why we need to evaluate the VOG at our local markets every week.
The opinions of Doug Ferguson are not necessarily those of beefmagazine.com or Farm Progress.