5 questions ranch families should ask before adding the next generation to the business

March 24, 2015

5 Min Read
5 questions ranch families should ask before adding the next generation to the business

When I was growing up, my parents were realistic with me regarding my aspiration to run cattle with them someday. They encouraged me to explore the world outside of the ranch, which I did during my college years by living and working in places like Washington, D.C., Minneapolis, and even Argentina. Those experiences helped show me that urban living wasn’t for me, and I set my sights on returning to the ranch.

As my college graduation drew closer, my parents told me that the ranch’s current level of production couldn’t support my addition to the family operation, so I explored ways to diversify the operation to enable me to return home. After Tyler and I were married, we were able to invest in an operation neighboring my parents’, which allowed us to add to the family business in different ways. However, the road in making our own way hasn’t been easy, and working with multiple generations and a spouse presents its own set of challenges.

According to a recent article written by BEEF contributor Wes Ishmael, “Two-thirds of family-owned agricultural businesses never make it past the second generation.”

READ: You replacing you

I think this statistic could be reduced if ranching families did a little soul-searching and developed realistic expectations of the profitability of the ranch, and then all family members communicated and reached agreement regarding the goals of the operation.

Here are five questions families should ask before adding more family members to the payroll:

1. Can the ranch support another family?

This is a simple question, but the answer is often complex with many variables to consider. At its current level of production, can the ranch support another member, or members, and enable all parties to pay their bills, support their families, and save for the future?

READ: Is your ranching business family first or business first? 

2. If not, how can the operation diversify to increase income?

If the answer to question one is no, is there potential to expand or diversify the operation to support more family members? When my husband and I returned to the ranch, we purchased and rented our own pasture, which allowed us to expand the herd without placing a squeeze on the stocking rate of my dad’s ground. We also started our own heifer and steer sale in the fall to increase cash flow and augment the income from Dad’s bull sale. We were also willing to take jobs off the farm. I speak and blog, while my husband is a hog buyer for a pork company. Both are flexible jobs that allow us to be home to calve cows and do chores, but the income helps pay the feed and vet bills, too.


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3. If yes, is everyone on the same page for the expected standard of living?

I’ll admit that the millennial generation, of which I am a member, can be guilty at times of wanting today what our parents and grandparents worked a lifetime to achieve. It’s natural to desire the big house, nice car, fancy truck and trailer, and lots of cattle, too. However, we also need to appreciate that it takes decades of hard work and wise investments to amass wealth. If multiple generations are part of the ranch, it’s important to make sure that every member is on the same page as to each member’s expectations and responsibilities, and how expenses will be handled and income shared.

4. How long is the next generation willing to wait?

In some families, a role on the ranch is assured from birth; for others, it takes time, sometimes a lifetime. The average age of U.S. ranchers is 58 years old, and typically ranchers don’t retire until health forces them to do so. This means the next generation often doesn’t attain a managerial position until their 40s, 50s and 60s. The younger generation needs to be patient and learn the ropes and skills that will lead to eventual leadership, but the older generation must responsibly plan the transition that will ensure the ranch can stay intact as the business succeeds to the next generation.

READ: Advice for passing on the family farm

5. Is labor a good trade for use of equipment, facilities and pasture?

As the younger generation on our family operation, my husband and I are willing to put in long hours and provide our blood, sweat and tears to be a part of the business. As the older generation ages, youth becomes valuable, and it’s a great way for the next generation to contribute. In our business, we trade labor and long days of work in return for using my some of my parents’ facilities and equipment. We don’t have the capital to invest in everything on our own, and this is what works for us. However, for some families, this might not be considered fair. The trick is to find what works for all parties as the younger generation transitions and invests in the operation.

I recently read an article entitled, “Being a young farmer -- is it worth it?” When considering all of the challenges of being involved in the ranching business, I think this blog sums it up best with this excerpt, “Being a young rancher is hard, but it’s worth every penny. It’s worth it to have something to pass down to our children, and our children’s children. Being a young farmer is worth every tear, penny, and 15-hour day. It’s worth it all.”

Do you have multiple generations involved in your ranching business? If so, how do you make it work? If looking to invite another family into the business, what hesitations do you have, and how do you communicate those challenges to all parties? Share your suggestions in the comments section below.

The opinions of Amanda Radke are not necessarily those of Beefmagazine.com or the Penton Farm Progress Group.


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