2010, anyone? Part 3 – Cash flow

This is the time of year when we start to plan for the next year; the spring rush is over, the summer grind is done, fall is, for the most part, slow, and winter is the season that the next year starts in. So I have been taking odd bits of time here and there to play with our spreadsheets and run through all of the various “what-if” scenarios that might be.

I have broken down our thoughts into three main categories (Production, Marketing, and Cash flow) which I will post over three days. Here is Part 3- Cash flow

Cash flow is the last thing to consider in our planning process for 2010. We need to add dollars to each and every one of the issues we have mentioned in the last two posts and not only do we need to add dollar values but we also need to predict when those dollars will be spent/earned. True financial crisis’s happen when cash flow goes negative, not when balance sheets go negative. Luckily, we love spreadsheets and can spend hours fiddling with the numbers and scenarios. We know there is some debate over the best spreadsheet software, but right now we have to say that Excel 2007 rocks our world. It is tough verbally describe this mathematical portion of our pondering, but it is by far the most important part of planning. You have to make sure that you are going to be in the black month in and month out and should mean that you end the year in the black as well. There is no point in doing something for nothing. It is much cheaper and easier to do nothing for nothing. But if you want to do something and earn something, the price is planning (and of course all of the other costs as well).

Here are some cash flow questions that we are pondering for next year:

  • Production
    • How much does it cost to finish the animal?
    • How does that cost coincide with cash flow?
  • Marketing
    • How much does it cost to sell that animal?
    • How much does it cost to store that animal
      • We have walk in freezer but it ain’t a cavern. If we over produce and undersell we have to utilize a commercial freezer and that costs money.
  • Overall
    • How much gross and net does each animal make me based on a number of different scenarios?
    • Can we figure out a reasonable scenario that keeps our cash flow in the black for the whole year?

We have broken down our operation and our planning process into three nice and tidy categories, but the reality is that it is much more interrelated than this. We haven’t mentioned any sort of back office considerations like insurance, LLC costs, advertising, range rent, etc.  Nor we have accounted for the vagaries of Mother Nature. How this winter turns out (lots of rain, no rain, rain at the wrong time, rain at the right time) will dramatically change our plans for 2010.

Our point with this series of posts is to show how much planning and forethought goes into producing high quality meats and a sustainable, profitable business. We are not doing this by the seat of our pants nor could we even if we wanted to. But we are open to change and relish the opportunities that lie within the ever-offing tomorrow.

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2010, anyone? Part 2 – Marketing

This is the time of year when we start to plan for the next year; the spring rush is over, the summer grind is done, fall is, for the most part, slow, and winter is the season that the next year starts in. So I have been taking odd bits of time here and there to play with our spreadsheets and run through all of the various “what-if” scenarios that might be.

I have broken down our thoughts into three main categories (Production, Marketing, and Cash flow) which I will post over three days. Here is Part 2- Marketing

If I were a conventional rancher, we could stop at the end of Part 1 with our production questions because once the animals got to a certain weight/age; we would sell them into the conventional market and never think about them again.  That is not the case here, we sell everything that we produce straight to our customers and that opens a whole other can of worms that need to be considered.

First thing that we need to consider is how much we are going to sell. We know that our beef sells really well. We have been selling it for years and people know and love our beef and we could sell three times the amount we can grow. Lamb sales are less than beef, but still good and are increasing as more people realize how wonderful good grass-fed lamb can be. Our free range pork was new this year and considering people are just discovering it, sales have been quite good. Our pasture raised chicken sales were a bit off from our prediction this year, but the sales were good enough to keep on with producing them. We think our chicken sale issues came from poor marketing, not flavor (not with how good our chicken is).

We have attached some numbers to how much we think we are going to sell next year. The question is when those sales are going to occur? Farmer Market sales tend to be in the summer and fall. Bulk sales are in the spring and summer. And our new Meat CSA should spread the sales out over the whole year but it is a new enterprise so we can’t plan around it very well.  Knowing when our sales are going to occur is critical when we get around to our cash flow plan (part three) as well as informing our production needs.

Here are some marketing questions that we are pondering for next year:

  • How much volume will our existing markets move? Is that enough?
  • We think we need to expand our marketing. Should we consider more FM’s requiring extra help or should we spend our time pushing our CSA?
  • Are our prices right? Do they need to go higher or lower? Essentially, we are considering “do I want to trade margin for volume?” i.e. sell fewer pounds but make more per pound or sell more pounds but make less per pound? This question of course is relative; we are not going to be Tyson anytime soon or ever.

Questions for you, our loyal reader:

  • Would you like to see us at a farmers market near you? If so, how far would you travel to get some our delicious meats?
  • Do you have a favorite farmer’s market? Do you know of a farmer’s market that would appreciate our meat?

2010, anyone? Part 1 – Production

This is the time of year when we start to plan for the next year; the spring rush is over, the summer grind is done, fall is, for the most part, slow, and winter is the season that the next year starts in. So we have been taking odd bits of time here and there to play with our spreadsheets and run through all of the various “what-if” scenarios that might be.

I have broken down our thoughts into three main categories (Production, Marketing, and Cash flow) which I will post over the next three days. Here is Part 1 – Production

 

A large part of the reason that we are planning for next year now is that meat we sell comes from animals we grow and animals grow slowly. You need to plan months if not years in advance to make sure that you have your production system matching your marketing system. To wit, grass-fed lamb takes 12-14 months to go from conception to harvest, grass-fed steers see that time upped to around 24-36 months, free-range pigs take about as long as a lamb and the speed racers of our production world are the pasture raised broilers which take 8-14 weeks depending on the breed.

 

The other tricky part to planning our production for next year is to make sure that the animal’s last day coincides with the right season. For instance, our grass-fed beef is only harvested off of our lush spring pasture, which lasts for about 90 days. So we need to plan three years in advance to make sure that our steers start the spring weighing about 900lbs in order to meet the harvest deadline. As you can guess that is a tough juggling act. Each of the species we raise have their own harvest season, and each needs to be raised in a honest, conscientious way that arranges their production cycle to best suit their needs and best suits our needs.

 

Here are some production questions that we are pondering for next year:

  • Should we plant some pasture that would allow for early spring grazing for the beef or plant some pasture that would extend spring into early summer? Both? And what does that type of planting offer to the other animals?
  • If we plant pasture, what sort of infrastructure does that require? Fencing, irrigation, etc.
  • Is planting pasture worth it? Do we have the time to make it work and work well? No point in doing it half assed – that would just be money and time down the drain.
  • Should we sell our spring lambs on the hoof now or finish them next spring and sell them as grass-fed?
  • Drought has reduced our cowherd to the point where next year we won’t have much beef to sell. Should we consider sourcing steers from another grass-fed operation that fits our production criteria or just say this is what nature allowed us to produce?
  • We have 15 pigs on pasture now, but our prediction is for us to sell about 3x that many next year. Should we load up on those weaners over the winter and have them ready for harvest early next summer or should we stagger them throughout the year?
  • Our chicken supply feels comfortable right now, but we are thinking that next year we might have to change our production practices away from organic feed to a high quality but non-organic feed to bring the cost down. That would be a tough decision because we strongly believe in non-GMO grain but if we can’t sell organic chickens then we shouldn’t grow them

Questions for you, our loyal reader:

  • Would you feel comfortable buying beef from us that we bought from another sustainable rancher?
  • Which would rather eat: a chicken fed an organic feed or a chicken fed a high quality, but non organic feed?

 

Our beef is ready

Many of you have been wondering when our beef will be ready.  You and I both have been wondering that exact same thing. I have been watching the rain, the grass, the steers, and the sun trying to gauge when that magical moment of having all of those factors line up wouldl be.  It was a couple of months ago when those stars aligned, and off to the butcher the steers went. Our beef is ready now because the butcher dry ages the meat for 3 weeks before cutting it. So the beef that is coming out of the butcher this week went there about 3 weeks ago. I must admit that I held onto the first beef of this year, just because I was hungry for some beef.  I have been eating it for the past couple of weeks and man, it is good. Nothing like a late spring/early summer bbq addiction to start the grilling season off well. Barbarosa Burgers topped with farmer market onions, homemade pickles, and sharp cheddar cheese on a sprouted grain bun is darn near perfection if you ask me. But then I must remember our ribeye steaks with a pepper rub, cooked just short of medium rare and I might have to change my opinion.  Oh, but what about home made faijitas with a Barbarosa skirt steak and grilled veggies? Yep, that is good too.  So I guess the moral of the story is that it beef is good and I am happy my freezer is full again. Yours, too, can be full just send me an email to start working it all out. Check out our price page for this years prices.