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CONSIDER MANY FACTORS WHEN PLANNING A PRODUCTION SALE

by: Eric Grant

Part 4 in a series

Let's say you've been developing a herd of 150 head of registered cattle for the last seven years. On average, you sell about 40 bulls to neighboring cattle producers on a private treaty basis, and on occasion you receive a phone call from a potential customer from another state who has heard good things about your program.

In other words, your reputation is building, and there are more and more people interested in your program, and there's every indication that you could sell more bulls at a higher price to more people through an auction sale.

You've flirted with this idea for many years, and now you think it's time to give it some in-depth consideration. What do you do first?

1) Determine the feasibility. Contact your state and breed associations as well as field reps from local and regional publications. Let them know what you're thinking about doing and invite a representative to come out and look at your cattle. In most cases, breed association reps see cattle across the country and can give you an indication if your program needs work before you risk a production sale or if you're on target. Ask them the tough questions: Is your program ready for a production sale? Are your cattle where they need to be? What are your breeding program's strengths? What are your weaknesses? Do you have the organizational abilities to host an annual production sale? What changes should be made in your management, nutrition and marketing programs to take your marketing program to the next step?

2) Estimate the costs. If you're already selling 40 bulls for $1,200 and want to sell 60 for $1,750, it may take considerable investment in advertising and marketing on your part to add that $550 in value to your cattle. By selling an additional 20 head, will you have to expand cow herd numbers to do so, or will you have to compromise the quality of the lower-end bulls to sell more numbers? How much do you think it will cost to advertise your sale and are those costs justifiable? For instance, you could easily spend 15% of your gross sales income on marketing alone. How many current customers will you lose by going from a private treaty sale to an auction sale? Keep in mind the time you spend on advertising, while it doesn't show up on the spreadsheet, it is still money that you invest in your sale. It may be time better spent doing something else – and with a greater return on investment -- in your day-to-day operations.

3) Evaluate your personality. Production sales are risky, especially when you're first starting out. Do you handle risk well? Do you enjoy meeting new people? Are you a comfortable self-promoter? Do you enjoy sales? Would you rather ranch than be bothered with all the extra work – and headaches – of a production sale?

4) Evaluate your financial position. Can you afford to spend the amount of money it will take to promote your sale during the next 12 months, or is it a better investment to continue on the course you're on by just selling a few bulls now and then? If you're heavily leveraged, banking on hitting a home run through a production sale is bad business. It will take time – usually several years – and considerable investment to build the clientele you need to really have a successful event.

5) Select a date of sale – and stick to it. Make sure the day you select will give you ample time for preparation, preferably 12 months or more in advance. Keep in mind that the most successful sales usually are scheduled on the same day year in and year out. For instance, one successful operator holds his sale the first Saturday in October every year. When you get that kind of repetition, it's worth thousands of dollars in advertising.

6) Consider weather. Holding a single-day sale means you will be at the mercy of the weather. While there are few guarantees, it's best to hedge your bets and select a day or a time of the year when your customers can travel to your sale easily and with few weather-related complications. It's also important to consider workloads, too. Don't schedule and event when the bulk of your customers are calving heifers, for instance.

7) Select a day when people would want to come to your sale. Some of the most successful bull sales take place in the fall, when the autumn leaves are at their glory. Other producers schedule their sales to follow or precede major breed events, such as shows or conventions. This “shirt-tail” approach capitalizes on the fact that many potential customers will already be in your neighborhood. Find out what events are taking place in your area during the possible dates of sale.

8) Select a sale date that someone else isn't using.

9) Select a sale site that's easy to get to. No one likes to drag a gooseneck trailer through traffic or over isolated, unfamiliar terrain. Convenience is a major consideration in traveling plans, and the more convenience you build into your sale, the more people you'll have attend.

10) Select a sale site that has accommodations like restaurants and hotels. Work with your local innkeepers to “block out” rooms for your customers and possibly negotiate discount room rates by booking in advance.

11) Let businesses in your community know that you are planning a sale, and work with them to make the event as successful as possible. Your customers will spend lots of money before they leave the site of your sale – not just on your bulls. They'll buy trucks, machinery, spend money at local restaurants and hotels, buy toys for kids, gas for their trucks, etc. By involving others in your community in your plans, you will make customers feel valued and appreciated during the entire time that they are in town.

12) Make sure you don't lose your established, local customers to gain a few, new regional clients. Lots of times when seedstock producers host a sale of regional, rather than local scope, they lose the very people who have supported them for years. Sometimes, regular, local customers feel betrayed or are afraid that they will be priced out of the market because of your decision to sell bulls to a broader customer base. Let them know why you are making this decision, and that their support of your program remains the most important aspect for its long-term success.

13) Select a sale site that has good cattle-working facilities. Nothing can hurt a bull sale more than on-site disorganization. Disorganization tells a lot about a program's management, and if you've got bulls tearing through already-broken-down fences, things will go from bad to terrible.

14) Select a site that's comfortable for your customers. No one likes to sit in a cold auction arena. Comfort means better bidding, and ultimately more dollars in your pocket.

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