Hypothetical financial question

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RanchMan90
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Hypothetical financial question

Postby RanchMan90 » Tue Apr 18, 2017 1:54 pm

Hypothetically speaking say a person made $50k at their 9-5:00 job and $50k net profit on the farm, while having $2000 a month in living expenses. Would it be financially smarter to hire an employee for $20k and keep said job or quit job to keep up with farm work load? What's your opinion and why? Thanks
Last edited by RanchMan90 on Tue Apr 18, 2017 2:25 pm, edited 1 time in total.
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Re: Hypothetical financial question

Postby callmefence » Tue Apr 18, 2017 2:15 pm

Is farm maxed out..cause 80,000 is more than 50,000
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Re: Hypothetical financial question

Postby M-5 » Tue Apr 18, 2017 2:19 pm

well if your making 100k now why would you change anything ?? unless your ready to retire and if your under 65 I suggest you keep your job cause your health care will eat up that 20K
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Re: Hypothetical financial question

Postby RanchMan90 » Tue Apr 18, 2017 2:21 pm

callmefence wrote:Is farm maxed out..cause 80,000 is more than 50,000

Do you mean maxed out as far as income? Hopefully with employee more work/income would be produced.
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Re: Hypothetical financial question

Postby shaz » Tue Apr 18, 2017 4:51 pm

Employees are never as good as the owner. Also, can you get the right help for 20K? Health insurance is an issue but any employer matching in your 401K is a big deal too.
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Re: Hypothetical financial question

Postby etr » Tue Apr 18, 2017 7:40 pm

Im not sure your math makes much sense. Your 20k employee is going to cost you more than 20k---payroll taxes, insurance, and any benefits? corporate structure---LLC? S Corp?. In addition, that level of employee (basically $10 hr) will be hard to depend on long term, meaning turnover. By quitting the off the farm job will you be able to expand and increase revenue to at least meet the 80k? Is there a quality of life you would gain by being on the farm full time that is worth dollars to you? It seems there are details missing to give an educated opinion.
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Re: Hypothetical financial question

Postby True Grit Farms » Tue Apr 18, 2017 7:58 pm

I sure wouldn't depend on farm income to pay the bills year in and year out. Working while you can is the name of the game, I'd work both jobs as long as possible myself. Anyone can work 12 to 18 hours every day and get ahead. It's hard to get ahead working a 40 hour week unless your a banker or some other suit wearer.
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Re: Hypothetical financial question

Postby Stocker Steve » Tue Apr 18, 2017 8:18 pm

Not enough information. Sounds like half of an NPV exercise ;-)

What about benefits?
How long will the 9 to 5 last?
Is the farm income consistent, or could you survive a couple bad years?
What is the required skill level of the "farm hand"?
What if you quit the 9 to 5 and hired a hand? :cowboy:
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Re: Hypothetical financial question

Postby RanchMan90 » Tue Apr 18, 2017 9:37 pm

Stocker Steve wrote:Not enough information. Sounds like half of an NPV exercise ;-)

What about benefits?
How long will the 9 to 5 last?
Is the farm income consistent, or could you survive a couple bad years?
What is the required skill level of the "farm hand"?
What if you quit the 9 to 5 and hired a hand? :cowboy:

The 9-5 job for $50k would be forever with incremental raises to $75k + benefits. Farm income would be based off last 12 months. Skill level of farm hard would be fence fixer, pen rider/feeder that would live on farm. Quitting 9-5 would not require said farm hand. The general consensus would be to keep job and hire farm hand. What am I missing, npv etc?
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Re: Hypothetical financial question

Postby Stocker Steve » Tue Apr 18, 2017 10:17 pm

True Grit Farms wrote:I sure wouldn't depend on farm income to pay the bills year in and year out. Working while you can is the name of the game, I'd work both jobs as long as possible myself. Anyone can work 12 to 18 hours every day and get ahead.


Been there, done that, and ended up with both a farm and some health issues.
Key is having family support and knowing when to quit. I stayed too long on the 9 to 5.
So it is a when question - - which depends on how your tolerance and your needs.
Last edited by Stocker Steve on Tue Apr 18, 2017 10:21 pm, edited 1 time in total.
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Re: Hypothetical financial question

Postby Stocker Steve » Tue Apr 18, 2017 10:20 pm

RanchMan90 wrote:The general consensus would be to keep job and hire farm hand. What am I missing?


Why not hire 10 guys and make 10x(50-20)=$300K ?

Or, what is limiting your profitable business size?
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Re: Hypothetical financial question

Postby Brute 23 » Tue Apr 18, 2017 10:32 pm

Yes, hire out even if it costs more than $20K. I'm a firm believer in diversifying my incomes. Id rather profit $20K from 5 different places then $100K from one. Especially if 4 other people are making me $20K each. The reality is as one person you will eventually plateau. There are only so many hours in the day.
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Re: Hypothetical financial question

Postby RanchMan90 » Wed Apr 19, 2017 7:36 am

Stocker Steve wrote:
RanchMan90 wrote:The general consensus would be to keep job and hire farm hand. What am I missing?


Why not hire 10 guys and make 10x(50-20)=$300K ?

Or, what is limiting your profitable business size?

Infrastructure and time/labor are the two main limiting factors. Hired help would kill 2 birds birds with one stone.
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Re: Hypothetical financial question

Postby Stocker Steve » Wed Apr 19, 2017 9:19 am

RanchMan90 wrote:
Stocker Steve wrote:Or, what is limiting your profitable business size?

Infrastructure and time/labor are the two main limiting factors. Hired help would kill 2 birds birds with one stone.


The sharper cattlemen here talk about "too many cows" (reducing profits due to increased outside inputs). Often the limitations are the leased pasture or crop byproducts or facilities or seasonal labor that give an operator financial advantage(s) up to a certain size. The unpopular fact is that cows do not make a great centerpiece operation in most areas but they are very good scavengers.
One of my more profitable periods was when I hired my teenage kids to run summer stockers on leased pasture. There were both acre and labor limits to this operation. When I pushed the stocking rate envelope (like usual) with an increased amount of purchased supplement I was mostly trading dollars.
Can you hire a retired/semi retired person part time? They make some of the best employees. :nod:
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Re: Hypothetical financial question

Postby RanchMan90 » Wed Apr 19, 2017 9:45 am

One of my more profitable periods was when I hired my teenage kids to run summer stockers on leased pasture. There were both acre and labor limits to this operation. When I pushed the stocking rate envelope (like usual) with an increased amount of purchased supplement I was mostly trading dollars.
Can you hire a retired/semi retired person part time? They make some of the best employees. :nod:[/quote]
I think we're on the same page here. I have an older gentleman that helps me as much as he wants to work and he can bring his grandson if we get into a big project. Delegating my order buying has also bought me some time.
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