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IMO the only way you make it in this game is having a big cash pile to sit on for rainy days and to capitalize on good buys. Money is made on the buy and you have to have cash on hand to do that.
Cattle are not a very big cash flow game... especially if you want to put that cash in your pocket. Its more of an asset accrual game... like buying stock IMO. People will always reference these certain points in time when they made X amount of cash on whatever they were doing but that tells us nothing. We all know you have to take an average over time have any indication what what is going on... like stocks.
"Don't let schooling interfere with your education" - Mark Twain
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Credit doesn't count and should be separated from your cash flow expenses. Different spread sheet. Payments for equipment come out of the account but you cannot rely on credit as your emergency back up.
Then there is the max. Any amount above X is extra and should be spent or transferred out. Pay off debt or take a profit or anything else.
there are hundreds of names and terms, but this system of "cash flow" worked for me.
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RanchMan90 wrote:What's your definition of cash flow? What's a reasonable return on it (whether it be assets, liabilities, labor, etc)? Best way to attain it? I'm sure this is a broad spectrum question, broad spectrum feedback appreciated.
I make my cow thing be self sufficient. The "farm account" gets mighty low sometimes. Part of what I like about calving 10 months out of the year is the cash flow. Seems like every time I turn around, I'm needing something. When I raised tobacco, that was a couple of checks a year, a couple weeks apart. You were always leery to spend much of it, till time to put out a new crop. The cows need something year round, and the money flows year round. Not the answer you wanted, but thats cash flow to me.
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2) Should depend on risk involved. Some taking heads throw out numbers like 2X (double your money in a year) or 2X (double the interest rate) or ... Leverage is often what helps with a high return.
3) Either know more than the other guy, and/or be willing to do more than the other guy, have high margins, and/or have high turns, and/or have a business that does not require a lot of capital reinvestment.
High margin high turn low capital does not sound like ranching to me.