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Beginners question about profit
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<blockquote data-quote="SRBeef" data-source="post: 692394" data-attributes="member: 7509"><p>There's the old joke about the TV newsman interviewing the winner of a large state lottery purse:</p><p></p><p>Newsman question: "What are you going to do with your new millions?"</p><p></p><p>Farmer/Rancher answer: "Farm (or Ranch) until it's all gone" </p><p></p><p>For those of us who have NOT won the lottery, it is important to turn a profit. Enjoyment and pleasure of raising cattle is one thing but if we (most of us) want to continue to do it, sooner or later we need to turn a profit. A real, more-cash-in-the-checkbook-at-the-end-of-the-year type profit. Depreciation, opportunity costs, etc aside, when all is said and done there needs to be a plus, not a minus, in the check book.</p><p></p><p>As HS points out, one of the very big, and maybe seemingly unfair, differences between us is that some start out with a paid up or near paid up land base. Others start out with a big mortgage. These differences do have an effect on the checkbook at the end of the year! But that's the way it is. And even though costs were maybe lower years ago when some started, it was probably just as difficult to get started in then current terms.</p><p></p><p>Not all costs however need to be fully paid the first year. Any business, including the cattle business, has certain start up costs (such as handling facility, water and fences) that will last several years or decades. These can be amortized over several years but that means initial investment to be paid back. I am using 7 years as the life of several initial facility investments and use 1/7th as a cash cost each year.</p><p></p><p>Still sooner or later we need to turn a checkbook profit.</p></blockquote><p></p>
[QUOTE="SRBeef, post: 692394, member: 7509"] There's the old joke about the TV newsman interviewing the winner of a large state lottery purse: Newsman question: "What are you going to do with your new millions?" Farmer/Rancher answer: "Farm (or Ranch) until it's all gone" For those of us who have NOT won the lottery, it is important to turn a profit. Enjoyment and pleasure of raising cattle is one thing but if we (most of us) want to continue to do it, sooner or later we need to turn a profit. A real, more-cash-in-the-checkbook-at-the-end-of-the-year type profit. Depreciation, opportunity costs, etc aside, when all is said and done there needs to be a plus, not a minus, in the check book. As HS points out, one of the very big, and maybe seemingly unfair, differences between us is that some start out with a paid up or near paid up land base. Others start out with a big mortgage. These differences do have an effect on the checkbook at the end of the year! But that's the way it is. And even though costs were maybe lower years ago when some started, it was probably just as difficult to get started in then current terms. Not all costs however need to be fully paid the first year. Any business, including the cattle business, has certain start up costs (such as handling facility, water and fences) that will last several years or decades. These can be amortized over several years but that means initial investment to be paid back. I am using 7 years as the life of several initial facility investments and use 1/7th as a cash cost each year. Still sooner or later we need to turn a checkbook profit. [/QUOTE]
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