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Hypothetical financial question

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RanchMan90

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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
 

M-5

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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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RanchMan90

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callmefence":mscqq4tn said:
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.
 

shaz

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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.
 

etr

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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.
 

True Grit Farms

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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.
 

Stocker Steve

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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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RanchMan90

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Stocker Steve":15gppb9i said:
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?
 

Stocker Steve

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True Grit Farms":cm2gupki said:
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.
 

Stocker Steve

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RanchMan90":bkcgd8xn said:
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?
 

Brute 23

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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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RanchMan90

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Stocker Steve":ti25qepg said:
RanchMan90":ti25qepg said:
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.
 

Stocker Steve

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RanchMan90":3rzcsgsc said:
Stocker Steve":3rzcsgsc said:
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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RanchMan90

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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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Not aimed at Ranchman:

Somebody knows something I don't, if they are hiring labor to raise/care for cattle, and have something left over for themselves. Once you've reached the limit of what you and family can do, it's a great great big jump to the next level.

Like anybody here raises tobacco but here goes------- I raised 16 acres of Dark tobacco for many years. Goal was to hire as little help as possible. I can promise you I made more total profit than the man raising 100 acres. He kept the road hot in his truck, while I was working in the tobacco patch. He was leasing ground, leasing pounds (actually acreage on dark), leasing barns, and forking cash out the back window to hired hands all day everyday.
 

Jogeephus

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Stocker Steve":3cye22pl said:
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:

One of the wisest statements I've read in a long time.
 

backhoeboogie

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RanchMan90":3lua3rr0 said:
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

You gotta think bigger Much bigger
 
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RanchMan90

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backhoeboogie":3ouo6puj said:
RanchMan90":3ouo6puj said:
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

You gotta think bigger Much bigger
Tell me more. Bigger on cattle or the job? You're an instrument man too aren't you?
 
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RanchMan90

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Bigfoot":1uo2oabe said:
Not aimed at Ranchman:

Somebody knows something I don't, if they are hiring labor to raise/care for cattle, and have something left over for themselves. Once you've reached the limit of what you and family can do, it's a great great big jump to the next level.

Like anybody here raises tobacco but here goes------- I raised 16 acres of Dark tobacco for many years. Goal was to hire as little help as possible. I can promise you I made more total profit than the man raising 100 acres. He kept the road hot in his truck, while I was working in the tobacco patch. He was leasing ground, leasing pounds (actually acreage on dark), leasing barns, and forking cash out the back window to hired hands all day everyday.
I hear ya. I appreciate all the feedback. Just out of curiosity what's the profit per acre on tobacco?
 

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