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Percentage of total profit

Bulldawg

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Earlier I posted a message about a proposal to some young boys and there father about raising calves for show on some property that I own in Ohio and I live in Texas. Turns out that they were more interested in raising beef cattle. My question now is what percentage should I give them for raising the cattle?

1. No debt on land, pond, cattle shelter, fence etc.
2. I buy the calves.
3. I pay all expenses.

They would be the caretakers. He would be interested in a percentage of total profit once cattle are sold. What percentage is the going rate for this kind of setup?
 

Craig-TX

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Unless you have enough land up there to support a lot of calves their cut, whatever it is, would not be enough to make it worth their time. Either that or your cut wouldn’t be enough to make it worth you investment. Being that far away it might make more sense to simply lease them the land and let them foot the expenses and take the risk.

Craig-TX
 

TXBobcat

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I agree with Craig on this one. I am in the same situation right now, working for someone that is away from the ranch. I do not take a cut of the profits, but get a salary instead. I was offered both options, but would rather be salaried, especially if the herd is small and just starting out. A salary is constant, just have to watch the hours worked.

For example: Let's say you had a herd of 20 cows, all cows calved and you were able to sell the calves for $300 profit after expenses were paid (in a perfect world). That would be $6,000. If you gave them 20%, that would be $1,200 dollars a year for their labor, or $100 a month, or who knows what per hour (depends on how much work you want them to do). That would leave you $4,200, which is not bad if you can get them to work for $1,200 a year. At an average of 1 hours work per day, that's $3.28 hour.

On the other hand, if you paid them a salary, say $250 month, the profit for the year off the first 10 calves would go to them. $250 month would compute to an average of 2 hours work a day at $4.11 an hour.
 

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