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Increasing The Gross Margins Of Existing Enterprises

Managing With Ranch Vision

Ranch profit will increase if the gross margins for the ranch enterprises increase. You can increase the gross margins of your enterprises either by expanding enterprises or by making them more efficient.

Enterprises can be expanded if resources are not being fully utilized. Because Ranch Vision provides you with an interactive simulation of your grazing livestock enterprises, you can experiment with ways to increase the size of these enterprises by adjusting inputs such as percentage retained for breeding replacements, purchases, cull percentage, etc., in order to preview the impact on the ranch business as revealed in the reports.

If the resources are already fully utilized, increases in gross margins can only be achieved by increasing the resources themselves or by improving enterprise efficiency.

Enterprise efficiency refers to how well an enterprise converts resources into gross margin. The basic resource for grazing livestock enterprises is grass. In a sense, a rancher is essentially a grass farmer seeking to convert the grass resource into marketable product.

Therefore, the best measure of efficiency for grazing livestock enterprises is gross margin per unit of grass consumed. Ranch Vision automatically calculates the enterprise efficiencies for all grazing livestock enterprises and presents them in terms of gross margin/Grazing Unit Month (GMU) for convenient enterprise comparison and optimization.

Because Ranch Vision provides you with an interactive simulation of your grazing livestock enterprises, you'll be able to instantly see effects of proposed management changes on the gross margins, grass consumption, and enterprise efficiencies of your enterprises.

You can perform cost-benefit analyses for virtually any proposed change in management strategy by identifying the expected impacts of that management change on your Ranch Vision inputs, changing them accordingly, and then examining the changes in your reports.

For example, you might consider using a vaccine to reduce calf scours. If you know that the vaccine costs $1.22 per cow, but can be expected to reduce your calf death loss by 25% and increase weaning weights by 10 lbs., then you would adjust the direct costs, weaned percentage, and weaning weights inputs in your Ranch Vision program accordingly. By comparing the reports, you'll be able to instantly see how the vaccine will impact gross margin, grass consumption, enterprise efficiency, etc. for your cow-calf enterprise.

Another example: you are considering a supplemental feeding program for replacement heifers and expect the cost to be $25 per heifer with a resulting conception rate increase in these heifers by 5%, simply make these adjustments to direct costs and pregnancy percentage and compare the resulting impacts on various reports.

As stated earlier, if you are fully utilizing your resources, then you can increase your gross margins through increases in the resources themselves. For grazing enterprises this might occur through the implementation of pasture improvements such as fertilization, irrigation, seeding, intensive grazing management plans, etc., or by simply leasing or buying more land. Again, such management decisions can be previewed through Ranch Vision. Simply adjust the Ranch Vision inputs to reflect the management decisions you are considering in order to preview the expected future impacts on various aspects of the ranch business.

You can use Ranch Vision to analyze virtually any ranch management decision by previewing how that decision will impact the many facets of your ranch business. The ability to explore possibilities for your ranch is now as big as your imagination and creativity!

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