1. Budgeting for Grass Fed Success Joe Colyn, Originz Gary Matteson, Farm Credit Council Allen Williams, Livestock Management Consultants

2. Business & Financial Skill Needs of Beginning Farmers & Ranchers EIEIO Project –Evaluating and Improving Educational Instruments and Outreach for Beginning Farmers and RanchersEvaluating and Improving Educational Instruments and Outreach for Beginning Farmers and Ranchers Community of Practice –Southeastern USA…and wider

4. Looking to the Future What are your skills?What are your skills? What is your tolerance for risk?What is your tolerance for risk? What is your capacity to deal with ambiguity?What is your capacity to deal with ambiguity? What is your capacity to lead others?What is your capacity to lead others? What is your capacity for self-discipline?What is your capacity for self-discipline?

5. What is your capacity to gather information?

6. define success acresgross sales tractorsyield/acre cows net profit

7. define success enough net profit to meet your goals for your family and your business

8. Plan to succeed, plan to be happy Tell your story in a business plan A budget is a plan in numbers Plan for contingencies know your business

15. Historical Dollars% of Sales Sales ( total income) $367,200100% - Cost of Goods Sold: (variable costs) $312,600 85% = Gross Margin:$54,600 15% - Overhead (fixed costs) $7,800 2% = Profit (Net Margin) $46,80013% The 5-Line Income Statement

16. This 5-Line Income Statement Becomes the basis of this Cash Flow Analysis Spreadsheet Showing Annual Business Results Historical Dollars% of Sales Sales ( total income) $367,200100% - Cost of Goods Sold: (variable costs) $312,600 85% = Gross Margin:$54,600 15% - Overhead (fixed costs) $7,800 2% = Profit (Net Margin) $46,80013%

17. The Concept of Cash Flow Budgeting

19. Grass Fed Cash Flow Analysis Summary of Annual Results from Spreadsheet (the 5-Line Income Statement)

20. GROSS RETURNS PER 200 HEAD also called Total Sales, Total Income: $ - $ 36,720.00 $ 73,440.00 $ - $ 73,440.00 $ 110,160.00 $ 367,200.00 As % Total Sales 100% JanFebMarAprilMayJuneJulyAugSeptOctNovDecAnnual A. TOTAL VARIABLE COSTS also called Cost of Goods Sold or COGS $ 116,033.33 $ 9,033.33 $ 7,633.33 $ 114,633.33 $ 7,633.33 $ 9,033.33 $ 312,600.0085% GROSS MARGIN (Total Sales-Variable Costs=Gross Margin) This is based on results from previous year of operation, or it is estimated from a benchmark15% B. TOTAL FIXED COSTS or Overhead: $ 650.00 $ 7,800.002% NET MARGIN (Sales-Variable Costs-Fixed Costs=Net Return) Also called net profit or net income in dollars, or net profit margin when described as a percentage $46,800.0013% E. MONTHLY CASH FLOW (D-C) $ (116,683.33) $ (9,683.33) $ (8,283.33) $ 28,436.67 $ (41,843.33) $ 65,156.67 $ (8,283.33) $ 63,756.67 $ 100,476.67 $ 46,800.00 G. Beginning Cash (Checking Account)$175,000.00$58,316.67$48,633.33$38,950.00$30,666.67$59,103.33$17,260.00$82,416.67$74,133.33$65,850.00$57,566.67$121,323.33 H. Ending Cash (Checking Account)$58,316.67$48,633.33$38,950.00$30,666.67$59,103.33$17,260.00$82,416.67$74,133.33$65,850.00$57,566.67$121,323.33$221,800.00 Grass Fed Cash Flow Analysis Monthly Results Spreadsheet Cash flows are highlighted in yellow

21. Grass Fed Monthly Cash Flow Analysis

22. Pick-up Truck?

23. how quickly can you make money? Goal of producing cash in 6 months Budget to accomplish goal Pay your bills Family living expenses

24. Managing inventory/expense…the time factor… 24-36 months 1-2 months

25. Record keeping is required for taxes Ultimate goal is to manage from records Need up-to-date and accurate records Create budget with expectations and measurable results plan your business

26. starting in the beef business Like any small business: income expenses cash flow

27. things to do before starting Save money Protect credit rating Gain experience Network Plan

31. Livestock…a 3, 6, 12, 24, 30 month cycle… Riding it out…to succeed.

32. Cycle for cash flow…

33. North Dakota: Returns Per Cow 2012 Returns: Cow/Calf Operation* –Average : $171.70 Net return per cow –Low 20%: -$34.65 –High 20%: $347.25 –*Based on 527 wwt @ $157.34/cwt.

34. North Dakota: Backgrounding Returns 2012 Backgrounding Operation Net Returns* –Average: $17.31/cwt –Low 20%: -$73.12/cwt –High 20%: $66.64/cwt –*Based on avg gain of 154 lbs and sale price of $143.46/cwt.

35. North Dakota: Corn Net Returns 2012 Net Corn Returns Per Acre: –Region 2 Average: $252.40 Low 20%: $52.74 High 20%: $447.97 –Region 3 Average: $383.96 Low 20%: $93.07 High 20%: $554.06

36. Grass Fed Beef Net Returns Return Per Head –Average Range: $150 - $350 –Low 20%: $10 - $80 –High 20%: $380 - $450 Return Per Acre –Average Range: $180 - $300 –Low 20%: $15 - $65 –High 20%: $325 - $400

37. Business Cycle ~ Cash Flow Cycle Plan, prepare – avoid surprises, achieve success

38. Helpful Resource Links www.finbin.umn.edu www.ndfarmmanagement.com www.iowabeefcenter.org www.grazinghandbook.com www.bcscd.com www.Mccc.msu.edu www.Mandan.ars.usda.gov www.greencoverseed.com

40. Three basic business skills: 1.Financial 2.Production 3.Marketing If you are lucky you have two of these skills. Partner with or hire the skill you don’t have. manage your business

41. .www.annualcreditreport.com

42. Thank You Contact us: Joe Colyn – 616 581 1360 joe.colyn@originz.comjoe.colyn@originz.com Gary Matteson –202 879 0840 matteson@fccouncil.commatteson@fccouncil.com Allen Williams –662 312 6826 beefrepro@aol.combeefrepro@aol.com –