Benefiting from the Good Times

Cattle prices continue to strengthen. Price insurance helps reduce the risk of owning cattle. We are definitely enjoying good times. Cattle prices are strong, how long this will last or how high prices may go are an unknown. I think we are seeing a natural response to many years of low prices. The main driver in the strong prices is the reduced cow herd in North America.

Due to current circumstances we are all likely to experience an increase in profit. The question arises: what will we do with our increased profit? Will you choose to spend or invest the increased profit? I think this is a serious question that each of us should reflect on. There are likely a 100 ways to spend the money. Most of them are good & would have a short term positive impact on our business. Unfortunately if we spend the profit there will be no fundamental change or long term improvement in our business. There are likely only 2 or 3 wise ways to invests our increased profit. These choices have the potential to produce fundamental change in our businesses which can lead to long term profit & sustainability.

Let me share a personal example of what an investment might look like. We had a good year in 1987 resulting in a $200,000 profit. That year we invested in a livestock scale ($50,000) a steel corral system ($50,000) & a new house ($85,000). We use the scale for sale purposes, to monitor our weight gains & to purchase our feed. The scale has been an excellent investment. It has saved us thousands of dollars. I would estimate our savings at over $400,000. The scale still works fine & will continue to save us money for many more years. Clearly this was a good investment. It is harder to quantify the return on the corral system. I know the corrals have saved a lot of money in time & repairs. As well we have a very efficient system. Each time we work cattle it is enjoyable, effective & efficient. Our corral system will last many more years & continue to produce a good return on our initial investment. Our corrals have been a good investment. The house we built in 1987 is in good shape & will be used for many more years. Again this was a good investment.

I would like to think that 27 years ago I was looking ahead & trying to make investments that would have a positive long term impact on our business. That isn’t really true. I made investments in 1987 that I felt were necessary & that would benefit us. Over time they turned out to be good long term investments. It wasn’t really planned. This isn’t bad in fact I think it is a good sign. H M is about making better decisions. None of us know what the future will look like. Since we can’t see the future it is impossible to make a detailed plan. In the present we know the circumstances & can make better decisions. Confidence & security comes from making better decisions today. These decisions will place us in a good position in the future. When the future becomes the present we will make another better decision. I believe this is a formula for success.

I invite you to consider how best to invest your increased profit. Wise decision making will pay big dividends. This is a topic that deserves serious consideration. Best wishes on your investments & a bright future.

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